Given the rise of the online gaming industry, consumer protection laws have been implemented to restrict excessive gaming on the internet. This research evaluates one such consumer protection policy and its effectiveness from both marketing and public policy perspectives. Specifically, we investigate the impact of usage restriction in South Korea on both gamers and the industry using individual-level game usage and spending data. Combining the difference-in-differences approach with a regression discontinuity design and propensity score matching, we show that although the regulation reduces overall game usage, the effects vary depending on past behaviors; that is, counter to expectations, the regulation effect, although negative for average gamers, is less so for heavy gamers and in fact directionally flips for the heaviest gamers. Furthermore, we find that its revenue impact is negligible, suggesting that gamers do not change spending patterns because of the intervention. Thus, usage restriction laws may deter light gamers from potentially excessive gaming but do not work well to dissuade heavy gamers, suggesting that a more nuanced approach (as opposed to a blanket usage restriction law) may be called for. Finally, we discuss the implications of such usage restriction laws as a vehicle to control over-consumption and protect consumers.
Bibliographical noteFunding Information:
History: Avi Goldfarb served as the senior editor and Hema Yoganarasimhan served as associate editor for this article. This paper has been accepted for the Marketing Science Special Issue on Consumer Protection. Funding: This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [Grant NRF-2017S1A3A2066788]. Supplemental Material: Data files and the online appendix are available at https://doi.org/10.1287/ mksc.2019.1174.
All Science Journal Classification (ASJC) codes
- Business and International Management