CHAPTER 1

INTRODUCTION

1.1 Research Background

The term microtransaction in the entertainment industry refers to a

business practice that will let its players able to purchase virtual items for small
amounts of money in video games. The word microtransaction itself is a
combination of two different nouns. The term “mikro- “comes from a Greek
prefix that will usually be found in a word to indicate something that is small as a
characteristic. On the other hand, the term transaction refers to an act, process or
instances where something is exchange by monetary means. However, according
to Sunarto Zulkifli, a renowned scholar in the science of Syariah Banking, the
term transaction refers to an economic / financial event that involves at least two
parties that are making an exchange, involving themselves in a business
association, lending and borrowing on the basis of mutual consent or on the basis
of legal provisions.1 Furthermore, according to the definition from the Oxford
Dictionary, microtransaction is defined as a very small financial transaction that is
conducted through the online platform.2

Video games are any forms of various interactive games that are played by
using a specialized electronic gaming device or a computer or mobile device and a
television or other display screen, along with a means to control graphic images. 3
It should be noted that prior to the 1970s, there was no significant commercial
aspect for the video game industry. However, after many advances in the science
of computing, the industry of video games in the entertainment industry would
change drastically.

1
Sunarto Zulkifli and Luthfi Yansyah El-Sanusy (2003). “Panduan Praktis Transaksi
Perbankan Syariah”, Zikrul Hakim, Jakarta, p. 10.
2
Microtransaction (Def.1). Oxford Dictionary. Accessed through
https://www.lexico.com/definition/microtransaction on 1 October 2020.
3
Video Game (Def. 1). Dictionary.com. Accessed through
https://www.dictionary.com/browse/video-game on October 1 2020.
 Furthermore, video game offers several positive experiences to the players
live. The general purpose of video games includes but not limited to: 1)
Relaxation; 2) Opportunities to exert control, enjoyment, creativity; 3) Platform
for socialization; 4) Prevent boredom; and 5) Provide challenge and sense of
achievement to the players. In addition, playing video games is also a good
method for stress management. For the aforementioned reasons, the interest of the
video game industry has continuously developed over the past few decades.

The video game industry is enormous. According to the latest statistical

figures, the video game industry is now larger than both the movie and music
industries combined, making it a major industry in entertainment.4 In 2019, the
global games market is estimated to generate 152.1 billion United State Dollars
(Henceforth will be abbreviated to “USDs”) from 2.5 billion players worldwide.
The numbers of players of video games can achieve that numbers because there
are three main categories in the video game industry which are the following: 1)
The Personal Computer (Henceforth will be abbreviated to “PC”) industry; 2) The
Mobile Device Industry; and 3) The Video Game Console Industry.

Currently, we are entering a new generation of video game consoles,

specifically the 10th generation with the announcement of PlayStation 5
(Henceforth will be Shortened to “PS 5”) and the Xbox Series X. The term video
game console refers to a computer system that are specially made for playing
video games by connecting it to a television or other display for video and sound.
the control or monitoring unit of a computer, containing the keyboard or keys and
switches.5 However, video games may also be played from a mobile device such
as smart phones. Therefore, the broad definition of a video game console can
simply refer to an electronic device in which a person can play a video game with.

According to Christopher Jakeson, an advertising and marketing analyst,

the main target audience for video games are mainly adolescent and minors. 6
Furthermore, he added that men are the primary audience for video games.
4
Samuel Stewart (2019). “Video game industry silently taking over entertainment world”
accessed through https://bit.ly/3eBmseG on 7 November 2020.
5
Console (Def.1). Dictionary.com. Accessed through
https://www.dictionary.com/browse/game--console on October 1 2020.
Especially in the region of United States, India and China.7 However, based on his
analysis, Indonesia is also one of the biggest markets for video games in the
region of South East Asia (Henceforth will be abbreviated to “SEA”).8 In addition,
the statistic also shows that the top search result for video games in google is a
Free-to-Play Mobile Phone Game called “Hill Climb Racing”. In relation to that,
the Game success has made a sequel called “Hill Climb Racing 2” which features
an online element and microtransaction.

In modern-day, the video game industry is no stranger to utilizing the

internet as a way to connect with their players. As a result, more video games
have adopted the Game as a Service (Henceforth will be abbreviated to “GaaS”)
business practice. The term GaaS refers to a video game business practice where
video games are delivered on a continuing revenue model. 9 As a result, video
game business actor would have to lock partial or the entire access to their video
game service if the user did not have access to the internet. This type of practice
would make it easier for the video game business actor in advertising their
services through the use of the internet either directly through their video game
menu or by directing its users to other platforms for their microtransaction
purchases.

The main problem of implementing microtransactions in a video game is

that it takes advantage of the psychology of addiction and conspicuous
consumption of its players. According to Tyler Black, a medical director in
Canada, video games in general will often trigger uncontrollable desires such as
excessive gambling or compulsive sexual activity.10 He added that actions that

6
Christopher Jakeson (2020). “What would be the target audience for a video game?”,
accessed from https://www.quora.com/What-would-be-the-target-audience-for-a-video-game on
7 November 2020.
7
Ibid.
8
Ibid.
9
Johan Kalsson (2018). “Games as a Service: Best Practices” accessed through
https://www.perforce.com/blog/hns/gaming-service-gaas-best-practices-modern-games on 7
November 2020.
10
Ryan Black and Tyler Black (2016). “Gaming, Gambling or Addiction? F2P Scientific
and Legal Perspectives”, in Game Developers Conference (GDC) 2016 at San Francisco.
started out as harmless activities may become harmful to the addicts through over-
use of their microtransaction services.11

In Indonesia, gambling is considered as a criminal offense. According to

Article 1 Law Number 7 Year 1974 regarding Controlling Gambling, all gambling
crimes is an offense against Indonesia’s national Law.12 Furthermore, Article 303
paragraph (3) of the Indonesian Penal Code, gambling is defined as games that is
based on the expectation from winning which depends on the element of chance
and the cultivating a habit of addiction from playing said game. 13 In addition,
according to Article 27 paragraph (2) of Law Number 11 Year 2008 regarding
Electronic Information and Transactions defined online gambling as distributing,
transmitting, and / or to make information or electronic documents that contains
gambling element to be accessible.14 As such, some form of microtransaction
business practice can be considered as a online gambling activities.

Furthermore, in Article 1 paragraph (5) of Law Number 8 Year 1999

regarding Consumer Protection, Service is defined as any service in the form of
work or achievement provided for the community to be utilized by consumers.15
Meanwhile, according to Article 1 paragraph (2) of Law Number 8 Year 1999,
Consumers are any individual users of goods and / or services available in society,
whether for the benefit of themselves, their families, other people or other living
creatures and not for trade.16 On the other hand, Business Actors are defined as
any individual or business entity, whether in the form of a legal entity or non-legal
entity established and domiciled or carrying out activities within the jurisdiction
of the Republic of Indonesia, either individually or collectively through an
agreement to carry out business activities in various economic fields.17

11
Ibid.
12
Article 1 Law Number 7 Year 1974 regarding Controlling Gambling.
13
Article 303 paragraph (3) of the Indonesian Penal Code.
14
Article 27 paragraph (2) of Law Number 11 Year 2008 regarding Electronic Information
and Transactions.
15
Article 1 paragraph (5) of Law Number 8 Year 1999 regarding Consumer Protection.
16
Article 1 paragraph (2) Ibid.
 In this research, the author will examine about the issue with the
microtransaction business practice for minors as a consumer in Indonesia.
Furthermore, the author will examine how the law regulates the rights and
obligations of each relevant party and how they are regulated in relation to the
microtransaction business practice in Indonesia. In addition, the thesis paper will
also be researching about to the scope of the relevant laws and regulations to the
issue of this thesis topic as well as making suggestions if there are room for
improvement to the currently available laws and regulations. By examining the
previously stated topics, it is hoped that the future generations of Indonesia can be
safe from the potential risks that may come from the continued use of unregulated
microtransaction in video games.

1.2 Formulation of the Problem

The author formulates the scope problem that are wished to be discussed
in this research so that the writing of this thesis paper will become more focused.
Based on the background of the problems that have been described in previous
parts of the paper, the author has formulated several main problems which will be
outlined as the following:
1. How is the comparison of legal protection against
microtransactions between Indonesia and foreign countries
implemented?
2. Is the current legal system that is formulated by the Indonesian
Government adequate in dealing with the dangers of
microtransaction business practice for minors?
3. What is the ideal approach to tackling this problem in Indonesia
currently?

1.3 Purpose of Research

1.3.1 General Purpose

In general, this research paper aims to increase the knowledge and insight
of the author and to contribute ideas for the development of the substance of the

17
Article 1 paragraph (2) Ibid.
discipline of law, especially in the field of consumer protection law in regards to
the issue of microtransaction business practice in Indonesia.

1.3.2 Special Purpose

In writing this paper, the author had determined several purposes that will
specifically match the topic of the research which are the following:

1. To compare in-game product attributes and basic legal provisions

for in-game purchases using the microtransaction business practice
with the principles of consumer protection law in Indonesia as an
attempt to determine the accountability of the business actors from
the video game industry that has used such practice in the
Indonesian market.
2. To compare legal solutions that are used in Netherlands with the
Republic of Indonesia for the issues that are discussed in this
research paper.
3. To find out the best legal protection available for minors in cases
where there is an issue with the microtransaction business practice.

1.4 Operational Definitions

In order to avoid different interpretations of the existing terms, the author

of this thesis will provide several definitions of the terms that will be used in this
research, which will be the following:

1. Video Game is a form of game that is played by electronically

manipulating images which are produced by a computer program
on a television screen or other display screen.18
2. Video Game Console a piece of electronic equipment that is
necessary to be used for playing video games on.19

18
Oxford Dictionary, s.v. “Video Games” accessed through
https://www.lexico.com/definition/free-to-play on 19 October 2020.
19
Cambridge Dictionary, s.v. “Video Game Console” accessed through
https://dictionary.cambridge.org/dictionary/english/game-console on 19 October 2020.
 3. Online Game is a genre of video game that is either partially or
primarily played through the Internet or any other computer
network that are available.20
4. Microtransaction is a business practice that is used in the modern
entertainment industry that will let its users able to purchase virtual
items for small amounts of money.21
5. Loot box is a kind of in-game purchase where players do not know
what is in a box until they have bought it.22
6. Virtual goods are intangible objects that can be consumed in online
games and communities in exchange for real-world currencies.23
7. Virtual items are intangible objects that can be consumed in online
games and communities but cannot be exchanged for real-world
currencies and can only be obtained by doing in-game activities.
8. Game as a Service is the business practice where the players will
not be having control of whether they can play a game due to a
company withholding that function.24
9. Minors are every human being who are under 18 (eighteen) years
of age and has not been married, including children who are still in
the womb if it is in his interest. 25 Furthermore, in the context of
legal matters, the term 'minor' means a person (juvenile) who is
below the legal age of responsibility or accountability.26

20
Andrew Rollings and Ernest Adams (2006). “Fundamentals of Game Design. Prentice
Hall”, New Riders, Indianapolis.
21
Ivanov, M. et al (2019). "Video game monetization mechanisms in triple A (AAA) video
games". Wardaszko, Marcin (ed.). Simulation & Gaming Through Times and Across Disciplines.
Warsaw: Kozminski University. p. 422.
22
Macmillan Dictionary, s.v. “Loot Box” accessed through
https://www.macmillandictionary.com/dictionary/british/loot-box on 19 October 2020.
23
Oliver Herzfeld (2012). “What Is the Legal Status of Virtual Goods?”, Accessed through
https://www.forbes.com/sites/oliverherzfeld/2012/12/04/what-is-the-legal-status-of-virtual-
goods/?sh=2c474c88108a on 7 November 2020.
24
Ross Scott (2019). "’Games as a service’ is fraud.”. accessed through
https://www.youtube.com/watch?v=tUAX0gnZ3Nw&vl=en on 19 October 2020.
25
Minors (Def. 6). Hukum Online. Accessed through https://bit.ly/3je7xb0 on 19 October
2020.
 10. Gambling is any game that is likely to be profitable, and will
depend on the luck or skill of the player and involves a stake in it.27

1.5 Research Methodology

1.5.1 Type of Research

The author of this research is planning to use the normative judicial
method as its main way to construct the paper. The normative judicial method is a
legal research method that is carried out by examining library materials or
secondary materials. This research will refer to the legal norms that is contained in
the Indonesian Consumer Protection Law, Netherlands Remote Gambling Act,
and other secondary Regulations related to the topic. The author aims to achieve
this by signing up and subscribing to an online journal service if needed.
Furthermore, the author also plans to do additional research by studying the
contents that are available from the documents and legal reviews that are available
in the Library of Universitas Indonesia.

1.5.2 Typology of Research

This Paper will use both the exploratory type and the descriptive type of
research. The author intends to utilize these research techniques in order to shed
some light to the readers regarding the general confusion for the microtransaction
business practice. In order to achieve that, the author will make a comparison of
how the microtransaction business practice is regulated under three different
countries, namely: The Republic of The Republic of Indonesia and Netherlands.

However, specifically speaking, the purpose of the descriptive studies is to

describe the various characteristics and nature of the microtransaction business
practice. On the other hand, the use of exploratory studies will be used as an
attempt to explain regarding the dangers of microtransaction in video games for
the minors as well as the reason why the government should take action against
these problems. As such, the author believes that both of these forms of studies
26
Damjancho Stojanoski (2017). “What is the difference in the European Union law
between "minor" and "child"?” accessed through https://bit.ly/2UdtU6C On 7 November 2020.
27
Gambling (Def. 1). Hukum Online. accessed through https://bit.ly/2T4mtOf on 19
October 2020.
are justified to be used in the research. Furthermore, the author believes that this
research is a monodisciplinary type of research. As a result, the research result of
this thesis is only based on one scientific discipline, namely the discipline of
law.28 Therefore, the author will not deviate the topic of research towards the
scope of social science and health science.

1.5.3 Type of Data

The types of data that will be used for this research is only the secondary
data. Secondary data is data that includes official documents, books, research
results in the form of reports, diaries and other literature sources related to the
research topic.29 Furthermore, the Secondary data used includes laws and
regulations that relates to consumer protection, microtransactions and minors. In
addition, the Author would like to bring a case study upon Case Number AWB -
20 _ 3038 of the Hague District Court regarding a microtransaction lawsuit from
the Netherlands Gaming Authority and Electronic Arts Incorporated.

1.5.4 Data Collection Tool

In consideration that this research will use the secondary data, the author
plans to use the document study method as a data collection tool. The document
study method is a method where the data will be mainly obtained from library in
the forms of books in order to look for theoretical basis. Furthermore, the author
will be searching for different written Laws and Regulations that has relation to
the topic of the research. Lastly, the author will also look for documents which
has supporting arguments from the opinion of several experts regarding the study
of consumer protection.

1.5.5 Data Analysis

The form of data analysis that will be used to construct the author’s is the
qualitative method. Furthermore, the characteristics of a qualitative data analysis
is that it will entail classifying several things, persons, and events and the

28
Sri Mamudji et. al, (2005). “Metode Penelitian dan Penulisan Hukum”, Publishing
Agency of the Faculty of Law of Universitas Indonesia, Jakarta, p. 5.
29
Soerjono Soekanto (2012). “Pengantar Penelitian Hukum”, Publishing Agency of the
Faculty of Law of Universitas Indonesia, Jakarta, p. 12.
properties that characterize them.30 The research materials that have been
collected and analyzed are in accordance with the principles of Economic Law,
specifically in the field of Consumer Protection Law.

1.6 Writing System

As for the writing system that will be used in the preparation of this thesis,
there will be four chapters to be written, which includes the following:

Chapter 1 of this thesis will discuss regarding the "Introduction" part of

the issue regarding the microtransaction business practice towards Indonesian
minors. In this Chapter, the author will briefly describe the outline of the thesis
writing. Among others, the author will be describing about the background as to
why there is a need for an academic writing in the scope of law related to the issue
on this thesis topic. In addition, the author will also explain regarding the
formulation of the problem to which is the basis or reference for the author in
seeking answers to this research. Furthermore, the author will also explain
regarding the research purpose which is the essence of this research, the
operational definitions which describe important terms related to this thesis
writing so that it could help readers understand the terminology better, the
research methods used in formulating this thesis paper, and the writing
systematics that will be used on this paper.

Chapter 2 will be discussing regarding “The Issue Regarding the Usage

of the Microtransaction Business Practice in Video Games to Minors”. In
other words, the content of this Chapter will be discussing regarding the general
explanation of the dangers from the microtransaction business practice for minors.
Furthermore, this chapter will be examining the principles of consumer protection
as well as the obligations and accountability of business actors of the video game
Industry in relation to the negative effects of the microtransaction business
practice.

30
John W. Creswell, (2013). “Research Design:Qualitative, Quantitative, and Mixed
Methods Approaches”, SAGE Publications, Inc, Nebraska.
 Chapter 3 will be discussing regarding “A Comparison regarding
Vulnerable Consumers Legal Protection from Microtransaction Business
Practice Between the Republic Indonesia and Netherlands Laws and
Regulation” In other words, the content of this Chapter will be explaining
regarding the difference and similarities between the Laws and Regulation of the
Republic Indonesia and Netherlands regarding microtransaction. The topic
discussed will range from Consumer Protection Law to Betting and Gaming Law.
Furthermore, it will also explain regarding the Author’s analysis on both of the
Country’s similarities and difference, as well as an analysis regarding the lacking
quality which both countries has in their attempt on controlling microtransaction
business practice.

Chapter 4 will be discussing regarding “Closing”. In this Chapter, the

Author will provide conclusions from the overall discussion of this thesis paper
and this Chapter will also contain suggestions that the Author hope will be useful
for consideration for future Laws and Regulations concerning microtransaction
business practice in Indonesia in regards to consumer protection for the benefit of
Indonesia’s youth and adolescents. In addition, the Author hope that this part of
the research will be useful for briefly enlightening the readers regarding the
dangers of uncontrolled and / or unregulated microtransaction business practice in
Indonesia.