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Japan Consumer Agency Says ‘Complete Gacha’ Game Feature Illegal

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May 18 (Bloomberg) -- Japan ruled a sales method used by online social-gaming operators in the country is illegal, following scrutiny by regulators who said it resulted in charges that were in some cases excessive.

Japan’s Consumer Affairs Agency plans to ban the method, known as “complete gacha,” under a law against unjustifiable premiums and misleading representations from July, it said in a statement today. Social-gaming companies including Tokyo-based DeNA Co. and Gree Inc. have already said they plan to abandon the feature by May 31.

The companies plunged in Tokyo trading earlier this month when the consumer agency announced it was considering restrictions on the sales method, saying it entices users with an appeal similar to gambling. Gree, Japan’s second-biggest social-gaming operator, said May 9 it may revise its earnings estimates if necessary as a result of eliminating the feature.

Kazuyuki Katagiri, a section chief at the consumer agency, declined to say which social games breach the law during a press conference in Tokyo today.

Gree fell 5.9 percent to 1,365 yen at the close in Tokyo trading, extending its drop this year to 49 percent. DeNA, Japan’s biggest social-games company, declined 2.5 percent and has dropped 16 percent this year.

In “complete gacha,” users pay about 300 yen ($3.78) apiece for virtual tokens that can be converted to a more valuable virtual item if the player obtains the right combination or a “complete” set. The items allow users to make faster progress in games.

DeNA, Gree and four other operators formed a group to improve the social-gaming environment in March and are imposing a ban on “real money trade,” where users sell those rare items to other players, the companies said April 23. The operators have limited monthly fees for users who are 19 years old or younger.

Gacha is the Japanese word for vending machines that dispense miniature toys or prizes in plastic capsules without showing the contents beforehand. Buyers take a chance they will receive a desired item after inserting coins and turning a knob.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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