For games companies, subscription fees adjustments and changes of the scope of subscriptions are very relevant. Third party tech vendors that games companies use to provide their games usually increase their fees on an annual basis. In order to provide the games with the same quality but without less profitability, games companies need to increase their subscription fees from time to time.
However, German courts have recently dealt with standard terms that allow streaming service providers to increase subscription fees. Their decisions are also relevant for the games industry.
Recent court decisions
Consumer protection organizations sued various streaming services providers arguing that clauses in their standard terms that allow streaming service providers to increase subscription fees during a subscription term are void according to German consumer protection laws. The courts decided in favour of the consumer protection organizations:
- A standard clause that allows a streaming service provider to change subscription fees "from time to time" and "at its reasonable discretion" "to reflect the impact of changes in the total costs associated with our service" resp. “increased overall costs” (with examples of cost factors) is not-transparent and unreasonably unbalanced. According to the courts, consumers would not be able to understand the clause and to check if any intended change of the subscription fees is in line with the requirements set out in the clause. Also, the courts argued that under the clause only an increase of the fees is possible but not a decrease of fees.
- In addition, the courts found that there is no legitimate interest for companies to reserve a right to unilaterally increase subscription fees. Streaming service providers could easily request from consumers to explicitly agree to higher fees. The subscription terms (in dispute) allowed streaming service providers to terminate the subscription with short notice. In the event of a refusal to agree on higher fees, the companies, according to the courts, could simply terminate the subscription.
Implications for the game industry
With respect to the increase of subscription fees, games companies should consider the following practices for Germany:
- Transparency: Any price adjustment clauses in the standard terms need to very clear on the conditions and circumstances that allow a fee increase.
- Consumer protection: Game companies should ensure that their standard terms do not unreasonably disadvantage consumers. For example, consumers must be able to explicitly object an increase or to terminate the subscription in case of an increase.
- Termination rights: Games companies should ensure that their standard terms allow to terminate subscriptions in case consumers refuse to agree on an increase. Please note that the duration of the subscription terms (initial term and renewal terms) also needs to be taken into account here.
Situation in other EU Member States:
Germany might be one of the first EU Member States where courts have dealt with subscription fees increases. However, the strict legal requirements that the courts referred to are based on the EU Directive 93/13/EEC of April 5, 1993 on unfair terms in consumer contracts, last edited in May 2022. Therefore, similar requirements will apply in each EU Member State.
