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Has the games industry turned tail on microtransactions?
Crate news?
Last week Monolith released an official statement announcing that as of 17th July, Shadow of War will no longer contain microtransactions. Buying Gold with real money will be gone for good on 8th May, and a couple of months later the market which erstwhile sold item chests, XP boosts and orcs for the Nemesis system will be dismantled completely. Apparently buying those orcs, rather than earning them in-game, "risked undermining the heart of our game," said Monolith, six months down the road from implementing that marketplace.
Six months ago the press was saturated with headlines about a new wave of intrusive microtransactions. Communities expressed their outrage, share prices dropped, oceans turned blood red. Now it's increasingly populated by news of their subsequent removal. If it wasn't for fear of having one's naivety etched indelibly onto internet record, the great microtransaction withdrawal movement of 2017/18 might be enough for one to proclaim that the practice was dead.
The reality of a multi-billion pound industry's business practices is, inevitably, nothing like that clear cut or easy to forecast. Still, the sheer number of controversies and about-turns from big publishers and major franchises in last six months demonstrate that what might have seemed like a good idea in the salad days of Q3 2017 is now a certain PR disaster. The times they are a-changin'.
The touch paper was really lit by Battlefront 2, and how EA and DICE handled the furore surrounding its pre-beta trials. Players invited to play the pre-release build, as you'll remember, were strongly critical of major characters (and their powerful abilities) being kept behind either a monetary paywall, or a 40-hour grind. In response, DICE tweaked made minor changes to item drop rates. It wasn't enough.
A miserly, RNG-based player reward system remained, and when one player discovered their $80 Deluxe Edition still required them to grind 40 hours to unlock Darth Vader they took to Reddit to voice their complaint. EA's reply on that thread became the most downvoted comment in the site's history. This time EA and DICE slashed price of character unlocks by 75% - but also lowered the credits earned from completing a campaign.
Amidst an oil fire of bad sentiment towards the game, the decision was finally made to pull microtransactions entirely on the day before release. They might return, said EA, at an unspecified later date, after some unspecified changes had been made. EA's stock value dropped 2.5% in 24 hours on launch day, and lost a total of $3 billion in stock value by the end of November.
In other words, a detailed blueprint on how not to handle a microtransaction backlash had been forged.
Imagine being a game developer during that period, knowing that the title you worked long hours on for years was about to go to market. And knowing it was full of microtransactions. Imagine how damp with sweat your phone-operating finger would be as you scrolled through the headlines about Battlefront 2. How could you avoid a similar fate? Something would have to give. And there's every indication that it did.
Back in the EA camp, Ghost Games acted swiftly when Need For Speed Payback's suspiciously slow progression system and paid loot boxes were met with hostility. Less than two weeks after launch, a statement went live announcing increased Rep and Bank rewards (XP and money to those of us with normal-sized car exhausts). Despite making this change a fortnight after Battlefront 2-gate, the developers insisted this economic rebalance was entirely unrelated.
In truth, EA felt the brunt of public disdain not simply because their microtransaction models were the most egregious, but because they were also the last of the big players to show their hand during the mad release scrum at the end of last year. They were the target of an accumulated anger that had been percolating for years, and was shown the red rag by September and October 2017's releases. Games with their own unpopular economies, and their own about-turns.
NBA 2K18 released to widespread criticism on 19th September 2017 for the latest changes it brought to an ever-more intrusive franchise microtransaction model. Virtual Currency multipliers for playing at higher difficulties were axed, while haircuts and tattoos for players' virtual ballers became one-use purchases rather than permanent ownership deals. Above all, there was a pervading sense that the entire game - a new quasi-MMO set on the shop-lined streets of a hyperconsumerist's fever dream - existed simply to coax players into buying VC with real money, and spending it on making their players able to hold a basketball without combusting with sheer ineptitude. 2K digital marketing director Ronnie '2K' Singh announced VC price cuts for haircuts, colours, and facial hair options on release day in response to 2K18's angry community reception.
Like EA's initial half-measure, it wasn't enough. The PS4 version of NBA 2K18 currently holds a critic score of 80 on Metacritic, and a user score of 1.6. Both are considerably lower than the previous game's critical numbers, but as Take-Two CEO Strauss Zelnick noted in a November earnings call, NBA 2K18 didn't seem to take a hit in sales or average daily users. Both increased on NBA 2K17s numbers, in fact.
What Zelnick told investors seems to reflect the wider industry's attitude to microtransactions: "There has been some pushback about monetization in the industry... People vote ultimately with the usage. And the usage on this title is up 30 percent in terms of average daily users."
That idea holds true of Assassin's Creed Origins, too. Launching in October 2017, it has since sold more than double what Syndicate managed two years prior. And it did so with a microtransaction model which neither sparked a major backlash nor was subject to rebalancing after release. Perhaps it was the specific implementation of Origins' paid content, which largely amounted to items you'd find in the world anyway, with the exception of a couple of item maps which had been available for free in previous entries in the series. Or perhaps it was the overall quality of the experience - it's hard to stay mad about those maps when you're atop the Great Pyramid, watching the sun play across the Iment Nome dunes.
There's a paradox in that, of course. If high sales numbers provide a license to pursue microtransaction models regardless of how they're received, low sales numbers also encourage microtransactions in order to make up the financial shortfall. Case in point: Despite Destiny 2's physical sales falling by 50% on its predecessor, and a vocal response from its community about the increased amount of RNG in player reward distribution and the fact that cosmetic shaders used to recolour items were now single use, it took until January 2018 for Activision and Bungie to change anything.
Still, some were quicker to act when the forums lit up with impassioned capital letters, despite commercial underperformance. Forza Motorsport 7's initial sales figures lagged behind its predecessor despite its availability on PC for the first time, and people were not happy about its VIP Pass. Previously this single-purchase piece of DLC entitled you to a permanent 2x credits bonus across all events, but in Forza 2 it was limited to the first 25 races. Not that there was any mention of its finite usage in the store page listing, as noted by one Redditor.
Two days after release, and after much spirited community feedback about the changes, Turn 10 pulled a U-turn. The VIP Pass was restored to its permanent boost-giving powers, and owners were now gifted four cars, too.
So long before it reached a head in Battlefront 2; before Belgian gambling authority bureaucrats worked to have EA's game banned, a narrative had already formed about hastily reneged microtransaction models and loot box systems. The solutions varied hugely in their severity. And it didn't always come from a fan backlash - there also seemed to be a desire on developers' part to move away from grinding and slot machine game design. Dawn of War 3's developers gutted the Skulls currency (obtained via in-game actions only) from their game several months after its release in April 2017, freeing players to experiment with Elite units and Doctrines without the grind. That followed Overkill buying back the franchise rights to Payday from 505 Games in 2016, and immediately removing the microtransactions they'd previously promised never to include. The implied narrative there was clear: the developers never wanted this, and now they've fixed it.
There are precedents even before that: in 2014, when Shia Labeouf popped a paper bag on his head for art and Kim Kardashian broke the internet, Digital Extremes were busy removing a specific $0.67 microtransaction that allowed players to recolour virtual pets called Kubrows. Upon discovering that one player had bought it 200 times hoping for a very specific set of buffs, the devs canned it. "It's just like, 'oh my dear god, what have we done?" he told Noclip. "We've created a slot machine."
It's worth noting that although this happened back in 2014, it didn't make the headlines until March 2018. Aka: the great microtransaction withdrawal movement of 2017/18
And that makes a lot of sense, because public interest in this topic has never been higher. We've entered an era in which publishers and developers are actually using the absence of microtransactions from their upcoming games as a PR strategy, as evidenced by Irony Galaxy's latest game, Extinction. "Extinction does not include microtransactions" reads a black and white disclaimer message at the beginning of its trailers, calling to mind the legal disclaimers that began each episode of Jackass.
Well, you can't be clearer than that about it.
Far from simply being a bit coy about their loot boxes, developers are now actively using an anti-microtransaction stance as an easy PR win. Increasingly, we see developers take apparent delight in confirming their absence. "No freakin way!" God of War game director Cory Barlog told a fan on Twitter who asked if there'd be microtransactions in his upcoming game.
"Hell no" said Marvel's Spider-Man creative director Brian Intihar when asked the same question by Game Informer, as if he were reading from the same playbook.
From our vantage point a quarter-way through 2018, the outlook appears rosy. Games are dropping their microtransaction models all over the place, while others are chest-beating about resisting their economic allure. But the real barometer for change will be the releases of Q3/Q4 2018. The annualised series and big-hitter publishers that barely got away with their monetisation models the last time around, and had to make revisions to satisfy their players. In the present climate, it feels as though a publisher mat as well announce that it's upcoming game is responsible for world hunger as admit that it contains the dreaded M-word.
But in an industry where product prices have remained largely the same for decades while product costs have escalated wildly, margins still need to be made. Videogames must remain fundamentally profitable ventures for their creators, and if those creators move away from the devil we know in order to make those profits, where might they look next for solutions? Maybe the answer is simply 'good quality products whose value and appeal are intrinsic' - but does that ring true of the industry that tried monetising hats and crates in the first place?
Four popular PC games break Netherlands gambling rules
By Janene Pieters on April 19, 2018 - 11:30
A League of Legends loot box. Photo: Screenshot / Youtube
Four popular online PC games violate the Netherlands' law on games of chance with their 'loot boxes', according to the Dutch Gambling Authority. These games should actually have a license, like a casino needs a license for a roulette table, because there is a risk of gambling addiction, the Authority said, the Volkskrant reports.
The Authority gave the game makers 8 weeks to change their games, or risk fines up to a maximum of 820 thousand euros. Until the Gambling Authority definitely establishes that a law was broken, the names of the games involved will not be revealed. "Just like elsewhere in our legal system, the publishers of these computer games are only suspects", Marja Appelman, director of the Gambling Authority, said to the newspaper.
The Gambling Authority looked at 10 games that contain loot boxes - a kind of treasure chest that contains items to change a player character's appearance or make it stronger. Some games also allow players to buy loot boxes. The Authority decided to investigate due to loot boxes' skyrocketing popularity over the past months.
Having loot boxes in your game, even against payment, is not against Dutch law. "But if the items in such a loot box can be traded outside the game, we speak of a gambling game for which you need a permit in the Netherlands and have to take measures to protect consumers against themselves", Appelman said to the Volkskrant.
The problem here is that online games can't yet apply for such a license in the Netherlands - a legislative amendment that will allow that is still in the Eerste Kamer, the Dutch Senate, for assessment.
The Authority also investigated whether games with loot boxes may be addictive. "In terms of design and mechanisms, they are comparable to slot machines and roulette", the researchers concluded. "However, there are no indications that loot boxes are being opened on a large scale by people who have gambling addictions or problems", Appelman added to the newspaper.
The Gambling Authority picked the games it investigated based on "their popularity on a frequently used internet platform that streams videos of games and players". That is almost certainly Twitch. Around 15 million people use this platform per day to watch 2 million gamers play various games. The most popular games on Twitch that contain loot boxes currently include Fortnite, League of Legends, Hearthstone, Player Unknown's Battlegrounds, Overwatch and World of Warcraft.
Valve pulls item trading for Dota 2 and CS:GO in the Netherlands over gambling concerns
Philip Moody - Wednesday, June 20, 2018 10:27am (PST)
Item trading may violate Dutch law
The Dutch government is taking action against loot boxes and other video game-related practices that it deems to be a form of gambling. Back in April, we reported that the Dutch gaming commission investigated ten games to determine whether they violated the nation's Betting and Gaming act. While they didn't outright state which four games they declared to be gambling, rumors suggested Dota 2, PUBG, and Rocket League were among those affected. Today, Valve has informed its Dutch gamers that Dota 2 and CS: GO are both losing item trading.
Dutch players logging in to either game will be greeted with a notice from Valve informing them that item trading and the Steam Marketplace have been disabled. The company received two warning letters from the Dutch government, one each for Dota 2 and CS: GO, and they have no choice but to disable the aspects that give items in either game real world value currently. Valve is adamant that their systems don't violate Dutch law, but they're left with little choice but to comply with the warning letters while they fight to have the ability to re-enable item trading and the Steam Marketplace in the future.
The Dutch Gaming Authority announced yesterday that they would be checking up on games that were sent warning letters starting today, with companies who remain noncompliant facing a fine of up to 830,000 euros or 10% of the company's global turnover, whichever is more. The authority suggests that companies who run afoul of the Betting and Gaming act could simply switch to a direct purchasing model rather than have a random chance to get something. There's no telling whether Valve will win its case and be able to enable item trading for Dutch players, but for now you'll have to do without if you live in the Netherlands.
Australian Senate backs loot box investigation
By Joe Donnelly a day ago
The Environment and Communications References Committee will report back in September.
Australia's Senate has passed a motion to investigate the use of loot boxes in videogames. The Environment and Communications References Committee will lead the probe, and will report back in September.
As reported by MSN, Senator Jordon Steele-John of the Australia Greens party submitted the notice of motion earlier this week. It was supported by the entire Senate, says MSN, which means the issue will not be debated—nor will it require a Senate-wide vote.
Kotaku Australia acquired a copy of the motion, and it highlights the following concerns:
The extent to which gaming micro-transactions for chance-based items, sometimes referred to as 'loot boxes', may be harmful, with particular reference to:
(a) whether the purchase of chance-based items, combined with the ability to monetise these items on third-party platforms, constitutes a form of gambling, and;
(b) the adequacy of the current consumer protection and regulatory framework for in-game micro transactions for chance-based items, including international comparisons, age requirements and disclosure of odds.
Image credit: Parliament of Australia website
"I have significant concerns about the adequacy of current consumer protection and regulatory frameworks for monetised game mechanics, particularly when we know they are accessible to children," said Steele-John in a statement ahead of the Senate hearing. "An incredible number of popular big name titles incorporate these kinds of monetised game mechanics, not as a way of improving in-game experience, but as a way of simply prying more money off of their players."
"The impact of gambling on people’s lives is such that we cannot afford to stay silent on this issue, and it is fantastic both the government and the opposition are supporting the Greens on this issue."
As highlighted in the screenshot above, sourced from the Australian Government website, Australia's Environment and Communications References Committee is due to report back on September 17, 2018.
This move follows the Netherlands and Belgium's recent loot box interventions. For further reading, check out Sam Horti's thoughts on how the loot box controversy shaped gaming in 2017.
CS:GO update blocks players in Netherlands and Belgium from opening loot boxes
Cash me outside.
A new CS:GO update has blocked players in the Netherlands and Belgium from opening containers - the game's version of loot boxes.
Valve's change comes after both Dutch and Belgian authorities declared some in-game loot boxes were gambling and warned publishers to remove them from games or face the consequences.
In April, the Netherlands' gaming authority looked at the loot boxes in 10 games and found four contravened its Betting and Gaming Act. It did not publicly name the games in question.
That same month, the Belgian Gaming Commission looked at four games - Star Wars Battlefront 2, FIFA 18, Overwatch and Counter-Strike: Global Offensive - and found all of them to breach the country's rules on gambling, bar Star Wars (which had its loot boxes stripped out by EA after last year's fan outcry).
June then brought the first in-game changes in response to these findings, as Valve pulled item trading and Steam Marketplace features for both CS:GO and Dota 2 in the Netherlands. Item trading has now returned to CS:GO as of today's update, although without the ability to open loot boxes it has been neutered significantly.
The Dutch Gaming Authority previously warned it would impose administrative fines of up to €830k (or, if more, 10 per cent of the company's worldwide turnover that violates the law) should it turn out game companies have not made sufficient adjustments.
"If administrative enforcement does not prove effective, the Gaming Authority can appeal to the Public Prosecution Service to prosecute criminal proceedings," it said.
Back here in Blighty, the UK still believes loot boxes are not gambling.
2K makes changes to NBA 2K microtransactions to comply with Belgium and Dutch gambling laws
"We disagree with this position," says 2K.
2K has removed some elements of microtransactions from its basketball franchise, NBA 2K, in a bid to comply with gambling laws in Belgium and the Netherlands.
According to Rock, Paper, Shotgun, two undated statements on the basketball arcade game's website detail how the developer has had to strip the option to buy MyTeam packs - the NBA 2K equivalent of loot crates - from the title in Belgium, whereas in the Netherlands, players will not be able to access Auction House, a feature that permits you to buy and sell your players.
In Belgium, MyTeam packs can remain on the premise that players may only use their in-game currency to purchase them, but given the law in the Netherlands prohibits "games which include 'loot box' style mechanics if the items they contain are transferable", Auction House has been removed in its entirety while 2K works on a solution.
As you might expect, 2K "disagree with this position" and asks players who agree with them to "contact [their] local government representative to communicate [their] opinion".
NBA 2K19 will release on Nintendo Switch, PC, PlayStation 4, and Xbox One on 11th September, 2018, although fans willing to shell out for the Anniversary Edition will be able to access the game a few days early on 7th September.
As yet, it's unclear how these statements will impact upon 2K19, which shortly goes on sale, or how it will affect the many versions of the annually-published game already in use.
Of course, 2K isn't the only company grappling with the impact of changes to gambling laws and fan dissatisfaction. In just the last month alone, Turn 10 announced that it will be removing Prize Crates - Forza Motorsport 7's version of loot boxes - from the game this coming winter, and Warner Bros. finally removed the market and microtransactions from Middle-earth: Shadow of War.
EA is not stupid. FIFA games are yearly releases, so by the time this matter concludes on court, the games will be outdated and might not even be supported. EA already got their money from them. They pay a fine and will laugh their way into the bank.
15 European gambling regulators unite to tackle loot box threat
Along with Washington State.
Emma Kent Reporter Intern @GoneEFK
Less than a week after Belgium began a criminal investigation into FIFA's loot boxes, 15 gambling regulators from Europe and one from the US have together announced they will "address the risks created by the blurring of lines between gaming and gambling".
The collaborative effort, organised at the 2018 Gambling Regulators European Forum, includes signatories from the UK, France, Ireland, Spain, and even the US (via the Washington State Gambling Commission).
The crate escape.
The key focus for the parties involved appears to be "tackling unlicensed third-party websites offering illegal gambling linked to popular video games". If you're wondering what this is, think back to skin betting site CS:GO Lounge, which allowed users to bet real money on a pot of their CS:GO items until Valve cracked down on the site in 2016. Many of these still exist, and regulators want both the video games industry and technology platforms "to play their part in helping crack down on these websites".
But the investigation won't stop there. The regulators stated games providers must "ensure that features within games, such as loot boxes, do not constitute gambling under national laws". This indicates more countries will now examine whether loot boxes can be classed as gambling.
Neil McArthur, chief executive of the Gambling Commission (UK).
The effort appears to be motivated by concerns about consumer protection and the safety of children online. Neil McArthur, chief executive of the UK Gambling Commission, said regulators "want parents to be aware of the risks and to talk to their children about how to stay safe".
"Unlicensed websites offering skins betting can pop up at any time and children could be gambling with money intended for computer game products," McArthur stated. "We encourage video games companies to work with their gambling regulators and take action now to address those concerns to make sure that consumers, and particularly children, are protected."
Signatories to the "declaration of gambling regulators on their concerns related to the blurring of lines between gambling and gaming".
- Austria: Alfred Hacker, Director, Federal Ministry of Finance
- Czech Republic: Karel Blaha, Director of the State Oversight Over Gambling Department
- France: Charles Coppolani, Chair of the French Online Gaming Regulatory Authority
- Gibraltar: Andrew Lyman, Executive Director, Gambling Division, HM Government of Gibraltar
- Ireland: Brendan Mac Namara, Principal Officer, Gambling Policy Division, Department of Justice and Equality of Ireland
- Isle of Man: Steve Brennan, Chief Executive, Gambling Supervision Commission
- Jersey: Jason Lane, Chief Executive, Jersey Gambling Commission
- Latvia: Signe Birne, Director of Lotteries and Gambling Supervisory Inspection of Latvia
- Malta: Heathcliff Farrugia, Chief Executive Officer, Malta Gaming Authority
- The Netherlands: Jan Suyver, Chair of the Board of Directors of the Netherlands Gambling Authority
- Norway: Henrik Nordal, Director Deputy General, Norwegian Gaming Authority
- Poland: Paweł Gruza, Undersecretary of State in the Ministry of Finance
- Portugal: Teresa Monteiro, Vice-President of Turismo de Portugal, I.P
- Spain: Juan Espinosa García, CEO, Directorate General for Gambling Regulation
- Washington State: David Trujillo, Director, Washington State Gambling Commission
- UK: Neil McArthur, Chief Executive Officer, UK Gambling Commission
Although no solid action has yet been taken, the international effort signals a major shift in the loot box regulation debate. The move comes in the wake of a crackdown on loot boxes by several European countries, including Belgium and the Netherlands, indicating pressure is mounting on publishers who continue to include loot boxes in their games.
The wording of the statement also shows regulators expect game companies to be more cooperative. In context, this is probably a direct response to Blizzard's recent statement claiming it disagreed with the Belgian Gaming Commission's "interpretation of Belgian law," and EA's complete refusal to remove loot boxes from FIFA in Belgium.
The international nature of the agreement is also significant. Previous attempts at regulation have been taken by individual countries, while this approach may bring about coordinated and wide-spread regulatory changes: ones which could potentially be harsher than those taken by individual nations. It hints some countries which previously stated they did not consider loot boxes to be gambling, such as the UK, may now re-evaluate the issue. Will we soon see more countries change their position?
Well look at the bright side. Mickey could be the first one that could win. EA is clearly going down...fast.
Australian study: Loot boxes are more like gambling than baseball cards
Jeff Grubb@jeffgrubb September 17, 2018 2:36 PM
Above: You can get the Han Solo beard skin, but it's not in a loot box.
Image Credit: DICE/Electronic Arts
In June, the Australian Parliament’s Environment and Communications References Committee began researching video game loot boxes. Just two-and-a-half months later, the group has reported its findings. And it’s bad news Electronic Arts and most of the mobile gaming business, according to news site Lexology.
Lead investigators Dr. David Zendle and Dr. Paul Cairns examined nearly 7,500 individuals. The researchers claim people who have problems with gambling tend to spend more on loot boxes. I’ve reached out to committee to get more details on its methodology. I’ll update this post once I have that information.
“Our large-scale study found important links between loot box spending and problem gambling,” reads the committee’s report. “The more severe a gamers’ problem gambling was, the more likely they were to spend large amounts of money on loot boxes. These results strongly support claims that loot boxes are psychologically akin to gambling.”
Loot boxes have drawn the attention of regulators around the world after gaming fans led a backlash against the business model. Consumer outrage reached its zenith last year leading into the release of Star Wars: Battlefront II from Electronic Arts. That game and countless others give players the option to spend extra money on crates that work a lot like a pack of baseball cards. You don’t know what is inside, but you’ll always get something. Most of the time it’s junk, but sometimes it’s useful and valuable. Upset gamers have said that this model works like an unregulated slot machine, and people in power in Europe and Australia have started listening to them.
Are loot boxes harmful? Possibly
Cairns and Zendle claim that loot boxes could cause gambling-related harm. They hypothesize that loot boxes could act as a gateway to real gambling or they could exploit gambling disorders without regulation.
“Industry statements typically disassociate loot boxes from gambling,” Cairns and Zendle said in a statement. “They instead highlight similarities between loot boxes and harmless products like trading cards or Kinder Surprise eggs. … By contrast, researchers argue that loot boxes share so many formal similarities with other forms of gambling that they meet the ‘psychological criteria’ to be considered gambling themselves. These results support the position of academics who claim that loot boxes are psychologically akin to gambling.”
The investigators pointed to their findings that people who spent a lot on loot boxes also spent a lot on gambling.
“This is what one would expect if loot boxes psychologically constituted a form of gambling,” said Cairns and Zendle. “It is not what one would expect if loot boxes were, instead, psychologically comparable to baseball cards.”
While I agree the real problem is the seeming necessity for government to step in. Raise your goddamn kids people
They're too busy slaving away for corporations these days.While I agree the real problem is the seeming necessity for government to step in. Raise your goddamn kids people
What are loot boxes? FTC will investigate $30B video game industry
Games such as "Overwatch" include paid “loot boxes” that some psychologists have called a form of gambling.
An "Overwatch" image featuring the character Tracer.Blizzard Entertainment
Nov. 28, 2018, 10:27 PM
By Benjamin Pu
A growing backlash against video game “loot boxes” — in which players pay for the chance to win digital goods — has gained a major new backer: the Federal Trade Commission.
The commission's chairman, Joe Simons, said during a congressional oversight hearing on Tuesday that the regulator would look into the in-game loot boxes, a response that came after Sen. Maggie Hassan, D-N.H., sent a letter to the Entertainment and Software Ratings Board (ESRB) asking it to investigate loot box practices.
“The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those often found in casinos and games of chance,” Hassan wrote in the letter.
Loot boxes are an almost $30 billion industry, according to tech consultancy firm Juniper Research, and a major source of income for video game companies but have also caused concern among anti-gambling advocacy groups and psychologists, who say consumers can exhibit gambling-like behavior in buying loot boxes.
Loot boxes, which can now be found in many popular video games including “Overwatch,” “Star Wars: Battlefront II” and “Counter Strike,” are a form of micro transactions that cost real-world currency to purchase in-game packages that can include everything from new characters and weapons to character costumes and even dance moves.
Much of the allure of loot boxes comes from the fact that players don’t actually know what they’ll get before they “open” the box. Most loot boxes contain common items, but some offer rare and valuable digital goods — some of which can then be sold on secondary markets for real money. “Skins” for guns in “Counter Strike” — essentially a paint job that does not affect the gun’s in-game effectiveness — are currently up for sale for hundreds and thousands of dollars.
Loot boxes are now a common part of major video games and gaming culture. The U.K. Gambling Commission published a report last week that three in 10 children had opened a loot box in a video game. It was the highest rate of participation in gambling-style activities online by an almost 20 percent margin.
A brief search on YouTube turns up thousands of videos of people opening loot boxes and discussing their contents — including younger gamers. In the video below, a young gamer opens loot boxes. Overwatch is rated by the ESRB to for teens ages 13 and up.
As loot boxes have become more common in video games, consumer advocacy groups and academics have found troubling patterns among some gamers.
Two researchers conducted a survey of more than 7,000 gamers and found "important links between loot box spending and problem gambling” and that gamers who displayed gambling addiction issues typically spent more money on video game loot boxes. The researchers warned that “buying loot boxes may therefore lead to problem gambling amongst gamers."
Loot boxes have also received pushback from within the gaming community. Electronic Arts’ “Star Wars Battlefront II” included a loot box system that included “Star Cards,” in-game items that made players stronger, sparking outrage after it created what some gamers called a “pay to win” system. After widespread backlash, Electronic Arts removed the ability to purchase loot boxes entirely.
After the community criticism of Electronic Arts, politicians began to take notice. Hawaii state representatives called the Star Wars Battlefront II loot box system a “predatory practice” and compared it to an online casino.
Politicians outside the U.S. have also taken notice. On Tuesday, an Australian Senate committee recommended a “comprehensive review” of loot boxes. Belgium and the Netherlands passed laws in April banning loot boxes entirely, labeling them as gambling.
The ESRB issued a statement to online video game media outlet Kotaku last year, pushing back on the characterization of loot boxes as gambling. “ESRB does not consider loot boxes to be gambling,” said an ESRB spokesperson in an e-mail to Kotaku.
The ESRB was established by the trade association of the video games industry and is a self-regulatory organization.
When asked for comment on the FTC’s discussion with Sen. Hassan, a spokesperson for the ESRB said in an email: “We would be happy to further discuss the matter with Senator Hassan and/or the FTC at any time.”
