For ages, we have seen loot boxes be a prevalent item in the online stores of video games. Although they seem to legitimate at the first glance, loot boxes exploit gamers in ways that can be deemed “misleading” and “manipulative”, as recent reports from the Norwegian Consumer Council suggest. The council even published a YouTube video describing why and how loot boxes should be regulated.
Video Game Sales Do Not Matter Anymore
The video game industry is one of the fastest-growing entertainment industries out there. It has already surpassed the sports and film industries but is showing no signs of slowing down. But, the video gaming industry is relatively new. Rules and regulations are evolving every day, and every aspect and element has not been completely regulated or checked from exploitation. Loot boxes are one such aspect that requires attention.
Originally, the bunch of revenue generated by video games would come from the sales numbers. But, over the last two decades, as consoles began connecting to the internet, the focus has shifted to in-game purchases. Thus, we have several high-quality completely free games on the market these days. These games rely only on in-game purchases.
What are Loot Boxes?
Loot boxes are “mystery packages” of in-game content. These boxes can be bought either with real money or with virtual currency which in turn can be bought with real money. Some recent video games have introduced multiple in-game virtual currencies, with some dedicated especially to buying loot boxes and other digital content.
In 2021, the video gaming industry raised a total of USD 178 billion. Out of this, USD 15 billion was raised from sales of loot boxes alone.
What is the Problem With Loot Boxes?
Loot boxes generally provide players with virtual crates, packs, or chests containing one or more loot items. They have one massive problem. They are “randomized”. People do not what they are buying while paying for them. This makes them highly controversial and unlike most other in-game purchases.
Some loot boxes can be earned via in-game milestones as well. However, game designers make them extra hard to unlock. Other than this, several other methods are employed to incentivize and push players to spend real money behind them.
Loot boxes qualify as in-game purchases as well. Thus, traditional rules like non-transferable and non-refundable also apply to them. This means if a loot box yields items a player is unhappy with, he/she has nothing to do about it. However, select grey markets allow for exchanges of in-game items as well. A big example can be Steam. But, the options are limited and most Gaming as a Service (GaaS) titles lock their items completely to their game store.
Randomized Mystery Boxes are Nothing New
Randomized mystery boxes where the owner is unaware of the contents are not a new phenomenon. We have seen them before in-store. These include trading cards such as Pokémon or Magic: The Gathering, or other mystery boxes that are often sold based on lore or genre. But, these boxes are not as problematic as video game loot boxes. Consumers need to order them at first, and either pick them up physically from a store or wait a few days for delivery to take place. This slows down the acquisition process. The EU has introduced a 14-day cooldown to slow down the process further.
But, video game loot boxes can be acquired with a single click. The transaction is almost effortless and can prompt users to spend their money on multiple items at the same time. There are no rules or regulations to stop users from acquiring these items either. Most of the stores are proprietary and are not controlled by the government in any way.
Game designers also introduce several deceptive methods to hide the true cost o these loot boxes. These include prompts between levels, store pages that showcase the most expensive items at a glance, and time-based purchase prompts. Some games also use trustworthy in-game characters to upsell the loot boxes. These techniques are built-in to exploit the players’ fear of missing out (FOMO) and thereby trigger purchases. This makes them excessively controversial.
Most of these designs can be considered as methods employed in gambling and casinos, including methods that are considered illegal by certain governments.
Deep Dive into Video Game Loot boxes: Opaque Algorithms, Misleading Probabilities, and Aggressive Marketing
Video games also do not reveal the algorithms employed behind randomizing the items from a loot box. It is known that video games continually monitor and personalize the experience based on behavioral data and maximize the expenditure of players. The model is designed in a way to increase the practices as they play the game. Video games change the probability of getting certain items from day to day, thereby This creates another grey area that is exploited by video games.
The amount of data collected from players is maintained by video game developers. Collection of such sensitive information as personality traits, consumption habits, skills, interests, etc. can “pose significant privacy risks“, according to the report from the Norwegian Consumer Council.
The lack of transparency and lackluster efforts at regulating the loot boxes from video game developers have got several authorities thinking about the exploitation caused by them. Coupled with the aggressive marketing and designs to hide the actual pricing of the items accentuates the issue further.
Digital Content is Items That You Cannot Touch
Probably the biggest problem with video game loot boxes is that they are digital content. This means they can be removed at any time from the game. Also, other risks like account hacks and bans pose a further threat all the time. This can cause significant monetary losses to the buyer. Some examples include November 2021 shut down of Niantic’s Harry Potter: Wizards Unite.
What Steps Have Been Taken Against Loot Boxes?
There have been several movements supporting the regulation of loot boxes in multiple jurisdictions. In the US, there have been initiatives to ban them completely as the country sees the purchases as an open ground for children to engage in gambling-like mechanisms. The UK is also considering the regulation of loot boxes in the tone of gambling.
In other European countries, steps have been taken at the national level. Thus, regulation is extremely fragmented. Some countries like Belgium and Netherlands have completely barred the use of loot boxes. Thus, games like Diablo Immortal were never launched in these regions. Some others are considering regulating them in the tone of gambling, while the other countries have not taken any steps against them.
Future Prospects
The prospects of loot boxes are multiple regulations being levied on them. The regulations will mostly be levied on grounds of unfairness, deceptiveness, aggressive marketing, and protection of consumer rights.
Both the European Union and the US governments are focused on figuring out sophisticated ways to contain the exploitation and provide players with a balanced experience.
Conclusion
Loot boxes are one of the most exploited regions in the video gaming industry. A large chunk of players who are aware of their existence has spent real money on acquiring such “mystery” items. With increasing regulations, the government can prevent developers and publishers from using them to increase their profits by huge margins unfairly. Only time will tell how these regulations will be implemented. The government can either levy massive taxes on these products to discourage players from buying them. An outright ban might sound like an extreme step, but is being practiced by several legislations and can be considered by a few more.