Whenever a term from the world of video games enters broader society, it’s a safe bet that it’s not for a good reason. Loot boxes—like Hot Coffee or Gamergate—don’t buck this trend. For at least the past five years, driven by a mix of grassroots Reddit organizing and parental horror stories—“my teen spent £6,000 on FIFA cards”—these randomized prize draws have attracted the world’s ire; in several countries, they’re now illegal. Last week, after a 22-month consultation, the UK government decided that loot boxes will not be regulated under betting laws. Despite finding a link between these systems and problem gambling, the government has left regulation up to the industry.
Nuance has been lost in this discussion. It’s never just been a binary choice between bans—“the nuclear option,” says David Zendle, a professor in computer science at the University of York—and letting the industry run wild. This is “misdirection,” he says, and gives the impression to gamers that they are at risk of losing their games. The precedent it sets is disappointing. It shuts down debate about regulation of any kind, leaving industry-friendly groups like the Entertainment Software Association (ESA) and Pan-European Game Information (PEGI) to pick up the slack. After all, loot boxes are not the only industry practice that needs to be examined. Predatory monetization is endemic.
Researchers trace the first loot boxes back to the Chinese free-to-play MMO ZT Online, released in 2006, where players opened virtual treasure chests. This formula mutated through various mobile games until it reached core franchises: in 2010, Valve incorporated them in Team Fortress 2. The success of Activision Blizzard’s Overwatch and its rewards of color-coded rarity led to a bevy of major titles, including Activision’s Call of Duty: WW2 and Xbox’s Gears of War 4, incorporating them as well. The practice reached a nadir with Electronic Arts’ Star Wars: Battlefront 2, in 2017, a “pay-to-win”’ system that generated outrage and saw congressman Chris Lee from Hawaii label the game “a Star Wars-themed online casino.” EA redesigned the system, but lost billions, and regulatory bodies started to take notice: Belgium would ban loot boxes in 2018.
Currently, it’s Fifa Ultimate Team that most people would associate these systems with. The odds of picking, say, a Prime Moments R9 card are ludicrously low (EA won’t tell us how low exactly). Converted from the in-game currency of FUT coins, the card is worth thousands of dollars.
Whether a system like this (or more egregious examples; not all loot boxes are built the same) constitutes gambling, or causes problem gambling, is both a hot topic and a red herring: The bottom line is that loot boxes provide another avenue for the vulnerable to ruin their lives. The correlative evidence between loot box engagement and problem gambling symptoms is robust. The thin line between gambling and gaming is a burgeoning academic field. And the rush I felt as a child when I pulled a shiny Venusaur from my booster pack is indistinguishable from the rush I feel as an adult when I win a hand of poker, or, more equivalently, hit big on roulette.
This all leaves a bad taste in the mouth, but it also suggests that predatory monetization boils down to gamblification. This isn’t the case. “Loot boxes are the thing many people know about,” says Zendle. “But at the same time as the loot box existed, there have always been other instances of players reporting exploitation or coercion.” Even if the UK had banned loot boxes, explains James Close, a lecturer in clinical education at the University of Plymouth, it would have made little difference. Fearing regulation, many game publishers have already moved on. Overwatch 2 won’t use loot boxes, and even EA, says Close, with a little effort, could switch up its business model. Monetization has diversified (in some cases for the better, he says) but this goes for the predatory kind, too.
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One study, published in the Journal of Business Ethics and supervised by Zendle and led by Elena Petrovskaya, a PhD researcher at the Centre for Intelligent Games and Game Intelligence at the University of York, asked 1104 players of video games to describe a time when they felt exposed to transactions that were perceived to be “misleading, aggressive or unfair.” Zendle and Petrovskaya purposefully cordoned off discussion of loot boxes; gamers still brought them up, which, they write, “highlights the high degree to which gamers perceive loot boxes to be predatory, and reflects the level of attention which loot boxes have received thus far.”
The study found 35 different techniques over eight domains: “game dynamics designed to drive spending, product not meeting expectations, monetization of basic quality of life, predatory advertising, in-game currency, pay to win, general presence of microtransactions and other.” The examples, several of which run afoul of UK consumer protection regulations, are numerous: Gamers cited aggressive advertising in Candy Crush that targets them when they cannot quite complete a level, or inventory space limits in Fallout 76 and Elder Scrolls Online that make it difficult to enjoy the game.
One of the most overlooked issues is in-game currency, Close says. It isn’t just that transactions often leave the player with enough left over to encourage more spending—players in the study cite League of Legends as particularly guilty here—it’s also the obfuscation that in-game marketplaces are allowed to get away with. (Diablo Immortal recently received a lot of criticism for this.)
Personally—and I’m sure there are worse examples—the most confounding system I’ve ever come across was Mario Kart Tour, a game heavily influenced by gacha mechanics. In the game, you receive rubies for completing races, which let you “fire off the pipe” (a loot box system) to get more karts. But gold coins are the game’s actual in-game currency, and are also used to buy karts. On top of that, you gain or lose “points” based on your position in a race, which let you unlock stars, which let you enter cups and start the cycle over again. The game also recommends a standard monthly battle pass payment. In-game currency always reminds me of the bit in The Simpsons where Homer purchases 1100 dollars of Itchy and Scratchy money—“like real money, but fun”, says the cashier—only to find out that no shop accepts it.
The fact that no one talks about this cost obfuscation, Close argues, is bizarre. The layer of abstraction these currencies create over real money is a psychological nudge called “material distortion.” You would never be able to get away with it in a brick-and-mortar store—imagine a candy shop where you asked kids to trade their money for gold tokens before they entered. “The consumer-rights bodies would be on that shop straightaway, saying, ‘You’re not allowed to do that—everything has to be priced in real currency,’” he says. (You can, of course, get away with this at arcades.)
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Many of these systems don’t even hide their intentions. There are games that mask slot machines and draw you in with freebies in a manner that resembles the ways casinos offer free drinks and food to keep you in the building. Unity’s CEO John Riccitiello recently claimed that developers who do not not make games with monetization in mind are “fucking idiots.” And from a purely commercial standpoint, is he wrong? One payment of 60 dollars for a game is a comparatively huge risk for investors: You bank on making most of your profit in a tiny window around a release.
It’s a “roll of the dice,” says Adrian Hon, CEO and founder of games developer Six to Start. “When we were looking for investment for Zombies Run and Six to Start ages ago, people would be like, ‘What does your spreadsheet look like in terms of the user acquisition?’” he says. “And I was like, ‘Well, Zombies Run is not a normal mobile game.’”
Hon says he’s seen a friend turn on loot boxes and immediately take in six figures. It’s difficult for developers to turn down that kind of money, let alone compete with those that don’t. “You’re not going to be able to spend as much money on advertising or marketing. You’re not going to be able to spend as much on talent acquisition,” says Hon. “And so other people who are less scrupulous are going to outspend you. So this idea of self-regulation–it’s just insane.”
Regulation could take many forms, such as tax breaks for companies who transparently share data about player spending with independent research bodies, or the creation of new bodies for classifying games. Unregulated, it’s a pie-in-the-sky idea that the industry will somehow, on its own, become more benevolent.
Ultimately, stricter regulation seems essential to video games’ continued development as an art form. As Hon suggests, predatory monetization salts the earth of creativity. The games built on these systems exploit their players—they aren’t art, but propaganda, another way to turn play into work. And the history of loot boxes demonstrates that the most exploitative systems can become mainstream if they prove they can turn a serious profit.
Updated 8-12-2022 8:40 am ET: This story was updated to clarify the authorship of Petrovskaya and Zendle’s paper.