My Thoughts on the Issue of Loot Boxes

Update (4/25): Further revised my argument on why loot boxes are not gambling to better explain how going at a "loss" with loot box contents is a bit more subjective than with traditional gambling.

Update (2/17): I have made some revisions to the gambling section to clarify the point I'm trying to make in that while loot boxes are not exactly gambling, they do have a manipulative element similar to that of the Skinner Box, which can promote addictive behavior.

Update (11/30): I forgot to add advice for parents to use parental control features to control spending where they are available, so this update will serve as a means of conveying that advice. I also revised some parts of the article to make my points clearer.

Loot boxes have been around in some form or another for quite a while. It has been said that it started with Team Fortress 2 with its crates and buyable keys to unbox the random contents. Other games, especially in the mobile market, featured a gacha that allowed players to randomly receive one of many rewards with varying levels of usefulness in the game. Card packs, which were once a source of reliable value because of the physical goods contained within, are becoming more comparable to loot boxes since their CCG form tends to produce intangible value in the way of digital, untradeable cards. More recently, Overwatch presented cosmetic rewards randomly earned from loot boxes and because of the game's popularity, it has become the face of the controversial system.

While I haven't published any articles about the controversy itself, I've expressed my opinions on this matter many times on Twitter, mostly by trying to act as something of a voice of reason (hopefully) so that outrage is channeled into something constructive. I also briefly discussed loot boxes in a couple times such as in this past article on monetization in games by dedicating an entire section to it and similar systems. However, I find I have a lot more to say to the point I might as well get it off my chest. Therefore, in this article I will attempt to isolate what I think is problematic about the loot box system and suggest solutions.

Are Loot Boxes Gambling?

One of the most notable talking points criticizing loot boxes is the fact that they are a form of gambling which is reflected in the many threads discussing the topic, such as this one, and therefore require regulation in some form. To put it simply, this is true to a degree and at least one definition of the word describes loot boxes pretty well, specifically this one based on a quick Google Search:

[To] take risky action in the hope of a desired result.

However, there's a fair bit of nuance to consider since that definition seems quite broad and what appears to be a more specific definition from the same Google Search (admittedly for the noun form of the word instead of the verb form) doesn't define loot boxes quite as well:

[A]n act of gambling; an enterprise undertaken or attempted with a risk of loss and a chance of profit or success.

The bolded part of the definition is what I consider to be in contention with how loot boxes and similar microtransactions operate since as far as I can tell, no loot box, gacha, or similar system leaves the player with literally nothing when operated and any sense of "loss" tends to be rather subjective. For example, Overwatch loot boxes always at least contain four cosmetic items and while some items, especially of the common rarity, may be considered useless by many players, there is still an objective minimum return from the purchased loot box even if it is a digital object.

Consider this when comparing against a game traditionally associated with gambling such as a slot machine. One puts money into the slot machine and among the many possible prizes, there's also the possibility of receiving nothing or receiving less than the amount bet. These lesser "prizes" are a very clear example of loss that is risked when one opts to play the slot machine and this is the same across all other games. Furthermore, one may have a strong desire to keep playing if they keep losing money in an attempt to break even or come out ahead, which is a metric that's more difficult to determine when judging loot boxes.

So loot boxes and similar systems in general don't seem to be as bad as traditional gambling. That is at least some solace to consider, but I don't think they're entirely innocent since the element of random chance is a point of concern. As I've learned from analyzing reward systems based on randomness, emotions such as frustration and joy can be major driving forces to the point I think even in-game systems need to be adjusted, preferably to reduce the frustration. When real money becomes involved, such emotions may compel players to spend more to seek a desired prize. To put all this another way, Skinner Box-style systems are being monetized and can promote addictive behavior which in itself is manipulative.

To summarize, I can see why loot boxes can be seen as gambling since the random rewards can elicit an emotional reaction that compels the player to keep trying. However, much like how the ESRB stated, players always get something in return for the money spent, which is not only unlike the possible results of traditional gambling, but the results are more subject to player preference and therefore more difficult to judge as problematic. This doesn't mean such systems are without problems though since there is still an emotionally manipulative element to consider due to the random reward elements that may encourage addictive behavior.

Looking at a Couple Recent Examples

In this section I'll look at a few notable games with loot box systems to determine where they went wrong if at all. This will largely involve at least a surface level look how each game is monetized. By doing so, it should be clearer on what my personal priorities are regarding monetization in games, which will have a large part in the following section where I'll suggest a solution in addition to expressing other thoughts on the loot box issue.

Star Wars Battlefront 2

The recent controversy regarding Star Wars Battlefront 2 that involves a huge negative reaction from many warrants a look into what went wrong to upset so many people. Since I didn't buy the game, I had to investigate, mostly by trying to find out how detrimentally pay to win the game was since that appeared to be a major complaint based on my perusing of threads and reviews I had already seen. I eventually found a review that provided a bit more detail into how the game was pay to win.

To summarize the section describing the game's multiplayer, Battlefront 2 appears to have something similar to an equipment system known as Star Cards that empower characters they are equipped to. The highest tier of cards is gotten by crafting with materials that can be earned from loot boxes, which can be bought with real money in addition to in-game currency. Having more cards allows the player to equip higher tier cards in addition to unlocking other key features, meaning players who spend real money to buy more cards instantly have an advantage. Furthermore, cards that are looted rather than crafted can always be equipped, superseding any requirements put into place. Finally, players who buy the loot boxes earn the in-game currency of Credits faster without potentially being arbitrarily locked out, which allows them to unlock powerful heroes faster among other advantages.

I ultimately found that Battlefront 2's progression and microtransaction systems are a sinister reflection of what games like League of Legends could've been. At the time I played the latter game a few years ago, it featured half-measures that blurred the line of whether it was a harmful pay to win game or not. For example, runes in League of Legends are comparable to Star Cards to a degree, but could only be purchased with in-game currency. In-game currency could be earned faster with a boost, but it requires players to actually play the game to reap the benefits. Champions could be bought with both real money or in-game currency, but some could be played for free and the game was generally balanced enough to allow players to do well even with inexpensive champions.

The point I'm trying to make is that Battlefront 2 failed on a monumental level with its microtransactions and a lot of it has to do with the fact that they are peddling a competitive advantage, with loot boxes being more of a secondary issue by comparison. To determine this, I devised a thought process that basically asks "if loot boxes weren't involved and the goods from them were sold directly, would this microtransaction pose a problem?" The answer was a definitive "yes."

This means that the content of the loot boxes was already problematic to begin with since those with a desire to be better than others in a game, whether it is due to simple aspirations, a superiority complex, a sense of pride and accomplishment, or the like, can exclusively benefit themselves by spending a little dosh. This to me is very manipulative since it appeals to a player's desire to perform better at the objectives that the developers set along with any existing competitive mentality. Loot boxes were the icing on this awful cake, bringing their own brand of compulsion due to random chance that serves as more of an amplifying effect to a system that was already highly manipulative without them. With all that in mind, I can't really be surprised that microtransactions were disabled among other changes in response to what, in my opinion, was some well-deserved backlash.

Overwatch

As I mentioned above, Overwatch is the face of the controversy surrounding loot boxes. Thankfully, unlike with Battlefront 2, I have a lot of experience with Overwatch and frequently view discussions on it as a result. I've even posted a couple comments on Overwatch's monetization strategy, which includes explaining my position on the game's loot boxes. In this section, I'll restate points I made in these comments with a bit more detail.

First of all, loot boxes are awarded as the player continues to play the game, which is a practice typical in most games with a progression system (even Battlefront 2 awards Credits over time). In Overwatch, each level awards a loot box and while levels normally require increasing amounts of experience that translates to increasing amounts of playtime, experience needed to level caps out pretty quickly, which makes loot box acquisition consistent. With the additional weekly loot boxes from Arcade mode considered, I'd say loot box acquisition for someone not interested in spending money on them is neither fast or slow, meaning it's within the realm of what I consider to be fair. The rewards also seem to be pretty good and at least appear close to the reported rates.

It also helps that the loot boxes themselves, unlike in games like Battlefront 2 or Shadow of War, contain only cosmetic rewards, making Overwatch a game that's not pay to win that also receives a "no" result on my thought process in this previous section. This largely leaves the randomness of the loot box rewards, which until a few months ago resulted in the earning of many duplicate rewards that did little to help fill out a player's collection since credit acquisition from duplicates is really poor. After a change was made to greatly reduce the amount of duplicates earned, the earn rate for cosmetic items improved but the consistency of earning credits decreased since it now has to be looted as a drop from the loot box. This makes unlocking specific cosmetics seem less efficient even if it that's not the case. This is worsened by the fact that in-game events with exclusive cosmetics are run from time to time, with the more recently released cosmetics for such events costing triple the amount of credits to unlock.

Based on these observations, I think Overwatch monetization could use tweaks to smooth out the random loot box rewards, which would reduce emphasis on the gambling elements of the game and in turn reduce compulsive behavior. For example, I made the following statement in my article on addressing randomness in rewards:

"Another way to do this is to provide a relatively costly alternative to earn a highly desired reward."

By applying this idea to Overwatch's cosmetic reward system, I quickly found that selling credits at a premium could serve as a decent solution to concerns over not being able to earn specific cosmetics. This leads to a situation where players can weigh the option of buying loot boxes to fill out their collection faster or buying credits to unlock desired cosmetics. Needless to say, credit prices have to be at least somewhat reasonable or it would be pointless to add them. Based on current loot box prices (which I think are too high, but I'm biased), the price for enough credits to buy a legendary cosmetic could be about $15, which is a couple dollars more than the 13.5 loot boxes needed to earn a legendary cosmetic in an average scenario.

While the above suggestion addresses Overwatch's loot boxes pretty well, it does leave some concern over whether having the system in the game at all is appropriate. This is because I've established that loot boxes and systems like it have some elements of gambling, which while not as serious as traditional gambling, might not be the best thing to put into a game that's likely to be played by younger audiences. Worry not, because I address this in the following, final section.

Some Closing Thoughts

Instead of closing out with a couple of paragraphs like I typically do, I will conclude with thoughts that fall into three distinct categories. These respectively address the regulation of microtransactions with gambling elements, the gaming industry's future actions, and the gaming community's ongoing reaction to loot boxes.

On Regulation

Since loot boxes and similar microtransactions at least resemble gambling in certain aspects, discussion of regulation much like with traditional gambling. Some, such as the Minister of Justice in Belgium, would see the practice banned and given recent discussion it's understandable as to why.

Personally, I wouldn't be so quick to jump straight to prohibition not just because there's historical examples of it not working but also because, as I've explained above, loot boxes and microtransactions like it (which I will call "gambling-style microtransactions" in this section for convenience) aren't entirely comparable to traditional gambling. Also, traditional gambling itself isn't totally banned. Furthermore, banning gambling-style microtransactions outright would likely cause the gaming industry to move on to practices that could be more consumer-unfriendly, especially considering past trends (such as the advent of pre-orders, day one DLC, etc). Because of these reasons, I think the following regulations would be appropriate:

• Follow China's lead and demand that rates for gambling-style microtransactions have their drop rates made transparent. Furthermore, impose a penalty for grossly inaccurate drop rates to prevent deception. These laws would help to cover the fact that the random chance of earning specific drops can be manipulated at any time without player knowledge and cut down on irresponsible usage of the loot box system.
• Implement a law that demands that players are able to directly purchase any goods that can be obtained by random chance from gambling-style microtransactions. This could be done by selling currency that can then be used to buy the good directly. To prevent loopholes like how Blizzard currently does in China, microtransactions must be offered that do not involve gambling-style microtransactions in any way, even if the objects such as loot boxes are received as a "bonus."
• It would be harder to try to control the microtransactions any further than this since trying to prevent a company from selling pitiful amounts of currency for a lot of real money is literally price control which could have problematic results.
• Traditional gambling has an age gate that appears to largely be set to 18. Since purchasable loot boxes and the like are not quite like traditional gambling, I would set an age gate but set it to a lower threshold such as 13 or higher. Games offering gambling-style microtransactions would then be demanded to put a reasonable amount of effort into preventing younger players from making purchases of those microtransactions without parental permission.
• I don't really expect this to entirely prevent younger players from making purchases, much like with other age gating, but companies will be forced to make their microtransactions less predatory when it comes to gambling-style microtransactions.
• Restrict the advertisement of games that feature gambling-style microtransactions. At the bare minimum, I think these restrictions should prevent advertisement of the gambling-style microtransactions themselves in situations where it's inappropriate to do so (like when targeting younger demographics) while the game and other microtransactions would be fine to advertise.

I could go on and try to propose ways to regulate other microtransactions such as any that are egregiously pay to win with the intention of predating on a player's desire to become more powerful at the expense of almost every other player's experience, but I think that would be very difficult to regulate. The point of this section is more to state that I do think gambling-style microtransactions need some regulation to reduce predation, make the systems involved more transparent, and provide consumers with more agency over their purchases if they so desire.

The Gaming Industry's Next Move

With the strong pushback against loot boxes and the bad press that EA has earned due to their disastrous Battlefront 2 release, it's probable that many other companies within the gaming industry will be walking on eggshells for a while. Regardless of where one stands regarding loot boxes or even microtransactions as a whole, now is a pretty good time to suggest reform and in this section, I am going to suggest what I consider to be good reform. I'm basically parroting some points I made in my article on game monetization, but it seems they need to be repeated in a sense:

• Embrace the sale of cosmetics. Considering that one of the major causes of recent controversy is because games tried to sell power to maximize their predation on consumers, cosmetics are a safe bet in most games since they're meant to be optional modifications that provide little to no competitive advantage.
• If microtransactions involve loot boxes or other forms of random chance, provide an alternative method to earn its contents such as the ability to directly purchase contents. This is a point I made in the Overwatch section of the article since loot boxes are the only way to earn most of the cosmetics in the game, which is certainly a cause for some frustration.
• Make loot boxes, if not just most microtransactions in general, really generous. This serves a general purpose of making microtransactions more worthwhile despite the fact they tend to be digital and thus both intangible and relatively ephemeral. In the case of loot boxes and their counterparts, it has the additional benefit of making them less like actual gambling since a player gets more value for the money they spend.
• Do not try to innovate something else that is highly consumer-unfriendly. It might seem like a good idea to get some quick money since consumers are very diverse in their opinions, but it also risks more (well-deserved) community backlash.
• Add parental control features to restrict underaged spending and make it highly visible. I am aware some games already utilize this to a degree but it should be a standardized feature.
• Refer to my past article on monetization for more information. I think I've said most of what I needed to for now but I may have missed something and it doesn't hurt to cover my bases.

Hopefully, the gaming industry learns from what has happened recently and channels that knowledge for the better.

Regarding Gaming Community Reactions

Finally, I want to address the gaming community reactions and to put it simply, I'm disappointed. I probably shouldn't have expected anything different but even when the Shadow of War controversy was in its infancy I began to notice that people were more interested in criticizing loot boxes as a system itself while simultaneously ignoring other major issues with games, especially problematic elements that used loot boxes as a medium of delivery. At the time there also appeared to be more hardline opinions, such as a total elimination of loot boxes that, while likely formed with good intentions, would probably be more detrimental to the industry than beneficial if taken seriously.

Furthermore, I specifically think that much of the concern over the gambling aspect of loot boxes didn't seem genuine but more such concerns were born of frustration and/or bandwagoning. To be fair, this particular viewpoint might be because I have become jaded to anything that resembles bandwagoning.

This isn't to say loot boxes don't have their problems as I've explained above, but it would be nice if opinions were a little more tempered instead of than being radicalized to the point where even core game design tenets are criticized for causing addictive behavior, therefore they need to be regulated in the eyes of some. I guess much like my suggestions for what the gaming industry should do in the wake of EA's blunder, I, especially as someone with basically no influence, am asking too much of too many people.