Gambling in Disguise: The Monetisation Crisis of Loot Boxes
The video game industry has intersected with regulation over the issue of monetisation. How developers employ monetisation strategies to generate revenue from players has resulted in a social crisis encompassing regulation of this industry
Videogames have progressed rapidly over the years, and more recently have integrated new tactics in monetisation that include stripping away many of the basic aspects of a videogame (such as playable content, exclusive rewards, loot boxes, and cosmetics) to be resold at a premium price. Monetisation in video games is primarily led through microtransactions, where players purchase additional content for (usually) smaller values than that of the original videogame purchase.
Microtransactions are a contentious part of video games, as publishers and developers employ a variety of discursive strategies to divert attention from these practices. Many designers are implementing intentional negative player experiences by including hindrances or psychological interference, to increase monetisation. These techniques have a variety of criteria to classify them, including giving advantages to paying players (also known as ‘pay-to-win’), or alterations of cosmetics (such as new skins for playable characters or weapons).
Video Game designers have discovered that by making some aspects of their videogame time-consuming and including interminable grinding, players will spend money to expedite gameplay and alleviate this frustrating experience. Conversely, other video game designers take advantage of jealousy, players purchase cosmetic indicators of status encouraging other players to purchase similar out of envy. Other classification criteria consist of players purchasing specific items, content, or rewards, either with a known value or acquired through a randomised reward (known as ‘loot boxes’). Loot boxes are purchased in-game, using real-world currency directly or through in-game currency (which is bought with real world currency). The items players can acquire (or ‘win’) from a loot box vary in rarity and desirability.
One of the ethical monetisation concerns over excessive spending comes from the repeatable nature of many types of microtransactions, especially loot boxes. Resulting in some players, known as ‘whales’ (players who spend a large sum of money, often on a regular basis) becoming targets of such exploitative game design. Another ethical concern is that the randomised reward system loot boxes employ, shares formal characteristics with gambling. Players are unaware of how much they need to pay to obtain a complete product (such as a full costume set for an avatar) after making an initial purchase. Notably, there is also suspicion that the content of a purchased loot box may (and can be) altered by the companies in charge of them, before they are opened.
As loot boxes are linked with traditional gambling mechanics, governments struggle to regulate this monetisation technique, with few international legislative successes. Within the United Kingdom according to the Gambling Act (2005), loot boxes are outside the definition of ‘gaming’, even if players use real-world currency to purchase them. This is due to the reward being allocated by chance, and the resulting enhanced experience is non-transferrable for value in the real world. However, both loot boxes and gambling rely on the individual (the player) risking money on the outcome of a chance event, with the goal of receiving a (perceived) high value reward. In addition to the accompaniment of exciting effects (such as sounds and lights) when a player opens a loot box, that resemble the experience of real-life gambling (such as lights and sounds from a slot machine being triggered upon a win).
As the minimum legal age for gambling in Great Britain is 18 (Gambling Act, 2005) it is pertinent to look at the number of gamers who are below the age of 18, of whom are most vulnerable to these predatory dark game design patterns. From the Interactive Software Federation of Europe report, 17% of gamers are between the ages of 6 and 14 years old (representing approximately 21 million players; ISFE, 2021). Whereas the Entertainment Software Association’s report shows nearly a quarter of all gamers in the US (24%, representing approximately 51 million players) are under 18 (ESA, 2022). As the minimum legal age for gambling in Great Britain is 18, these statistics are troubling.
Interestingly, research has found a strong positive relationship between loot boxes and gambling disorder. This positive relationship was stronger than any other relationship between microtransactions and gambling disorders. Additionally, the nature of loot boxes, akin to that of gambling, may be the underlying factor in the relationship between gambling disorder symptoms and microtransaction expenditure.
This suggests that adolescents who purchase loot boxes are at a much higher risk of developing gambling disorder symptoms. Critically, these findings show minors (under the age of 18) engaged in loot box purchasing behaviours to the same extent as adults.
Consequently, this highlights the significant need to protect children and adolescents who participate in loot box purchases in video games, from the potential and detrimental harm they can cause. The value and intentions of loot box design must be made transparent for all individuals, to facilitate safe, clear, and ethically responsible trade, reducing the implementation of exploitative techniques. This calls for a review of policies and industrial changes as though loot boxes are not legally defined as gambling, they are a form of ‘simulated gambling’.
If you want to learn more, SG Certified offers a comprehensive training module on this subject. With expert guidance and engaging content, this training will take you on a comprehensive journey through loot boxes and gambling, covering key concepts, current regulations, and laws, and offering practical insights and suggestions into ways the industry can become more responsible and sustainable.
Keywords:
Video game industry, monetization, microtransactions, loot boxes, gambling, regulation, ethics, exploitative game design, gambling disorder, pay-to-win