A retrospective on the year of the loot box
By Duncan Fingarson, Senior Columnist
Loot boxes in video games are not a new thing, but last year saw more games taking them on as a monetization model, along with more controversy surrounding the idea than ever before. Loot boxes as an idea (a box containing randomized digital loot available for purchase with real money) originally appeared in Chinese games over a decade ago. The first use of loot boxes by a North American publisher, however, was in the Team Fortress 2 update that introduced the Mann Co. Supply Crate. Shortly after, Team Fortress 2 went free to play.
Since 2010, loot boxes have popped up here and there. Star Trek Online, as well as Neverwinter and other MMOs have used them as an alternative revenue source for free to play enabled games. The first use in a full-price title was in the multiplayer mode of Mass Effect 3 in 2012.
Then came Overwatch.
In 2016, Blizzard’s team-based online FPS, heavily inspired by Team Fortress 2, released with loot boxes as a core component of its level-up system. The boxes contained cosmetic items, and were either earned through leveling up or purchased with real money from the store. Overwatch was a critical and commercial success, and it opened the floodgates.
It’s easier these days to find a Triple-A game with loot boxes than without them. Star Wars Battlefront II was heavily criticized for including in-game advantages in its loot boxes, instead of purely cosmetic items. Similarly, Middle Earth: Shadow of War features the ability to buy loot boxes containing in-game orcs, in case actually playing the game is too much of a bother. Call of Duty: WWII features loot boxes that are visible to the other players in game, so that other people can watch the boxes being opened. Bungie’s Destiny 2 has bright engrams, bought from an in-game merchant with a secondary currency that can be obtained with real money.
The randomized reward system, coupled with more desirable items existing at higher tiers of rarity, makes the boxes a money sink. It might take many purchases before a player gets the item they want, and this repeat purchase loop highly incentivizes publishers to put loot boxes in their games, even in cases when the loot boxes are detrimental to the core gameplay experience.
To make things worse, people are bad at probability. There’s a reason the Gambler’s Fallacy is called what it is, and one only has to walk into a casino to see it at work. A lot of modern loot boxes have flashy opening animations, and in some cases the rarer items are even flashier. It’s reminiscent of slot machines in presentation and in implementation. But is it truly gambling?
Certainly the governments of many countries think so. In China, law requires all games with loot boxes to disclose the odds. The Australian regulatory commission has stated that they believe loot boxes are gambling. The State of Hawaii wants to combat loot boxes as well, deeming them “predatory.” Belgium is investigating whether or not to regulate such games as gambling, as is the Netherlands. The issue, however, is not that clear.
The UK Gambling Commission issued a position paper in March 2017 that touches, among other things, on loot boxes. The commission found that, though loot boxes closely resemble gambling through the elements of chance and wagering a stake against a prize, it is not licensable unless the prize has some monetary value. If it’s restricted to in-game use, it’s not a duck, no matter how much it quacks like one.
By a strict definition, they’re right. Loot boxes offer the elements of chance, but the elements of stake and prize are more debatable. In one sense, it’s impossible to lose when you buy a loot box; the contents might not be what you want, but you’ll always get something. On a slot machine, there’s no such guarantee. Loot boxes are more akin to a lucky dip or grab bag, where the contents are unknown but never nonexistent. The waters are further muddied by the fact that loot boxes contain digital items only, often not able to be exchanged for currency, and thus holding no intrinsic monetary value.
That said, loot boxes do look an awful lot like gambling, even if they cannot be regulated as such. Everything about loot boxes is designed to get players to want to buy more, sometimes to the tune of hundreds of dollars. Oftentimes there’s a second virtual currency that is bought with real money, then exchanged for the box, in an effort to obfuscate how much actual money is being spent. There’s also the same sort of operant conditioning effect that happens with gambling; because the rewards are randomized, there’s always the chance that the next one will be the one you want. Or the next one. Or the next one… It’s a vicious cycle.
Though loot boxes have hit the news in Canada, there are currently no regulations on them in our country. Gambling is regulated provincially, so if there is to be loot box law in Canada, it’ll have to come from the provincial government.
There is, then, no solid answer for the question “Are loot boxes gambling?” The closest that has been arrived at so far is a series of “Yes, but…” and “No, but…”-type answers. At least in BC, it’s not yet regulated as such. Should it be? Quite possibly. Certainly something should be done to help protect consumers. The video game industry has not shown any particular inclination to regulate itself, and why would it? Loot box systems make money hand over fist.
Until people get better at thinking about and handling their money—something which hasn’t happened in all the time we’ve had money, and is unlikely to happen any time soon—or the next big thing comes along, it looks like loot boxes are here to stay. Community backlash has forced some games to modify or disable their loot boxes, but nobody has yet removed them completely, and more and more games keep trying to find ways to squeeze them in.
The only option to truly avoid loot boxes is to not buy games that contain them. There are still some publishers putting out games loot box-free, and the indie scene is littered with quality titles if you know where to look.
At the very least, when buying and playing games, try to avoid paying twice.