Since the turn of the century, the video game industry has evolved from an expensive hobby enjoyed by a relatively niche audience, into one of the largest and highest consumed forms of entertainment on the planet.
With an estimated global market value of just under $80 billion (£56.6bn), it is no understatement to say that the industry is a proverbial gold mine. However, there is an emerging, lucrative form of in-game monetisation used by some video game publishers that has caused a huge backlash and a great deal of scrutiny: the loot box.
Whilst the premise, function and importance of loot box varies between different video games, they are universally a system within a game where a consumer can spend real-world money to open a crate or box to obtain an unknown quantity or quality of in-game items.
Video games are a medium that is widely and easily accessible by children, and in a lot of cases, they are directly marketed towards minors. In 2017, Triple-A games such as Star Wars Battlefront II, Overwatch, NBA 2K18, and Call of Duty WWII, games extremely popular with those under the age 18, all included a loot box system.
Such systems are not entirely new to the video game industry. Since 2009, Electronic Arts (EA) have published and evolved the omnipresent football simulator FIFA franchise, and began by including the ability to purchase ‘packs’ containing different footballers, which can then be traded on an in-game marketplace.
However, as the popularity of loot boxes in video games has grown, so have fears about the similarities between paying to open a loot box and mainstream gambling, and the age of those gamers who are engaging in it.
The parallels are undeniable: a gamer will spend real-world money for the chance to receive desirable in-game items. Very rarely are the exact odds of obtaining certain items available to the player, something that is usually available to casino or betting shop gamblers.
Aaron*, 16, says he has been playing video games “since he could hold a controller”. His favourite and most played game is the FIFA football franchise, currently FIFA 18.
FIFA is one of the most popular and best-selling video game franchises in history [Marco Verch]
He also explains that he’s not the only one buying loot boxes: “All my friends play FIFA and we all spend money on packs, we don’t really have much else to spend our money on. It’s exciting, every time you open a pack you get a rush ’cause there’s a chance you might get a high-rated player.”
When asked if opening packs were like gambling, Aaron replies: “It’s not gambling cause you’re guaranteed to get at least something, but it [opening packs] is addictive.”
In February 2017, two men were convicted of running a website that allowed users, predominantly children, to buy the in-game currency of the FIFA franchise – called ‘coins’ – which can also be found in loot boxes. Futgalaxy.com had no official affiliation to the game, and the two men paid over £250,000 in fines after pleading guilty.
Late in 2017, the Belgian Gambling Commission launched an investigation into whether the loot box system in video games does constitute a form of gambling. Whilst the conclusions of the investigation are not yet available, the commission did state: “the mixing of money and addiction is gambling.”
Koen Geens, Belgium’s Minister of Justice added: “Mixing gambling and gaming, especially at a young age, is dangerous for the mental health of the child,” before confirming that he wants to ban in-game purchases if the contents of the purchase are non-transparent.
In China, gambling regulators forced Blizzard Entertainment, developers of Overwatch (which has an estimated player-base of 35 million worldwide), to reveal the exact odds of receiving items of varying quality. For example, an ‘epic’ item will appear once in every 5.5 loot boxes on average, whilst the rarest type of item – known as ‘legendary’ items – will only appear once in every 13.5 loot boxes. So far, such transparency is only required by Blizzard Entertainment for the Chinese version of the game.
In November 2017, Hawaii state legislator Chris Lee condemned the new Star Wars Battlefront II game (also published by FIFA publishers EA) as a “Star Wars themed online casino, designed to lure kids into spending money; its a trap.” Lee goes on to say that the State of Hawaii is “looking at legislation to prohibit the access or sale of these games [containing loot boxes] to those who are underage in order to protect families.” He also adds Hawaii and other US states are looking at “prohibiting different kinds of mechanisms in those games.”
Star Wars Battlefront II came under fire for its inclusion of loot boxes from Hawaii state legislator Chris Lee [EA]
Furthermore, an annual survey of youth gambling published at the end of 2017 by the UK Gambling Commission said 25,000 in the UK children are problem gamblers, with most of those learning to bet through video games or social media.
The report says that Britain is “sleepwalking into a future public health storm”, and highlights how children are gambling in a “consequence-free environment”, partially blaming the trading the skins (often obtained through loot boxes) in popular video games such as Counter Strike: Global Offensive. A US report recently estimated that the skins betting industry is worth $5.1bn (£3.8bn).
However, Tim Miller, the UK Gambling Commission’s executive director explains that if the items obtained via loot boxes are only usable in-game and cannot be converted or “cashed-out” into real-world currency, loot box systems are “unlikely to be caught as licensable gambling activity,” meaning the commission would have no legal power to intervene in the UK.
Miller does, however, recognise the concerns of parents who feel their children are at risk of exposure to gambling-like practices in video games. “The line between video gaming and gambling is becoming increasingly blurred. Where it does meet the definition of gambling it is our job to ensure that children are protected,” he says.
Even though a significant number of the industry’s biggest publishers such as EA, Blizzard and Activision have integrated loot boxes into their flagship titles, not all creators agree with the model. CD Projekt Red, developers of 2015’s multiple game-of-the-year winning The Witcher 3: Wild Hunt, stated that their newest project, Cyberpunk 2077, will not contain a loot box system, or any type of micro-transaction (an in-game transaction using real-world currency) for that matter.
The Polish developer didn’t miss the opportunity to take a swipe at their ‘greedy’ rivals who do use loot boxes systems, either.
.@PrettyBadTweets Worry not. When thinking CP2077, think nothing less than TW3 — huge single player, open world, story-driven RPG. No hidden catch, you get what you pay for — no bullshit, just honest gaming like with Wild Hunt. We leave greed to others.
— CD PROJEKT RED (@CDPROJEKTRED) November 19, 2017
Not only have loot boxes in video games been so controversial that legal action is being taken in some parts of the world, they are also dividing the creators of games themselves. Fears that children are being influenced or even directly involved by a type of gambling are widespread and in some cases, vindicated.
The future of loot boxes in video games is still unclear, and the question of whether they are introducing children to gambling is yet to be definitively answered. However, one thing is certain – this is only the beginning of the loot box story.
*Name changed at the request of interviewee
Featured image via Overwatch by Blizzard Entertainment