loot boxes – not evil

Loot boxes are not evil, they shouldn’t be regulated, and they’re certainly not gambling.

It seems like everyone has a hot take on gaming’s controversy du jour, and as a mobile developer I figure my perspective on the matter could be a valuable counterpoint to what is clearly the prevailing opinion across social media.

First, some definitions. A loot box is a reward mechanism, seen mostly in casual or mobile games (though increasingly also in high-profile AAA games). Loot boxes are given to the player in exchange for completing some task or goal; often they will be rewarded when the player reaches a progress milestone, such as leveling up or defeating an especially difficult level. Crucially, loot boxes themselves can usually also be purchased for real money.

Loot boxes contain items (“loot”) that the player can use in the game. What form this loot takes will depend on the specific game of course, but common examples include new costumes for the player’s character to wear, in-game currency (gold, gems, etc.), special accessories, and other aesthetic bonuses. Essentially, instead of just outright giving the player these items directly, the game distributes them in a pseudo-random manner via the loot box mechanism.

From the perspective of a developer this system has several key advantages. First, using loot boxes prevents the player from simply buying the item(s) that they want most. To obtain a specific item, players must actually find it inside a loot box (the contents of which are random), meaning that it will take longer for the player to obtain it. The practical result of this is more time spent playing your game, more investment in the rewards loop, and actual interest in progressing through the game.

There’s also a psychological benefit to using loot boxes. Players will feel excited to open them. There’s a feeling of suspense not knowing what item(s) will come out of any given box, and when the player eventually does get that one item they’ve been pining for, they feel elated. In this way a positive feeling is associated with the loot boxes themselves, which significantly increases the odds that players will use real money to buy additional boxes and continue the positive feedback loop.

Is this gambling?

That depends on how you define the term. Certainly it’s true that you’re wagering your money on an unknown reward (assuming you’ve purchased a loot box with real money), which to some may be enough to classify them alongside slot machines and lotto tickets. But I believe this is missing the forest for the trees, and fails to answer the actual question that matters: Are loot box mechanisms detrimental to players in the same way that gambling is detrimental to casino-goers?

Is purchasing a digital box containing an unknown amount/quality of digital goods equivalent to throwing cash in a slot machine?

The answer is clearly no. Here’s why:

Loot boxes are always guaranteed to have something in them. I don’t know of any games in which you can receive a loot box that contains nothing. Assuming you’ve bought a loot box with real money, you are always getting a guaranteed return on your investment, equivalent to the least valuable thing that game’s lootboxes can contain. For example, if the “bust” loot box for your game is one that contains just 10 gems, then that is the value of your monetary investment. Anything you get in addition to that base reward is extra value; a nice bonus, but never guaranteed.

Additionally, the range in possible reward values between a “bust” loot box and a “jackpot” loot box is substantially lower than the range in possible rewards from an actual slot machine. A single slot machine payout could theoretically pay off your mortgage; a single loot box can at most reward you with multiple very rare game items.

This ties into the second crucial difference, which is that loot boxes are never rewarding you with actual money. You cannot pay real money for a loot box and be rewarded with more real money; you will only ever receive items whose worth is relevant only within the context of that specific game.

[ADDEMNUM 01/11/18: There is some haziness now in this regard – the Steam marketplace allows the reselling of in-game items to other players for real-world money, which means rare items can theoretically translate to actual dollars. PUBG and CS:GO are two prominent examples of secondary markets. As far as I know, mobile platforms do not allow for this as of yet.]

To make a slot machine that functioned equivalently would require removing those aspects of it that make it so addictive to gamblers in the first place. First, you would have to decimate the maximum payouts to be substantially smaller. You would then have to simultaneously ensure that the machine never pays out actual cash, but only “CasinoBux”, a proprietary currency redeemable only within the walls of that specific gambling establishment.

Certainly this gimped slot machine could be fun to play, and it could be presented with enough flair and style to hook players for a long time. But it’s not “gambling” in the nefarious sense. Loot boxes aren’t slot machines, they’re Chuck E. Cheese ticket games.

I don’t have the hubris to assume that I know what’s best for game consumers, and I definitely don’t have the confidence in the powers that be to make that call on my behalf. Plus, this nebulous call for “regulation” leaves a lot of room for interpretation. What would be regulated? The rewards themselves? The odds? Would they have to be examined by an Office of Loot Box Fairness regulator on a game-by-game basis? What would this do to game development schedules/budgets? Who determines what is “fair”? Can a game have deliberately unfair loot box reward distributions if they’re disclosed first? What actual harm does this regulation prevent?

Wouldn’t it just be easier, fairer, simpler, and cheaper to let individual players decide for themselves what to play?

As a player, I like loot boxes. I think they’re fun to open and make the process of collecting meaningless in-game rewards way more interesting than typical shops or straight unlocks. And I think younger players especially are much more open to the concept of loot boxes than are older players, who may be used to paying a set amount of money for a set amount of content. The games industry has changed significantly from the days of brick-and-mortar retail releases being the main distribution method, and micro transactions and DLC have established themselves as a key way for digitally-distributed games to make money.

In the end, it’s up to individuals to determine if they want to invest time/money into games that use loot box mechanisms to distribute rewards. Certainly it’s understandable to be upset when an otherwise stellar game obfuscates its best rewards behind a wall of poorly realized and unbalanced reward crates, but it’s the developers’ prerogative to design their game however they damn well please. Players can take it or leave it.

If you don’t want to support games with loot boxes then don’t. It really is that simple.

Consumers have more power than they realize, as evidenced by the recent Battlefront II backlash that saw Electronic Arts completely remove the micro transaction model from the game on the eve of its launch. (This was only a bandaid, of course, and the actual game still suffered from poor reward balancing, but that’s just how it goes sometimes.)

The mobile games industry is an especially brutal environment for smaller developers who may lack the budget to invest in significant marketing. Mobile gamers have come to expect an enormous amount of value for free, and recouping those development costs without strong-arming players into excessive in-app purchases is an increasingly difficult endeavor. How do you make money on a free game where the vast majority of players – typically at least 95% – never pay a dime on optional purchases?

There are many answers to that question, and more solutions will be tested and scrapped and argued about for as long as videogames exist. Loot boxes may be the newest method, but they won’t be the last, and at the end of the day we’re talking about videogames here. To conflate actual real-money gambling with stupid digital treasure chests that contain stupid digital hats is, in my opinion, dumb.

Of course, I’m no expert, and I’d love to hear why I’m probably wrong about everything (seriously). Are loot boxes evil? Is benign psychological manipulation designed to increase player retention inherently wrong? Do mobile gamers need to be protected from their own bad decisions?

Drop me a comment or hit up my Twitter!

*For the record, I don’t like AAA games with established franchises using loot boxes. I think it’s stupid to pay $60 for a game AND be forced to wade through half-baked loot crate swamps to get good items. I don’t buy those games.

*I do think there’s a case to be made against games with loot boxes explicitly aimed at children, but I also think those concerns are pretty well covered already through COPPA regulation.

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