Hooked on loot boxes

Yesterday, ESRB president Patricia Vance announced a new "in-game purchases" label to be placed on physical copies of games that allow users to spend money from within the game. Although the label will be placed on games featuring everything from subscription models to downloadable songs, it was essentially a move in response to recent uproar--and threats of legislation--over loot boxes.

"I'm sure you're all asking why we aren't doing something more specific to loot boxes," Vance told a conference call of games journalists. "And I'll tell you we've done a lot of research over the past several weeks and months, particularly among parents. What we learned is that a large majority of parents don't know what a loot box is, and even those who claim they do don't really understand what a loot box is. So it's very important for us to not harp on loot boxes per se, but to make sure we're capturing loot boxes but also other in-game transactions."

This seems a bit like history repeating. After all, it was originally the threat of legislation that caused the Entertainment Software Association (then the Interactive Digital Software Association) trade group to create the ESRB in the first place. And the board's minimal concession to a problem here is similarly in keeping with its history. From the beginning, its purpose has been to regulate the industry just enough to take the teeth out of any calls for the government to step in, and no further.

So it makes some sense that when faced with critics railing about the corrupting influence of games on children, Vance and the ESRB would move to address the fears of parents. But as they discovered, parents don't really care about loot boxes; they barely know they exist at all. So rather than do something that could possibly curtail the revenues ESA members are making on their loot box-driven games, the ESRB figured the next step was to placate some seemingly related concern parents actually have.

"This time around, the people pushing for a crackdown on loot boxes aren't just poorly informed outsiders. Many of the calls for the industry to check itself are coming from inside the house"

The problem here is that in the past when the ESRB has found itself in the political discussion, it has mostly been for video game violence. And in those cases, the root of the complaints were very much coming from parents. It was easy for a parent to see Doom or Mortal Kombat on the nightly news and conclude that those games shouldn't be sold to children. It was easy for them to see the gameplay, plot synopsis, storytelling tone, marketing and/or title of a Grand Theft Auto game and think it didn't belong in a hobby they believed was "just for kids."

But this time around, the people pushing for a crackdown on loot boxes aren't just poorly informed outsiders. Many of the calls for the industry to check itself are coming from inside the house, as it were. It was angry players who made Star Wars: Battlefront II loot boxes a national news story and prompted EA to rethink plans for its holiday blockbuster on the eve of release. It was a lifelong gamer in Hawaii State Representative Chris Lee who introduced legislation to curb "predatory mechanisms" in games. And it's a significant group of influencers, gaming journalists, and others within the industry who have been vocally calling for loot boxes to be reined in or abandoned entirely for years now, because we know exactly what they are, and we know where this is going.

Loot boxes are a side effect of a larger trend in gaming, the push for engagement. In the games-as-a-service era, companies only make money off players by keeping them around. As an infinitely repeatable activity with randomized results, loot boxes are simply an effective way to continuously monetize people who stick around. If one were to sell cosmetic items or characters directly, even the most engaged players would probably just buy what interests them and call it a day. But with loot boxes, publishers are pushing the upper boundary of what players can spend in their game so high as to be functionally meaningless.

As a result, publishers are aggressively pushing engagement metrics, both internally and externally. Speaking at the NASDAQ 37th Investor Program in December, Electronic Arts CFO Blake Jorgensen proudly discussed the value the company's sports games and their Ultimate Team modes bring to users.

"If you go to a movie today, it can cost you in the US $20 to get in the movie before you buy popcorn, which is fun. It's great, I love it," Jorgensen deadpanned. "But at the same time, a $60 video game that people are playing three, four, five thousand hours during the year on, that's a lot of value for your money. And even if you spend some money on top of that, you're typically spending it on increasing the fun and excitement of the game. So we're just trying to give the consumers what they really want, and more of it, versus trying to build another game or do something different."

5,000 hours is a lot of time, especially in the span of a year, which (leap years aside) only consists of 8,760 hours. 5,000 hours is enough time to work two full-time jobs for an entire year, with eight hours of overtime per job, per week. If you're playing a game for 5,000 hours a year and getting a full night's sleep, that leaves you less than two-and-a-half hours per day for eating, bathing, school, work, family time, or any other non-game-related activity one would expect of a well-rounded human being. No weekends, no days off.

When I asked EA if Jorgensen's comments meant the company has literally seen players of its games log 5,000 hours of playtime over the course of a year, I was told not to read too much into his statement. But even assuming that the chief financial officer of a publicly traded company would be so careless--or actively misleading--with the numbers he gives to investors, the point remains that Jorgensen spoke about this hypothetical 5,000-hour player as an example of tremendous success.

"The publishers of the world don't want to make games for players to consume so much as they want to make games that consume their players"

This is where the outrage over loot boxes is coming from. This time it's not rooted in ignorance and a fear of the unknown. It's rooted in the knowledge that the publishers of the world don't want to make games for players to consume so much as they want to make games that consume their players.

It's in the knowledge that EA has researched matchmaking techniques not for fair games, but to feed people the sequence of wins and losses most likely to keep them from putting the controller down and walking away. It's in the knowledge that Activision has patented a way to skew matchmaking in its games to benefit those who made in-game purchases and encourage more such spending.

It's in the knowledge that even when a government imposes the mildest of restrictions--a simple demand that you tell players what the distribution of various items is in the loot boxes they're buying--publishers like Activision Blizzard willfully circumvent the law in bad faith rather than let people make an informed purchasing decision.

The ESRB originally responded to concerns about loot boxes by comparing them to collectible card games. And to a certain extent, that's a fair comparison. The difference is that when I go to buy a pack of Magic: The Gathering cards, Wizards of the Coast doesn't necessarily know it's me buying them. Wizards of the Coast can't tie the purchase to my Xbox Live Gamertag or PlayStation Network account. It can't look back on years of my spending behavior on collectible card games. It can't make an educated guess as to which kind of cards I like to use, and how frequently I need to see those cards show up in packs to keep me buying more. It can't intentionally withhold those cards from me if it suspects I'm determined to go for them at any cost. When I buy a pack of Magic cards, I can be assured that the contents of that pack are the same for me as they would be for anyone else. That is absolutely not the case with loot boxes.

"When I buy a pack of Magic cards, I can be assured that the contents of that pack are the same for me as they would be for anyone else. That is absolutely not the case with loot boxes"

The industry's publishers are tracking every aspect of player behavior, no matter how obscure, and examining it for hidden patterns and links. They are relentlessly pushing engagement, with no thought given to the consequences that can have on their players. They have embraced virtual currency mechanics that obfuscate the value proposition of their offerings, and shown a contempt for transparency and disclosure with their customers. I do not for one second trust these companies to apply what they learn from the careful and constant monitoring of their player bases with any ethical grounding.

It doesn't matter if loot boxes are technically gambling. When your game employs the same principles of gambling to engage people in the hopes they funnel unlimited amounts of money your way, I'm not going to be won over when you tell me, "But it's all OK because there's no way they'll ever get a penny of their money back."

It doesn't matter if gaming addiction is a diagnosable disorder. We have more than enough stories of players dying during marathon sessions. Designing games specifically as bottomless pits for people like this to fall into is a dubious way to turn a profit.

I don't want to see laws passed governing the implementation of loot boxes in games, but if the companies and trade groups that run the industry can't be bothered to take these concerns seriously, I'm not sure I see this ending any other way. And if those laws are too restrictive, unforgiving, and detrimental to people trying to innovate in good faith, we shouldn't be too surprised. Between Activision Blizzard's flaunting of the mildest of legal requirements and the ESRB dragging its heels on doing anything substantive, there's no reason to think this industry is capable of tackling concerns about loot boxes on its own.