How the video game industry exploits players using loot boxes

How the video game industry exploits players using loot boxes

Are Loot Boxing Days Counted? Probably not in the short term, but it seems that more and more agencies and policymakers are taking an interest in the issue of loot chests. The same goes for players who organize around consumer associations all over the world.

You’ve probably never heard of KEPKA, DECO or Consumentenbond. These are, roughly speaking, associations such as the UFC-Que Choisir, well known to people living in France. From Austria to Iceland to Poland, Spain, Switzerland, Sweden and Denmark, Italy and Greece, a growing number of consumers are calling for better regulation of loot boxes in gaming. video.

In recent days, the Norwegian Consumer Council (NCC) has published a fairly overwhelming report on loot chests sold mostly on mobile platforms. This is accompanied by coordinated action by some 20 consumer associations in no less than 18 European countries.

Loot boxes are accused of exploiting consumers “by predatory mechanisms, encouraging dependence, targeting vulnerable consumer groups, etc.”

At first glance, a loot box may seem innocuous. However, it is the source of many expenses for some players, in part because publishers use clever or biased means to achieve this:

  • Exploiting cognitive biases and vulnerabilities through misleading design and marketing.
  • Using layers of virtual currencies to hide or distort costs in the real world.
  • Target loot boxes and manipulative practices on minors.

Loot boxes whose real cost is difficult to understand (NCC illustration)

For the Norwegian Consumer Council, the video game industry is likely to be underestimated by policy makers, to the point of being considered a niche market by the authorities. However, it is more lucrative than film and music. More than 2.8 billion people play video games worldwide. In-app purchases generated $ 15 billion in revenue in 2020 and have become the industry’s main source of profit for mammoths.

Despite this status as a major industry, video games are too far removed from NCC regulation, especially because business models are technically complex or innovative.

Among the methods used by developers is the commitment spiral. The first step is to get someone to try something for free or give you a gift so you can take the first step. It can range from food to car sales, and it also works with loot boxes.

Then several techniques can be put in place, such as offering you very expensive items that you will routinely decline, and next to the less expensive products for which you would be willing to make an exception. Because that’s the whole point of commitment. Once the first expenses are made, they become almost natural and some players will not back down and will not question their expenses. It is indeed difficult to admit that one was wrong.

Of course, everyone is free to buy or not. This is a slogan often used by companies. This feeling of freedom is important because it encourages some players to take action. If the player is “free to choose”, he will be strengthened in the idea that this choice is his, which increases the chances that he will act.

The probability of winning something good is lower than the one presented in the game (NCC illustration)

The games also use two diametrically opposed techniques but whose goal is always the same. The first is to initially offer to spend a very small amount, the goal being to spend significantly more as soon as the buying behavior has been accepted. The second works the other way around. We offer you a very expensive product that everyone would refuse. Then a cheaper, more reasonable item is offered so that the player can agree to withdraw their credit card. Another technique is to offer time-limited items: “You will only be able to get these cosmetic items for a limited time.”

The Norwegian Consumer Council proposes several solutions to get loot boxes into the nails, including:

  • In-game purchases must always display a price in real currency.
  • Better protect minors. Games accessible to minors should not have loot boxes or pay-to-win mechanisms.
  • More transparency: regulators must have access to algorithms, and players must be warned when the decision of the loot boxes is based on a particular algorithm.
  • Video game companies should be banned from using misleading designs to exploit consumers. One must avoid showing the wonders accessible while their rate of attainment is very low.

All of this is all the more important as many players are minors and more sensitive to sales techniques. A study in the UK shows that 55% of boys between the ages of 15 and 16 have already bought loot boxes.

In this sense, loot boxes have many similarities to virtual casinos and gambling. This is all the more dangerous as industry players tout the use of Machine Learning to customize games based on behavioral data to maximize spending.

The full NNC document is visible at this address. It is in English, but I invite you to go through it because it is very interesting and shows that in the long run, the authorities will have to make decisions in order to regulate the loot boxes. Their disappearance is not mandatory, but developers need to be supervised to protect consumers and prevent abuse.

In the past, publishers have seen their loot boxes changed as a result of player complaints. Some games are even banned in some countries, such as Diablo Immortal recently in Belgium and the Netherlands. However, it goes without saying that if the number of countries closely monitoring loot boxes increases, they will affect publishers where it hurts, that is, in the portfolio. They will therefore adapt their offer accordingly and will no doubt fail, at that time, to point out that they are doing so for the well-being of the players.

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