How the video game industry exploits players using loot boxes

Are Loot Boxes days numbered? Probably not in the short term, but it seems that more and more agencies and politicians are interested in the problem of loot boxes. The same goes for players organized around consumer associations around the world.

You have probably never heard of KEPKA, DECO or Consumentenbond. Roughly speaking, these are associations like the UFC-Que Choisir, well known by people living in France. From Austria to Iceland via Poland, Spain, Switzerland, Sweden or even Denmark, Italy and Greece, an increasing number of consumers are demanding better regulation of loot boxes in games.

In recent days, the Norwegian Consumer Council (NCC) has published a rather condemning report on loot boxes, which are predominantly sold on mobile platforms. This is accompanied by a coordinated effort from around twenty consumer organizations in no less than 18 European countries.

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

At first glance, a loot box may seem trivial. However, it is the source of many expenses for some players, especially because publishers use smart or tendentious means to achieve it:

  • Exploitation of cognitive imbalances and vulnerabilities through misleading design and marketing.
  • Use layers of virtual currencies to hide or distort real-world costs.
  • Targeting loot boxes and manipulative practices against minors.

Looting boxes whose real costs are difficult to understand (illustration NCC)

For the Norwegian Consumer Council, the video game industry is probably underestimated by decision makers, so they are considered a niche market by the authorities. However, it is more lucrative than cinema and music. Over 2.8 billion people play video games worldwide. In-app purchases generated $ 15 billion in revenue in 2020 and have become the main source of profits for industry giants.

Despite this status as a large industry, video games escape too much regulation, according to NCC, especially because the business models are technically complex or innovative.

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

Then more techniques can be introduced, such as offering you very expensive items that you will systematically reject, and next to cheaper products that you would be ready to make an exception for. Because that’s the whole point of engagement. Once the initial expenses are made, they become almost natural and some players will no longer retire and question their expenses. It’s actually hard to admit that one was wrong.

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

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

The games also use two diametrically opposed techniques, but whose purpose is always the same. The first is to initially offer you to spend a very small amount, where the goal is to spend significantly more as soon as the buying behavior has been accepted. The other works in the opposite way. You will be offered a very expensive product that everyone would refuse. Then we offer a cheaper, more affordable item so the player agrees to take his credit card. Another technique is to offer time-limited items: “You will only be able to get these cosmetic items for a limited period of time.”

The Consumer Council offers several solutions to get loot boxes in the nails, i.a.

  • In-game purchases must always be priced in real currency.
  • Protect minors. Games available to minors should not have loot boxes or pay-to-win mechanisms.
  • More transparency: regulators must have access to the algorithms, and players must definitely be warned when the loot box decision is based on a particular algorithm.
  • Video game companies should be banned from using misleading designs to exploit consumers. You should avoid showing available wonders when their achievement rate is very low.

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

In this sense, loot boxes have many similarities with virtual casinos and gambling. This is all the more dangerous as industry players highlight the use of machine learning to personalize games based on behavioral data to maximize consumption.

The entire NNC document can be viewed at this address. It is in English, but I invite you to read it because it is very interesting and shows that in the long run the authorities will have to make decisions to regulate loot boxes. Their disappearance is not mandatory, but developers need to be monitored to protect consumers and avoid abuse.

In the past, we have already seen publishers change their loot boxes after 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 that closely monitor loot boxes increases, they will hit publishers where it hurts, ie the wallet. They will therefore adapt their offer accordingly and will no doubt not fail, at the time, to point out that they are doing so for the well-being of the players.

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