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> It's not something we should trivialize or laugh at or compare to baseball cards.

This seems like a strange comparison to reject. Baseball cards were originally 'prizes' packaged with other products, and they were randomized to create excitement and keep people brand-loyal while they hoped to find the prize they wanted. They're the precursor to CCG booster packs, and from there to MMO loot systems, so of course we should compare loot boxes to baseball cards!

And it's even darker than that. The major originators of baseball cards were tobacco companies, so you'd go out and buy ATC cigarettes in hopes of getting Honus Wagner. The causal chain from baseball cards to smoking to cancer was far tighter than the chain from loot boxes to problem gambling to suicide, and yet we're told that loot boxes are a real problem, not like baseball cards. Exploiting people, and targeting kids, with randomized prizes is way older than B.F. Skinner's work.

It's a minor side note of course, not the core of the discussion, but it's a bit concerning to see a researcher specializing in loot boxes botch his history so badly.

I thought this was strange too. I was just watching Gary open a few $500 football card boxes today (5 cards in each). Upon opening a box without any rare players he said: "That's what you get sometimes gambling!" So I think people know that's what's going on.
> So I think people know that's what's going on.

Addicts generally know at some level that they are addicted. The core problem is more that addicts can't break the compulsive behavior without a significant intervention.

Some stores would only have one box of baseball cards. You would literally run out after 24 packs were sold. It wasn't like baseball card stores were ubiquitous, like they are today.

There were natural bottlenecks in place, where as today, people can literally blast through 24 packs with a tap of a screen.

its the scalability of these loot boxes that are a problem now.

I mostly wanted to point out that baseball cards are a natural and historical point of comparison, but I agree that loot boxes are have moved past their predecessors. They've rolled together the tactics of CCGs, MMOs, and casinos into something thoroughly unholy.

From CCGs and even baseball cards, we obviously get artificial rarity and the basic Skinner box experience. From MMOs, we get scheduled rewards to draw players back, player-bound prizes that can't go to an aftermarket like cards, and unconstrained on-screen purchasing. From gambling, we get secondary currencies for fluid spending, the lights-and-sounds opening experience designed to make bad outcomes feel rewarding, almost-got-it visuals like a one-off reel, and banned-in-casinos tactics like scheduling wins based on money spent.

The results are genuinely alarming. I used to think these fears were overblown and 'whales' were mostly people with spare cash, but then I started to see kids interacting with freemium games. It's a distillation of decades of cash-extraction tactics, aimed at children or at distracted adults, and delivered by a vector that's constantly accessible. Honestly, it's one of the best arguments I've seen that people can be systematically harmed by access to products even without physical addiction or health damage.

Baseball cards, trading card games, capsule machines, blind box toys and collectibles... they are all legalized gambling for kids (and adults) and loot boxes are simply more of the same but in digital form.

I'm not sure why the former aren't regulated more closely though.

Crane/claw machines and Stacker arcade machines are "skill" games that are very close to gambling given the irritating (though technically not random) variation in claw tension (making the game almost impossible to win at low tension) and the randomness of the last level of Stacker.

But it’s comparing them to something which existed in its time to something which doesn’t exist today is kind of tangential.

Baseball cards today don’t have a connection to tobacco.

At least there’s something physical and tangible with sports cards...I can’t say the same for Overwatch packs etc.
Are people burning through a lot of money buying Overwatch loot boxes? They are just so easy to get by playing, and they serve no in-game purpose. I really think it's a great monetization model. I paid $30 once, I get a new update every month. If you really want some cosmetic, you pay for loot boxes, and either get the item you want, or enough duplicates to get enough credits to get the item you want. I dunno, it all seems very fair to me.

I will admit that some people really do want cosmetics and will go out of their way to get them. I have a friend who really likes collecting "everything". The end result is us playing mystery heroes with remarks from her like "I hate mystery heroes so much" because it means 3 extra loot boxes a week. (I like mystery heroes, though. That's why I play it.) But maybe that's the beginning of a problem.

Similar intrinsic worth though (c. zero).
That makes cards worse, since they have encumbrance.
It feels to me that the issue is game studios are too large. Indie's don't engage in this behavior and still produce very excellent games without going bankrupt (Factorio, Stardew Valley, Stormworks). Even smaller developers that choose a Free-to-play model with transactional elements (Path of Exile) can do it in a very player friendly way that aligns with game value.

On the other side are companies like Activision and EA that will sell you a $60 game and expect you to spend another $60 in micro-transactions, screaming "more profit" the whole time.

My advice is choose who you support with your money carefully.

Only two of those games have 3d graphics: one has an mtx revenue stream, and the other is a stylized low resolution design and conveniently has no real background to render.

Successful indies survive as they do because they stay within their severely constrained production budgets. Modern AAA's have large studios and insane budgets (Red Dead Redemption 2 is estimated to have cost around $1B to produce) because modern computer graphics are really, really time consuming and expensive to produce.

If we assume that RDR2 did cost $1B, and Rockstar nets an average of $40 per sale, they'd have to sell 25 Million copies just to break even on box sales alone. Reports are that they've hit that number of units shipped as of this month, but again, that's just to break even (and assumes the game has never been sold at a discount, and that physical copies have the same margin as digital).

That $1B number gets some real doubt from me. I'd bet the real number is a few $100M lower. No way rockstar had over 1k people working on that rd2 for eight years at ~$100k avg.
Without microtransaction and lootbox revenue, developers might have to not build essential features like ensuring horse testicles shrink or enlarge to match the ambient temperature.

How would players cope with this lack of equine testicular realism?

It's true indies and smaller studios can make some great games but there's yet to be a real way to make a large game with lots of detail and nice graphics other than throwing tons of people at it to place all the random street trash in The Division or figure out the building destruction in Battlefield and those people are expensive.

I'm not defending the microtransaction money grabs EA has been making recently but there is something to be said for the fact that games have STAYED $60 for years while getting more detailed and more expensive to make.

Path of Exile does have (cosmetic) loot boxes though. They didn't always, but they do now.

Not a problem for me because I just don't buy them, but just not buying them isn't really a solution for people with a gambling problem.

Games like Factorio do show indeed that it's possible to just sell an excellent game for $20-30 and be profitable.

Now, I don't have a source for this, but I heard valve for example stopped making single player-pay upfront games because the a one time profit of $200 million simply isn't worth it compared to, let's just call them 'modern monetization' techniques.

Path of Exile doesn't have just cosmetic loot boxes, you can actually buy game upgrades! You can unlock inventory tabs and get better sorting.

And that's what I mean. Those features are a few dollars, you almost always know exactly what you're getting, and they're generally only useful after you've put a few hours into the game. For a free to play game, that's a totally valid use in my book.

> but just not buying them isn't really a solution for people with a gambling problem

Someone having a pre-existing gambling problem isn't the fault of the developers, nor is that what the researcher in the original article is claiming. The researcher claims that allowing kids to engage in buying loot boxes fosters a gambling addiction later in life.

Indies also make lootboxy games, but they don't last because they get bought or cloned by companies like Zynga. and big companies also make non-lootboxy games. But when an indie makes a lootboxy hit, then it becomes a big company with its big money.
This caught my eye

"It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said. "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this."

Elmachtoub said games need to be monitored to ensure publishers are actually following the probabilities they post, and it needs to be tracked not just in aggregate but on the individual consumer level because it's otherwise possible to gain more money by extorting specific individuals.

....

"Another unique thing about loot boxes versus baseball cards is that companies can see your inventory. That's a fundamental difference. Being able to take advantage of that would obviously be beneficial to the seller and allow them to exploit more.

They raise a valid point with a needlessly sensationalist title - but it does feel like a natural (d)evolution of the gaming industry. This is what happens when a studio becomes successful, hires a lot of people, then tries its hardest to maximize profits.

The real solution here is that parents need to educate themselves on how to lock down permissions on game purchases and manage their children's playtime/addiction levels. Government regulation is not a good substitute for parenting.

Remember, as a consumer, you can still support games that don't employ these tactics! Personally, I have way more fun playing Rimworld, Factorio, etc.

Are you saying the same thing about casinos? That children should be able to go to casinos? And the parents should just make sure their children don't actually go to the casino?

That sounds wholly crazy to me. Loot box mechanics should automatically result in a mature rating for the game.

> Government regulation is not a good substitute for parenting.

I don't get this attitude. You seem to agree that loot boxes are a rather stupid idea born out of oversized companies using psychological tricks to make money.

Given that, there is simply no cost to the government banning this practice. Requiring, instead, every single parent to learn about the myriad ways companies may come up with to exploit their children seems wasteful at best. But of course not every single parent would be able to avoid every single trap, so this stance really is just about accepting some number of people to be the pray of corporations.

This sort of argument is surprisingly common: toxic food additives, usury credit card or insurance rates ... literally any scam ever invented: you'll find people arguing it's the victims' fault for not being experts in toxicology or investment.

Why do you believe that the default should be "allow gambling" with only the option to opt out, with a different method of opting out with every singe platform.

Imagine if that were our default computer security stance. "Let the websites do whatever they want; it's up to the users to educate themselves and limit what websites can do."

I think that loot boxes should be subject to the same laws as slot machines in the US (since they are online slot machines, right?).

If your state doesn't allow slot machines and online gambling then no loot boxes for you. If it does, you must also be 18 / 21 to purchase a loot box; depending on state law.

What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines?

This is also a deep hint to a potential worst case outcome of loot boxes. Pinball machines experienced a prohibition because of their similarity to slot machines. States that do not allow slot machines stopped allowing pinball machines. Eventually those states started to relax the prohibition based on whether or not pinball machine scoring systems could be determined by player skill and whether or not pinball machines produced payouts/rewards/prizes. But they started by banning all pinball machines, and bankrupted a number of companies in the industry.

Videogames should have been a lot more careful to avoid this situation in the first place. It's not like the pinball prohibition was that long ago (New York was the last state to stop prohibiting pinball machines in 1976), nor that it was that far from home because it impacted laws on early arcades where videogames got their start (literally right next to pinball machines, and sometimes by the same manufacturers).

It probably is a stretch for states to simply ban all videogames in 2019, but that sort of reaction is certainly possible in the right climate, and it has happened before.

> What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines?

Prosecutors' reluctance to make a case and uphold existing laws.

Many games lack a way to convert from in game items to real world money so I can see where existing gambling things wouldn't apply, eg only a few games have a market setup where you can buy and sell items for real money like TF2. Some even completely lack trading so there's not a way to get money for them period.
I've never understood this, all economic transactions are voluntary, who am I (or in this case, you) to tell people they can't make that decision?

People who make bad decisions shouldn't be protected from the consequences of their actions. I do agree that loot boxes and gambling mechanics are pretty bad methods of monetizing a game, that's why I don't buy them, but I don't presume to tell other people what they should think of them or the business owners whether or not they can add them in.

This assumes the lack of negative externalities from such a system.
When my nephew was 7 years old, he ran up a £200 bill for nonsensical digital objects on Xbox Live during the 360 era. Microsoft reimbursed my brother after we described the problem to them.

This was a little while before the media even knew there was a story. Given the early success of Xbox Live, I suspect they probably saw the issue coming long before the recent witch hunt, and did the right thing.

I think as a burgeoning social problem, it can definitely be likened to what the fast food chains are now penalised for. And as it's a burgeoning problem, there are probably no (edit - meaningful long-term) research projects to explore the link between free to play marketing and gambling problems later in life, but I'd be surprised if there's no link there.

I think it would be remiss of any organisation to call for a total ban, just as it would be for any group to call for a ban on cake... But I do think laws prohibiting the offering of in-game products to certain age groups, for cash should be considered.

Beyond that though, I think loot boxes and in-game economic structures are fair... ummm... game...

Cake at least has a natural limit, you'll be physically sick. Loot boxes the physical limit is probably going to make everyone who isn't Bezos poor.
I agree wholeheartedly with the concerns about gambling.

I have another concern to toss on the pile while I'm at it though. This what-if was presented by Bellular a few days back: (TL;DR: The profit ratio for microtransactions is orders of magnitude larger than expansions)

Assuming a new WoW mount:

- Takes about 1 man-year of effort to create, costing the company $200,000

- 10% of the player population will purchase the mount at $25

- WoW has approximately 4M active players

That mount just made Blizzard/Activision $10M, at a cost of 200,000. That's a profit/cost ratio of 50:1.

It gets even worse when you factor in loot boxes. New mount has a 1% chance (which is very high) and loot boxes are $1 each? That's going to net (a very approximate) $40M in profit for that one new mount, raising the ratio to around 200:1.

Let's compare that to releasing a new expansion:

- 100 man years of development effort (a team of 50 for two years, probably on the low side)

- $10M in marketing budget and other overhead

- 4m players purchase it at $40 each

That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1.

Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players. How will that impact our games going forward?

> Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players

This model is prevalent in mobile gaming as well. Many popular games have IAP of $50 - $99, that you can buy multiple times per month, which is targeted more towards a 1% than a 10%.

> How will that impact our games going forward?

I think it affects many industries. Real estate is one of them. I've lived in a few cities with rising real estate costs where the majority of new mid-rise apartments are luxury, clearly priced towards those 10% or less.

People who have money, want as much money as possible now, at any future cost. This is simply the general outlook of many businesses at the moment. Of course, this is unsustainable, and it will probably crash at some point.

> That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1.

This doesn't consider the immense second order effects of releasing an expansion. Releasing a new expansion maintains and increases player engagement - i.e. monthly subscription fees. Without new expansions to keep the player base engaged, players won't purchase cosmetic additions like mounts.

> "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said.

Perhaps contrary to the author's point, the ability to reap rewards by defrauding players regarding probabilities of payouts seems to imply some rationality in purchasing the loot boxes.

> "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this."

In all things there is often a short-term benefit to be derived from lying. It doesn't necessarily then follow that "there must be regulation around" all things.

Obtaining money by deception is already regulated: it's fraud. People publishing deliberately inaccurate lootbox odds should be prosecuted and given, at the very least, a criminal record and large fine.
> It doesn't necessarily then follow that "there must be regulation around" all things.

The industry has proven that it can't regulate itself. The consumers can't push back against it, because the industry is becoming self-sufficient by only preying on a small minority of the users and doesn't appear to care about the others.

What's the logical next step that isn't regulation?

Life itself is also life or death
Its also life-or-death for much of the game industry. The same way most restaurants and fast food chains wouldn't be able to exist without "cheap tricks" targeting primitive brain circuity (e.g. MSG, sweeteners, frying), most game studios would not be able to survive based on box sales alone. They need a skinner-box to extract more money out of people. Creating a game that is compelling enough to extract ever-increasing value out of people based on content, quality, and narrative alone is extremely difficult. Making a "random loot box" system is extremely easy and pays far more, even though its the "easy way out". Of course, like fast food and cigarettes / drugs, the consumers also bear responsibility. Rather than supporting "clean" games with something noble to offer, the games that exploited these tricks virtually printed money, while the "old timey" approach of spending years making a quality title gave way to the more casino-like interactions we see today. The truth is fast food, drugs, and gambling are just more fun than home-cooked nutritious meals, healthy habits, and deep/challenging engagement.

Pretty much everything fits these patterns of reduction to the basic animalistic appeal: movies, music, clothing/attire, dating apps, even our politics. Its just easier and more effective to appeal to the limbic system than to figure out something new and profound.

>most game studios would not be able to survive based on box sales alone.

Where are you getting that? It's the basis of your entire argument and there's nothing to back it up. The loot box model is relatively new and we have a plethora of successful games (most) which don't use them at all.

This has been proven false multiple times, including EA explaining to their investors that removing lootboxes from Battlefront 2 had no material impact on the profitability of the game.
In 1999, I could go into a game shop and pay £40 for a finished game with a story.

In 2019, it costs £60 (or more for a "gold edition" or whatever). It isn't finished, has colossal bugs that require 50 GB patches just after launch, barely has a story (because listening to 13-year-olds shout ethnic slurs at one another is the new having a well-written story—and every developer thinks stories are passé and we all want "Live Services") and then tries to use psychological tricks to try and induce a gambling addiction.

I opt out and play the old games from the 90s and early 2000s that don't do all this BS.

Games that dont have loot boxes outnumbers the ones that do. And there are definetely very good aaa examples in such games. Those games/companies survives just fine.

And it is not like all games that have loot boxes games are f2p game. Quite a bit of them are full price games + lootboxes

they could survive on box sales alone, but they would have to change back to what they used to be.

edit: And let me point out, you can make money online without lootboxes, plenty of companies do, so it's not as if the revenue stream completely disappears.

They could just charge more for the games. Video games used to be a lot more expensive in the 1990s and people still bought them.
Whatever happens with WoW Classic will echo across the industry.