Researchers and people from within the gaming industry are calling for loot boxes or so-called “micro-payments” to be regulated and treated as gambling within video games.
Until the last few years, once you paid the purchase price for your video game, that was it. But as more and more games are exclusively multiplayer online games, it has become common for gamers to be offered the opportunity to spend more money.
Now within the games themselves, people can buy more chapters, items and other things to improve their character and make it easier to compete against other people.
In some cases, there is an element of chance in that gamers can buy a mystery box or item not knowing what they will get.
This feature attracted widespread public attention in late 2017 when EA Games released Star Wars Battlefront II, in which much of the focus was on purchasing crates that would improve a player’s stats in a game.
After massive uproar from gamers, EA eventually backtracked on people needing to buy loot boxes to aid their progression, and blamed the controversy on the game having lower-than-forecast sales.
But the incident drew attention to the increasing number of games that are asking users to hand over more money, and now a Senate inquiry is looking into whether this could be, in some cases, classed as a form of gambling.
Psychology researchers from the University of Tasmania (Dr James Sauer) and Massey University (Dr Aaron Drummond) in New Zealand analysed whether loot boxes met the psychological criteria to be considered gambling. That is: purchasable with real money, accessed after payment is made, provide a reward at least partly determined by chance, and be an optional requirement of the game.
The researchers looked at 22 different loot box systems in console and PC games, and found 10 met all the requirements to be considered gambling, and in four of these games, players could also cash out the money.
In a hearing last month, Sauer said the long-term consequences of loot boxes were not known yet.
“We do not know how or if that will adversely affect players long-term. What we do know is that many of these loot box systems operate on powerful psychological principles that are designed to encourage the repetition of behaviour in pursuit of a reward,” he said.
“These are potent mechanisms that are common in more conventional forms of gambling — the idea of variable ratio reinforcement and delivering rewards on a seemingly random scale that’s designed to keep people playing to try to achieve the reward.”
The Australian Communications and Media Authority (ACMA) chair Nerida O’Loughlin said in a submission to the inquiry that ACMA has received over 35 complaints and inquiries about loot boxes in the last year, peaking in November 2017 with controversy over Star Wars Battlefront II, but that under current legislation games with loot boxes could not be regarded as gambling because the games are not played for money.
“In many cases, the items that may be redeemed from loot boxes do not have any monetary or other value,” O’Loughlin said. “In those circumstances, the loot box clearly cannot meet the definition of ‘gambling service’.”
Paul Newson, the deputy secretary for Liquor and Gaming New South Wales said loot boxes for the most part do not meet the definition of gambling under NSW law because most loot boxes do not offer players the chance to “cash out” or get real-world monetary gain from buying a box.
But O’Loughlin added that in cases where there was a market where people could on-sell items for a higher price and thus make money from it, it was less clear whether it could be considered gambling.
Drummond pointed to the market established for Counter-Strike: Global Offensive, with users able to sell items for anything from a few cents to US$1,800.
ABC News reported in 2016 one Australian gamer charged almost $2,000 on his dad’s credit card on items in the market.
The most common solution, those in favour of regulation argue, would be to use the existing classification system and rate those games with loot boxes with a gambling component as MA15+ or R18+.
Game developers are warning against regulation that would restrain them from including some of these options, however, and could harm game development in Australia.
“Retail prices have been flat for about two decades, so you could argue that they’ve gone down while the development budgets for games have gone into the billions of dollars,” Blake Mizzi, board member of the Game Developers’ Association of Australia, told the Senate committee. “In some cases they dwarf the largest film productions … in-game purchases such as the loot box mechanics you’ve heard mentioned have become a core revenue prop that has made this game industry viable.
“Game developers often rely on a very small … percentage of players to support the majority of the players. These in-app purchases have become viable economics from the principal weapon against piracy as well.”
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