Nothing beats the feeling of opening a digital box, crate or pack containing a copy of one of the superrare items available in a game. Targeting the dopamine kicks of players, the video game industry has embraced the business model called freemium many years ago. However, it was only this year that this business model got into a conflict with Belgian regulatory instances.
Freemium essentially means that the video game in question is free-to-play, providing in-game purchases, better known as micro transactions to players in order to unlock features or to get an edge over the opponent. Another application of this business model are the so-called loot boxes. Loot boxes contain items that can be used in-game, varying from cards for card games or weapons for shooters. There’s a chance connected to the rarity of the items inside the boxes. Recently, EA Sports announced their new Star Wars-themed game Star Wars Battlefront II. This game also provides players the opportunity to purchase loot boxes and set a big discussion in motion about the link of these virtual prizes to real-life gambling.
Given that loot boxes can also be purchased by using real world currencies and given the chance factor in the unboxing, the Belgian Gaming Commission ruled that this business model does in fact constitute gambling and should therefore undergo the same regulation.
Ever since this discussion has started, more and more statements about the nature of loot boxes have been made, some even calling it ‘predatory gaming’. Whilst it is unknown whether global legislative actions will be taken against the business model, it is very likely it will have a huge impact on the gaming industry in the foreseeable future.
https://www.econotimes.com/How-Loot-Box-Regulations-May-Affect-the-Video-Game-Industry-1422967
Thank you for the interesting blog! I’ve been playing some freemium games over time and I’ve always wondered whether or not the business model was similar to gambling. Although I guess what determines whether it’s the same as gambling, is the value the digital items have in the real world. If you can’t trade the items in real life or exchange them for money – in other words, if it stays within the game – I think it steers away from real life gambling a bit. I wonder what will happen in the future, and I have to admit that I hope that I can still open those chests in my freemium games. Because like you said: nothing beats that feeling (and the disappointment that comes with it in 99% of the times).
Hey Ramon, thanks for your interesting post! It is very interesting to see how videogame developers will have to change because of the new status quo abut loot boxes.
Besides the Belgian Gaming commission, also the Dutch gaming commission ruled that loot boxes are a form of gambling. However, the UK Gaming commission do not rule loot boxes as a form of gambling, they state that the items contained within each pack are only usable within that particular game and cannot be used as real money. I saw that you mentioned Star wars Battlefront 2 as well, because of the huge backlash of the loot box system in this game, the developers vouched to implement it completely differently in their upcoming games of the series (Hoggins, 2018).
However, the FIFA series, another big series from EA sports, refused to change their loot box system after threats of the gaming commissions. EA’s CEO denied that the loot box system of the FIFA series was gambling, as he stated that players of the game always get a specified number of items out of the loot box and they do not provide any way to cash out or sell items or virtual currency for real money (Hoggins, 2018).
I do not think this is the last time we are going to hear from the gaming commissions, as further resistance of the gaming developers will continue. A negative outcome for the game developers will definitely change the whole gaming industry as loot boxes became a vital part in a lot of games.
https://www.telegraph.co.uk/gaming/news/ea-faces-prosecution-belgium-fifa-19-loot-boxes/
Very interesting piece Ramon! Even though I have some experience with the concept of the loot boxes I never really thought about the gambling essence in it. Since games like call of duty also heavily rely on the revenue from micro transactions under which loot crate purchases are categorized, I am curious to see how potential regulations could influence gaming developers’ business models. Regarding Karim’s informed comment, I have to somewhat agree with EA’s stance that their loot system has a basic form of the items that you will receive with no real world monetary value. However, I do believe that the presence of rare cosmetic items in a game introduced through loot boxes present opportunities for individuals that intend to abuse this system and trade accounts with wanted items. It does not necessarily have to do with the mentioned gambling aspect of a game but definitely is a consequence of the luck factor that is involved.