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Self-regulate loot box mechanisms - while you still can

As European states begin ruling against loot boxes, this is the industry's last chance to prove it can be trusted to regulate itself

Back at the start of January, prompted for a prediction for a major event that would hit the games business in 2018, I pointed at the slow but steady rumbling about loot boxes and real-money transactions that's been coming from various different governments around the world. As the industry has cast about for new business models to fund its products, it was inevitable that it would try out some things consumers detested, and fairly likely that it would hit upon some ideas that would give legislators and regulators pause; with loot boxes, it seems, we have reached the crucial point where those two things intersect.

This week both the Netherlands and Belgium ruled that certain implementations of loot boxes in high-profile console games are in breach of gambling regulations, and made note of being pretty unhappy with other implementations, too, even though those don't technically breach the rules at present. Investigations in other European countries are underway; the similarity in the Dutch and Belgian rulings suggest that the outcomes in many other countries will be equally unfavourable.

"The similarity in the Dutch and Belgian rulings suggest that the outcomes in many other countries will be equally unfavourable"

There is absolutely no joy in an "I told you so" at this juncture, because for all that a vocal set of consumers despise these business models - and even acknowledging that I personally find them distasteful and exploitative - it's a sobering reality that quite a lot of games industry jobs, and even some entire studios, rely on the revenue these systems create. It's not as simple as saying, "if these systems are banned, X number of jobs will be lost"; there are ways to mitigate the impact, options studios and publishers can pursue, backup plans wise managers will be working on now. That doesn't change the fact that the Dutch and Belgian rulings, and the likelihood of these rocks preceding an avalanche, are very serious indeed and are going to create instability, stress and heartache for plenty of people across the industry.

Taken in isolation, the judgements don't seem all that troubling - a headache for certain companies and products, sure, but nothing earth-shaking. The Netherlands and Belgium are decent-sized markets, but not so big that being banned from them would seriously impact a major publisher's bottom line. And the rulings are specific to a sub-set of console games implementing loot boxes in very specific ways.

The real fear, of course, is that these judgements precede the emergence of a cross-European consensus against loot box mechanisms, something which both governments hinted at in their statements. While regulations on gambling differ significantly across EU member states, there are points of commonality both in law and in political will. And with the United Kingdom, often a strong advocate for a more laissez-faire approach to business regulation, losing its voice within the EU next March, the possibility of European regulation of industry business models needs to be taken very seriously.

There are two key aspects of the judgements that should give the industry particular pause. The first is that while they refer specifically to a small number of console games - reflecting the fact that legislative and regulatory interest in these systems has been spurred by consumer backlash to these systems in console games such as last year's Star Wars: Battlefront 2 - the adjudications could be applied pretty seamlessly to a lot of smartphone games. Certainly, the core reasoning being applied here is threatening to a lot of smartphone game business models, and it's likely that any cross-European consensus on regulation would end up ensnaring mobile games alongside the console games that are the current target.

"It's time to get cracking on Plan B... Know how you would step away, if you suddenly found yourself forced to do so"

The second aspect is less technical and specific, but arguably far more worrying for the industry. Both adjudications made a very prominent point of calling out the appeal of these systems to minors, the lack of any major effort on the part of game companies to keep gambling-like systems out of reach of minors, and the fact that this greatly deepens the seriousness of the issue from a regulatory point of view.

Moreover, it was emphasised in both cases that even where games didn't technically step over the line of "gambling", the regulators were concerned about the potential impact on minors of the "gambling-esque" systems being employed - implying that there is scope for tougher rules on these kind of random-draw gameplay systems and business models for titles which are accessible to children. That in itself is concerning; what is perhaps more concerning is that the judgements in both jurisdictions were very much in sync on this point, suggesting that other regulators around Europe are quite likely to reach similar conclusions.

That's where this issue starts to cross over from being a potential legal headache into being a potential political minefield. The games industry will lobby to protect its business interests, and it'll have some reasonable points to make; after all, while loot boxes may cross lines in a few places, there's scope for self-regulation (though realistically, that should already have happened, and the industry's frankly dismissive response to these issues thus far - especially in the United States - bears much of the blame for this situation having reached the point of government intervention).

Games are a big business in Europe, with many countries having successful development industries that employ a lot of skilled staff (though again, the loss of the UK's voice in this regard is unhelpful at this juncture, as it's the country with by far the most to lose from regulations that harm the games industry). A compromise solution that essentially amounts to the EU avoiding potential commercial damage to the games business in return for industry promising to regulate its own behaviour seems like something that could be accomplished, especially since the Netherlands' adjudication seemed to be strongly hinting in that direction already.

"The window for agreeing a code of self-regulation before regulations are imposed from above is rapidly closing"

The problem is that both judgements make this explicitly about minors, and that's where the politics starts to look very thorny. Here's the reality: if this is escalated to the point where governments and the EU itself start to get seriously involved in the question of regulation or legislation, they're going to get trapped in a political situation in which acceptance of industry self-regulation simply will not fly. The narrative will be, 'here are these businesses, primarily American businesses, which were making money by getting European kids addicted to gambling'. It will permeate the media discourse around the topic, and leave politicians with no choice but to take firmer stances than they might personally wish or than might be economically sensible.

As much as we may all fret about the danger posed to industry jobs by heavy-handed regulation, there's simply no way that some games industry jobs being lost is ever going to outweigh the political expediency of making a strong example of the business if and when this ever becomes a political rather than a legal (and bureaucratic) question.

What this means for the industry is twofold. Firstly, it's a little late in coming, but the industry's bodies need to get their damned act together and start working on a genuinely solid set of self-regulation rules and frameworks, because the best (and possibly only) way to get ahead of this mess before the stones Holland and Belgium have sent rolling downhill turn into a landslide is to have a good, firm self-regulation system in place and dealing with the problem before the EU's regulators come knocking.

Secondly, for individual companies who have skin in the game - those whose games depend to some degree on loot boxes or on any random-draw mechanisms that look like gambling when squinted at in a dim light - it's time to get cracking on Plan B. Perhaps the regulations (imposed from within or without the industry) will give your games a pass; but perhaps they won't, especially if this turns into a politically contentious topic. Even if you don't step away from those mechanisms now (and it would be sensible to at least make them optional or secondary in new games being brought to market over the next year or two), at least have a plan of action. Know how you would step away, if you suddenly found yourself forced to do so.

I maintain that this may, ultimately, be a positive for the games business. Constraints breed innovation, and all too much of the industry's output in recent years has been narrowly focused on pursuing this very specific set of tightly targeted monetisation models down what is quite likely a blind alley, especially in terms of audience growth and diversity. In the short to medium term, however, this has the prospect of escalating into a full-blown crisis for many companies.

The window for agreeing a code of self-regulation before regulations are imposed from above is rapidly closing. The industry needs to act now.

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Latest comments (27)

Klaus Preisinger Freelance Writing A month ago
Age restrictions will split the user base, reddit threads about adults having unfair advantages will do the rest. The only cosmetics argument will only last for so long, after all, visuals are everything, online and in daily life. People do not wear sacks for clothes, claiming fashionable clothing was an optional cosmetic addition to their everyday look.

It would also be foolish to argue loss of employment. By that line of reasoning all drugs should be legal and dealers not prevented from making a living by the police.

After the f2p craze, subscription models might have more life in them than most people give them credit for, when it comes to post launch revenue.
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Ian Griffiths Game Director, HutchA month ago
@Klaus Preisinger: They're not doing anything about f2p, just loot boxes and even there the rules aren't clear yet.

It wouldn't be foolish to argue loss of employment, governments care about business because it contributes to tax income. I'm confused as to why you conflate illegal drugs with f2p, there's no evidence of harm and there's no major social impacts so it's a false equivalence.

The 'f2p craze' isn't over, it's started and getting stronger. Just look at Fortnite, a game that cost little to make just generated $223 million in a month. Free-to-play across mobile, console and PC is huge business, I don't know why you think it's going anywhere.
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Brian Lewis Operations Manager, PlayNextA month ago
What I have not seen (reference anyone) is the specific details that were determined to make these lootboxes fall under the gambling law. For example, how did they justify that Overwatch lootbox items have a value (other than the cost of the lootbox) as the items can not be traded or sold? This determination is one (of a few) that could drastically change the way any items in any game are considered.

In the past, lootboxes were not legally gambling, due to how the law interpreted them. It is important to understand what has changed, as it affects much more than just lootboxes.
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Klaus Preisinger Freelance Writing A month ago
What I have not seen (reference anyone) is the specific details that were determined to make these lootboxes fall under the gambling law.
https://www.koengeens.be/news/2018/04/25/loot-boxen-in-drie-videogames-in-strijd-met-kansspelwetgeving

Google translate is quite good with Dutch and the press release from the justice minister is quite specific in pointing out offending gambling mechanics found in lootboxes.
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Ian Griffiths Game Director, HutchA month ago
From what I hear there is a 26 page summary of it somewhere. It sounds like they ignored the expert advice they were given when putting together the report. They only looked at four games and it's not clear exactly why these are considered illegal, it certainly does suggest that many more things might fall under this definition. Additionally, it looks as though the ruling isn't final yet so there's still more to come.
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Klaus Preisinger Freelance Writing A month ago
https://www.gamingcommission.be/opencms/opencms/jhksweb_en/law/law/

Relevant Highlights:
games of chance: any game by which a stake of any kind is committed, the consequence of which is either loss of the stake by at least one of the players or a gain of any kind in favour of at least one of the players, or organisers of the game
This is the important definition, wherein it is not necessary that the player wins back anything of monetary value, which is often brought forward as a necessity by American companies. The Website itself admits 'The definition of games of chance is very wide.'

-xxx-
bet: game of chance where each player makes a stake and that results in gain or loss which is not dependent on the acts of the player but on the occurrence of uncertain events that occur without intervention of the players;
This is usually what proxy currencies try to work around, but since every casino has its proxy currency, it might as well be Euros instead of gems, coins, or rubber ducks.

-xxx-
Article 3. The following are not games of chance within the meaning of this Act:
[...] card games or board or parlour games played outside class I and II gaming establishments and games operated in attraction parks or by industrial fairgrounds
Lobby hard here for video games before arguing trading cards.

-xxx-
Article 4.
§1. It is prohibited for anyone to operate in any form, in any place and in any direct or indirect manner whatsoever, a game of chance or gaming establishment, without a licence
Licenses, gods way of eliminating unlicensed competitors.

-xxx-
There may be played in class II establishments only those games of chance where it is established that the player cannot on average sustain a loss greater than 25 euros per hour.
Spending caps are normal procedure within these gambling laws.

-xxx-

Sure, the political process starts now, when it could have started years ago but did not. However ignorance, does not equate to legalization of something. Yes, it starts with a handful games, when there are so many more, but if you try to make the first report evaluate all games with lootboxes there are, you will never get done. No commission is going to let itself troll that way.

Edited 2 times. Last edit by Klaus Preisinger on 28th April 2018 7:59am

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Ian Griffiths Game Director, HutchA month ago
@Klaus Preisinger: I appreciate you looking into the details. I can imagine that loot boxes would want to be considered under article 3.

I don't see why it wouldn't be trivially easy to turn these into games of skill.
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Ron Dippold Software/Firmware Engineer A month ago
@Brian Lewis: I know, FIFA's had this forever. All that changed was the particularly naked abuse by several major game publishers at once which brought attention to it. Specifically SW:Battlefield II, but at the same time others like WB got particularly greedy. It's just the spotlight being shined where there's noise.

(The rest of this is not specifically aimed at Brian)

The legal figleaf that lootboxes aren't gambling was a particularly thin one, because they are gambling in every way that counts. Game companies love them precisely because they ruthlessly exploit every risk/reward/dopamine weakness in the human primate brain in exactly the same way casino gambling does, but worse. You're paying real money for a pull at the virtual slot machine lever because the game turned the screws on you, and the chances of you getting what you really want are much less than at a casino. We know what has real value to the player, and we give them out at an extremely low drop rate. We bury them in unwanted trash drops and claim that's 'value' that was worth the real money they paid.

The game industry is That Guy in the Fedora going 'Actually, technically, it's legally not gambling' - it's dirty, it's disingenuous, and it doesn't hold up to external scrutiny at all. It counted on nobody caring enough to look. Which is exactly what Fahey is talking about.
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Christopher Dring Publisher, GamesIndustry.bizA month ago
I'm not sure whether it's gambling or not really matters. Consumers don't like them and certain games are attracting unwanted attention from legislators. As a collective industry we ought to follow the same processes that we do with our GaaS titles. Listen to the feedback, react accordingly, put some rules in place, and - if needed - return to the monetisation drawing board once again.
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just give us normal games as a service - with a full retail pack, and full experience. dun dun dun done
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Ian Griffiths Game Director, HutchA month ago
@Ron Dippold: I think the draw of loot boxes is more than just 'getting what you want'. The fun of not knowing is part of it.

It's not disingenuous to say they're not gambling because they don't seem to have the same impact as gambling. You say this doesn't hold up to scrutiny but we are yet to see someone show that loot boxes have the same impact as gambling. I cover this in some detail here - http://www.gamasutra.com/blogs/IanGriffiths/20180215/314677/Much_Ado_About_Loot_Boxes.php
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Ian Griffiths Game Director, HutchA month ago
@Christopher Dring: Consumers do like them, we can see this because lots of consumers play games with them and purchase the loot boxes. Now, a lot of people dislike them but it's the extra revenue that keeps more and more game companies alive, or at least give them a better chance of success.
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Shane Sweeney Academic A month ago
@Ian Griffiths:
I'm confused as to why you conflate illegal drugs with f2p, there's no evidence of harm and there's no major social impacts so it's a false equivalence.
Showing how actual gambling negatively impacts children isn't very conclusive either. We understand certain people get too carried away on pokies and f2p but does it specifically impact children negatively during there development?

Hard to say, it's possibly not great - but the reason gambling isnt legal for children isn't over a perceived healthrisk. It's because adolescents are more likely to take risks and have problems with impulse control because the part of their brain that drives emotion develops before the part of the brain that processes complex information.

Children gambling is largely illegal on its unethical and exploitative nature then any implied health concerns. At the heart of the ‘loot box equated to gambling argument’ is a social concern that leans more on its exploitative nature then any measure of direct harm.

In that context proving harm wont be necessary and disproving harm isn’t a smoking gun. Further to that point, dwelling on proving how harmful or not harmful loot boxes are could lead to further misunderstanding as to why the public is upset.

Edited 3 times. Last edit by Shane Sweeney on 30th April 2018 7:59pm

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Ian Griffiths Game Director, HutchA month ago
@Shane Sweeney: There is evidence on the harm of drugs but f2p shows no similar impacts. So it's still a false equivalence. The comparison to illegal drugs wasn't about children, it was about everyone - illegal drugs are illegal for all so I'm not sure why you've moved the goal posts here.
Showing how actual gambling negatively impacts children isn't very conclusive either.
Showing how something affects a group that you want 'protect' is vital to understanding the problem. We limit gambling for children precisely because of the risks of harm. Brain development is complex and not well understood but suffice to say, we want to protect children from potentially addictive interactions, be that drugs or gambling.

I never mentioned health, I mentioned harm. In the main there's nothing about loot boxes that is particularly more exploitative than any other economic activity, there's certainly no evidence that loot boxes hold the addictive potential of gambling.

Disproving harm is most definitely a smoking gun because that goes right to the heart of whether something is ethical. We absolutely should have a minimum standard of harm when looking to restrict some given action that the majority have no issue with. For example, while a number of people are shopping addicts, we don't shut down all retail spending - we balance the benefits of the many against the problems of the few.

The 'public' isn't a homogeneous group with a singular voice. Some consumers are upset with loot boxes and they can choose to opt out by not buying loot boxes or not buying the games with them in. We shouldn't be advocating for ignorance, we shouldn't ignore data, the more we learn about an issue the better we understand it.
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Klaus Preisinger Freelance Writing A month ago
The fact that children are even brought up in this discussion at any point should be the gravest of alarm signals.

99% of the time when gambling restrictions are discussed in front of a political panel, you hear the stories about how even legalized gambling hurts families because the father is gambling away money. Reports of how grown men in their 40-50ies spend 100€ before 10 in the morning, which is considered troubling by panels even when the victims of gambling mentioned have the money to do so. That is before we get into all the aspects of money laundering involved and your corner of the street legal gambling parlor does not operate closed database crypto currencies. So yes, political ignorance is the industry's bliss at the moment.

If the video game industry wants to escalate this to a new level, then by all means, roll out stories of how there are no studies about the damage gambling has on children. You will get blank stares from politicians. It is like asking for a study about the damaging effects of dropping nuclear bombs on a kindergarden. Sure, there is no study about that, so technically we do not know what would happen in a truly scientific sense, if we dropped those bombs. Could be ash, could be a generation of Bruce Banners.. So how about we double-blind drop nuclear bombs on kindergardens until we reached 5 sigma? At the other extreme end of the spectrum we have the vaccination deniers. So whatever any study on the effects of gambling on children concludes, it might not matter anyway.

Any attempts of 'why are they getting away with it', e.g. trading cards, will be shut down in half a sentence that goes a little bit like 'thank's for your input on that, we get to them after we are done with you'.
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Keldon Alleyne Strategic keyboard basher, Avasopht LtdA month ago
Ian Griffiths: Consumers do like them, we can see this because lots of consumers play games with them and purchase the loot boxes.
That's like saying consumers like being overcharged for hoover parts because lots of consumers buy hoovers with overpriced hoover parts.


Now, a lot of people dislike them but it's the extra revenue that keeps more and more game companies alive, or at least give them a better chance of success.
It's not the only way games companies can earn money, so there is nothing special about this method, it is merely what is current.


In the main there's nothing about loot boxes that is particularly more exploitative than any other economic activity, there's certainly no evidence that loot boxes hold the addictive potential of gambling.
It does need to have the exact-same-to-the-measure level of addictiveness to be a problem. Nevertheless what we know about the psychology of gambling is that the mere mechanism alone is somewhat addictive, and also an easy tool for ... wait for it ...

... manipulation.

If it follows that mechanism (which it does), then it's a powerful tool for manipulation and for creating at least slightly addictive behaviours. I mean, let's be completely honest, loot boxes are not used in not manipulative ways.

They wouldn't be an effective method of extracting money from players if they weren't exploiting various behavioural biases and cognitive / behavioural shortcomings, such as sunk cost fallacy, our slight addiction to random rewards, and how we make purchases with clear information asymmetry (and there is plenty of information asymmetry here, otherwise they'd indicate likely total cost of completion).

Edited 4 times. Last edit by Keldon Alleyne on 30th April 2018 10:39pm

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Shane Sweeney Academic A month ago
Society doesn’t form opinions on just harmful activities it often forms it on fairness. Legislation is formed on the back of public opinion. We can pretend that proving harm is the bar, but if that was the case we wouldn’t have legally enforced age restrictions on video games / films in most countries if certainty of harm were required.

Digital loot boxes are more exploitative then other economic activities as additional purchases are one button press away, in the hands of those with undeveloped impulse control. A long shot to repeat visits to the local news agent to get another deck of cards. Harmful or not it crossed a line and became perceived as exploitative.

As Chris pointed out, we should listen to the public’s feed back, react accordingly and put some rules in place. Claiming there is no proof of harm and changing nothing misses the point and will just get us even more regulated.
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Ian Griffiths Game Director, HutchA month ago
@Klaus Preisinger: Children appear in lots of subjects from who should play certain games to when we should go to sleep. That we talk about these things is not indicative of a problem.

I'm not saying gambling isn't damaging, I'm saying the evidence suggests that loot boxes aren't the same as gambling. Your nuclear bomb example is ridiculous because here what you claim is going on is actually going on. If they are damaging - where is the damage?
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Ian Griffiths Game Director, HutchA month ago
@Keldon Alleyne:
That's like saying consumers like being overcharged for hoover parts because lots of consumers buy hoovers with overpriced hoover parts.
You involve a qualification of being 'overcharged' which puts it into a different space. I'm saying the example is like saying that people hate vacuum cleaners because they are expensive to fix.
It's not the only way games companies can earn money, so there is nothing special about this method, it is merely what is current.
It's not the only way to make money, but it is an effective way to do so. My point was that without the money a number of studios might struggle to operate or survive.
It does need to have the exact-same-to-the-measure level of addictiveness to be a problem.
You're right it doesn't need to be the same impact to be a problem but it does need to have enough of an impact for the balance of legislation to be necessary.
Nevertheless what we know about the psychology of gambling is that the mere mechanism alone is somewhat addictive, and also an easy tool for ... wait for it ...

... manipulation.
We know that variable rewards can be powerful with animals, yes, does that overpower human agency with the power to leave is another question. Games use variable rewards and yet they are not addictive. Humans clearly have the power to overcome such weak operant conditioning in a free environment.
They wouldn't be an effective method of extracting money from players if they weren't exploiting various behavioural biases and cognitive / behavioural shortcomings, such as sunk cost fallacy, our slight addiction to random rewards, and how we make purchases with clear information asymmetry (and there is plenty of information asymmetry here, otherwise they'd indicate likely total cost of completion).
Why wouldn't they be? There's a problem with the use of the word 'exploit' here, it lacks nuance of gradation. For example you can exploit a person, bad, or you can exploit that your work doesn't start until just after your morning run, not bad. Every economic action exploits that we 'want' things, this isn't a bad thing despite the fact we use the word 'exploit'.

Most of what we see as shortcomings aren't necessarily so. The sunk cost fallacy isn't necessarily a fallacy, that's just an idea. How many scientific breakthroughs wouldn't have occurred if we stuck to such an idea? Humans aren't 'addicted' to random rewards. Information asymmetry is an absolute result of a random system, though showing drop rates is fast becoming the norm.
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Ian Griffiths Game Director, HutchA month ago
@Shane Sweeney:

Society doesn't operate as a homogeneous group either. The history of humanity shows that opinions are rarely formed on reasonable notions of fairness; from burning witches to Stalinist collectivisation we can see we're pretty bad at this.

We have age ratings precisely because of potential harm. In many countries age ratings aren't legally binding in the home but instead a guide, it's a tool for parents to understand what content is in a film or game.
Digital loot boxes are more exploitative then other economic activities as additional purchases are one button press away, in the hands of those with undeveloped impulse control. A long shot to repeat visits to the local news agent to get another deck of cards. Harmful or not it crossed a line and became perceived as exploitative.
In your example digital lot boxes are no different to many forms of shopping on the internet. People with undeveloped impulse control don't have credit cards or access to borrowing. A person could just as easily spend all their money in a shop, how many of us have enough cash to cover an entire shop's inventory? It hasn't been perceived as exploitative by all, the UK government have said they don't need new rules for loot boxes.
As Chris pointed out, we should listen to the public’s feed back, react accordingly and put some rules in place. Claiming there is no proof of harm and changing nothing misses the point and will just get us even more regulated.
It doesn't miss the point, it is the point. Legislation without proof of harm is bad. Look at how much the public rallies against the illegal status of cannabis, a drug that to my knowledge has a death toll of zero (not that I'm advocating people using any illegal drugs). When legislation restricts freedom without proof of a benefit or evidence of harm then it's bad legislation.
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Shane Sweeney Academic A month ago
There has never been conclusive proof that young people exposed to any media causes harm. Nor have you cited any, even if it was possible (which I doubt) it's too difficult to prove without child experimentation. The same is true for children gambling, and countless other things. It's not proven it's just accepted - a shared reality, and here we are finding it illegal. The fact cannabis is illegal is exactly my point to how regulation actually passes. You might be able to fight at the High/Supreme Court based on harm, but legislation *will* pass on the whims of politics. It doesn't matter whether you think it's bad or not.

I agree that in some countries age ratings are used only as a guide and are not legally enforced. This is also my point, if the industry had brought in ratings earlier instead of arguing that video games caused no harm, we would have less countries with legal regulation. That's also what we all want to avoid.

The random Skinner box mechanic is obviously the concern in traditional gambling, if the outcome is certain like in shopping then gambling wouldn't exist.
Comparing online shopping and gambling is obviously not a serious comparison. Their isn't talk of regulating DLC which is more akin to shopping, it's the Loot-box random drop mechanic combined with one click buy that has brought the attention. I agree it's a thin line, but at the end of the courts that line won't be defined by provable harm.

Edited 1 times. Last edit by Shane Sweeney on 30th April 2018 11:43pm

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Keldon Alleyne Strategic keyboard basher, Avasopht LtdA month ago
@Ian Griffins
You involve a qualification of being 'overcharged' which puts it into a different space. I'm saying the example is like saying that people hate vacuum cleaners because they are expensive to fix.
My point is that the fact people are buying games with loot boxes in them is no more an indication that people like loot boxes (since that is not the primary product) any more than people are buying games for having scrolling credits at the end.


My point was that without the money a number of studios might struggle to operate or survive.
There are lots of mechanisms studios or other businesses might not operate or survive without. There is nothing inherently special about lootboxes. Naturally people will fight tooth and nail for them because it benefits their business interests.


Humans clearly have the power to overcome such weak operant conditioning in a free environment.
And yet we don't.

Most of what we see as shortcomings aren't necessarily so. The sunk cost fallacy isn't necessarily a fallacy, that's just an idea. How many scientific breakthroughs wouldn't have occurred if we stuck to such an idea?
Benefits that result from a behaviour makes it no less of a cognitive shortcoming.


Information asymmetry is an absolute result of a random system, though showing drop rates is fast becoming the norm.
The problem isn't merely in there being information asymmetry in random systems, but in the actual sale. In effect we're pricing a product at $X, knowing the likely total cost of completion is $X + $Y(+/- $Y).

The whole point of the mechanism is to conceal the total cost of effective ownership, while also placing it behind a commitment of high involvement from the consumer. Is that really not what's going on here?
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Ian Griffiths Game Director, HutchA month ago
There has never been conclusive proof that young people exposed to any media causes harm. Nor have you cited any, even if it was possible (which I doubt) it's too difficult to prove without child experimentation. The same is true for children gambling, and countless other things. It's not proven it's just accepted - a shared reality, and here we are finding it illegal.
Experimentation would be unethical but children have reported distress and this is conclusive evidence of harm, though everyone responds differently. In any case, as I said many of those laws seem to be advisory for parents. We do have evidence of harm with children who gamble - https://www.theguardian.com/society/2017/dec/12/children-britain-problem-gamblers-report

However, this isn't about children, this is about restricting something from everyone, which should require evidence of harm.
but legislation *will* pass on the whims of politics. It doesn't matter whether you think it's bad or not.
That legislation is passed without a solid basis doesn't mean that it's good, that's my whole point.
Comparing online shopping and gambling is obviously not a serious comparison.
Why not? Both take money and have addicts, that's pretty similar to what you are objecting to loot boxes. The point is that the extent of a problem matters as to how seriously we should take the problem.
Their isn't talk of regulating DLC which is more akin to shopping, it's the Loot-box random drop mechanic combined with one click buy that has brought the attention. I agree it's a thin line, but at the end of the courts that line won't be defined by provable harm.
Maybe they won't, but they should.

Ultimately I think monetization designers will find ways around all of this so while loot boxes might change in some way, I would expect to see similar features very much sticking around.

Edited 1 times. Last edit by Ian Griffiths on 1st May 2018 9:40pm

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Ian Griffiths Game Director, HutchA month ago
@Keldon Alleyne:
My point is that the fact people are buying games with loot boxes in them is no more an indication that people like loot boxes (since that is not the primary product) any more than people are buying games for having scrolling credits at the end.
Having worked on many of these games I've seen enough feedback to suggest that a non-trivial number of players like loot boxes. However, you're right it doesn't mean everyone does, though unlike credits they're normally core to the game.
Humans clearly have the power to overcome such weak operant conditioning in a free environment.
And yet we don't.
That's a lab test, again, as humans we have agency and the ability to walk away - we can overpower these systems.
Benefits that result from a behaviour makes it no less of a cognitive shortcoming.
I'm suggesting these aren't shortcomings precisely because of the benefits they have driven.
The problem isn't merely in there being information asymmetry in random systems, but in the actual sale. In effect we're pricing a product at $X, knowing the likely total cost of completion is $X + $Y(+/- $Y).

The whole point of the mechanism is to conceal the total cost of effective ownership, while also placing it behind a commitment of high involvement from the consumer. Is that really not what's going on here?
Some loot boxes might be trying to 'conceal' the cost of ownership although in most cases ownership for most would rise is people could purchase items directly. It is an interesting notion, we sell loot boxes and part of what that is the experience of the loot box - the excitement of the unknown can be palpable. That's something you don't tend to get with a direct purchase.
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Keldon Alleyne Strategic keyboard basher, Avasopht LtdA month ago
Having worked on many of these games I've seen enough feedback to suggest that a non-trivial number of players like loot boxes.
Like loot boxes, you say? Please elaborate just so we're clear.

For instance, if they just enjoy the mechanism (without money being involved) then great, you've found an enjoyable mechanic.

But if instead their enjoyment of the mechanism requires a cost to be liked / enjoyed, then we again have to ask ourselves exactly what sort of mechanism we are engaging with.

That's a lab test, again, as humans we have agency and the ability to walk away - we can overpower these systems.
I'm sorry, but how does it being a lab test invalidate the fact that it captured human behaviour? And even if we can overpower these systems, Ian let's be honest, most people struggle to resist a Snickers bar on their diets to fit into their wedding dresses (or after the doctor has told them they have diabetes). Yes, people have agency, but let's not pretend it's anywhere near absolute agency, or that it's immune to manipulation.

Some loot boxes might be trying to 'conceal' the cost of ownership although in most cases ownership for most would rise is people could purchase items directly.
Sure, and nobody is debating that. So long as we are happy to admit it is trying to conceal the cost.

No doubt people will experience excitement during the process. This is all in line with decades of study. But if their enjoyment of the mechanic requires real money to be enjoyable then you have to ask whether we are merely dealing with re-engineered gambling mechanics.

Note, I'm not here to say that all things about loot boxes are bad / evil, I just like to be candid about these things.
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Klaus Preisinger Freelance Writing A month ago
Even on topics where a plethora of studies pointing in the same direction exists, humans tend to turn scientific prediction into a matter of belief which allows them to freely believe in the outcome they prefer for reasons of personal convenience. Cmp.: climate change, vaccinations, smoking, nutrition. So even if politicians will regulate according to studies, the opinion about it inside the industry is unlikely to change, since scientific fact is very likely inconvenient and people do not like to offer their belief to inconvenient belief systems. Have you ever heard of a major religion without life after death? Not happening, too inconvenient.

The video game industry is in a special position in this matter. Deny climate change and you may get flooded in your lifetime, you may get not. There is no immediate negative effect you experience right after making your decision to deny the facts and predictive sciences. The same is true for smoking, or eating unhealthy, or the negative effects of loot boxes a decade down the road. Deny a game and not only do you not get punished for it, you can immediately reward yourself with the next game which does conform to your random belief. E.g.: I do not have fun with this game having loot boxes, so I buy the next which hasn't any, hurray, I have fun now, let's make a Youtube confession about it. This example works just as fine vice versa, so it is not surprising where publishers put their stakes.

So you have a group of people who have their quasi-religious beliefs confirmed almost immediately and suffer no immediate consequence for every folly they are talked into by PR. They all live together in a society where personal convenience is the big selector for what gets supported ideologically.

At this point a politician will realistically guess that stopping lootboxes is near impossible, since way too much personal belief is involved, no matter whether that belief is nonsensical or not. As long as the industry in question settles to leave minors out of it, the sale of products with undetermined effects continues. That is the typical quid pro quo. It usually even continues long after studies have come around to show that basically nobody who seeks to remain healthy should ever consume the product in question.
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Ian Griffiths Game Director, HutchA month ago
@Keldon Alleyne: Yep, people like buying loot boxes with real money.

I'm not saying the tests are invalid, I'm saying agency gives us the power to overcome. Again though the test was looking at gambling and there seems to be something non-trivial about money on the impact of gambling in comparison to loot boxes. Loot boxes aren't food either and there seems to be a tiny number of problem cases given the popularity of loot boxes and the impact is small.

I don't agree that in all cases it's about concealing cost but we can disagree there. As I've pointed out, while this may intuitively have some features we associate with gambling the it doesn't have the same negative impacts.

At this point though i think we're just disagreeing about the same thing.
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