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Why we're headed toward loot box legislation | Opinion

The games industry is poorly positioned to defend itself on this front, and the fallout could impact a lot more than just loot box mechanisms

Looking back at the early 1990s controversy over gaming violence, it's really quite amazing that the games industry avoided legislation in the US.

In December of 1993, leaders of the industry were called before Congress by Senators Joe Lieberman and Herbert Kohl for a hearing on violence in video games, sparked in large part by the notoriety of games like Mortal Kombat and Night Trap. It was an opportunity to show legislators that this was a responsible industry, one united by a sober understanding of the obligations it had to its customers, one that parents could trust to do right by them and their children.

Naturally, it completely botched that opportunity.

Howard Lincoln used his time in front of Congress to attack Sega for allowing Night Trap on the Sega CD

Howard Lincoln used his time in front of Congress to attack Sega for allowing Night Trap on the Sega CD

While the industry was technically united in its desire to avoid legislation and adopt a self-enforced rating system, it was divided on everything else. Retailers like Toys R Us and Walmart didn't even respond to the Senate's invitation to appear at the hearing. There was no trade group for video game publishers at the time, so they were primarily represented by Nintendo of America's soon-to-be-chairman Howard Lincoln and Sega of America VP of marketing and communications Bill White. And rather than put aside their differences for their critical shared interests, White and Lincoln devoted much of their congressional testimony to re-hashing the Super Nintendo vs. Genesis console war struggle then playing out on shelves.

Sega and Nintendo devoted much of their congressional testimony to re-hashing the Super Nintendo vs. Genesis console war struggle then playing out on shelves

Lincoln blasted Sega for allowing uncensored fatalities in the Genesis version of Mortal Kombat and for permitting Night Trap to be released on the Sega CD, saying it "simply has no place in our society" because of its depictions of violence against women. He mocked Sega's assertion that games were no longer just for children. And when Sega's voluntary age ratings system came up, Lincoln excoriated his competitor for taking the step only "when they started getting heat" about Night Trap.

(Lest it go unsaid, Lincoln was addressing Congress to advocate for adopting a self-enforced ratings system because the industry started getting heat about its games.)

As for White, he used his time to note that Sega had taken nearly half of the home console market share since it challenged "Nintendo's monopoly over the video game market" two years prior, to talk about Sega beating Nintendo to the CD format, and to show a prepared video clip comparing Street Fighter II on the Super Nintendo (no content warning) with Street Fighter II on the Genesis (rated MA-13).

The senators were clearly unimpressed. Lieberman closed the session by letting the industry know that he would be introducing legislation mandating video game ratings, and all-but-begged Lincoln and White to make it unnecessary by getting on the same page and adopting their own system before lawmakers did it for them.

Thankfully, the message was received. Another round of hearings was held four months later. By then, the largest players in the industry had the beginnings of a trade group in the Industry Rating Council, represented at the hearings by Electronic Arts senior VP Jack Heistand. It also had an encouraging progress report on how the rating system plans were coming along, noting the expected challenges and limitations along the way.

This largely satisfied the legislators and led to the formation of the Entertainment Software Rating Board, which played a key role in future fights over violence in games in the US. Avoiding government regulation of gaming content in the US stands as one of the greatest accomplishments the games industry has collectively made since its inception. It's also one that the industry seems determined to undo.

History Repeating?

Let's bring this around to the current debate over loot boxes and addiction.

You would think the industry is in a better place to stave off legislation now than it was almost 30 years ago. We have an abundance of industry trade groups, for one, with the Entertainment Software Association advancing game publishers' interests in the US. Like many of its international counterparts, the ESA knows its way around a courtroom and has a pretty good track record at thwarting legislative efforts.

And where the early '90s were marked by in-fighting and petty bickering, the console wars seem to be headed to an era of glasnost, with cross-platform play a reality, Nintendo and Microsoft buddying up, and Sony celebrating its rivals' achievements.

The industry's big players will come together to celebrate games, but apparently not to self-regulate them

The industry's big players will come together to celebrate games, but apparently not to self-regulate them

So why is the industry poorly positioned to fend off current legislative proposals, like the one Senator Josh Hawley announced last week?

Part of the answer lies with the ESA itself. As Variety reported last week, the trade group has been in "disarray" over the last few years, with the actions and attitudes of former president and CEO Michael Gallagher sowing discord among ESA employees and member companies alike. Then there's the ongoing debate about how best to evolve E3, formerly a must-attend staple of the gaming calendar that has seen influential member companies like Electronic Arts and Sony scaling back or eliminating their participation.

Obviously, none of that has helped. But even if the ESA hadn't been dealing with a dysfunctional working environment or uncertainty surrounding its crucial trade show (E3 brings in about half the ESA's operating budget each year), there are more significant factors at play.

Let's quickly go back to Jack Heistand and the 1994 Senate hearings. Heistand testified that the IRC represented a group of seven companies: EA, Acclaim, Atari, Nintendo, Phillips, Sega, and the 3DO company. Those companies collectively accounted for more than 60% of the market, he said.

Nintendo, Sony, and Microsoft are still ESA members so the console market is accounted for, but the dominant mobile and PC platforms -- Google, Apple, and Valve -- are all absent

I asked the ESA how much of the market its 41 member companies represent today, and they didn't have that information handy. That's entirely understandable, given how much gaming has grown in the intervening years. We're over $100 billion annually now, with mobile, console, and PC games thriving in subscription, premium, and free-to-play formats. And while the ESA has some mammoth companies among its ranks (Tencent's participation is a major win), I think it's safe to say the ESA represents a smaller portion of that industry than it used to.

Perhaps more importantly, the ESA represents a smaller portion of the platform holders. Nintendo, Sony, and Microsoft are still member companies so the console market is accounted for, but the dominant mobile and PC platforms -- Google, Apple, and Valve -- are all absent.

When I spoke with newly minted ESA president and CEO Stanley Pierre-Louis earlier this week about his appointment, I asked him about the absence of Valve, Apple, and Google from the trade group's membership.

"Our door is open to any industry players who want to expand the dynamic marketplace for video games," he replied.

The passive approach suggested by that statement isn't good enough, and I certainly hope it's not an accurate portrayal of the group's actions. The ESA should be actively working to bring these companies in, to convince them of the shared interests they have with the ESA and the damage they risk by not coming together on this issue specifically.

As Heistand told Congress decades ago, the participation of such companies is key for a coordinated self-regulatory effort.

"The single most important thing that could occur to bring our industry together lies within the delivery vehicles," Heistand said. "So when a company like Walmart says they will stock rated products only, it makes our job putting together a universal, reliable, responsible, understandable rating system much easier."

Any argument the ESA makes for Google, Apple, and Valve to sign on would be considerably more persuasive if the trade group could show it had its act together on loot boxes

Even if the ESA can figure out some black-and-white guidelines that address concerns about loot boxes without restricting responsible uses of the mechanics (which is already no easy task), it can only rely on the console makers to adopt them. And while consoles have certainly played host to some of the controversial players in this debate, these mechanics and many of the most aggressive implementations of them are coming from the mobile and PC markets, where non-members like Google, Apple, and Valve have more influence.

Of course, any argument the ESA makes for Google, Apple, and Valve to sign on would be considerably more persuasive if the trade group could show it had its act together on loot boxes in the first place. That would mean having reasonable and carefully thought out guidelines for self-regulation that could be applied industry-wide.

Pierre-Louis no doubt has a number of key issues he needs to address in short order as he takes over stewardship of the ESA, but the expansion of its membership to include these companies should be a top priority. In the age of digital distribution, the lines between platform holders and storefronts are disappearing. This should make it theoretically easier for the ESA to enact self-regulation because it would need to convince fewer key parties to jump on board, but it also makes any absence of those key players increasingly conspicuous and difficult to work around.

Apple at least has acknowledged that loot boxes need checks in place. In 2017, the company mandated odds disclosure for games offering loot boxes. While I personally think Apple should go a lot further with that requirement and ensure players can see the odds of them landing whatever specific item they want, I must give it credit for actually having some guidelines and being transparent about it.

Google Play's developer guidelines don't appear to contain any limitations specific to loot boxes, and a representative did not return our inquiries about the subject. Nintendo acknowledged our inquiry but never gave an answer. Sony didn't give a response of any kind. Microsoft declined to comment on its policies when asked. I fail to see how it benefits the industry to pretend these questions aren't worth answering.

We also asked a number of developers and other people in the industry who reasonably should know about what restrictions exist. Most weren't aware of any. One developer confirmed that platform holders had rules governing how transactions with users worked, but wouldn't get more specific than that. A number suggested that the rules can differ not only by platform, but possibly by game as well.

That opacity is entirely on brand for the industry, but it's also deeply damaging to its credibility, which will be pretty important as it looks to fend off legislation.

Long Past Time To Act

In early 2018, after complaints about loot boxes from players and politicians alike, the ESA finally addressed loot boxes. It announced that it would add a label to all games with additional purchases, launched a website telling people how to use parental controls on their game systems, and (presumably) hung up a "Mission Accomplished" banner, satisfied that the loot box problem was officially dealt with.

From time to time since then, the ESA has addressed complaints, but mostly to say simply that loot boxes aren't gambling, and a number of government regulators have agreed with that position (or at least haven't contradicted it). When Senator Hawley announced his proposal for loot box legislation, the ESA's comment began, "Numerous countries, including Ireland, Germany, Sweden, Denmark, Australia, New Zealand, and the United Kingdom, determined that loot boxes do not constitute gambling."

The problem is that Hawley isn't looking to define loot boxes as gambling, or have them subject to oversight from gambling regulatory bodies. Instead he decried "manipulative" game mechanics, "the exploitation of children," and games that "prey on user addiction" by "fostering compulsive habits." He mentioned gambling all of one time, in a description of loot boxes that criticizes them for combining addictive gameplay with the sort of compulsive player behavior seen in "other forms of gambling."

The ESA might win a court case over whether such games meet legal definitions of gambling, but I suspect it will have a much harder time arguing that loot boxes aren't manipulative, exploitative, or encouraging of compulsive behavior, partly because those words aren't clearly defined legal terms, and partly because they are absolutely accurate descriptions of some treatments of loot boxes.

Some games have such byzantine loot box systems that sites like PCGamesN (pictured) publish primers to explain how they work

Some games have such byzantine loot box systems that sites like PCGamesN (pictured) publish primers to explain how they work

Even if he's not looking to legislate them as such, Hawley sees loot boxes as a form of gambling, much like the majority of players themselves do. A recent University of British Columbia study found 68% of adult gamers believed loot boxes to be gambling, while 86% of UBC student gamers did. The same study also poked a hole in the "It's not gambling because you can't cash out" argument, as 28% of the adults had sold loot box items, while 40% of the students had. (And as with any good gambling operation, the number who reported turning a profit from their loot box gambling was considerably lower.)

Legislators looking to prove the biggest players in the industry have been designing for addiction at all costs won't have to look very hard to find executives championing horror stories as glowing successes

The industry's case is further hurt by a shift in emphasis in recent years. Whereas it used to be common to treat cold hard unit sales as the most important metric, there's been no shortage of companies touting engagement metrics instead, saying those are the true markers of success in the games-as-a-service era. Legislators looking to prove the biggest players in the industry have been designing for addiction at all costs won't have to look very hard to find executives championing horror stories as glowing successes. (Remember that time EA's Blake Jorgensen bragged to investors about how his customers might play a game for 5,000 hours in a single year, which works out to almost 14 hours a day, every single day? I bring it up a lot because it's equal parts telling and appalling.)

This is further complicated by the ESA's fight with the World Health Organization over whether addictive gaming disorders are a real thing deserving of their own diagnosis. This week, ESA president Stanley Pierre-Louis put forth the unusual defense that "classification does not imply that gaming disorder exists," as if the WHO makes a habit of describing non-existent conditions in its International Compendium of Diseases (which provides billing codes that are crucial to the US health care system).

The time for a responsible industry to check itself was before it became so dependent on aggressive monetization and a compulsive player base

Pierre-Louis also suggested that problematic game playing is likely a symptom of an underlying problem, "be it ADHD or something else." Even if he's right about that, I'm not sure that helps the industry's cause. If we're talking about a fight taking place in a court of public opinion, I'm not sure you're going to win many supporters by saying you're financially exploiting your customers' pre-existing medical conditions rather than creating stand-alone gaming addictions in otherwise healthy people.

In any industry that experiences the explosive growth games have in the past decades, there are going to be growing pains. And sure, some of the problems the ESA has been dealing with would have been difficult to predict in the pre-online era. However, the shift to the games-as-a-service era has been happening for years, and telegraphed every step of the way. Even before games-as-a-service was the preferred focus of the EAs and Activision Blizzards of the world, the PC and mobile markets were a clear sign of what was coming. The time for a responsible industry to check itself was back then, before it became so dependent on aggressive monetization and a compulsive player base to drive growth.

Throwing the Dice

There's an irony in the ESA insisting loot boxes aren't gambling because the industry itself is making a massive bet on them. By refusing to acknowledge an issue or self-regulate loot boxes in any meaningful way, the games industry has invited a legislative crackdown on much larger aspects of its business. If it can navigate this controversy without a legislative crackdown, the way is clear for continued growth around the world. If legislators start cracking down, the games industry might find it loses a lot more than just loot boxes.

Just look at Hawley's proposal. Loot boxes may be the headline grabber, but he's not stopping at that mechanic. He intends to ban pay-to-win mechanics as well. That would rule out players paying for items that give them competitive advantages in multiplayer games, or games designed "with artificial difficulty curves to induce players to spend money on upgrades simply to progress."

Candy Crush has no loot boxes, but lots of criticism for manipulative monetization

Candy Crush has no loot boxes, but lots of criticism for manipulative monetization

Putting aside how in the world Hawley plans to define an "artificial difficulty curve" -- isn't everything about a video game artificial by definition? -- you can see how this applies far beyond loot boxes. How many games let players skip a grind by buying something? How many let players buy something that makes the game easier? Hawley's poster child for the legislation is Candy Crush because a) it's a game his constituents have a good chance of being familiar with, b) it lets players buy boosters to make the game easier, and c) it lets players pay money to skip the waiting period for their lives to refill. There's nothing about loot boxes in there.

The industry is as hooked on loot boxes and other engagement-driven monetization as its users are

The "good" news is that Hawley only wants to ban these mechanics in games aimed at children, and to ensure they are inaccessible to children in games aimed at adults. So these mechanics aren't entirely forbidden, even if they do become less commercially viable. The bad news is that this coming legislative fight -- one that would have been entirely avoidable if the industry had exercised a little foresight and restraint -- could have dramatically negative implications for a business model that massive swaths of the industry have aggressively pivoted toward for the past decade.

I worry it's too late for the industry to avoid legislation now for a number of reasons. For one, the industry is as hooked on loot boxes and other engagement-driven monetization as its users are. Publicly traded companies are under pressure to produce forever-escalating revenues, and the idea of the executives in charge pumping the brakes on this after they've converted their entire way of building games around it sounds like a non-starter to me.

Second, there's too clear a record of exactly what's been going on. There have been too many executives relentlessly pushing for engagement, too many games borrowing the psychological tricks of slot machines, too many developers designing around monetization at all costs. The industry didn't just fail to hide the bodies; it did GDC post-mortems with detailed map slides every step of the way.

That said, "it's too late to matter" isn't an excuse to not do the right thing. So I would instead just tell the ESA -- and everyone making games, really -- the same thing Lieberman told Sega and Nintendo more than 25 years ago:

"I know there's a tremendous market incentive here. The money's got to be very attractive. But the best thing you can do, not only for your country but for yourselves, is to self-regulate. Believe me, it's not only going to be important to our kids. It's going to be important to the ultimate credibility and success of your business. And frankly, in some measure it's going to be important to the maintenance of Constitutional freedoms in our country. Because unless people self-regulate, unless people draw some lines, the sense that too many people in our country have that we're out of control is going to lead to genuine threats to our freedom, which nobody wants to see."

As much as people might remember those Senate hearings as a witch hunt, they were apparently instrumental in convincing the games industry that it needed a unified front. We could use a reminder of that now. Unfortunately, it remains to be seen if politicians will be as kind in giving the industry such a wake-up call on loot boxes before bringing down the legislative hammer.

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Latest comments (17)

Evtim Trenkov Founder, Playright Games5 months ago
Whats unfortunate and sad is that the solution to every problem is having a bunch of lawyers and unaccountable bureaucrats to write up legislation. Mine (so called millennials) and the next generations are getting used to relying on a bunch of politicians to think instead of us... but hey as long as twitter has trendy hashtags and games industry workers spend ~60% of their paid office hours being politically engaged instead of building games (and value) for their studios and innovating on these models and gameplay systems things gonna be alright, right?

My market observation is that loot boxes are losing appeal amongst both devs and players. Its getting slightly commercially unviable to build your whole monetisation model just around Gachas, without providing any additional guaranteed value for X time / Y money spend. So the market matures and provides alternatives already (e.g. Battle Pass-likes). The players are not silly. And this misconception amongst devs that the player (unfortunately considered by some to be an "idiot user") is going to pay unfixed quid for a Darth Vader caused a massive backlash! I loved that this happened. So we have the market maturing here.

Government can maybe focus on what really can improve lives - avoid wasting tax money on champagne; keep people safe from bullshit policies, local thugs and mental foreign dictators; help everyone understand the psychological reasons that make vulnerable folk waste money on gambling beyond control and let everyone else do their jobs / run their businesses.

Finally it would be nice to see some data on how much revenue from Gachas comes from "predatory" tactics towards vulnerable players and what % comes from super fan players, who can afford spending, and spend with consent. But hey - reasonable thinking does not generate votes and clicks does it?

TL;DR - respect your players, respect your market, innovate your game in the best possible way and things are going to be alright for everyone.

Edited 2 times. Last edit by Evtim Trenkov on 16th May 2019 3:03pm

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Ian Griffiths Product Owner, Hutch5 months ago
Let's bring this around to the current debate over loot boxes and addiction.
You post no data or analysis on whether loot boxes are addictive. Addiction isn't a simple label to throw out there; it's a word with an important definition and a requirement of proof. What evidence is there that loot boxes are addictive? The best data I've seen on the topic was a self-reporting survey through Reddit and didn't seem particularly conclusive, especially as it showed an incredible pre-analysis bias.
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Ian Griffiths Product Owner, Hutch5 months ago
"with artificial difficulty curves to induce players to spend money on upgrades simply to progress."
I love this, as though difficulty curves are somehow the opposite of artificial. Tell me, what is a natural difficulty curve and how is it different or less arbitrary than an 'artificial' one!?
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Show all comments (17)
Evtim Trenkov Founder, Playright Games5 months ago
@Ian Griffiths: Thats a brilliant one LOL. I guess a commission will determine if my curve is unnaturally difficult. Standardised Skill in FPS games! STAMP! "Please pay your difficulty evaluation fee at the desk on the 5th floor"
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I have a libertarian streak in me too Evtim but the idea "the market" will always sort itself out is an over-worn bit of obvious nonsense. It doesn't automatically follow. Yes the prosperity of markets is a net good but to pretend the business sector doesn't also have all the flaws of humanity built into it too is how we end up with polluted rivers, un-breathable cities, a gutted tax base in a soaring economy, lax safety laws, ripped off tenants, low pay for honest work and a climate crises that, amazingly, refuses to solve itself.
I'm a big believer in personal freedom and "buyer beware" and I'm sure we'd all prefer if the industry brought in a set of standards to police loot boxes itself - which I don't doubt would be a headache to sort out - but just as seat belts had to be legislated for, these might be imposed from above on an industry unwilling to show the proper duty of care to its nameless customers.
I don't see any of this as strange as digital gaming is still a new economy, where there's always a rules-defying phase of mushrooming growth before settling into a comfortable thrum of liveable regulation. Though they hate to admit it, politicians are built to react to citizens and if they very occasionally do something in their constituents favour against the market, it’s not automatically the same as “relying on a bunch of politicians to think instead of us”. Sometimes they’re actually just working for us.
I agree with Brendan that defining what a loot-box is, and what is or isn't exploitative, is a brain-teaser of a problem and possibly harder to find agreement on than age-rating violence was. OTOH I don't think any of us would reckon it's beyond our ability as a sector to do it. It's seems just a question of will and at the moment too many games companies are just in straight denial that there is a problem. Hopefully we'll wise up and get on so that we don't, as you say, spend "60% of (our) paid office hours being politically engaged instead of building games"
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Bob Johnson Studying graphics design, Northern Arizona University5 months ago
Where is the part where the parent just doesn't allow their kids to buy stuff on their phone? I can't speak for Android, but on IOS this is easy to enforce.

My kids have spent ~$0 on this stuff on iOS because all purchases need my permission. I don't have in-app purchases enabled either.

And as the article noted, which I didn't know, Apple requires developers to publish the odds of obtaining prizes in a loot box.

Edited 1 times. Last edit by Bob Johnson on 16th May 2019 6:21pm

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Keldon Alleyne Strategic Keyboard Basher, Avasopht Development5 months ago
@Ian Griffiths:
You post no data or analysis on whether loot boxes are addictive.
Read up on B.F. Skinner's research on uncertain rewards (1).

We already have sufficient evidence of the phenomenon in general. If loot boxes satisfy the generalisation, the burden of proof is on the claim that loot boxes are a special-case exception to the observed and well studied general phenomena - not the other way around.

Studies and surveys on loot boxes would be useful.

Uncertain rewards drive behaviour (2).

Here is a bunch of information on gambling and uncertainty (here).

Loot boxes are again linked to problem gambling: Results of a replication study.

Video game loot boxes are linked to problem gambling: Results of a large-scale survey.

@Bob Johnson:
Where is the part where the parent just doesn't allow their kids to buy stuff on their phone? I can't speak for Android, but on IOS this is easy to enforce.
Perhaps they just don't expect in-app purchases to be possible without explicit permission being required. Maybe they don't play enough games with loot boxes to know that little detail.

Among other things ...

It is our responsibility as professionals to ensure that our customers are properly informed. Anything else is irresponsible due to the asymmetry of specialist knowledge.

Edited 2 times. Last edit by Keldon Alleyne on 16th May 2019 8:59pm

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Bob Johnson Studying graphics design, Northern Arizona University5 months ago
@Keldon Alleyne:

Meh that excuse works once at most and doesn't work as good today as 5 years ago.

And yes anybody making anything should treat their customers with respect. It's good business in the end. Goes without saying in any industry. And yet there's also always bad actors in any industry.

The reality is there are protections built into platforms today so your kids can't spend a dime on their own. Some are better than others. All have improved over the past few years. And these systems prevent your kids from spending a dime on anything whether it's loot boxes or full games or season passes or ...

Edited 2 times. Last edit by Bob Johnson on 16th May 2019 10:25pm

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Klaus Preisinger Freelance Writing 5 months ago
Current Alabama legislation should be the best indicator that a politician does not require reason to enact something. In fact, the very absence of reason may even be better. Why make a law based on empathy, when a vengeful law can do the trick, because enough people self-delude into believing it will never affect them and give them the sadist pleasure of seeing somebody else but themselves suffer? It is no longer masses feeling oppressed and going after the oppressor, it is masses feeling oppressed asking the oppressor for the favor of oppressing somebody for once, before going back to being abused themselves. In my opinion that statement fits abortion laws as much as it does fit free lootboxes for loging in seven days in a row; or most balance patches. Go figure.

Creating an angry mob that is willing to vote has undone Lootboxes more than every study based on reason ever linked in a comment has or ever will. So you may, or dare I say shall excuse me not linking studies or video confessionals of former developers. It has become pointless, you see. The far more dangerous warcry these days is 'do what you want, we will still participate in the election regardless and let you know then.' That will get the mob, the lobbies and the politicians spinning for a while. Expect no reason to come from it.
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Ian Griffiths Product Owner, Hutch5 months ago
@Keldon Alleyne:
We already have sufficient evidence of the phenomenon in general. If loot boxes satisfy the generalisation, the burden of proof is on the claim that loot boxes are a special-case exception to the observed and well studied general phenomena - not the other way around.
This isn't true in a number of ways. First, Skinner's work doesn't prove that variable ratio schedules are addictive, only that they are more compelling than other methods.

Second, it's trivial to show that variable ratio schedules are not addictive. In the opinion piece you shared, which isn't Skinner's actual research, there's talk of videogames and how they use variable ratio schedules in gameplay. If these were addictive then videogames would be addictive. However, this isn't true, all research so far indicates that videogames are not addictive, and thus neither are variable ratio schedules.

Third, the burden of proof is on the people claiming that loot boxes are addictive because they are talking about legislating loot boxes that monetize variable ratio schedules but ignoring that games which are purchased also have these variable ratio schedules. Why should legislation be applied to one without the other? That would need more study. And again, the most evidence suggests that these aren't addictive and that's based on humans in the real world, not rats in a cage with nothing else to do.

Talking about - https://www.phd-insights.com/learn-user-research/why-is-email-addictive

Uncertain rewards drive behaviour (2).
All rewards drive behaviour, some are more effective than others. This doesn't necessarily mean they are addictive.

Here is a bunch of information on gambling and uncertainty (here).
Linking to gambling isn't particularly relevant because loot boxes are not gambling as the player cannot win money or money's worth. This can also be seen by the absence of problem behaviours around loot boxes in comparison to gambling.

Loot boxes are again linked to problem gambling: Results of a replication study.
They are "linked" but not proven to be addictive. There are three big issues I have with the study and t replication study:
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0206767
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0213194

First, the collection of data was through an online self-reported survey and an awful lot of bad data came in and had to be discarded.

Second, the authors state that they think loot boxes should be regulated. To me this implies considerable bias, I'm looking for evidence of a problem not guidance about what to do if there is a problem.

Third and most importantly, this doesn't prove that loot boxes are addictive. There is some correlation that shows people who gamble tend to spend more on loot boxes but where this effect is clearer in the replication study the authors note there seemed to be a very high ratio of problem gamblers in the sample which is unexplained.

And at the end of that, the article was still omitting such evidence.

Edited 1 times. Last edit by Ian Griffiths on 17th May 2019 1:11am

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Ian Griffiths Product Owner, Hutch5 months ago
@Barry Meade: The market will always find an equilibrium, whether one considers that 'working out' is a debatable point.

While the prosperity of markets has caused pollution it's also lifted enormous number of people out of abject poverty. The Green Revolution in the 1960s all but eradicated natural famines. We have a strong economy with taxes that pay for a wide range of social benefits from free healthcare, housing, education and social support to systems of regulations that ensure high quality safety standards in products and services. We have incredible safety laws; deaths at work are at historical lows and life expectancy is decades longer than it was in 1900. Deaths from natural disasters are a fraction of what they were in the 1920s. I don't quite get all the doom and gloom given how things have improved. Also, realistically we will handle climate change, it will just take some time. Also, seatbelts weren't legislated for in the first place, it was a private companies that designed, created and made them common.

I think there's very little 'buyer beware' in the f2p world. In my experience I've been far more disappointed by buying games upfront and finding them boring than I have been disappointed by loot boxes; primarily because I know what I'm getting, or rather the context in which I am getting it. The duty of care for any company selling something is pretty well understood, we sell things to informed customers and they are free not to buy them. The platforms also offer controls to disable purchases that are very easy to use.

I think it's important to see evidence of a problem before rushing to regulate something. I don't see so much of a problem as I do a complaint from a subset of gamers that they don't like the business model. Trust me though, the complaints to politicians will come thick and fast if they make it harder to play the likes of Candy Crush!
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Evtim Trenkov Founder, Playright Games5 months ago
@Barry Meade: All good points, Barry! Thanks for the feedback on my comment!

I might have gone a bit hotheaded with my choice of words, but I stand by what I say. The reason why I got so triggered is that we don't have sufficient amount of data about:

- What proportion of the revenue of these lootboxes comes from vulnerable players. If this is a small proportion then the solution is figuring out how to tackle these psychological reasons for players to bet endless amount of money on stuff. These folks are vulnerable and just banning certain designs without addressing the root won't solve the issue permanently. They will find something else to waste money on in a few months time. Problems won't get sorted.

- As you and Brendan very well pointed out - its difficult to define what a Gacha. If its as simple as "Players pay virtual currency to get a virtual items, having concealed inside it a collection of randomised virtual content" then does that include indirect ways of obtaining these boxes with currency? (e.g. I pay 10 gems to build an army and attack your town to be rewarded with a loot box). If in my example I can also attack you without paying the 10 gems and get the loot box its just gameplay/progression and not exclusively monetisation. If its too high level it puts too much blockers on conventional designs. If its super narrowly defined than the whole regulation will probably be easy to go around.

There is so much work to be done before we jump on the regulation bandwagon I think. And I think (and I am guilty for not doing it too) that if designers spend a sweet chunk of time on inventing something new that makes loot boxes less predatory we would sort this issue out. I feel like there is more talk than work done on the matter (again I am guilty of that too, as I don't have a design to propose ;)). As I said in my TL;DR - players are smart and designs that respect them, as long as the game is good, will probably be doing way better commercially.
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@Ian Griffiths. I agree with lots of what you say, my own disposition is pretty much that of Steven Pinkers (even when wrong). I also granted the benefits of 'the market' up front, your listing those benefits doesn't hide the fact that we live in an era where governments & politicians have almost completely suborned their brains to whatever business wants. If this wasn't made obvious to you since the financial the crash in 08/09, well, I don't know what to say to you and this isn’t the forum to go into it. Suffice to say we’re still dealing with the fallout of that slap in the face to voters today with Brexit, the appearance of angry fact-free politics and reformation of hard-right parties across Europe & America. Our having a sunny attitude isn’t helping defeat the shouty men selling a betrayal narrative.

To be picky for a moment ‘The Seat Belt’ was invented without legislation but ‘seat belts’ did not magically appear in every car on the planet without legislation to force it, which was my point.

When I listen to us splitting hairs about academic studies on addiction, I wonder are we really reacting to what the public experiences. The context to this is that parents are worried not only about gambling but that every digital experience they hand their child these days has a built in shop urging them to buy something. When I was a kid parents hated those chocolate bars strategically located by the till that made their kids greedy at the exact moment they were paying for stuff. Well, kids are obsessed with gaming now and within gaming there is an march by developers, undeclared to parents, to total monetisation of everything. This goes for ad-based services too, where my own sister-in-law wondered how it was an ‘free, no-IAP’ game about penguins for their nine year old featured ads for a shooting game. The fact that some PC master race types are moaning about lootboxes on Twitter is not even a tenth of the ire and worry this is causing parents all over. We are in severe danger of not seeing the woods for the trees. We know gaming is a magical experience for kids because we experience that magic ourselves as players. But gaming now also represents everything from being hacked, having your identity stolen, bank cards replicated, to online grooming, gambling addiction and giving very young children an obnoxious focus on materialism and status. And I see these worries everywhere, it’s one of the most common things friends & family bring up to me knowing I’m in the industry.

My own view is that every generation has a moral panic that it eventually adapts to, and much of this noise is simply the usual older/younger generation gap. So I don’t want to see Government getting heavy-handed over something it doesn’t really understand. I would hope though that *we* do understand and can help guide any regulation. However, “but they can’t buy anything” is not the answer to “why are my kids being asked to buy things all the time?”. “Technically, it’s not gambling” is not an answer to “Why have you built a free shooting game for kids that uses slot machines to make money?”

As for the premium-games-are-the-real-ripoff argument, well ho ho, bless you for fighting your corner. Nobody is angling to legislate for that sector and that speaks for itself. F2P is ubiquitous not because it is ‘helping consumers’ but because it makes boatloads of money for its makers. And it does that by dangling advancement through the game, or status within a peer group, to (sometimes young) players who otherwise feel they are losing out because games are built to be a challenge. The day F2P makes less money than premium and is still the default method of game design from Activision and EA then I’ll buy any sincerity it being a fairer deal for players. Until then, far smarter to look at what we’ve actually created in the face and swallow the implications that flow from it.
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Ian Griffiths Product Owner, Hutch5 months ago
@Barry Meade: I don't think governments and politicians have 'suborned' themselves to whatever business wants at all. We have plenty of regulation that limits and restricts business in favour of citizens. Also, I think it's innacurate to think of 'business' as some sort of conglomerate where all parties have shared values or goals.

It doesn't suffice to say that the financial crisis, or that the response to it is responsible for Brexit. I think that's an assumption that is too simplistic to make. I also don't think that fact-free politicians are new, I seem to remember the 45 minute claim happening among other mistruths coming from politicians well before the financial crisis. I don't think the way to 'defeat' a betrayal narrative is by wallowing in self-pity, I think we need to make more compelling arguments than them.

I want to be very clear, I'm not splitting hears on studies on addiction, I'm saying that they're not showing that these things are addictive. I don't think there is a great deal of concern from parents and for that which there is seems to be highly correlated to media coverage. Not to say that concern isn't reasonable, but it's not necessarily well informed.

I don't think gaming is represented by the negative actions of the illegality of identity theft and other negative experiences, those are fringe experiences that occur to very small proportions of the relevant population. I don't think this is a moral panic, it's simply not that big an issue. I would reserve that for concerns about 'fake news' and 'dangers of social media'.

I think the answer to why kids are asked to buy things in games is 'because you're letting them play games that may not be suitable for them'. I'm not saying that technically it's not gambling, I'm saying it's actually not gambling, or if it is gambling then your definition widens to encompass a lot more things than you would have probably thought it would. As for asking why someone has built a shooter for kids that uses slot machines I would say - they haven't.

As for the premium-games-are-the-real-ripoff argument, well ho ho, bless you for fighting your corner.
First, please don't try to belittle me by saying things like 'bless you'. I treat you with respect here and I expect the same in return.

Second, I am not making the argument that 'premium games are the real rip-off'. I don't think premium games are a rip-off, in the vast majority of cases at least. What I'm saying is that in my experience I've been far more bothered by paid games not living up to my expectations than f2p ones and a big part of that is because I already know the game and the context of what I am buying.
Nobody is angling to legislate for that sector and that speaks for itself.
Yes, they are. The sector has already been regulated with numerous elements of consumer law. It wasn't long ago that the EU rules that digital game stores have to offer refunds for purchases of games. Paid games also tend to suffer a lot more with calls to reduce violence and other content which you tend not to find in f2p games as they tend to want to be available to a broader audience.
F2P is ubiquitous not because it is ‘helping consumers’ but because it makes boatloads of money for its makers.
When a product or services makes a lot of money for those producing it it's because that thing is popular with consumers. It's not so much that it's helping consumers, more that it's more popular with consumers.
The day F2P makes less money than premium and is still the default method of game design from Activision and EA then I’ll buy any sincerity it being a fairer deal for players.
Something making less money wouldn't be indicative of fairness. Companies that aren't fair would typically receive less business and it could indicate lower value or an unfair approach to its customers.
Until then, far smarter to look at what we’ve actually created in the face and swallow the implications that flow from it.
I'm more than happy to look at what we've created. Most every platform provides stores that inform the consumer about what the game is before they acquire it. Most every company and platform involved with f2p provide customer support and refunds for mistaken purchases and unauthorised purchases. And with regards to loot boxes they now include things like minimum guarantees or drop rates or some version thereof. And of course they all have to abide by consumer regulations. That's not to say there isn't more that they might do but everyone seems to have fairly happily addressed issues as they have cropped up.

Best of all though, I can say that f2p games have created lots of new games that are enjoyed by much larger, far more diverse audience than ever before.
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Keldon Alleyne Strategic Keyboard Basher, Avasopht Development5 months ago
When a product or services makes a lot of money for those producing it it's because that thing is popular with consumers. It's not so much that it's helping consumers, more that it's more popular with consumers.
That doesn't make any sense.

Loot boxes are no more popular with video game consumers than exorbitant overdraft fees are popular with financial service consumers.

Unless stated otherwise, I think we can be close to 99% certain that the loot boxes aren't why people are playing those games.

They play games with loot boxes for two primary reasons:
1. The game looks interesting, and they are already invested in the franchise
2. Reasonable (or no) cost of entry

People can use something and still have complaints about it. Using something doesn't mean you like every single thing about it. That's absurd. Besides there are complaints from users about the use of microtransactions and loot boxes in certain games.

It can add value, don't get me wrong. But let's not claim people want the loot boxes themselves. You'd need to offer them a reasonable alternative to justify that claim such as access to the full game without loot boxes.

But when we bury our heads in the sand and fail to self-regulate; that is when legislation comes in.

Responsibility can greatly benefit the industry as a whole or the pioneering developers.
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Ian Griffiths Product Owner, Hutch5 months ago
@Keldon Alleyne: So we can look at both sides; the game as a product or service as a whole, and the loot box system. Of course, we can't really talk about the loot box in complete isolation; it needs the content in context of the game for the items to hold some desirable quality to the consumer.

Where you've quoted me I was referring to the product and service that is f2p games. Taken as a group, they are currently more popular, and more financially successful than paid games.

As you're talking more about the elements of loot boxes themselves I will address that. First, I don't think it's a good comparison to say, overdraft fees. Loot box purchases with real money are optional in a way that overdraft fees are not, someone has more control over whether they buy a consumer good than whether they go into their overdraft as that is the result of an external mechanism or system. In any case, your point that people overall don't like them is what I will take as the point of the comparison.

I don't think that we can be 99% certain that people don't play because of the loot boxes. I mean, can we say that about MTG? What about the Pokemon Card Game? What about Panini sticker albums, baseball cards and more? There are plenty of real world and virtual loot boxes that consumers enjoy, in many of those cases it's reasonable to assume because they like those elements, and we cannot say with any certainty that they're not playing them because of the loot boxes.

We also can't say that people definitely play for the reasons you give. I don't doubt that they are reasonable factors but we can't rule out many other reasons.

I'm not saying people can't dislike something, in my experience pretty much everything I've bought has some negatives. However when I talk about popularity I'm referring to the amount of money these games make over a consistent period with a large number of users.

I don't really know what you mean when you say people don't want loot boxes themselves. A loot box without the context of the game wouldn't be much, neither would the menu system, or the matchmaking. As I pointed out above, plenty of people like loot box driven experiences and people clearly like buying loot boxes.

When it comes down to the element of a means to an end, what would people rather have; a free game with loot boxes or no game at all? That's pretty much the case when it comes to most online games nowadays. Games like The Division tend not to have the staying power of games like League of Legends. In the same way a bank wouldn't exist without charges; these games wouldn't exist without some form of monetisation. Does that monetisation have to be in the form of loot boxes? No, but those tend to be on the more popular and successful end of the spectrum.

We'll stop making em when you stop buying em!
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@Ian Griffiths: Wasn't my intention to take the piss, apologies if that's how it came across. You did say "In my experience I've been far more disappointed by buying games upfront" which is at least near to saying premium games are, in your experience, the bigger rip-off. If that's not what you meant then, well, I guess neither of us has perfect communication in print.

I'm with you in that I don't think tests prove that all free games merely ride on the back of addiction to the bank. I‘d assume we need to be pretty careful with these ideas as any legislation will affect gaming as a whole and we’ll all stand or fall by it. However I also think that denying there is an issue at all is a bad strategy as a sector. The mere fact that something makes a lot of money says zero about its moral impact. As with everything there are externalities to consider. When I eat a burger am I thinking about the deforestation of the amazon it causes? Nah. Does me not thinking about it mean it’s not happening? Nope. Should campaigners against deforestation shut up because they are a minority and burgers are popular? Not even a bit.

I don’t experience the worry about online gaming as only “highly correlated to media coverage” as you do though obviously the media loves to milk a negative story. I see it in my own life with friends and family and just witnessing it around me, to say nothing of what I read. It seems to me fairly obvious there’s an ongoing concern from parents about their kids playing always-online monetised games they don’t fully understand with people they don’t know. And this is not laziness, from what I can see parents try to control & understand these things and yet the worry is still there. Do we just get to point at a chart and say “not true, fake news” and that’s that? If that worked we wouldn’t have an irrational global movement against inoculating kids from killer diseases. Or the return of the flat-earth theory. But here we are, it's 2019.

**Off topic** at the time of the EURef it was seen a forum for a protest vote and the result was seen as a giant two fingers to the government & establishment who just expected the population to do as they’re told. It’s exactly why the Lisbon Treaty vote failed in Ireland first time around – the government didn’t listen to people so the voters sent them two fingers. All the UK has had since ’08 is austerity. That was the single idea to combat the crash. Just cuts. That’s it. People were very pissed off that services were being slashed, housing was becoming impossible when city traders were actually handed millions in taxpayer money. It also made immigrants an easy target as they compete for the same dwindling services. That’s not the same as saying Brexit was economic, as I don’t believe that. I believe it was a reaction to rotten politics. It had been building for many years before the 2016 vote. The UK is a strange democracy where too many can’t vote for whom they believe in. They instead have to vote tactically against those they dislike. This has meant a fixed system of voter suppression that, yes, kept UKIP from parliament but also meant nobody in parliament had to answer to anybody, because they got in by a system. So MP’s have an mistaken sense of their own popularity and voters don’t get to vote for who they actually like. This is a pressure cooker and the EURef was a big valve.

Anyhoo, I'm prolly repeating myself now so will leave it there. Thanks for the chat & putting yer view on things.
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