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The flawed Kinder Egg defence

The University of Adelaide's Dr Daniel King on what his "Unfair Play" academic study reveals about the industry's monetisation practices

Being a part of the wider games industry at the moment feels like working at the Chocolate and Razor Blade Factory. It's exciting, and people love chocolate after all, but there's currently a lot of awkward questions being asked about all the razor blades.

While politicians and the press stomp around our factory, beguiled and dumbfounded by the sheer complexity of it all, they keep saying: "As wildly misinformed people with a staggering amount of bias, we're concerned about the razor blade aspect of this operation. Can you help abate these concerns?"

And our response is to close the door to the razor blade room and put up a big sign that reads "NOT RAZOR BLADES". That is to say, the industry response to rising concerns has been inelegant and ineffective.

In her talk entitled "Help! Games under attack!" at Develop:Brighton last month, UKIE CEO Dr Jo Twist came to the industry's defence in the face of parliamentary inquiries, gaming disorder classifications, loot boxes, and the media. Dr Twist refuted the commonly-used attack that games employ algorithms to manipulate people, arguing the industry faces cultural bias for its use of loot boxes and similar mechanics, where things like LOL Surprise Dolls, Pokémon Cards, and Kinder Surprise Eggs don't.

"A Kinder Surprise Egg does not collect your data... People do not link their credit cards to Kinder Egg vendors"

Dr Daniel King, University of Adelaide

"We need to be aware of this as people, as the general public, but we need to remember that we're not the only people making money out of shit," said Twist. "When people talk about regulating loot boxes I always use [LOL Surprise Dolls] as an example.... You don't know what's in them. It's a whole bunch of plastic shit, right... These can cost up to £80."

This is just one example of the argument being applied in defence of loot boxes, or in an attempt to demonstrate how the games industry is unfairly targeted. It's a good soundbite, and plays into the industry's persecution complex -- admittedly developed from all the times it's been unfairly demonised by politicians and the press -- but academic research suggests that this is a false equivalence.

"There are some similarities but it is a pretty weak argument and comparison," says Dr Daniel King, a senior research fellow from the School of Psychology at the University of Adelaide. "A Kinder Surprise Egg does not collect your data. The Kinder Egg does not learn more about the person buying and opening the Egg, such as his or her preferences for its contents. The Kinder Egg does not adjust its contents according to an algorithm based on population data. People do not link their credit cards to Kinder Egg vendors. Kinder Eggs are physical and can be given away or traded, unlike virtual items.

"It is difficult to spend thousands of dollars on Kinder Eggs, unless one visits a Kinder Egg 'megastore' or the wholesaler perhaps. You have to go to a shop to buy Kinder Eggs, they are not acquired in your living room. Kinder Eggs are not by their nature integrated into a broader online social experience and community of Kinder Egg purchasers. The transaction, user experience, and consequences are quite different."

The comparison between mechanics like loot boxes and products like LOL Surprise Dolls was scrutinised by Dr Daniel King

Dr King is lead author of a recent academic study entitled 'Unfair play? Video games as exploitative monetised services: An examination of game patents from a consumer protection perspective'.

The study examined 13 in-game purchasing patents in relation to consumer rights, and found that many could be "characterised as unfair or exploitative." The patents in question include behavioural tracking, price manipulation, incentivised continuous spending with no refund entitlement, and the "potential to exploit vulnerable players."

While the primary aim of Unfair Play was to evaluate IAP design features using the protection framework of the Australian Competition Consumer Commission -- based on the recent case law example of ACCC vs. Valve which saw the game company fined $3 million -- it's the secondary aim which is of wider industry relevance: to consider the "psychological and clinical implications" of certain design features. In particular, a focus on how these features "might affect gaming motivations and behaviors among vulnerable users," such as those who become "probelmaticaly involved" in games.

It's worth noting that the review is not comprehensive, and not all the patents have been implemented in games yet. The 13 were selected from a broad search of the Google Patents database of over 87 million filings. The search was designed to filter in-game monetisation schemes, and screened for consumer interaction. Of the 28 which matched, 15 were excluded due to "high similarity" with other patents.

Of the examined patents, 12 featured "sophisticated" data collection systems that use machine learning to offer customised purchasing opportunities. Additionally, players who have yet to spend money are categorised based on gathered data, and presented with "offers known to be accepted by players with similar profile characteristics."

"These individuals tend to have difficulties in delaying gratification and may be particularly vulnerable to overspending on in-game purchases"

Unfair Play? Video games as exploitative monetised services

"Other methods included solicitations which may 1) interrupt play, employ pressure tactics such as limited time offer with a countdown timer, and/or b) be embedded or implemented within the broader architecture of the game world, such as being positive in a central, unavoidable location in the game," reads the review.

These tactics are not uncommon in the games industry, or anywhere for that matter. Tech giants customise adverts and purchasing opportunities based-on the vast swathes of data they collect from us every day. It has become an unfortunate reality of life in the 21st Century, often excused as the "price you pay for a good service."

While we may be acutely aware that algorithms silently pull at the strings of our everyday lives, there is an existential horror to how easily these systems guide our actions. The list of 13 patents included in Unfair Play demonstrates the lengths game companies are going to in order to maximise IAP profit, with arguably little regard for the product, experience, or consumer wellbeing.

Take for example this gem, from Activision (US2016005270A1), which caused a stir when it was granted in October 2017, summarised in the review as follows: "A player purchases an item of perceived superior utility due to being selectively match-made into situations against a superior player with that item."

Then there's this one, from Kabam (US9138639B1): "A player may have to pay more/less for items based on their behavioural data, irrespective of the contextual value of the item."

Or this one from Aftershock Services (US9666026B1): "A player is encouraged to make urgent purchases of an item with the value of the purchase being altered on the basis of player data."

That's not even taking into account the raft of (marginally) less insidious, but still highly impactful monetisation systems such as dynamically adjusting virtual item bundles, targeted sales, rotating loot box odds, event-based currency, timed offers, personalised messaging campaigns, and population profiling.

Ultimately, the review found that some game companies have been developing complex systems designed to maximise revenue which "lack basic transparency" and encourage purchases "in ways that could be characterised as potentially unfair or exploitative."

"A player may have to pay more/less for items based on their behavioural data, irrespective of the contextual value of the item"

Summary of patent US9138639B1

"This review's observations of in-game purchasing systems suggest that, in some situations, a player who makes in-game purchases often does so at his or her own risk, with limited or no guarantee that this transaction will yield the desired outcome," reads the study. "These findings have implications for the study of problematic gamers, including individuals who may have gaming disorder, who tend to demonstrate strong decision-making biases related to gaming.

"Current addiction models suggest that these individuals tend to have difficulties in delaying gratification and may be particularly vulnerable to overspending on in-game purchases, particularly when presented with offers that provide immediate short-term gains or benefits in the game."

While the Diagnostic and Statistical Manual of Mental Disorders (DSM) from the American Psychiatric Association includes a classification for internet gaming disorder, it is "separate from gambling disorder because money is not at risk." Essentially, it lacks the sunk cost fallacy of gambling, where players will spend more money in the hope of reclaiming losses.

However, Unfair Play suggests that it "may become more necessary for the DSM and other guidelines to recognize the financial aspects of problematic gaming behaviour." It is argued that that entrapment may explain players who escalate their in-game spending, without the financial incentive of gambling.

"In some games... players may spend an increasing amount of money that begets further spending on the game," reads the review. "For example, the patent US9582965B1 referred to a system that presents a series of time-sensitive offers that are designed to escalate the user's financial investment and encourage the user to spend unused virtual credit to minimize loss aversion.

"The investment of an irretrievable sum of money in pursuit of desired virtual items may be perceived by players as an investment to the extent that it will increase the likelihood of obtaining these items. In this connection, spending more and more money on virtual items may have a 'sunk cost' effect that serves to justify continued expenditure."

Addressing a parliamentary inquiry into immersive and addictive technologies in June, senior vice president of studios at King, Alex Dale, said the Candy Crush developer receives "two or three" emails a month from players concerned they are spending too much time or money on the game. That's from an active user base of 270 million.

"It's not about being 'forced' -- it's about the game anticipating or making the best judgement about what the player is likely to accept"

Dr Daniel King, University of Adelaide

This was his defence when responding to questions around the possible addictive nature of Candy Crush: "We have no indication from our meetings with players, or the customer care contacts we have, or any of the surveys, that there is a problem in this area beyond two or three people contacting us every month."

However, we put this response to Dr King, who says: "Yes, it is a minority of players that are overspending, as is the case with gambling products. One might ask, do people who lose at casinos tend to file complaints -- some might, but many don't. People often feel regret and shame about spending thousands on something like microtransactions and will avoid drawing more attention to it.

"It would be more helpful for researchers if companies like King were willing to disclose more than just numbers on complaints, and share other data that can inform our understanding of the player psychology and who is more at risk of overspending and how it happens."

A frequent defence of microtransactions in games is that they are optional, and that players will never be forced to spend money. While this is technically true in most cases, there is a streak of dishonesty here.

"The 'not forcing anyone' argument is undermined by the fact that many of these games appear to employ systems that are designed to present constant in-game purchasing opportunities," says Dr King. "The promotions and solicitations are unavoidable in some cases, and the game may have design elements that make it very frustrating to players unless they spend money.

"Our review suggests that there are some emerging designs that aim to capitalise on player data to present individualised offers that the system 'knows' the player is more likely to accept. So it's not about being 'forced' -- it's about the game anticipating or making the best judgement about what the player is likely to accept."

There is another argument used in defence of the games industry, that it is a young sector undergoing birthing pains. But after 40 years, the industry has gone from the innocence of Pong to meticulously crafted algorithms that appeal to the base instincts of our lizard brain.

You could compare it to how supermarkets examine human psychology to "enhance" the consumer experience, as demonstrated by how American consumers spend more in stores that lead you counter-clockwise; or how painting prison walls pink can lower inmate aggression; or how blue lights at train stations in Japan lowered suicide rates by 84%. We have all impulse-bought chocolate or sweets at the checkout just because they were there, or made that split-second decision to get a McDonalds (fast food chains often employ the colour red because it encourages reckless behaviour), or bought something we don't need because "Oh my god, what a deal!"

But really the two don't compare; one is using basic human psychology to cast a wide net, while the other is using a laser-guided harpoon to get you, specifically. Games have spent the last 40 years learning how best to manipulate people. Of course, "manipulate" makes it sound dirty, but the principles are the same. Whether it's the labyrinthine nightmare world of Dark Souls, or the intricately designed time loop of Minit, good game design understands people, how they work, and what they want.

Unfair Play is not a comprehensive dismantling of the problem, but it clearly demonstrates why there is a growing concern, and how the games industry is feeding that rather than heading it off. It's not a young industry, it knows exactly what it's doing -- it just has a decision to make.

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Ivy Taylor avatar

Ivy Taylor

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Ivy joined GamesIndustry.biz in 2017 having previously worked as a regional journalist, and a political campaigns manager before that. They are also one of the UK's foremost Sonic the Hedgehog apologists.

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