Below is the transcript of my talk given at the 2018 Mid-Atlantic Pop & American Culture Association.

Check out the full episode here at the Games & Gaming Culture section of the site.

Play to Pay: The Machinations of Microtransactions & the Lure of Loot Boxes

Welcome everyone. Today I’ll be speaking about microtransactions/loot boxes in games; covering a brief history of their origins, some of the tumultuous developments over the past year or so, and finally an accounting of where they roughly stand now, with a dose of my own opinions thrown in.

First, a broad trajectory of the current situation can be traced back to the rise of free-to-play mobile games. Traditionally, these games offer an initially complimentary but limited pool of resources, usually enough for a tutorial on their use. Once these are spent, they proceed to encourage and/or outright entice players to buy more of the premium currency du jour in order to either: progress faster, skip an arbitrarily imposed time-limit that otherwise prevents the accumulation of further resources, or some combination thereof. This model was sustainable due to the fact these games are, as a tautology, free at the outset and the MTX are by and large optional, ancillary to playing and enjoying a given game, albeit at a slower pace.

There’s a sort of scale or hierarchy attached to MTX. Games like: Player Unknown’s Battlegrounds, Fortnite, Warframe, Paladins (and many others) offer a multitude of items and cosmetic options via various packages and tiers, but at the end of the day, are restrained to supplementary aesthetic elements, with no direct impact on gameplay.

Moving into the sphere of AAA releases with MTX, what’s usually pointed out as the obvious contentious aspect are that these are full-priced games containing baked in additional purchases, some of which contribute to heavily unbalancing the core experience, both in terms of single player and multiplayer. The most prominent example being Star Wars: Battlefront 2. And the reason for which brings me to what is often the most maligned mutation of MTX: Loot boxes. Arguably the most insidious form, as they’ve been compared to (and in fact declared by some regulatory bodies to be synonymous with) gambling.

Loot boxes employ the tactic of preying upon the psychological predilections most akin to addiction. Their construct is that instead of paying what may or may not be deemed a reasonable price for a known quantity or item, the player purchases an essentially random generator. Rather than outright buying something specific, you buy the possibility of getting it, or conversely getting something that is entirely undesired/worthless, again depending on the given game and the utility or rarity of items in the possible pool.

A recent Australian study conducted showed a link between that portion of the population with addictive tendencies to, predictably, being more susceptible to loot boxes, providing some hard evidence that these companies are knowingly exploiting a certain portion of the audience in the name of the almighty dollar.

There are certainly other avenues to consider on top of the above. For example horror stories have circulated of children running up credit bills on in-game/in-app purchases, which I’ll just mention one notable instance of: In the spring of this year, Harry Potter: Hogwarts Mystery, a by all accounts cheap cash grab mobile game; the nature of which was highlighted in a widely shared section wherein the player’s character model was shown being graphically strangled by a vine, which could be countered by buying more ‘energy’ to escape. Perhaps more egregious since a majority of the audience were largely tweens and younger. The end result was these kids asking their parents for real money to prevent their digital avatar from being horribly digitally murdered. Now that’s admittedly on the extreme end of the scale, but I think it goes to show just how far some companies will go to squeeze more cash from their user-base with dubious and tasteless tactics.

Returning to BF though, as it became the galvanizing factor for the backlash after the beta released last October, when a large portion of players voiced their concern, verging on outrage, precisely because it was based on paid loot boxes and thus randomization of upgrades, unlocks and progression; making them doubly a gamble, and creating the possibility of wildly unbalanced matches, depending on how much players were willing to spend on pulling the slot lever of the system, which by design the game enticed them to do constantly. Understandably due to this, many expressed extreme displeasure with these circumstances.

In response, publisher Electronic Arts held an AMA reddit session. Shortly after providing the community with…unsatisfactory answers, the thread infamously became the most downvoted response in the platform’s history and remains so to date. Since, as it turns out, pissing off both Star Wars fans and videogamers, which have significant crossover on the Venn diagram, at the same time is a bad idea. Indeed EA was known for similar behavior prior, but this was the watershed moment that catapulted the controversy and rippled across the industry and beyond.

In the fallout of that debacle, EA was forced to walk back their original “vision” and completely remove loot boxes for the release version. But the damage had been done, and the stain spread to other high visibility titles attached to well-known IP which followed suit. For example, Middle Earth: Shadow of War removed loot boxes well after (6 months) the initial sales window, and eventually the entire marketplace option. The ESRB [Electronic Software Ratings Board] in Feb. 2018 added a label on games that contained MTX, and that was pretty much the extent of their contribution and stance. Sort of like nutritional information: may contain gluten or high fructose corn syrup or what have you, without actually weighing in or taking a side, and basically washed their hands of any other responsibility.

As the issue continued to persist and reverberate both within the industry and the public awareness, that was the point when government entities began to step in and directly attempt to mandate, classify and curtail these practices. Just some of the highlights include: Hawaii House of Representatives member Chris Lee stating in a press conference regarding BF: “This game is a Star Wars-themed online casino designed to lure kids into spending money…it’s a trap!” Elsewhere, in June, Valve was forced to disable item trading in two of their games: CS: GO and DOTA2 due to the Dutch gaming commission labeling loot boxes and the ability for players to trade items from them as gambling.

In August, Activision-Blizzard was forced to remove them from Overwatch and Heroes of the Storm in the Belgian region due to their classification as gambling under local law there. Publisher 2K ran a “petition” asking customers in the region to lobby the government on their behalf in response to having to remove loot boxes from NBA ’19.

Belgium/The Netherlands seemed to emerge as one of the main battlegrounds between regulatory commissions and publishers, as in September EA outright refused to comply with an edict to remove loox boxes from the latest FIFA, putting themselves in direct violation of the established ruling, and currently in the process of being taken to court over it– proceedings are still ongoing. EA was also forced to disclose odds on FIFA premium lootboxes, revealing some of the most desirable top-tier rewards have a less than 1% chance of appearing, which seemed to only confirm suspicions about their validity and nature. Also in Sept, Finland joined in with scrutinizing loot box practices regarding CS:GO in relation regional lottery laws. Shortly after that, 15 other European gambling committees, along with the state of Washington, began investigating loot boxes and possible injunctions against them. The issue has been the hot-button topic of the videogame industry over the past year and persists to this day. We’ll likely see more conflicts between publishers who make games with MTX/Loot boxes vs. their customers and regulatory bodies in the future.

Nevertheless, at this point it looks like the tide is turning against them. After the furor of BF and related titles, the consumer pushback combined with pressure from various entities that imposed stricter limitations on MTX/loot boxes to hold the worst offenders accountable, and at least in some instances forced them to curb the practice, which of course I advocate as a positive development, and will hopefully continue to be the case going forward.

So, thanks again, and of course for an additional 50 red gems, you can get a chance to win this talk in epic and legendary versions as well.

-Scott Thurlow