We all want to win, and some people are willing to pay a little extra if it means their chances at winning are higher.
The drive to win and the competitiveness of today’s gaming industry has opened the doors for different ways to monetize video games.
Making money beyond digital distribution and retail sales is important for publishers and some gaming companies. And while finding new ways to monetize a game that is already on the market can be tricky, a clear frontrunner method has emerged. This lucrative approach is called loot boxes.
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What are loot boxes?
Loot boxes are an in-game monetization method. Here’s how they work:
How loot boxes work
- The player purchases a loot box from an in-game store using real currency.
- The player opens their purchased loot box. A box unlocks a set of random items (typically 3-4) that can be used in-game. These can be simple items like new outfits and avatar customizations to game-changing items like powerful weaponry and armor.
- The prices of loot boxes may range depending on its type, i.e. “rare loot box” or “legendary loot box.”
RaidAway opening a Call of Duty: Black Ops 3 loot box called a “reserve crate.” This particular crate unlocked character customizations and a rare weapon.
Loot boxes are a major driver of the in-game spending market, which is expected to reach more than $160 billion by 2022.
Loot boxes are also considered to be the most controversial in-game monetization method. Even the federal government is offering public workshops regarding customer concerns over loot boxes.
When it comes to loot boxes, you’re either for or against them.
Customers who are pro-loot boxes see the monetization method as seamless with a great upside. Purchasing a loot box is easy and can be done in seconds, and while the items in it are random, there’s always the possibility of unlocking something that could make you objectively better at the game. For some players, this is enough motivation to spend hefty amounts of real-world currency on a game they’ve already purchased.
Customers who are anti-loot boxes see the method as unfair. The common concern is “if we purchased the game, why should extra content be locked behind pay-walls?” This concern is even greater when it comes to multiplayer game modes, where loot box weapons and armor put some players at a clear advantage.
Another controversy regarding loot boxes is actually being investigated by the Federal Trade Commission (FTC). This controversy links loot box to gambling.
Loot boxes and gambling
Because the contents of loot boxes are chosen randomly, this makes them different from downloadable content (DLC) micro-transactions.
In DLCs, the player knows what piece of content they’re purchasing and the item(s) it entails. The same cannot be said for loot boxes, and customers may end up spending more than the price of the game trying to earn an exclusive item.
The complete randomization of loot boxes has frustrated the gaming community and the FTC has decided to step in.
“The prevalence of in-game micro-transactions, often referred to as ‘loot boxes,’ raises several concerns surrounding the use of psychological principles and enticing mechanics that closely mirror those often found in casinos and games of chance.”
– Senator Maggie Hassan to the ESRB
The argument here is that the “pay-to-win” loot box model could form addictive gambling habits, especially in young gamers.
As a matter of fact, a gamer once spent over $17,000 on loot boxes in just three years. "I am 19 and addicted to gambling," he wrote in an online post.
For now, loot boxes are a major in-game revenue driver for publishers and gaming companies, but regions such as China, Japan, Australia, and others have already decided to regulate loot boxes under gambling laws.
Without surprise, some of today’s largest publishers and most popular gaming companies have capitalized on the use of loot boxes. Some have had less controversy than others.
Overwatch was one of the earlier adopters of loot boxes and actually saw great success in the ways they implemented them.
In Overwatch, a player would earn a loot box every time they leveled up their in-game character, meaning everyone had a possibility of earning exclusive items as long as they played the game. At least one rare item was guaranteed in every loot box too.
Overwatch loot boxes featured cosmetic items like custom outfits and voice lines for random heroes. These items weren’t considered game-changing nor did they give one player an objective advantage over another.
Finally, Overwatch was transparent about their loot box reward percentages. See the chart below for the item breakdown.
Star Wars Battlefront 2
Star Wars Battlefront 2, developed by Electronic Arts (EA), is an example of a publisher facing harsh scrutiny over its implementation of loot boxes.
In Star Wars Battlefront 2, a player would have to purchase in-game currency (called crystals) using real currency. Then, crystals would be used to purchase loot boxes.
The loot boxes were wildly random in terms of receiving quality items. This led to players spending more money than they anticipated on loot boxes.
The contents of the loot boxes were game-changing as well. For example, Darth Vader, a powerful character in the Star Wars universe, was hidden within loot boxes. Those who decided to spend money to unlock Darth Vader would have an obvious advantage over other players.
Darth Vader, one of Battlefront's most prominent in-game characters.
Star Wars Battlefront 2 was one of the most anticipated games of 2017, but the loot box system tipped the scales in favor of players willing to spend more money on the game. This led to harsh criticisms and low scores across all major gaming review sites.
The reception of EA’s loot boxes was so bad, the company decided to pull its loot box system from the game entirely – but the damage had already been done, and game sales dwindled.
What’s your take on loot boxes?
We’ve seen how loot boxes can add a fun gamification element within video games, but can also divide a community of players.
When loot boxes are done correctly, customers have positive gaming experiences and feel their money was well-spent. When done incorrectly, customers have negative gaming experiences and may feel cheated.
As loot box systems are studied more, publishers and gaming companies may be able to find ways to keep the lucrative monetization method without alienating large fanbases. Until then, it’s up to the players to decide if the payoff of contributing to a video game’s loot system is worth it.
Want to learn more about gamification? Here are 7 examples of gamification used in industries other than gaming.