“Loot boxes” are becoming increasingly prevalent on computer video games despite rising alarm over the early exposure of children to gambling, new research suggests.
Research by academics at the University of York indicates that the prevalence of loot boxes – virtual bundles of random items exchanged for real-world money – is continuing to grow on desktop games: in the group of top games studied, the presence of loot boxes has increased from about 4% to 71% over the past nine years.
The preprinted study charts the introduction of loot boxes within the 463 most played desktop games on the site Steam from 2010 to 2019. It also reported a rise in microtransactions, where specific items are purchased, from 8% to 86%.
“A common line amongst industry representatives is that loot boxes are a niche feature in modern video games,” said its author, David Zendle. “In contrast to this, these results suggest that loot boxes have become a common presence in the lives of many gamers. In 2010, loot boxes appear to have been almost unheard of in desktop games. However, this is no longer the case.
“We appear to have reached a point where the majority of gamers on Steam play games with loot boxes.” He added that loot boxes were believed to be even more widespread in mobile games.
Spending money on loot boxes, which originated in Japan, has been linked to problem gambling since they involve a high degree of chance and a risk-reward factor, mimicking slot machines and roulette. Cognitive psychologists have said they are “designed to exploit potent psychological mechanisms associated with the development and maintenance of gambling-like behaviours”.
It is difficult to ascertain the true value of the in-game items, but one estimate suggests £23bn was spent on them last year and it is forecast to be a £39bn industry by 2022. A number of video game companies make more money from in-game purchases than from sales of the games themselves.
Digital games revenue rose 11% year on year to £86bn in 2018, according to analysis by SuperData. A large proportion of that figure, £48bn, was spent on mobiles. Meanwhile, £22bn was spent on PC games and £10bn on consoles.
Randomised in-game microtransactions – more commonly known as “loot boxes” – have revolutionised the business of video games, offering publishers a revenue stream that can far outstrip the once-traditional £60 cost of a boxed game without triggering heated accusations of turning a game into a “pay to win” farce.
The system was largely developed in Japan, where games that rely on loot boxes are known as Gacha games, after a popular physical equivalent, Gachapon machines, which offer a capsule containing a random toy from a selection of ten or so. Customers are encouraged to buy multiple capsules to try to collect the entire line.
The digital equivalents encourage the same collector mentality, with a few additions: different items are typically more or less rare, for example, so while any given loot box may be guaranteed to contain a certain number of common items, there will be just a fraction of a percentage point chance that they will contain any of the rarest sort.
Critics argue that this approach, deployed in popular games including FIFA (where the loot boxes are dubbed “card packs” and contain football players) and Overwatch (where the loot boxes contain cosmetic outfits, dialogue and visual art for characters), is equivalent to gambling, since players are encouraged to compulsively purchase loot boxes based on the chance they will receive the specific rare item they desire, with the same psychological triggers from success and failure.
In the UK, 93% of 10-16-year-olds in the UK regularly play computer games, according to research by Parent Zone.
Young people have reported that playing games with loot boxes has led to addictive behaviour and left them in debt. About 2% of 11-16 year-olds are considered problem gamblers, according to the Gambling Commission, and it is feared that childhood spending on loot boxes increases susceptibility to gambling addiction later in life.
Some games are now introducing subscription-based models and even abandoning loot boxes altogether as the threat of regulation grows across the world.
The industry has largely resisted calls to remove loot boxes voluntarily. It now faces an impending threat of regulation in the UK and elsewhere after Belgium, the Netherlands and China either classified them as gambling or moved to restrict them. Sweden is currently investigating how to regulate them.
The children’s commissioner for England joined an influential committee of MPs in September in calling for loot boxes to be considered gambling and for tighter regulation to protect young gamers, some of whom spend hundreds of pounds on loot boxes to advance in games and keep pace with the progress of their peers.
Carolyn Harris, chair of the all-party parliamentary group on gambling-related harm in the last parliament, said the rise of loot boxes on video games was “shocking”. “They’re grooming children to normalise gambling activity by encouraging speculative transactions where you don’t know what you’re going to get,” she said.
“They grow up thinking there’s nothing wrong with pressing buttons and spending money on something that’s not real. They don’t even think of it as gambling. But speaking to young adults, they’ve all brought loot boxes and have now graduated to becoming gamblers.”
A brief published earlier this month by the law firm White & Case said: “Sponsors with portfolio companies in this space should analyse the extent of the portfolio’s reliance on loot boxes as a revenue stream and assess the viability of alternative income models.”
Pressure for reform is also growing in the US after a senator proposed a ban and criticised video game companies for “preying on user addiction”.
“Now that microtransactions are widely accepted as part of the gaming experience, the amount of money spent on virtual in-game items and loot boxes is only going to keep growing unless the US follows the lead of other countries and seriously considers whether loot boxes are a form of gambling,” said Ryan Morison, a lawyer specialising in digital entertainment.
The Association for UK Interactive Entertainment, a trade body for the games industry, said millions of people across a range of platforms and devices enjoyed playing games “sensibly and safely”.
A range of business models were used to provide players with a number of choices through either paying upfront for a game or playing for free and paying for content within games, it said.
“The newer subscription models which are being launched, as well as innovations such as season passes, offer even more choice and control in how people access the entertainment content they want to enjoy.”
