Is The Future of Gaming All Loot Boxes?
Loot boxes are coming under more and more scrutiny as their meteoric rise continues. The practice of buying in-game boosts, hacks, materials, and cheats is everywhere in online gaming.
In 2020, an estimated $15 billion was spent on in-game purchases, and a report by Juniper Research states that loot box revenue will reach $20 billion by 2025.
These are serious sums of money, and the phenomenon has attracted the attention of governments across the world.
British MPs have called for loot boxes to be classed as gambling and restricted to under-18s, and German MPs passed an act underlining the ‘interaction risks’ of the loot boxes. In the United States, Senator Josh Hawley (R-MO) introduced the Protecting Children from Abusive Games Act 2019.
This sought to prevent games “played by minors” to contain loot boxes, and although it didn’t pass, it showed the world’s biggest economy was also having concerns about loot box prevalence.
Two recent studies, one by Juniper and one by the GambleAware charity in the UK, said around 5% of gamers generate 50% of all loot box revenue. By 2025, that will equate to around 230 million players.
While mobile gamers, typically playing ‘free-to-play’ games available from the Google Play Store Apple’s App Store, represent the majority of these extra payments, loot boxes are increasingly seen in more traditional video games.
Why do developers like loot boxes
For developers, particularly those operating in app stores, loot boxes are an obvious attraction. Create an addictive free game but offer in-game purchases to help players move through that game more quickly. The costs to the player may be relatively small compared to buying a traditional video game, but if millions of players are paying, the sums rapidly become astronomical.
The popular game Candy Crush had a $633,000 daily revenue just from American iOS users!
Increasingly, loot boxes are also appearing in Xbox and PlayStation games, and again the benefits for those game developers are clear. They are now not just selling a one-off product. They are in many ways replicating a subscription model, with many players paying additional fees on top of the original purchase price to unluck rewards.
In some cases, games are now sold at a lower price, with the studio confident they can make back the discount plus more with loot boxes.
Can it continue?
There is a lot of player backlash at traditional video game developers for introducing loot boxes. Call of Duty even dropped them from its last few titles (although it replaced them with a premium game product), as has Fortnite. Star Wars: Battlefront II was another game to face backlash over its loot boxes.
For many, the concern is around player safety. Children can quickly rack up large sums buying loot boxes (there is rarely any additional verification needed to buy a loot box), and accounts are often set up in parent’s or guardian’s names. Stories abound about adults facing enormous bills for loot boxes their children have purchased. 40% of children who play online games are estimated to have bought a loot box.
Increasingly, the purchasing of loot boxes is being linked to problem gambling. Loot boxes are referred to as a form of gambling, more akin to playing casino games than harmless online gaming. And this might be what takes down loot boxes for good.
We touched on the government scrutiny at the start of this article. While the problem might get worse before it gets better, it looks inevitable that countries in Europe – perhaps bloc action by the European Union – will change loot boxes. Or at least change the way game providers offer in-app and in-game purchases.
But ultimately, it’s the game developers who will stay in charge. National legislation can only cover national issues. A ban in the UK could easily be gotten around by operating from a different jurisdiction. And with thousands of new games being released each month, it’s increasingly complex for any regulators to keep up.
And for the moment, the big app stores have little incentive to clamp down on loot boxes – they take a massive cut of every single transaction through the game forever. The Apple Store had revenue of $72.3 billion in 2020, up nearly $20 billion in 2019.
Loot boxes, therefore, look certain to stay in the gaming landscape in one form or another for the foreseeable future.