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The Loot Box Problem Just Got Much Worse

Earlier this week, the game industry finally acknowledged an issue that has embroiled game players and game makers for so long that politicians around the world have been debating its impact on children for months.

Loot boxes, a bit of digital code created to deliver a flashy online in-game prize to players who either have the patience to earn one or the cash to buy one, have been in the news since late last year. Lawmakers from Australia, the UK, Netherlands, Belgium, France, Germany and Sweden have all already weighed in on the issue of whether loot boxes are gambling and if, no matter how you define them, they should be regulated. Earlier this month, state legislators in Hawaii introduced four new bills that would impact the microtransaction practice if made law. Finally, after U.S. Senator Maggie Hassan (D-NH) sent a letter to the head of the ESRB threatening a federal study into the matter, the board broke its silence.

The result, a decision to implement a new warning label on certain games and an educational effort, seems more smoke-screen than credible examination of a pressing, important issue to the game industry. The decision could also have a lasting, negative impact on the industry as a whole.

Under the new rule, all games with microtransactions – which is a bulk of games – will include the new label and there will be no further description of what sort of in-game purchases are in the title. When pressed on the lack of nuance in the labeling, ESRB head Patricia Vance said that it would be too confusing to parents, that most don’t understand what a loot box is.

Vance also noted in her answer that the ESRB had spoken to parents to help shape this new rule and the board’s decision. Later, a spokesperson said that those insights came from an online survey of 400 parents of gamers conducted this February. That poll found that 69 percent of parents didn’t know what a loot box was. Of the remaining 31 percent who said they did, only 28 percent actually did.

Those seem like the exact sort of statistics that would make it clear that including more details about loot boxes, both in a label and an educational outreach program, is necessary. Understanding is, in fact, one of the metrics that the ESRB uses to show how good its own rating system is. But instead, the ESRB and Entertainment Software Association are burying the phrase and explanation of loot boxes, almost deliberately obfuscating the difference between what could be reasonable in-game purchases and what isn’t.

While Sen. Hassan said that she is happy that the ESRB is taking a “step forward,” she went on to make it clear she wasn’t happy with the board’s specific comments on loot boxes. “I am still concerned by the ESRB’s skepticism regarding the potentially addictive nature of loot boxes and microtransactions in video games.”

While the ESRB’s Vance says that it wasn’t particularly hard to get the new rules OKed by industry leaders, it’s clear in both in action and in my many conversations with developers, that some in the industry have a lot to lose and don’t want any interference.

Electronic Arts, for one, kicked off this turmoil with a poorly constructed, seemingly tacked-on approach to loot boxes for Star Wars: Battlefront II. It so incensed players that the monetization was pulled. And while EA continues to decline comment on the issue (as recently as last night), it still discusses the value and importance of microtransactions in investor meetings.

Activision, one of the other major players in the game industry, patented a method to essentially fleece gamers of their cash through microtransactions with psychologically designed player pairings and in-game offerings. When it was discovered, the company said it wasn’t currently using them. But it’s unclear if that will change, or already has.

Take-Two Interactive, which has seen an enormous uptick in profit through micro-transaction fueled Grand Theft Auto Online, says it doesn’t see loot boxes as a form of gambling. The company also said it plans to only release games with “recurrent consumer spending hooks” going forward. Whether those are loot boxes or some other form of microtransaction remains to be seen.

The reality is that microtransactions represent an enormous portion of the video game industry’s income. Analysis group Superdata estimates that the transactions tied to free-to-play PC games accounted for $19 billion dollars of the industry’s revenue in 2016, while traditional PC and console game sales only accounted for $8 billion.

And then there is the issue of game pricing. While many big, triple-A games continue to grow or become “living games” that have endless play value, the typical retail price seems to remain fixed. Money for those new services and better, bigger games have to come from somewhere, some in the game industry quietly argue.

The thing is that not all microtransactions are bad. In fact, many do provide worthwhile or inexpensive additions to games that players are more than happy to pay for.

And that’s why the ESRB’s decision this week is so damaging to all involved. Lumping together all forms of post-release content as the same thing only makes it harder to pinpoint what isn’t acceptable among gamers and developers or is even unethical.

Most game developers, I believe, likely feel the exact same way as most game players about predatory loot boxes. I have to believe that few in the game industry want a game that feels more like an addiction, that strips people of cash they don’t really want to or can’t afford to spend. Few game developers likely signed up to make an earning through addiction by design.

My Pollyanna-view of game makers as a whole is only supported by the reaction this week to news that the Game Developers Conference will be hosting a panel advocating against anti-loot box legislation.

Some developers seemed unhappy about the panel and the potential that it could continue the use of the worst types of loot boxes and exploitation of whales, the term used for gamers who spend an out-sized amount of money on seemingly free-to-play games.

The good news is that it’s not too late. The ESRB can expand its decision and detail not just what a microtransaction is, but the different sorts, both good and bad. The Entertainment Software Association can prod its members quietly to be more direct about microtransactions and to steer clear of predatory practices. Game developers and heads of major game publishers can embrace the notion of ethical design and work to find a balance between earning a profit and strip-mining the industry for short-term benefits at the expense of weak-willed gamers and unsupervised children.

So much has changed in the game industry since it won that long fought battle for First Amendment protection in 2011. Today, games are used to deal with death, to improve medical care, to blow off steam, to allow gamers to explore Thoreau’s Walden or traipse across the red dust fields of Mars and imagine life there in two generations. It would be a tragedy to step back from that potential and artistry in a moment of avarice.

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