There is a lot wrong with the way our industry does loot boxes.
We've seen loot box systems that are game breaking, others that are exploitative, some that are even downright unethical.
And if that has made you wary of this monetization model, I can't blame you.
But, I'm not sure I'm on board with the demands to eliminate the model entirely, or even to never put them in $60 games.
It's... complicated, let's talk about it.
[Intro music] "Penguin Cap" by CarboHydroM
To start, let's review why the industry is turning to supplemental monetization models like lootboxes.
If you watched our previous two episodes, you'll recall that
player expectations for AAA game fidelity,
and the cost of building games to meet that fidelity standard, have been on the rise for years.
And yet, the purchase price for a AAA game, remains locked at 60 dollars,
regardless of rising costs or inflation, and that's starting to get untenable.
If you want to learn more about that, I recommend checking these two episodes out later.
The ultimate dilemma, though, is that
AAA studios need to see higher profits to match the higher costs, but they can't do so by raising prices.
James was at a convention a few weeks ago and he asked the audience:
"How many of you would buy just as many games each year if they cost $80?"
Two people out of an audience of hundreds raised their hand,
and that is what the games industry is afraid of.
And so they've been exploring supplemental revenue models to make up the difference.
We've tried subscription fees and DLC,
micro-transactions,
season passes and collector's editions,
but our most successful experiment so far is lootboxes.
And it's not that surprising that they're so successful.
They're basically the video game equivalent of a Magic the Gathering booster pack, and
the thing you gotta know about Magic booster packs is that, for a very long time,
they were the highest earning per-user monetization item in all of gaming.
It's a time tested and extremely successful model.
Now obviously the benefits of this model for the developer are huge.
Loot box content is generally far less expensive to produce than DLC or expansions
and the possibility for duplicates inevitably means that players will end up purchasing more content
than the devs actually make.
Done well, it handily solves that $60 price tag problem.
And I would argue that this benefits players in some significant ways as well.
I see a lot of people complain that games with loot boxes are
trying to make everybody pay hundreds of dollars to enjoy the game, but
it's actually the exact opposite case.
Some players being willing to spend hundreds of dollars on these games is what makes it easier
for the industry to sell these games at the more affordable $60 price.
Those big loot box spenders are subsidizing that $60 price tag for the rest of us.
And obviously game companies aren't doing it out of the kindness of their hearts.
Higher profits are unquestionably their goal, but
this is functionally what a successful supplemental profit model like loot boxes achieves.
Games of increasing scale and fidelity sold at the same standard price,
keeping those games affordable for more of us.
And the same principle applies in the free to play space.
I have personally gotten to enjoy hundreds of games for free,
because other players were paying the developer's salary
by buying loot boxes and card packs.
That is a fantastic thing that I would never want to see go away.
But, that subsidy should be freely given.
I have got no qualms with some rich folks throwing tons of money at these games
so the rest of us can play affordably, especially if the content they're buying is strictly cosmetic in nature,
but only if they are not being conned into spending money they can't afford,
and that is where this gets more complicated.
Because frankly, despite all of that positive stuff I just said,
a lot of companies are deploying loot box systems that are exploitative.
There are games out there using everything we know about the human brain
to try to get people to spend money they don't have,
and that is a legit "capital P" Problem.
Now there are some common myths around this that need dispelling:
First, you'll hear some claiming that these games are preying on children,
trying to get them to spend tens of thousands of their parents' money
but this is actually very rare.
It makes for a good news story, so every time it does happen, we hear about it.
There are also consumer protections in almost every affluent country at this point
which force game companies to refund purchases made by minors if a parent requests it.
Most game companies actually HATE having to deal with children purchasing their stuff,
because it just creates so many headaches.
That said, anyone who is doing this, that is actual evil.
I can't believe I have to say this sentence but:
Don't prey on children, please!
The second and much more common discussion point you'll hear is that loot boxes are gambling or
are at least similar enough to gambling that they'll either
-cause gambling addiction,
or, at the very least,
prey on those vulnerable to gambling addiction.
This... needs more study.
It may well be true, but the only major study I've seen on the matter, didn't find that to be the case.
Both legally and psychologically, there's an important distinction between gambling and non gambling
and that is the ability to cash out.
Because you can't take your rare Overwatch skin and sell it back to Blizzard for actual spending money,
the experience affects us differently.
Video game loot boxes are less like craps and roulette
and are more akin to a crane game, or a blind box, or the raffle for prizes at the county fair.
At least that's what the science seems to suggest right now.
Again, this requires a lot more serious study.
I've seen a number of psychologists voice their personal opinions,
some saying "of course it's gambling,"
others saying "of course it's not gambling"
but really it just reinforces the point.
We need to actually scientifically look into this, and on a large scale,
because if loot boxes and booster packs and such are causing or triggering actual gambling addiction,
that is something we need to know about.
And if they're not, that's something we need to know too,
because constantly insisting that they are
could lead to a whole host of legal problems that I don't have time to get into today.
But in either case,
a lot of game companies are making use of B.F. Skinner's research on compulsion mechanics
to create their payout schedules for loot boxes
which is the same research slot machine companies use.
We can do better than that.
In fact, we HAVE to do better than that.
We can make getting a loot box feel rewarding
without using psychological tricks to try to manipulate players into buying more of them.
Now in the limited amount of real research that there has been on this,
I have found one thread that really does sadden me.
Rather than gambling addiction,
those people who spend too much money on loot boxes
were actually found to be suffering from some form of social anxiety or social pressure.
Those who spent money they couldn't afford to,
often did so because they felt like they were going to let their guild down if they didn't,
or because they feared they would lose their top dog status and feel humiliated if they didn't keep paying.
This is something that much of the industry does still lean heavily into when designing these and that is wrong.
That is something we should never do.
Be on the lookout for that stuff because, especially in the mobile and the free to play world,
that kind of predatory approach has become so common it's, almost taken for granted today.
At the end of the day, I don't have a problem with loot boxes as a monetization model, even in $60 games.
When designed ethically,
the loot box model allows allows rich folks to pay more money so the game stays affordable for the rest of us,
and that is alright by me.
If someone has a bunch of money to throw around and they want to buy something ludicrous,
our society generally seems pretty OK with that.
It's like a rich person choosing to buy a Ferrari.
If they want to throw $300,000 at a car that
looks cooler and drives better than any vehicle most of us will ever get to drive,
that is something our society lets them do.
Do I think they could spend that money on something better than a sports car or cosmetics in a video game?
Oh yeah. Definitely.
Do I think that they should do better things for humanity with that money?
Yeah, probably. But, it's not my money.
And at least, unlike the Ferrari, them buying loot boxes helps to keep the cost of games down for the rest of us.
Just, games industry, don't be evil about this.
This really shouldn't have to be said.
People like games. People are OK with spending money on games.
You don't have to make your loot boxes as exploitative as possible to maximize your revenue.
You have got a solid monetization system here, just don't break it for yourself.
In fact, just look to Battlefront II for your object lesson.
If you get greedy and drop a badly-designed loot box system in front of your players,
you will lose revenue like you wouldn't believe.
I might come back to that Battlefront mess in a later episode, because, hmm, boy.
But, suffice it to say, your customers aren't robots.
Designing a more-efficient system for them to mechanistically put money in,
to get more money out of them, won't work.
Maximizing profit, in this case, isn't actually the way to maximize profit.
You know what? You have a conscience. Use the dang thing.
At the same time, we as an audience have to understand what we are asking for.
We can't expect game makers to keep prices the same at the expense of their ability to keep the lights on.
We have to find better answers.
We have to reward the companies that create good loot box systems.
I mean, absolutely do get out there and complain if
some company serves up an exploitative or terrible monetization system, just,
don't expect supplemental monetization systems to go away.
That, or, just be ready to start paying $80 per game, which I don't think is anybody's preference.
Besides, there is another reason we need to be careful what we ask for, legal reasons, in fact.
But, I am running way too long on this already, so I will save that for next time.
Thanks for watching, I'll see you next week.
[Outro] "High Tide" by FoxyPanda