To those on the periphery of the video games industry, the term ‘loot box’ might not mean much, but within it, the controversial practice has been a source of ire, as well as great profit.
Since the launch of Blizzard’s competitive shooter Overwatch, the practice of having players earn randomly selected in-game items has skyrocketed across console and PC releases. Originating from free-to-play titles, the practice has become controversial as it can stifle player progression and turn them to directly purchasing the boxes and gambling with their contents.
A debate has been raging as to whether legislation should be applied to such mechanics, labelling them gambling and therefore unsuitable for minors. Despite this, a new study from Juniper Research reports that the business model is set to earn a whopping $50bn (£35bn) annually in global consumer spending by 2022. The earnings are an increase on just under $30bn (£21bn) this year.
This follows findings from the Gambling Commission that 11 per cent of 11-16 year olds in the UK had engaged in skin gambling.
"Juniper strongly recommends regulation for skin trading and gambling, in an attempt to both prevent youth participation and remove malicious actors who run sites which steal skins or short-change users," reads the statement from the research firm.
So what does this mean for licensors? This is uncharted territory for the games industry. If legislation does come into effect, certain titles could show a reduced audience if they do not change their business models. There is also the risk of brand becoming toxic if its fanbase views its mechanics as exploitative. For an example of this, look no further than EA’s woes with Star Wars Battlefront 2, which saw the publisher forced to remove the game’s progression system and apologise to fans.
Meanwhile, Valve has taken measures against on third-party websites who operate casino-style betting for skins. The Steam Community Market allows users to sell in-game items to others for money, with Steam taking a 5 per cent cut of these transactions.
With over six billion items traded on the skins market, Juniper believes that Steam is responsible for the majority of trades. "Steam makes money from these transactions,” said Juniper, “hence the reluctance to shut the practice down."
Warner Bros. is another publisher that has backed away from the practice, removing microtransactions and loot boxes from Middle Earth: Shadow of War.