In April of 2018, Belgium’s Minister of Justice, Koen Geens, announced that three popular video games – Overwatch, Counter-Strike: Global Offensive, and FIFA 18 – were in violation of Belgium’s gambling legislation. The announcement, made as a result of an investigation conducted by Belgium’s Gaming Commission, has added a new dimension to a series of questions New Zealand officials have just begun to ask themselves: 1) Do the mechanics of modern video games constitute gambling? 2) Does that make these video games illegal? And 3) If so, what should be our response?
To understand the reasoning behind Koen Geens announcement, we have to look at the historical market trends of the video game industry. Traditionally, games were bought and sold on a ‘pay-upfront’ model. That is: you couldn’t play the game until you’d paid a set price, but once you’d paid, the entire game was yours for life. This worked well in the early 2000s, when home consoles were the dominant method by which people gamed. Console gamers wanted to play one game for a long period of a time, and were therefore happy to make large, one-off time and money investments.
But then things changed. The mid-2000s saw smart devices make their way into the hands of more and more people, which created a whole new video game market: mobile gamers. This new market didn’t play games the usual way: whereas console gamers played games to be immersed in them for hours on end, mobile gamers tended to game to fill short periods of time in between activities – on the train to work, while waiting in a queue, or while eating lunch. As a result, the games they favoured were shorter, shallower experiences which could be played in 1 to 5 minute bursts. Because mobile gamers played these games sparingly, they were unwilling to make the large monetary investments in them that their console counterparts tended to do. Game publishers were forced to reassess the way in which they approached marketing, and began to look outside the traditional ‘pay-upfront’ model to find new ways to monetise their games.
From this emerged the ‘pay-to-win’ model. Developers discovered they could make their game free to download and play, but then charge people to overcome obstacles inside the game. The thinking was, if a player had invested enough time and effort into completing the game, they’d be happy to fork out a few bucks here and there to keep their good times going. Games like Farmville let players play free and unhindered for the first few hours. Then, once the player was hooked, the game introduced a ‘wait time’, which effectively paused the game until an arbitrary timer ran out. Farmville offered waiting players a choice: keep waiting, or pay a few dollars to make the timer disappear. Other games, like Chair Entertainment’s Infinity Blade, encouraged players to buy better weapons and armour (which made the game easier as a result) with real-world currency. Cynical as these practices were, they worked well enough to sustain a whole new batch of mobile games. But then developers had an idea: what if you didn’t pay-to-win, but paid for the chance to win? And thus, loot boxes were born.
Loot boxes are a game mechanic which sees a player pay money (in-game or real life) to receive a randomly selected virtual reward. Sometimes these rewards can be sold for real-life money, other times they can only be used inside the game. So, for example, you might pay $5 for a box which contains three potential rewards: a blue gem, a green gem, and a red gem. You open the box, and an algorithm randomly gives you one of the three gems.
The loot box now dominates the modern video game industry – and not without good reason. Loot boxes are, categorically, the most effective way of monetising in-game obstacles. This is because the random chance element means there’s no guarantee you’ll get exactly what you want when you pay for the loot box. This in turn means developers are able to wring even more money out of the consumer than they would otherwise be able to. Whereas games like Farmville let you pay upfront to make the obstacle disappear, the random chance element of loot boxes mean that, more often than not, if you want the new level, sword, armour, or other item that is holding you back from achieving success, you’ll probably have to cough up more than once to get it.
The success of this monetisation method has lead to more and more game developers, both console and mobile, including it in their games. Today, practically every new major video game contains a loot box mechanic, regardless of whether it’s free to play or not. But the inclusion of these into larger, more ‘traditional’ games, has begun to highlight just how predatory they really are. In particular, concern has been expressed over the similarities that exist between loot boxes and pokie machines.
In Counter-Strike: Global Offensive, loot boxes appear disguised as ‘weapon crates’. Weapon crates, which are bought with real money, give players a randomly selected ‘skin’ (a cosmetic change which can be applied to a player’s guns). These skins can be traded with other players for in-game items, or real-world money. Unfortunately, not all skins are made equal; some are much rarer than others, meaning loot boxes might give a player a skin worth little, or a skin worth a lot. Thereby, you can see it wouldn’t be much of a leap to identify this as gambling. Players are essentially spinning a virtual wheel for the chance to win something worth a lot (or a little) of real world money. It’s a not-so-subtle attempt to prey on the player’s psychological desire to seek the thrill of being rewarded from gambling. Want the new, super-cool tiger skin? You can spend $200 buying it off another player, or you can buy a weapon crate for around $5 and try your luck.
But does the game have to be giving out items of real monetary value to be considered gambling? What if they give out items that aren’t worth anything, but might still be desirable? In FIFA, players are encouraged to build the best football team possible by collecting footballers. Players can collect these footballers in two ways: by buying the best ones from the shelf for a high price, or by receiving them through the relatively cheap ‘player packs’. Player packs, once bought, give players a randomly selected football player – one of value or little worth. Again, like CS:GO, the player packs operate as a sort of fruit machine, preying on players’ desire to keep up with their opponents. But unlike CS:GO, FIFA doesn’t let players cash their footballers out for real money. So is this gambling? Belgium’s Justice Minister certainly thinks so. And it makes sense when you think about it; while the ultimate packs aren’t offering players monetary advantages, they do offer another kind of advantage – being better than your friends.
Of course, gambling in itself isn’t a worry. It’s entirely legal for consenting adults to gamble in New Zealand. But it’s important to remember many of these games are targeted towards children. FIFA 18 carries a G rating in New Zealand, and both Overwatch and CS:GO support massive player-bases of adolescents. All of these games are inundated with loot boxes, and have been singled out by Belgium for their exploitation of children’s naivety in regards to gambling.
Maria Bellringer, associate director of AUT’s Gambling and Addictions Research Centre, has spent a lifetime researching the interplay between youth and gambling. In an interview given to Craccum last year, she believed developers deliberately targeted children in their advertising, as they were more likely to fall for gambling elements within the game, which was worrying. “If gambling behaviour is normalised, then kids are more likely to be trying it out [later on in life]”, she believes. Bellringer also identifies the blend of skill and chance as making these games particularly dangerous; the skill element allows developers to avoid marketing their games under gambling laws, while also tricking players into believing their skill can overcome random chance. “When you’re playing a video game, you think you’re playing a game of skill”, Bellringer says. “When gambling-type elements are embedded in a video game, that… brings in something totally different. That element of skill is gone, and suddenly you’ve got these random chance events … in something that is nothing to do with gambling, supposedly”. She further adds that “kids don’t necessarily know that”.
Bellringer’s concerns are shared by Andree Froude, of Problem Gambling Foundation New Zealand, who says her own experience has proven that exposure to gambling at a young age can lead to normalisation of gambling as an adult. “The ‘gamblification’ of games is a real concern”, she told Craccum. “Some of the mechanics of loot boxes are really, really similar to those of pokie machines, and they’ve been designed … for that very reason”. While Froude indicated more research needed to be done to establish exactly how gambling in games might be affecting children, she admits “I think we need to look really, really hard at whether our gambling act, and whether our regulations around this, are going to protect young people”.
But what can be done about it? A few things, actually. Currently, video games entering New Zealand are classified (given a rating between G and R18+) by the Office of Film and Literature Classification. They’re judged on the same five criteria that films, media and books are: the extent to which it deals with sex, horror, crime, cruelty and violence (as laid out by section 3 of the Films, Videos and Publications Classification Act 1993). Perhaps we should consider adding ‘gambling’ to the list of factors on which games are classified. Alternatively, we could follow in the footsteps of Belgium and the Netherlands, where lawmakers are actively working with game developers to ensure their games meet the regulations around gambling games.
Or, perhaps, we should consider paying more for our games. Because, as with many things in life, it appears the loot box issue is a problem of our own making. In 2017, American game designer Raph Koster ran a study which compared the development cycles of large modern games with games made a decade earlier. While the study was far from perfect, Koster found that on average, games cost ten times as much to produce now as they had a decade earlier. Interestingly though, the average price of a large-budget video game had hardly risen, from around US$50 in the mid-2000s to US$60 in 2017. Games companies had tried to increase the price, but American consumers had been unwilling to shell out more than a few extra dollars.
Koster contends that ‘gamblification’ of games is a natural result of our unwillingness to accept their increasing cost. Games were getting more expensive, therefore they required more and more revenue to remain profitable. With consumers unwilling to pay more to own games, developers were forced to look elsewhere to make money, and their eyes fell on techniques within the gambling industry.
While it’s unclear whether the ‘gamblification’ of video games is actually impacting the development of children, one thing is clear; modern monetisation practices run dangerously close to traditional definitions of gambling, and more needs to be done to regulate them.