Most Gamers Hate Buying Loot Boxes, So Why Are Games Using Them?

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Over the last few years, we’ve seen an increasing number of games locking desirable content behind the digital operant conditioning chambers known as “loot boxes.” The basics of how loot boxes work are common to all games that use them. Players are presented with the opportunity to spend real money, in exchange for an in-game box containing one or more items.

From here, the particulars vary. In some games, the boxes are random rewards you unlock with keys you bought with real dollars. Sometimes the boxes are free, but the keys to open them cost money. Some games also offer the opportunity to earn keys and chests by advancing through the title in the traditional fashion, or by completing in-game objectives, while others don’t. In some cases, the items you find inside the chest can have a direct impact on how well you perform in-game, while others are strictly cosmetic and don’t affect gameplay at all.

The other thing loot box games have in common? They’re really starting to piss off the players that encounter them.

It’s not hard to see why. Over the past decade, we’ve seen a steady shift towards new monetization strategies. They initially sold for small amounts of money or were strictly cosmetic in nature. When mobile games took off, those frequently offered the option to purchase an in-game currency with real-world money, with said currency being used to bypass game levels, quickly finish buildings with ridiculously long build times, and to purchase powerful weapons and armor. AAA games adopted some of these features, but they mostly debuted in games that had gone free-to-play. The AAA games that did sell items while charging an up-front fee typically either stuck to cosmetic changes, or offered players enough opportunities to earn the relevant currency that the items in question were always something you could earn within a reasonable period of time.

Loot boxes take the idea of “pay-to-win” and add a noxious random generator. In a conventional F2P + $ currency model, you may be paying for equipment or resources to play the game, but at least you know what you’re going to get when you spend money. Loot boxes randomize their payouts and, in many cases, will happily award you a duplicate item you already have. We’ve gone from a model of “Pay $ X For Y Item” to “Buy an unknown number of keys or crates until you get lucky and find something you wanted or needed.”

It’s cynical exploitation of a well-known psychological fact: The best way to keep someone playing a game is to give them a powerful reward or major upgrade on an irregular time schedule. Lotteries and gambling both exploit this strategy, and we’re seeing games start doing it as well. The fact that AAA games that cost $ 60 up front are using it adds insult to injury. Middle Earth: Shadow of War, Star Wars Battlefront II, Forza Motorsport 7 and NBA 2K18 are all examples of games that use loot boxes that have already launched or will launch in the fourth quarter of this year.

Part of the problem is that game prices have been stuck at $ 59.99 for well over a decade. If pricing had simply kept pace with inflation, games should be sitting at ~$ 71. If a game were to sell 3 million copies, that’s ~$ 35 million in revenue that won’t be earned. Even against rising game development costs, $ 35 million ain’t chump change.

The biggest problem with loot boxes has nothing to do with whether a game is F2P or AAA, though this can impact how gamers perceive whether loot boxes are fair. The bigger issue is loot crates create powerful perverse incentives for developers to sabotage their own titles to make players more willing to pay extra for the crates themselves. This can range from giving desired items a less-than-1-percent drop rate, to technically allowing gamers who don’t buy keys or boxes in-game to earn these rewards anyway, but only at a glacial pace. The worst games are the ones that make access to top-end gear functionally mandatory to finish a title, while also forcing players to grind dozens or hundreds of hours to earn the same equipment.

Data and graph by Ars Technica

Now, toss in the fact that video game development costs increase every single generation, mostly driven by gamers that demand better artwork, more nuanced voice acting, ever-more-sophisticated gameplay, and affordable prices. Companies clearly don’t feel as if they can raise their rates. So they find ways to try and upsell you on various Day 1 DLC, special costumes, “Collector’s Editions” and yes, pay-to-win and loot box systems.

Reports in 2016 from two different companies found that 10 percent of mobile game players were responsible for 59 percent of a title’s total revenue (Tapjoy), while a different company found an even more lopsided statistic, with just .19 percent of players accounting for 48 percent of revenue (Swrve). We have a market where game prices have been static for a decade (as detailed by Ars Technica back in 2013), while game development costs have continued to rise. Without raising the base price, developers are stuck trying to eke more money out of the same group of people.

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This graph, from a talk in 2011 by Mark Cerny, shows how video game costs blew into orbit and have never come back down. Things are worse, six years later.

The trend is clear, and it’s terrible for gaming. For decades, the intrinsic idea baked into most games has been that they should at least attempt to reward skill-based play, whether that reward came in the form of a higher score, getting to leave your initials on the arcade cabinent’s screen, better gear, seeing a different ending, or having a longer list of achievements. But the more lopsided a game’s funding model is, and the more it depends on a handful of players investing large amounts of money, the more likely it is that any balance changes or new introductions are going to depend on what those players want.

Having played World of Warcraft from its closed beta to 2012, I watched battles between so-called “casuals” and “hardcores” play out on a daily basis. So long as everyone paid the same price–$ 15 per month–everyone had the right to lobby for their own particular vision of what the game should offer and how it should be tweaked. When Blizzard said it made changes and created content based on its own analysis and player feedback, there was no reason to think the company was lying. Hardcore raiders were the most reliable customers and even voluntary brand ambassadors. Keeping them happy was essential. But the casual players who logged in for an hour or two a few times a week also mattered, and both contributed the same $ 14.95-per-month to Blizzard’s bottom line.

Now, imagine that those same hardcore raiders had been paying Blizzard twice, three times, or five times as much money per month. Suddenly, one group of players counts for disproportionately more, and there’s no longer a 1:1 relationship between how much money the game earns per month and how many people are paying the monthly fee. Some people’s “votes” are worth much more than others. I’ve often wondered how this will impact Star Citizen (assuming it ever launches), when there are people on one side who paid $ 40 to $ 60 for the game and people on the other who invested thousands or tens of thousands of dollars. It makes sense to ask for more input when you’re a major financial backer. But it’s also uncharted territory for a AAA game to try and juggle that much price disparity.

To be clear, I hate loot boxes. I’m not a fan of paying real dollars for a chance to win something when I just slapped down $ 60 for a game. The more pay-to-win mechanics are integrated into the core gaming loop, the greater the chance that the game will itself be impacted, and not for the better.

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