Why video game marketers will be saying “No loot boxes” more than “60fps” or “4K HDR” this fall

The controversy surrounding loot boxes (random packs of in-game items often sold for real money) reached its peak in November 2017 when EA abruptly postponed its plans to offer paid loot boxes in Star Wars Battlefront II. Gamers shunned the title as “pay to win” due to the in-game advantage given to heavy spenders who could obtain powerful items. Loot boxes soon attracted the attention of lawmakers around the world as individuals like Hawaii State Representative Chris Lee accused them of amounting to unregulated online gambling. However, a March 2018 update marked a turning point in the saga as EA unveiled a radically overhauled progression system for its beleaguered title. With the new Battlefront II setup, players are not be able to purchase items that affect gameplay. EA’s move indicates the games industry is getting less reliant on loot boxes after going overboard in 2017.

 

The loot box controversy hampered Star Wars Battlefront II out of the gate.

 

 

Gambling authorities in countries ranging from the UK to New Zealand have determined loot boxes do not fit their criteria for gambling, and tech-aware legislators are also turning their attention toward Facebook. Even as threats of government regulation continue to subside, developers are nevertheless reluctant to embrace them as much as they’ve done in the past.

 

EA’s move shows that publishers are capable of self-regulation, which is largely driven by a fear of fan backlash. The disdain that gamers have for loot boxes are enough of a deterrent to prevent their wholesale adoption, and we’re already seeing some publishers adapt. Most recently, Warner Bros. Interactive Entertainment announced that paid loot boxes would be removed from the 2017 title Middle-earth: Shadow of War. Microsoft’s Sea of Thieves will soon get microtransactions, but not loot boxes. Destiny 2 did launch with a system of paid random items, but developer Bungie has since de-emphasized its real-money storefront in favor of rewarding players with more items through gameplay. In the lead-up to the release of Monster Hunter World, the game’s producer said in interviews that it did not need loot boxes. The title went on to sell 1.6M digital units in January 2018, becoming one of Capcom’s biggest hits ever.

 

In part, the momentum against loot boxes can be credited to gaming personalities on Twitch and YouTube. Influential figures like Jim Sterling and Angry Joe do not hesitate to call out business practices they see as unethical. A large share of US console and PC players base their purchasing decisions on the recommendations of creators on sites like YouTube (38%) and people on social media (31%), and they pay less attention to traditional critics (23%). At the upcoming E3, we’re likely to see presenters announce “no loot boxes” or that paid content is “cosmetic only” in order to get on the good side of creators and hardcore gamers.

 

Despite the hostility against the business practice, publishers have plenty of other monetization techniques at their disposal. Fortnite: Battle Royale pulled in $126M in revenue in February without selling a single loot box. Instead, the in-game shop features a daily rotation of a few cosmetic upgrades. The limited-availability of these items creates a sense of urgency that leads to impulse purchases as players debate: “Do I buy the thing I want now, or do I risk not having it available again for months?”

Loot boxes won’t disappear anytime soon given their success in games like Overwatch (over $600M of loot boxes sold through February 2018). In the short term, though, “No loot boxes” will be the game industry’s own “gluten free water” — and we’re likely to even see this slogan used to market titles where loot boxes would not make sense such as adventure games (e.g. Firewatch).