Loot Boxes in Games Draw FTC’s Attention

A year ago, loot boxes were a persistent annoyance for gamers, but they didn’t get much attention from the rest of the world. But then, Electronic Arts made the mistake of stuffing too many of them into Star Wars: Battlefront 2. The outcry over Battlefront 2 was so loud that EA had to drop the loot boxes, and regulators began to take notice. Now, several countries have enacted regulations on random loot, and the US Federal Trade Commission (FTC) has now pledged to look into it.

In a recent hearing on Capitol Hill, Senator Maggie Hassan (D-NH) discussed the issue of loot boxes with FTC commissioners. Hassan points out that loot boxes are present in games of all types, from the lowliest casual mobile games up to expensive AAA titles. Referencing a Juniper Research report from earlier this year, Hassan says loot boxes will be a $50 billion industry by 2022.

Loot boxes form an integral piece of the progression mechanics in many of today’s most popular games including Overwatch and FIFA. These are distinct from other in-game purchases because the items in each box are random. Sometimes you get common items, but there’s a chance you could get highly sought-after goodies. And of course, you have to buy most loot boxes with real money.

After detailing the potential issues with loot boxes, Senator Hassan asked FTC chairman Joe Simons to undertake an investigation. Simons affirmed he would, but it was just a simple “yes.” Simons didn’t offer additional insights or express any feelings on the matter. If the FTC follows through, it will evaluate the negative impact of loot boxes and update the committee on the outcome.

Thus far, Japan, the Netherlands, and Belgium have all taken action to regulate loot boxes. Belgium has been the most heavy-handed, forcing some publishers to remove loot box mechanics. Meanwhile, the Entertainment Software Association contends that loot boxes are not gambling because they “have no real-world value.”

The more regulators and researchers look into loot boxes, the more they look like gambling. It doesn’t matter if the items you get have no real-world value — people attach value to them. This is different than a conventional in-game purchase or DLC because you don’t know what you’re getting in a loot box. So, you can’t do a cost-benefit analysis to decide if you should spend the money. Loot boxes exploit human psychology just like a spinning roulette wheel, dangling the possibility of fabulous prizes in front of our faces to encourage spending. We’re only beginning to understand how that affects players, and maybe the FTC can help figure that out.