11 ms·

Loot boxes a matter of “life or death,” says researcher

52 points by EndXA 7y ago

vorpalhex 7y ago
It feels to me that the issue is game studios are too large. Indie's don't engage in this behavior and still produce very excellent games without going bankrupt (Factorio, Stardew Valley, Stormworks). Even smaller developers that choose a Free-to-play model with transactional elements (Path of Exile) can do it in a very player friendly way that aligns with game value. On the other side are companies like Activision and EA that will sell you a $60 game and expect you to spend another $60 in micro-transactions, screaming "more profit" the whole time. My advice is choose who you support with your money carefully.
- lawl 7y ago
  Path of Exile does have (cosmetic) loot boxes though. They didn't always, but they do now. Not a problem for me because I just don't buy them, but just not buying them isn't really a solution for people with a gambling problem. Games like Factorio do show indeed that it's possible to just sell an excellent game for $20-30 and be profitable. Now, I don't have a source for this, but I heard valve for example stopped making single player-pay upfront games because the a one time profit of $200 million simply isn't worth it compared to, let's just call them 'modern monetization' techniques.
  - vorpalhex 7y ago
    Path of Exile doesn't have just cosmetic loot boxes, you can actually buy game upgrades! You can unlock inventory tabs and get better sorting. And that's what I mean. Those features are a few dollars, you almost always know exactly what you're getting, and they're generally only useful after you've put a few hours into the game. For a free to play game, that's a totally valid use in my book. > but just not buying them isn't really a solution for people with a gambling problem Someone having a pre-existing gambling problem isn't the fault of the developers, nor is that what the researcher in the original article is claiming. The researcher claims that allowing kids to engage in buying loot boxes fosters a gambling addiction later in life.
    - lawl 7y ago
      Yeah I'm aware of how their monetization works and I think it's great as they at least never force you to buy them and everything eventually becomes available for a flat price in the shop at some point. > Someone having a pre-existing gambling problem isn't the fault of the developers, nor is that what the researcher in the original article is claiming. The researcher claims that allowing kids to engage in buying loot boxes fosters a gambling addiction later in life. Kids can also buy lootboxes in PoE. Ok sure, technically kids shouldn't be playing PoE, but that's just not reality.
  - fredley 7y ago
    $20 on Factorio is probably the best money I've ever spent on a game, having played over 1,000 hours. In other words, they've managed to make something endlessly addictive without any gambling element at all...
    - Bartweiss 7y ago
      Although from an industry perspective, that's bad news because you're paying $0.50/hour for entertainment. And without room for a new campaign or a graphics upgrade, whoever wants to sell you your next 1,000 hour game still has to compete with Factorio. Minecraft, Terraria, Factorio, and maybe Satisfactory have all done well, but each one contends with all the rest. Don't get me wrong, I love Factorio and I think it's a way more valuable achievement than any of the loot box games under debate. I also think it's a viable development model: Factorio was in the top 100 for 2018 Steam revenue, with a 20 person studio. It's just interesting that unlike other media, videogames have this order-of-magnitude variation in how much they compete with one another. (This ties into a much longer narrative about the decline of single-player campaigns. The beauty of e.g. Dragon Age is that you can make an engrossing game and build, not undermine, the market for your next one. But as the difficulty of development shifts towards hard-to-reuse things like character models, there's an increasingly strong incentive to emulate CoD and R6 and wring as much longevity as possible out of each iteration.)
  - ThrowawayR2 7y ago
    > Games like Factorio do show indeed that it's possible to just sell an excellent game for $20-30 and be profitable. Sure, but that means nothing since games of the quality of Factorio come along once in a blue moon. It's nice that selling filet mignon is profitable, but selling a decent burger has to be profitable too to have a viable industry. That has proven to be difficult in the games industry under the current circumstances. (And if any here disagree, ask yourself, "is the software or service I'm building for my employer comparable to a Factorio or whether it's just another average product/SaaS and whether or not my employer "deserves" to be profitable to sign my paycheck".)
    - Bartweiss 7y ago
      It's not just that: Factorio makes it harder to games like Factorio to be profitable. The way we consume videogames is essentially unique among media, because the time investment is so varied. Making a superhero movie helps saturate the market for superhero movies, but almost no one directly decides "instead of going to the rest of the MCU, I'll just rewatch Iron Man fifteen times". But with videogames, it's unremarkable to someone who loves two games give one 50 hours of playtime and the other 1,000. If you're going to enter the market, competing with that 1,000 hour title is a much tougher challenge. Factorio is like an an endless filet mignon; since it's not sold on graphics or story, that $20 purchase will endure to challenge all of its successors. (Satisfactory might catch on, but if it does the niche will be one step more exhausted.) Minecraft is a $30 game that's still eating play hours among people who've owned it for years; continuing monetization has depended not on a sequel but on ports (Pocket Edition), peripheral merch, and new generations of players; that's very obviously not a model most games can use. Dwarf Fortress is a niche of its own, near-permanently filled by just two donation-funded developers. (Dominions is less famous, but similar: a two-man team has kept people playing their output for twenty years.) Even AAA products like Civilization struggle; lots of people avoid buying Civ games at release because they compare unfavorably to the patched-and-expanded predecessor. Nor is it a coincidence that all of those games are immersive strategy or construction titles. On one hand, they're generally modest in terms of graphics and campaign, so there's no obvious need to switch to newer titles. And on the other, they're modest in graphics and server load, so a small team can make a popular title relatively cheaply. The end result is that you can make a solid profit on this sort of cheap, no-loot, no-subscribtion game - if you're one of an inherently small number of winners in a constrained design space. I don't think there's anything wrong with this. It's a triumph that $20, thousand-hour games exist, and the people making them actually do seem to make solid money. But it's worth remembering just how niche an arrangement this is. It's possible for media to exist that is at once desired and unprofitable to create; the Factorio equivalent for an FPS or CCG might well be such a product.
  - boarnoah 7y ago
    Curious which category you'd classify Valve's monetization techniques. The big ones Counter Strike and Dota are entirely cosmetics after all.
- deleted 7y ago
  [deleted]
- kec 7y ago
  Only two of those games have 3d graphics: one has an mtx revenue stream, and the other is a stylized low resolution design and conveniently has no real background to render. Successful indies survive as they do because they stay within their severely constrained production budgets. Modern AAA's have large studios and insane budgets (Red Dead Redemption 2 is estimated to have cost around $1B to produce) because modern computer graphics are really, really time consuming and expensive to produce. If we assume that RDR2 did cost $1B, and Rockstar nets an average of $40 per sale, they'd have to sell 25 Million copies just to break even on box sales alone. Reports are that they've hit that number of units shipped as of this month, but again, that's just to break even (and assumes the game has never been sold at a discount, and that physical copies have the same margin as digital).
  - davemp 7y ago
    That $1B number gets some real doubt from me. I'd bet the real number is a few $100M lower. No way rockstar had over 1k people working on that rd2 for eight years at ~$100k avg.
    - Scramblejams 7y ago
      Don't forget marketing budgets. It's not unheard of for the really heavy hitters to spend at least as much marketing a game as developing it: https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develop https://en.wikipedia.org/wiki/List_of_most_expensive_video_g...
  - lawtalkinghuman 7y ago
    Without microtransaction and lootbox revenue, developers might have to not build essential features like ensuring horse testicles shrink or enlarge to match the ambient temperature. How would players cope with this lack of equine testicular realism?
- rtkwe 7y ago
  It's true indies and smaller studios can make some great games but there's yet to be a real way to make a large game with lots of detail and nice graphics other than throwing tons of people at it to place all the random street trash in The Division or figure out the building destruction in Battlefield and those people are expensive. I'm not defending the microtransaction money grabs EA has been making recently but there is something to be said for the fact that games have STAYED $60 for years while getting more detailed and more expensive to make.
- lonelappde 7y ago
  Indies also make lootboxy games, but they don't last because they get bought or cloned by companies like Zynga. and big companies also make non-lootboxy games. But when an indie makes a lootboxy hit, then it becomes a big company with its big money.
darepublic 7y ago
Life itself is also life or death
program_whiz 7y ago
Its also life-or-death for much of the game industry. The same way most restaurants and fast food chains wouldn't be able to exist without "cheap tricks" targeting primitive brain circuity (e.g. MSG, sweeteners, frying), most game studios would not be able to survive based on box sales alone. They need a skinner-box to extract more money out of people. Creating a game that is compelling enough to extract ever-increasing value out of people based on content, quality, and narrative alone is extremely difficult. Making a "random loot box" system is extremely easy and pays far more, even though its the "easy way out". Of course, like fast food and cigarettes / drugs, the consumers also bear responsibility. Rather than supporting "clean" games with something noble to offer, the games that exploited these tricks virtually printed money, while the "old timey" approach of spending years making a quality title gave way to the more casino-like interactions we see today. The truth is fast food, drugs, and gambling are just more fun than home-cooked nutritious meals, healthy habits, and deep/challenging engagement. Pretty much everything fits these patterns of reduction to the basic animalistic appeal: movies, music, clothing/attire, dating apps, even our politics. Its just easier and more effective to appeal to the limbic system than to figure out something new and profound.
- zuuow 7y ago
  Whatever happens with WoW Classic will echo across the industry.
- celticmusic 7y ago
  they could survive on box sales alone, but they would have to change back to what they used to be. edit: And let me point out, you can make money online without lootboxes, plenty of companies do, so it's not as if the revenue stream completely disappears.
  - ebiester 7y ago
    It is all about if people will be willing to have less detailed games or pay 90-100 dollars for the same games, or increased subscriptions.
    - 7y ago
piker 7y ago
> "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said. Perhaps contrary to the author's point, the ability to reap rewards by defrauding players regarding probabilities of payouts seems to imply some rationality in purchasing the loot boxes. > "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this." In all things there is often a short-term benefit to be derived from lying. It doesn't necessarily then follow that "there must be regulation around" all things.
- pjc50 7y ago
  Obtaining money by deception is already regulated: it's fraud. People publishing deliberately inaccurate lootbox odds should be prosecuted and given, at the very least, a criminal record and large fine.
  - falcolas 7y ago
    Here's a question - if you have 1 in 1,000, or 1 in 1M odds of getting a specific item, is it acceptable to list those odds as "<1%"? That's what occurs today when companies are forced to reveal rates. It's misleading at best.
    - cma 7y ago
      If "<1%" is so successful in misleading people and increasing sales, why wouldn't they just do it without the regulation requiring it?
      - falcolas 7y ago
        > why wouldn't they just do it without the regulation requiring it Likely because it has a negligable effect, and it's harder to do than not to do. Does a gambler stop gambling despite knowing their odds of beating the house are less than 1%?
        7y ago
charliesharding 7y ago
They raise a valid point with a needlessly sensationalist title - but it does feel like a natural (d)evolution of the gaming industry. This is what happens when a studio becomes successful, hires a lot of people, then tries its hardest to maximize profits. The real solution here is that parents need to educate themselves on how to lock down permissions on game purchases and manage their children's playtime/addiction levels. Government regulation is not a good substitute for parenting. Remember, as a consumer, you can still support games that don't employ these tactics! Personally, I have way more fun playing Rimworld, Factorio, etc.
- rowanG077 7y ago
  Are you saying the same thing about casinos? That children should be able to go to casinos? And the parents should just make sure their children don't actually go to the casino? That sounds wholly crazy to me. Loot box mechanics should automatically result in a mature rating for the game.
  - charliesharding 7y ago
    It's not that I don't think it's a problem, it's that I think regulation isn't a good solution. Game companies would just find a way to circumvent the system. What if loot boxes could be bought with in-game credits? What if you could buy short term in-game credit boosters for real money? The regulation route, if continuously followed to address the problem, would end up with all games being rated 'M', or being subject to high regulations/restrictions which would affect anyone who wants to enjoy them. After all, games themselves are designed to short circuit your brains reward system to give you hits of dopamine. The root of the problem is that kids aren't always capable of understanding these complex issues, and it should be up to their parents to inform and constrain how their kids enjoy games.
    - falcolas 7y ago
      If the companies are already doing bad things, arguing "let's not regulate it because they might do bad things" doesn't help the situation at all. It's not just kids. It's also adults, many of whom have an addiction issue with gambling. Parents becoming experts on gaming and microtransactions won't solve the issue. Given that the industry refuses to self regulate, and they aren't reliant on rational consumers to the point where actions that rational consumers make would matter, what is the next solution that isn't regulation?
dynamite-ready 7y ago
When my nephew was 7 years old, he ran up a £200 bill for nonsensical digital objects on Xbox Live during the 360 era. Microsoft reimbursed my brother after we described the problem to them. This was a little while before the media even knew there was a story. Given the early success of Xbox Live, I suspect they probably saw the issue coming long before the recent witch hunt, and did the right thing. I think as a burgeoning social problem, it can definitely be likened to what the fast food chains are now penalised for. And as it's a burgeoning problem, there are probably no (edit - meaningful long-term) research projects to explore the link between free to play marketing and gambling problems later in life, but I'd be surprised if there's no link there. I think it would be remiss of any organisation to call for a total ban, just as it would be for any group to call for a ban on cake... But I do think laws prohibiting the offering of in-game products to certain age groups, for cash should be considered. Beyond that though, I think loot boxes and in-game economic structures are fair... ummm... game...
- pbhjpbhj 7y ago
  Cake at least has a natural limit, you'll be physically sick. Loot boxes the physical limit is probably going to make everyone who isn't Bezos poor.
Bartweiss 7y ago
> It's not something we should trivialize or laugh at or compare to baseball cards. This seems like a strange comparison to reject. Baseball cards were originally 'prizes' packaged with other products, and they were randomized to create excitement and keep people brand-loyal while they hoped to find the prize they wanted. They're the precursor to CCG booster packs, and from there to MMO loot systems, so of course we should compare loot boxes to baseball cards! And it's even darker than that. The major originators of baseball cards were tobacco companies, so you'd go out and buy ATC cigarettes in hopes of getting Honus Wagner. The causal chain from baseball cards to smoking to cancer was far tighter than the chain from loot boxes to problem gambling to suicide, and yet we're told that loot boxes are a real problem, not like baseball cards. Exploiting people, and targeting kids, with randomized prizes is way older than B.F. Skinner's work. It's a minor side note of course, not the core of the discussion, but it's a bit concerning to see a researcher specializing in loot boxes botch his history so badly.
- LukeWalsh 7y ago
  I thought this was strange too. I was just watching Gary open a few $500 football card boxes today (5 cards in each). Upon opening a box without any rare players he said: "That's what you get sometimes gambling!" So I think people know that's what's going on.
  - thephyber 7y ago
    > So I think people know that's what's going on. Addicts generally know at some level that they are addicted. The core problem is more that addicts can't break the compulsive behavior without a significant intervention.
    - crawfordcomeaux 7y ago
      In my experience as a recovering behavior addict, the difficulty partially lies in a lot of cultural concepts around addiction, recovery, and learning that run counter to what science tells us about learning. "Instantaneous recovery" is described as a random chance event, as opposed to possibly the outcome of someone who's got a better grip on how to grow because they were missing a single piece of wisdom that, when acquired or acted on, led to cascading network effects in the brain.
falcolas 7y ago
I agree wholeheartedly with the concerns about gambling. I have another concern to toss on the pile while I'm at it though. This what-if was presented by Bellular a few days back: (TL;DR: The profit ratio for microtransactions is orders of magnitude larger than expansions) Assuming a new WoW mount: - Takes about 1 man-year of effort to create, costing the company $200,000 - 10% of the player population will purchase the mount at $25 - WoW has approximately 4M active players That mount just made Blizzard/Activision $10M, at a cost of 200,000. That's a profit/cost ratio of 50:1. It gets even worse when you factor in loot boxes. New mount has a 1% chance (which is very high) and loot boxes are $1 each? That's going to net (a very approximate) $40M in profit for that one new mount, raising the ratio to around 200:1. Let's compare that to releasing a new expansion: - 100 man years of development effort (a team of 50 for two years, probably on the low side) - $10M in marketing budget and other overhead - 4m players purchase it at $40 each That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1. Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players. How will that impact our games going forward?
- root_axis 7y ago
  > That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1. This doesn't consider the immense second order effects of releasing an expansion. Releasing a new expansion maintains and increases player engagement - i.e. monthly subscription fees. Without new expansions to keep the player base engaged, players won't purchase cosmetic additions like mounts.
  - falcolas 7y ago
    You're right. But it doesn't change that the focus of the studio changes from "how do I keep these 4M players playing my game" to "how do I keep these specific 400,000 players purchasing my microtransactions". And given some of the monetization industry talks, the strategy doesn't necessarily include "make a good game".
- ativzzz 7y ago
  > Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players This model is prevalent in mobile gaming as well. Many popular games have IAP of $50 - $99, that you can buy multiple times per month, which is targeted more towards a 1% than a 10%. > How will that impact our games going forward? I think it affects many industries. Real estate is one of them. I've lived in a few cities with rising real estate costs where the majority of new mid-rise apartments are luxury, clearly priced towards those 10% or less. People who have money, want as much money as possible now, at any future cost. This is simply the general outlook of many businesses at the moment. Of course, this is unsustainable, and it will probably crash at some point.
eveningcoffee 7y ago
This caught my eye "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said. "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this." Elmachtoub said games need to be monitored to ensure publishers are actually following the probabilities they post, and it needs to be tracked not just in aggregate but on the individual consumer level because it's otherwise possible to gain more money by extorting specific individuals. .... "Another unique thing about loot boxes versus baseball cards is that companies can see your inventory. That's a fundamental difference. Being able to take advantage of that would obviously be beneficial to the seller and allow them to exploit more.
lunias 7y ago
I think that loot boxes should be subject to the same laws as slot machines in the US (since they are online slot machines, right?). If your state doesn't allow slot machines and online gambling then no loot boxes for you. If it does, you must also be 18 / 21 to purchase a loot box; depending on state law. What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines?
- fucking_tragedy 7y ago
  > What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines? Prosecutors' reluctance to make a case and uphold existing laws.
- rtkwe 7y ago
  Many games lack a way to convert from in game items to real world money so I can see where existing gambling things wouldn't apply, eg only a few games have a market setup where you can buy and sell items for real money like TF2. Some even completely lack trading so there's not a way to get money for them period.
  - pas 7y ago
    But keys cost real money. And people want bragging rights, not money.
    - rtkwe 7y ago
      Yes but without the conversion to real money on the back end it doesn't fit perfectly into existing regulations. It's also partially that they've just not really been on the radar in a big way until the past couple years. I'm not saying why they shouldn't I'm saying why they haven't so far.
- WorldMaker 7y ago
  This is also a deep hint to a potential worst case outcome of loot boxes. Pinball machines experienced a prohibition because of their similarity to slot machines. States that do not allow slot machines stopped allowing pinball machines. Eventually those states started to relax the prohibition based on whether or not pinball machine scoring systems could be determined by player skill and whether or not pinball machines produced payouts/rewards/prizes. But they started by banning all pinball machines, and bankrupted a number of companies in the industry. Videogames should have been a lot more careful to avoid this situation in the first place. It's not like the pinball prohibition was that long ago (New York was the last state to stop prohibiting pinball machines in 1976), nor that it was that far from home because it impacted laws on early arcades where videogames got their start (literally right next to pinball machines, and sometimes by the same manufacturers). It probably is a stretch for states to simply ban all videogames in 2019, but that sort of reaction is certainly possible in the right climate, and it has happened before.
ShrinkingWild 7y ago
I've never understood this, all economic transactions are voluntary, who am I (or in this case, you) to tell people they can't make that decision? People who make bad decisions shouldn't be protected from the consequences of their actions. I do agree that loot boxes and gambling mechanics are pretty bad methods of monetizing a game, that's why I don't buy them, but I don't presume to tell other people what they should think of them or the business owners whether or not they can add them in.
- esyir 7y ago
  This assumes the lack of negative externalities from such a system.

52 points by EndXA 7y ago

It feels to me that the issue is game studios are too large. Indie's don't engage in this behavior and still produce very excellent games without going bankrupt (Factorio, Stardew Valley, Stormworks). Even smaller developers that choose a Free-to-play model with transactional elements (Path of Exile) can do it in a very player friendly way that aligns with game value. On the other side are companies like Activision and EA that will sell you a $60 game and expect you to spend another $60 in micro-transactions, screaming "more profit" the whole time. My advice is choose who you support with your money carefully.

lawl 7y ago
Path of Exile does have (cosmetic) loot boxes though. They didn't always, but they do now. Not a problem for me because I just don't buy them, but just not buying them isn't really a solution for people with a gambling problem. Games like Factorio do show indeed that it's possible to just sell an excellent game for $20-30 and be profitable. Now, I don't have a source for this, but I heard valve for example stopped making single player-pay upfront games because the a one time profit of $200 million simply isn't worth it compared to, let's just call them 'modern monetization' techniques.
- vorpalhex 7y ago
  Path of Exile doesn't have just cosmetic loot boxes, you can actually buy game upgrades! You can unlock inventory tabs and get better sorting. And that's what I mean. Those features are a few dollars, you almost always know exactly what you're getting, and they're generally only useful after you've put a few hours into the game. For a free to play game, that's a totally valid use in my book. > but just not buying them isn't really a solution for people with a gambling problem Someone having a pre-existing gambling problem isn't the fault of the developers, nor is that what the researcher in the original article is claiming. The researcher claims that allowing kids to engage in buying loot boxes fosters a gambling addiction later in life.
  - lawl 7y ago
    Yeah I'm aware of how their monetization works and I think it's great as they at least never force you to buy them and everything eventually becomes available for a flat price in the shop at some point. > Someone having a pre-existing gambling problem isn't the fault of the developers, nor is that what the researcher in the original article is claiming. The researcher claims that allowing kids to engage in buying loot boxes fosters a gambling addiction later in life. Kids can also buy lootboxes in PoE. Ok sure, technically kids shouldn't be playing PoE, but that's just not reality.
- fredley 7y ago
  $20 on Factorio is probably the best money I've ever spent on a game, having played over 1,000 hours. In other words, they've managed to make something endlessly addictive without any gambling element at all...
  - Bartweiss 7y ago
    Although from an industry perspective, that's bad news because you're paying $0.50/hour for entertainment. And without room for a new campaign or a graphics upgrade, whoever wants to sell you your next 1,000 hour game still has to compete with Factorio. Minecraft, Terraria, Factorio, and maybe Satisfactory have all done well, but each one contends with all the rest. Don't get me wrong, I love Factorio and I think it's a way more valuable achievement than any of the loot box games under debate. I also think it's a viable development model: Factorio was in the top 100 for 2018 Steam revenue, with a 20 person studio. It's just interesting that unlike other media, videogames have this order-of-magnitude variation in how much they compete with one another. (This ties into a much longer narrative about the decline of single-player campaigns. The beauty of e.g. Dragon Age is that you can make an engrossing game and build, not undermine, the market for your next one. But as the difficulty of development shifts towards hard-to-reuse things like character models, there's an increasingly strong incentive to emulate CoD and R6 and wring as much longevity as possible out of each iteration.)
- ThrowawayR2 7y ago
  > Games like Factorio do show indeed that it's possible to just sell an excellent game for $20-30 and be profitable. Sure, but that means nothing since games of the quality of Factorio come along once in a blue moon. It's nice that selling filet mignon is profitable, but selling a decent burger has to be profitable too to have a viable industry. That has proven to be difficult in the games industry under the current circumstances. (And if any here disagree, ask yourself, "is the software or service I'm building for my employer comparable to a Factorio or whether it's just another average product/SaaS and whether or not my employer "deserves" to be profitable to sign my paycheck".)
  - Bartweiss 7y ago
    It's not just that: Factorio makes it harder to games like Factorio to be profitable. The way we consume videogames is essentially unique among media, because the time investment is so varied. Making a superhero movie helps saturate the market for superhero movies, but almost no one directly decides "instead of going to the rest of the MCU, I'll just rewatch Iron Man fifteen times". But with videogames, it's unremarkable to someone who loves two games give one 50 hours of playtime and the other 1,000. If you're going to enter the market, competing with that 1,000 hour title is a much tougher challenge. Factorio is like an an endless filet mignon; since it's not sold on graphics or story, that $20 purchase will endure to challenge all of its successors. (Satisfactory might catch on, but if it does the niche will be one step more exhausted.) Minecraft is a $30 game that's still eating play hours among people who've owned it for years; continuing monetization has depended not on a sequel but on ports (Pocket Edition), peripheral merch, and new generations of players; that's very obviously not a model most games can use. Dwarf Fortress is a niche of its own, near-permanently filled by just two donation-funded developers. (Dominions is less famous, but similar: a two-man team has kept people playing their output for twenty years.) Even AAA products like Civilization struggle; lots of people avoid buying Civ games at release because they compare unfavorably to the patched-and-expanded predecessor. Nor is it a coincidence that all of those games are immersive strategy or construction titles. On one hand, they're generally modest in terms of graphics and campaign, so there's no obvious need to switch to newer titles. And on the other, they're modest in graphics and server load, so a small team can make a popular title relatively cheaply. The end result is that you can make a solid profit on this sort of cheap, no-loot, no-subscribtion game - if you're one of an inherently small number of winners in a constrained design space. I don't think there's anything wrong with this. It's a triumph that $20, thousand-hour games exist, and the people making them actually do seem to make solid money. But it's worth remembering just how niche an arrangement this is. It's possible for media to exist that is at once desired and unprofitable to create; the Factorio equivalent for an FPS or CCG might well be such a product.
- boarnoah 7y ago
  Curious which category you'd classify Valve's monetization techniques. The big ones Counter Strike and Dota are entirely cosmetics after all.
deleted 7y ago
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kec 7y ago
Only two of those games have 3d graphics: one has an mtx revenue stream, and the other is a stylized low resolution design and conveniently has no real background to render. Successful indies survive as they do because they stay within their severely constrained production budgets. Modern AAA's have large studios and insane budgets (Red Dead Redemption 2 is estimated to have cost around $1B to produce) because modern computer graphics are really, really time consuming and expensive to produce. If we assume that RDR2 did cost $1B, and Rockstar nets an average of $40 per sale, they'd have to sell 25 Million copies just to break even on box sales alone. Reports are that they've hit that number of units shipped as of this month, but again, that's just to break even (and assumes the game has never been sold at a discount, and that physical copies have the same margin as digital).
- davemp 7y ago
  That $1B number gets some real doubt from me. I'd bet the real number is a few $100M lower. No way rockstar had over 1k people working on that rd2 for eight years at ~$100k avg.
  - Scramblejams 7y ago
    Don't forget marketing budgets. It's not unheard of for the really heavy hitters to spend at least as much marketing a game as developing it: https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develop https://en.wikipedia.org/wiki/List_of_most_expensive_video_g...
- lawtalkinghuman 7y ago
  Without microtransaction and lootbox revenue, developers might have to not build essential features like ensuring horse testicles shrink or enlarge to match the ambient temperature. How would players cope with this lack of equine testicular realism?
rtkwe 7y ago
It's true indies and smaller studios can make some great games but there's yet to be a real way to make a large game with lots of detail and nice graphics other than throwing tons of people at it to place all the random street trash in The Division or figure out the building destruction in Battlefield and those people are expensive. I'm not defending the microtransaction money grabs EA has been making recently but there is something to be said for the fact that games have STAYED $60 for years while getting more detailed and more expensive to make.
lonelappde 7y ago
Indies also make lootboxy games, but they don't last because they get bought or cloned by companies like Zynga. and big companies also make non-lootboxy games. But when an indie makes a lootboxy hit, then it becomes a big company with its big money.

darepublic 7y ago

Life itself is also life or death

program_whiz 7y ago

Its also life-or-death for much of the game industry. The same way most restaurants and fast food chains wouldn't be able to exist without "cheap tricks" targeting primitive brain circuity (e.g. MSG, sweeteners, frying), most game studios would not be able to survive based on box sales alone. They need a skinner-box to extract more money out of people. Creating a game that is compelling enough to extract ever-increasing value out of people based on content, quality, and narrative alone is extremely difficult. Making a "random loot box" system is extremely easy and pays far more, even though its the "easy way out". Of course, like fast food and cigarettes / drugs, the consumers also bear responsibility. Rather than supporting "clean" games with something noble to offer, the games that exploited these tricks virtually printed money, while the "old timey" approach of spending years making a quality title gave way to the more casino-like interactions we see today. The truth is fast food, drugs, and gambling are just more fun than home-cooked nutritious meals, healthy habits, and deep/challenging engagement. Pretty much everything fits these patterns of reduction to the basic animalistic appeal: movies, music, clothing/attire, dating apps, even our politics. Its just easier and more effective to appeal to the limbic system than to figure out something new and profound.

zuuow 7y ago
Whatever happens with WoW Classic will echo across the industry.
celticmusic 7y ago
they could survive on box sales alone, but they would have to change back to what they used to be. edit: And let me point out, you can make money online without lootboxes, plenty of companies do, so it's not as if the revenue stream completely disappears.
- ebiester 7y ago
  It is all about if people will be willing to have less detailed games or pay 90-100 dollars for the same games, or increased subscriptions.
  - 7y ago

piker 7y ago

> "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said. Perhaps contrary to the author's point, the ability to reap rewards by defrauding players regarding probabilities of payouts seems to imply some rationality in purchasing the loot boxes. > "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this." In all things there is often a short-term benefit to be derived from lying. It doesn't necessarily then follow that "there must be regulation around" all things.

pjc50 7y ago
Obtaining money by deception is already regulated: it's fraud. People publishing deliberately inaccurate lootbox odds should be prosecuted and given, at the very least, a criminal record and large fine.
- falcolas 7y ago
  Here's a question - if you have 1 in 1,000, or 1 in 1M odds of getting a specific item, is it acceptable to list those odds as "<1%"? That's what occurs today when companies are forced to reveal rates. It's misleading at best.
  - cma 7y ago
    If "<1%" is so successful in misleading people and increasing sales, why wouldn't they just do it without the regulation requiring it?
    - falcolas 7y ago
      > why wouldn't they just do it without the regulation requiring it Likely because it has a negligable effect, and it's harder to do than not to do. Does a gambler stop gambling despite knowing their odds of beating the house are less than 1%?
      - 7y ago

charliesharding 7y ago

They raise a valid point with a needlessly sensationalist title - but it does feel like a natural (d)evolution of the gaming industry. This is what happens when a studio becomes successful, hires a lot of people, then tries its hardest to maximize profits. The real solution here is that parents need to educate themselves on how to lock down permissions on game purchases and manage their children's playtime/addiction levels. Government regulation is not a good substitute for parenting. Remember, as a consumer, you can still support games that don't employ these tactics! Personally, I have way more fun playing Rimworld, Factorio, etc.

rowanG077 7y ago
Are you saying the same thing about casinos? That children should be able to go to casinos? And the parents should just make sure their children don't actually go to the casino? That sounds wholly crazy to me. Loot box mechanics should automatically result in a mature rating for the game.
- charliesharding 7y ago
  It's not that I don't think it's a problem, it's that I think regulation isn't a good solution. Game companies would just find a way to circumvent the system. What if loot boxes could be bought with in-game credits? What if you could buy short term in-game credit boosters for real money? The regulation route, if continuously followed to address the problem, would end up with all games being rated 'M', or being subject to high regulations/restrictions which would affect anyone who wants to enjoy them. After all, games themselves are designed to short circuit your brains reward system to give you hits of dopamine. The root of the problem is that kids aren't always capable of understanding these complex issues, and it should be up to their parents to inform and constrain how their kids enjoy games.
  - falcolas 7y ago
    If the companies are already doing bad things, arguing "let's not regulate it because they might do bad things" doesn't help the situation at all. It's not just kids. It's also adults, many of whom have an addiction issue with gambling. Parents becoming experts on gaming and microtransactions won't solve the issue. Given that the industry refuses to self regulate, and they aren't reliant on rational consumers to the point where actions that rational consumers make would matter, what is the next solution that isn't regulation?

dynamite-ready 7y ago

When my nephew was 7 years old, he ran up a £200 bill for nonsensical digital objects on Xbox Live during the 360 era. Microsoft reimbursed my brother after we described the problem to them. This was a little while before the media even knew there was a story. Given the early success of Xbox Live, I suspect they probably saw the issue coming long before the recent witch hunt, and did the right thing. I think as a burgeoning social problem, it can definitely be likened to what the fast food chains are now penalised for. And as it's a burgeoning problem, there are probably no (edit - meaningful long-term) research projects to explore the link between free to play marketing and gambling problems later in life, but I'd be surprised if there's no link there. I think it would be remiss of any organisation to call for a total ban, just as it would be for any group to call for a ban on cake... But I do think laws prohibiting the offering of in-game products to certain age groups, for cash should be considered. Beyond that though, I think loot boxes and in-game economic structures are fair... ummm... game...

pbhjpbhj 7y ago
Cake at least has a natural limit, you'll be physically sick. Loot boxes the physical limit is probably going to make everyone who isn't Bezos poor.

Bartweiss 7y ago

> It's not something we should trivialize or laugh at or compare to baseball cards. This seems like a strange comparison to reject. Baseball cards were originally 'prizes' packaged with other products, and they were randomized to create excitement and keep people brand-loyal while they hoped to find the prize they wanted. They're the precursor to CCG booster packs, and from there to MMO loot systems, so of course we should compare loot boxes to baseball cards! And it's even darker than that. The major originators of baseball cards were tobacco companies, so you'd go out and buy ATC cigarettes in hopes of getting Honus Wagner. The causal chain from baseball cards to smoking to cancer was far tighter than the chain from loot boxes to problem gambling to suicide, and yet we're told that loot boxes are a real problem, not like baseball cards. Exploiting people, and targeting kids, with randomized prizes is way older than B.F. Skinner's work. It's a minor side note of course, not the core of the discussion, but it's a bit concerning to see a researcher specializing in loot boxes botch his history so badly.

LukeWalsh 7y ago
I thought this was strange too. I was just watching Gary open a few $500 football card boxes today (5 cards in each). Upon opening a box without any rare players he said: "That's what you get sometimes gambling!" So I think people know that's what's going on.
- thephyber 7y ago
  > So I think people know that's what's going on. Addicts generally know at some level that they are addicted. The core problem is more that addicts can't break the compulsive behavior without a significant intervention.
  - crawfordcomeaux 7y ago
    In my experience as a recovering behavior addict, the difficulty partially lies in a lot of cultural concepts around addiction, recovery, and learning that run counter to what science tells us about learning. "Instantaneous recovery" is described as a random chance event, as opposed to possibly the outcome of someone who's got a better grip on how to grow because they were missing a single piece of wisdom that, when acquired or acted on, led to cascading network effects in the brain.

falcolas 7y ago

I agree wholeheartedly with the concerns about gambling. I have another concern to toss on the pile while I'm at it though. This what-if was presented by Bellular a few days back: (TL;DR: The profit ratio for microtransactions is orders of magnitude larger than expansions) Assuming a new WoW mount: - Takes about 1 man-year of effort to create, costing the company $200,000 - 10% of the player population will purchase the mount at $25 - WoW has approximately 4M active players That mount just made Blizzard/Activision $10M, at a cost of 200,000. That's a profit/cost ratio of 50:1. It gets even worse when you factor in loot boxes. New mount has a 1% chance (which is very high) and loot boxes are $1 each? That's going to net (a very approximate) $40M in profit for that one new mount, raising the ratio to around 200:1. Let's compare that to releasing a new expansion: - 100 man years of development effort (a team of 50 for two years, probably on the low side) - $10M in marketing budget and other overhead - 4m players purchase it at $40 each That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1. Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players. How will that impact our games going forward?

root_axis 7y ago
> That's $160M in revenue, but with $30m in costs. Profit to cost ratio of 5:1. This doesn't consider the immense second order effects of releasing an expansion. Releasing a new expansion maintains and increases player engagement - i.e. monthly subscription fees. Without new expansions to keep the player base engaged, players won't purchase cosmetic additions like mounts.
- falcolas 7y ago
  You're right. But it doesn't change that the focus of the studio changes from "how do I keep these 4M players playing my game" to "how do I keep these specific 400,000 players purchasing my microtransactions". And given some of the monetization industry talks, the strategy doesn't necessarily include "make a good game".
ativzzz 7y ago
> Given the orders of magnitude between the two, there's a strong incentive to only cater to the 10% of players, at the expense of the other players This model is prevalent in mobile gaming as well. Many popular games have IAP of $50 - $99, that you can buy multiple times per month, which is targeted more towards a 1% than a 10%. > How will that impact our games going forward? I think it affects many industries. Real estate is one of them. I've lived in a few cities with rising real estate costs where the majority of new mid-rise apartments are luxury, clearly priced towards those 10% or less. People who have money, want as much money as possible now, at any future cost. This is simply the general outlook of many businesses at the moment. Of course, this is unsustainable, and it will probably crash at some point.

eveningcoffee 7y ago

This caught my eye "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money," Elmachtoub said. "There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this." Elmachtoub said games need to be monitored to ensure publishers are actually following the probabilities they post, and it needs to be tracked not just in aggregate but on the individual consumer level because it's otherwise possible to gain more money by extorting specific individuals. .... "Another unique thing about loot boxes versus baseball cards is that companies can see your inventory. That's a fundamental difference. Being able to take advantage of that would obviously be beneficial to the seller and allow them to exploit more.

lunias 7y ago

I think that loot boxes should be subject to the same laws as slot machines in the US (since they are online slot machines, right?). If your state doesn't allow slot machines and online gambling then no loot boxes for you. If it does, you must also be 18 / 21 to purchase a loot box; depending on state law. What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines?

fucking_tragedy 7y ago
> What's the loophole currently being exploited that prevents loot boxes from being classified as online slot machines? Prosecutors' reluctance to make a case and uphold existing laws.
rtkwe 7y ago
Many games lack a way to convert from in game items to real world money so I can see where existing gambling things wouldn't apply, eg only a few games have a market setup where you can buy and sell items for real money like TF2. Some even completely lack trading so there's not a way to get money for them period.
- pas 7y ago
  But keys cost real money. And people want bragging rights, not money.
  - rtkwe 7y ago
    Yes but without the conversion to real money on the back end it doesn't fit perfectly into existing regulations. It's also partially that they've just not really been on the radar in a big way until the past couple years. I'm not saying why they shouldn't I'm saying why they haven't so far.
WorldMaker 7y ago
This is also a deep hint to a potential worst case outcome of loot boxes. Pinball machines experienced a prohibition because of their similarity to slot machines. States that do not allow slot machines stopped allowing pinball machines. Eventually those states started to relax the prohibition based on whether or not pinball machine scoring systems could be determined by player skill and whether or not pinball machines produced payouts/rewards/prizes. But they started by banning all pinball machines, and bankrupted a number of companies in the industry. Videogames should have been a lot more careful to avoid this situation in the first place. It's not like the pinball prohibition was that long ago (New York was the last state to stop prohibiting pinball machines in 1976), nor that it was that far from home because it impacted laws on early arcades where videogames got their start (literally right next to pinball machines, and sometimes by the same manufacturers). It probably is a stretch for states to simply ban all videogames in 2019, but that sort of reaction is certainly possible in the right climate, and it has happened before.

ShrinkingWild 7y ago

I've never understood this, all economic transactions are voluntary, who am I (or in this case, you) to tell people they can't make that decision? People who make bad decisions shouldn't be protected from the consequences of their actions. I do agree that loot boxes and gambling mechanics are pretty bad methods of monetizing a game, that's why I don't buy them, but I don't presume to tell other people what they should think of them or the business owners whether or not they can add them in.

esyir 7y ago
This assumes the lack of negative externalities from such a system.