They're nearly everywhere, so they can't be that bad, right?

The term 'Loot box' describes a usually virtual box which you may buy or be rewarded with for playing certain online games. It's contents are unknown and only randomly decided when you choose to open it. At that point you'll either be really happy about a very rare and visually pleasing cosmetic accessory for your favorite character or disappointed by a rather common simple icon you can display in the game for others to see.

So why's that a problem? Well the suspense of opening such a box to then see whether or not you got a desirable outcome seems rather similar to regular gambling in casinos, which depending on the country you live in might be strictly regulated or forbidden for some people. I'll get more into the similarities and differences between loot boxes and gambling, as well as other examples that are comparable at the end of the post, but here are my 8 Reasons why loot boxes are a bigger Problem than you might think:

1. Loot boxes exploit people prone to gambling addiction

Do casinos serve another purpose other than exploiting people? Maybe. I honestly don't really like their business practice to begin with and I think it's fair to have regulations in place to stop them from doing whatever they want. Gambling machines are designed to appeal with their flashing lights, noises and the occasional reward they give out. In the end some might enjoy their time in a casino even if they more likely than not lost most of their money there. While some people can gamble responsibly, a lot cannot. Loot boxes are designed similarly. Their target are not the people who come there to spend everything they brought but the people who can't help but come back with more.

2. Loot boxes get children involved in gambling

Where most places on the world agree that children should not be allowed to gamble, it's a lot easier in an online game. You just log onto your favorite game, select your preferred payment method to get your paid in-game currency as usual and get your loot boxes all in the comfort of your own home. No getting up and going to a place dedicated to said gambling activity. No real measures to keep children from participating. Usually with rather generous limits on how many boxes one can buy per day. 

3. Loot boxes have very little transparency

In a lot of cases loot boxes prizes are simply described as being chosen randomly from a variety of available items. Customers usually know what they can get, but how likely they are going to get what they want is often a mystery. Because the items usually have different tiers of pricing or rarity one can get really lucky and get a really rare and valuable item or get really unlucky and get something common and cheap. But the price they paid for the box is the same, no matter what they get out of it. Because there's normally very little information about the odds of getting the desired reward it's near impossible for a customer to make an informed decision on whether or not the price they have to pay is worth the risk of receiving something undesirable. Imagine customers who are only really interested in one certain type of character, for instance attackers. Based on their knowledge that there are only two types of characters, attackers and defenders each with the same amount of characters they could assume their chance to get something they want is at about 50% when in reality it could be way lower due to other reasons like rarity or price tiers. Those customers would need to buy a fair amount of loot boxes before they even have the chance to realize their chance to get what they want is way below what they thought. That leads directly to the next reason:

4. Companies are easily capable of malicious manipulation of their system

The mechanic or algorithm to choose the content is fully up to the company selling the box, which means it could be as heavily biased toward giving you undesirable contents as they want. (Just recently Riot Games was found out to play with loaded dice concerning "skin-shard re-rolling", to give players lower tier rewards than they expected.) Furthermore nothing stops companies from changing the odds of certain items at any point. They could give you the feeling you're getting rewards worth your investment on one day, then bait you into buying more of what you already know with a heavy discount but at the same time skew the odds to give you worse results than you were used to.

5. Companies can collect data about individuals to squeeze the most out of them

Online games could easily collect information about each individual player, to optimize the system to give them just enough to not have them quit from frustration but never enough to satisfy them to a point where they stop either. The more data they collect about someone the easier it gets to understand them. What characters do they prefer? What items do they look at in the preview? Just how much of what they like do they need to get in one loot box opening session to come back and buy more? Are they more likely to buy loot boxes after winning or losing a match? Would they buy more right away if they got a really rare item now or if they got a discount on the next few loot boxes? The possibilities are nearly endless and I wouldn't wonder if some of this is being used already.

6. Companies bait people with free samples

Another common practice with loot boxes is to offer a few over a given time frame for simply playing the game. Companies consistently conceal their true intentions with this practice under the false pretenses of wanting to offer rewards to all players as a form of appreciation of them playing their game. And it works. Don't get me wrong, ever since micro-transactions existed within games players were asking for ways to obtain premium content without the need of paying real money. And for some of them the model of receiving a little something of the otherwise paid content for free works just fine. They got what they wanted. However the problem here is that companies hide behind the excuse of being generous toward their player base when in reality they are simply looking to get players interested in loot boxes who would otherwise not pay for micro-transactions. For a lot of people it gets a lot easier to start gambling, when they're already familiar with the tool or mechanism used to gamble. In the end companies lose very little for offering small amounts of loot boxes for free. Only very few people who're generally willing to pay for something get that something randomly, usually they just get stuff they wouldn't have bought anyways. Meanwhile a fair amount of people try the loot boxes for free and end up buying more later on. People that would otherwise not have spent that money on the game.

7. Loot boxes are a way of selling you what you don't want to buy

The average user of a free-to-play game doesn't pay for micro-transactions, however the few users who pay are usually willing to pay a lot for what they want. Even with the free sample loot boxes from earlier it's not all that easy to get a free-user to become a paid-user. It's way simpler to get the already paying users to pay more. Of course they will pay for the new fresh content the game just got, but creating new characters, cosmetic items and skins takes a lot of effort. Why not just sell more of what's already there? Well luckily loot boxes make that possible. The random nature of the contents of loot boxes means companies can indirectly sell the content users intentionally chose not to buy because they don't like it. Yes, they thank their paying users by selling them the items they don't want. How many loot boxes does one have to open before getting something they're somewhat happy with? How many until getting something they would have chosen to buy directly? Probably a lot, and by that time they most likely paid a lot more than what their wanted item is worth.

8. The success of loot boxes will spread to other markets

We're already seeing loot boxes in places that most probably wouldn't have expected. Special seasonal chat emoticons on Twitch.tv for instance. Will we eventually see them everywhere? Grocery shopping with the rare chance to get fresh fish instead of the more common butter and rice. Mystery stock market loot boxes for some random shares. Buy 5 random train tickets for the price of two which may or may not bring you to your destination and are non-transferable. Crypto loot bo... Nevermind, forget about that last one, I'm sure that has no market at all.

But is it actually gambling, though?

So two points that are often raised when comparing loot boxes to gambling are the following. Firstly many argue that loot boxes unlike gambling in a casino will always give you something for your stake. Well that's generally true, even if you get the worst possible thing still got something, so it's not like gambling. However this makes me ask whether that would also mean that all a casino has to do in order to be allowed to let children gamble is modify their machines to print out a little something for them whenever they lose. Now they always get something, right? And before you argue about value: unlocking a cosmetic item for a player costs a company nothing, the team creating it was already paid.

Now there's another point I'd like to raise here, but not before I tell you the second argument defenders of the loot boxes bring up, because my point works against both. The second argument is that trading card games and for that matter collectible sports cards have done the same as loot boxes in the past. Fair point, they do something fairly similar, however with one main difference: I get to keep them as long as I want, and that in multiple ways. If I don't want them anymore I can trade or sell them, something which most online games don't allow for their loot. In addition to that I can use my cards practically forever. I can play as long as I have enough cards for two decks and someone to play with, whereas online games usually rely on the company developing them to run servers to play them on. When they eventually decide to shut down their servers all my collected loot becomes void. If the game is doing well that might be far into the future, but eventually it will stop being profitable enough to be worth maintaining the servers.

So what to do about loot boxes? Well I don't have one definitive answer to make them a more healthy business practice as a whole, but I think the least the companies owe their customers is more clarity about the odds of the rewards being distributed. Something which at least Apple is already forcing anyone wanting to publish their app on their app store. I'm hoping that more actions like this are being taken in 2018 to ensure a fair playing field for everyone.

Thanks for reading!