Loot boxes in video games are a cause for concern, but they also offer a chance to educate

Who does not like a surprise? We often feel excited to unbox gifts, hoping that what is inside is something that we have been longing for.

Even when the revealed item is disappointing, we may still enjoy the thrill of opening it.

Little wonder then that video game loot boxes — virtual goodie bags which mobile gamers can pay for to get random, coveted rewards — have become very popular among players, prompting the Ministry of Education to include the danger of loot boxes as part of its cyber wellness education resources for students.

Those who are less familiar with loot boxes may wonder: Why are they popular, and why should we be concerned?

GROWING POPULARITY OF MOBILE GAMES

Since the days of Nokia’s “Snake”, mobile gaming has evolved to become a multimillion-dollar industry, surpassing the personal computer and console gaming industries.

Part of the reason is because game designers have found a viable revenue model — the freemium model.

This model offers the game for free, but also provides the option to purchase virtual items such as loot boxes.

In this way, companies can attract paying players to sustain operations and make profit, while also gaining enough non-paying players to maintain a sufficiently large player base.

Research shows that spending players are often a very small subset of the total gamer population, yet they also spend disproportionately more.

SHIFTING ATTITUDES

Loot boxes are particularly attractive because players get a chance of obtaining valuable items which enhance character abilities or provide cosmetic enhancements, among others.

Such items are often either impossible or extremely difficult to obtain elsewhere.

To be clear, the loot box concept is not new.

Consider Pokémon trading card packs offering a shot at an extremely rare card, or even the “tikam tikam” of yesteryear where children picked random tickets to win prizes.

However, the sheer popularity of mobile games and the ease of purchase with just a few swipes are what make mobile game loot boxes different.

Understanding what drives purchase decisions of loot boxes is critical to tackling this issue, and research in this area can guide policymakers in exploring the best way to regulate and educate.

A shift in players’ attitudes towards spending money in games has also contributed to the popularity of loot boxes.

When freemium games were first introduced, initial attitudes towards spending money in games were negative. Players believed that the sale of loot boxes could skew the game in favour of those who spend, diminishing the importance of skill.

Players of conventional video games often prided themselves on mastering skill, so using money instead of skill to obtain rare items was seen as cheating. But as freemium games grew in popularity, such behaviour has been normalised and some even do it to support the game company.

IMPULSIVE BEHAVIOUR

Loot boxes are often compared with gambling because the actual chances of getting rare items are kept so low that players are inclined to keep buying until they either finally get what they want or give up after spending too much money.

In addition, game companies often make in-game announcements when a player successfully receives rare items from loot boxes.

This may lure other players to believe that they could be just as lucky. Coupled with the competitive nature of mobile games, players may find loot boxes hard to resist.

While we may think that most of our purchase decisions are made rationally after careful consideration, research shows that people often make poor purchase decisions against their self-interest, only to regret the decision immediately after.

This suggests that players with specific psychological traits (like low self-control) may be particularly susceptible to the lure of loot boxes, which is perhaps why spending players only account for a very little portion of the total player base yet spend enough for game companies to profit.

Furthermore, there is evidence that even those with high self-control may indulge in impulse purchases occasionally.

Researchers offer one explanation for this: Coping with stressful situations in life can lower one’s self-control temporarily, making one more prone to impulsive spending.

This means that beyond game design factors, external situations in real life can also prompt purchase decisions in the heat of the moment.

For instance, during the Covid-19 pandemic, many people experience high stress levels from disruptive life changes. Under such conditions, they are more likely to give in to the allure of loot boxes.

VULNERABILITY OF THE YOUNG

We think that the most vulnerable group of people are teenagers who have their own phones, giving them easy access to freemium mobile games.

Yet the part of the brain that helps them see and understand the future consequences of their behaviour may not yet be fully developed.

Teenagers may thus not fully understand the consequences of purchasing hundreds of loot boxes, such as the costs involved.  

In designing effective cyber wellness education materials, simply telling students about the dangers of loot boxes may not be sufficient.

We need to help them apply this knowledge to themselves and appreciate the implications of their own purchases.

For this, real-life case studies and testimonials from other teenagers can help this vulnerable group realise the risks more vividly. 

A THREE-PRONGED APPROACH

The benefit of a freemium model lies in granting players the freedom to decide how much they want to spend on the game, while also allowing companies to have a viable source of revenue through the sales of virtual items such as loot boxes.

But while the proportion of players who spend in games remains low, it can be easy to succumb to temptation.

As with any other hobbies, adults should be mindful of the amount of money they are committing to the game, and only spend within their means. 

For younger players who may have yet to develop a strong sense of self-control, we recommend a three-pronged approach.

First, the mobile game industry should reveal the actual chances of getting a particular item through loot boxes.

Ideally, loot box items should also be made available through alternative means, such as direct purchase or in-game play.

Second, the Government can monitor the industry for good practice, and also introduce resources for parents to facilitate conversations on loot boxes with their children.

Lastly and most importantly, mobile games present a good opportunity for parents to teach their children about impulse management, financial management, and resource management.

This is because other than chance-based loot boxes, mobile games often also sell non chance-based items like those that offer more definite play time.

A child who is given S$5 to spend in the game could decide between taking a bet on loot boxes or spending it on something more substantial like additional playtime for more game progression.

After all, a key challenge presented in many mobile games is to allocate available resources on hand most efficiently, which is a skill transferable to real life.

Communication with one’s children is the first step to minimise any unpleasant surprises.

ABOUT THE AUTHORS:

Jeremy Sng is a PhD candidate at the Wee Kim Wee School of Communication and Information, Nanyang Technological University. Dr Jung Younbo is an associate professor and associate chair (academic) at the same school.