European Governments crack down on loot boxes

Following Electronic Art’s blatant disregard for Belgium laws regarding the sale of loot boxes, multiple European countries have tasked their gambling regulatory institutions to have a closer look at the practice.

More than a dozen European countries are taking action against loot boxes

For the sake of background, the whole debacle began earlier this year, when Belgium issued a ban on the sale of loot boxes to players residing in the country. The government came to the conclusion that loot boxes are more akin to gambling than other forms of microtransactions and that their widespread availability could be harmful to developing gamers.

Following this ban, almost all of the top game publishers, such as Blizzard Activision and Valve, to name a few, complied with the new legislation and stopped offering them to Belgian players. However, Electronic Arts had different ideas and opposed the law, claiming that it did not agree with the interpretation. As a result, the Belgium Government launched a criminal investigation against EA. More on that topic here.

In the wake of those events, 15 European governments and one US State have signed an agreement to bring the practice of selling loot boxes under scrutiny and take appropriate action if necessary. To this purpose, the gambling regulatory institutions of those countries and the Washington State Gambling Commission will closely review loot boxes and determine if they have a place in modern video games, as far as European gamers are concerned.

The agreement was signed by the heads of each gambling regulatory body of the following jurisdictions:

  • Austria
  • Czech Republic
  • France
  • Gibraltar
  • Republic of Ireland
  • Isle of Man
  • Jersey
  • Latvia
  • Malta
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Spain
  • Washington State, USA
  • United Kingdom

What could this means for the future of paid loot boxes

While loot boxes have always been the subject of debate and heavy criticism, the backlash against them has always been from people within the games industry, namely journalists and other types of content creators. This is the first time that entities outside of the realm of gaming have launched an assault on loot boxes on such a large scale. Granted, there has been action taken against the practice as in the case of Belgium, but that was an isolated instance. Certain Members of the United States Congress have brought up the subject in the past, but it was not followed with any proposals for new legislation.

With so many jurisdictions having a closer look at the issue, one could seriously put into question the future of loot boxes in European and North American countries. Although, not all countries have expressed a desire to ban or even regulate them. Germany and Canada have not signed the agreement, despite being massive markets for the gaming industry.

The problem with loot boxes is that they are in a grey area, where some view them as gambling and others do not. The dilemma stems from the fact that gambling does not guarantee winning results, whereas loot boxes always offer something, regardless of its value within the context of the video game. Similar points were once made in the United States to dissuade the arguments that collectible baseball cards were gambling aimed at children.

The esports betting industry is also facing the same problem, certain Bills and Regulations hint at the illegality of esports betting. However, many esports betting sites have managed to get around these laws and bills, some wonder if Loot boxes will manage to skip pass these laws.

How would a supposed ban influence game publishers?

Then there is also the question of what effect this will have on game publishers. Loot boxes have become a popular phenomenon across the game’s industry since it provides publishers with a steady supply of revenue.

Initially, loot boxes only offered cosmetic rewards that did not affect the base gameplay in any way. This is the case of Blizzard’s Overwatch, where loot boxes only contain player icons, character skins, emotes, and similar prizes. However, certain unscrupulous publishers have embedded the loot box mechanic so deep into their games that it has a significant impact on players.

Notorious is EA’s Star Wars Battlefront II, where loot boxes were practically the only way one could get the intended experience. The game had been developed in such a way that player progression would happen at crawl pace unless supplemented by the purchase of loot boxes, which rewarded useful weapons and gadgets on a random basis. This was meant to incentivize players to buy more and more loot boxes. After severe backlash from the community, EA removed loot boxes from Battlefront II, however by that point it was far too late. The loot box system was so far entrenched in the core of the game’s progression that it left players grinding for multiple hours for a simple upgrade or cosmetic enhancement, of which there were thousands.

The reason why game publishers choose to take this route is to that they are trying to remain competitive in an industry that has ceased to be kind to AAA games. Game development has never been more expensive, with games taking multiple years to complete and millions of dollars invested. Furthermore, while the cost of developing a AAA game has skyrocketed, the selling price has not. For the consumer, games have never been cheaper and when the prices are adjusted for inflation, doubly so.

What could come after loot boxes?

With the future of loot boxes in question, one has to wonder what tomorrow may bring for the games industry. Time has shown that trying to squeeze every last dime from consumers is never a good idea in the long run, as indicated by the current state of loot boxes and the backlash to worthless paid DLC.

Of course, one could always argue that developers should push for more quality games and consumer-friendly practices. Polish video game publisher CD Projekt Red has earned tons of goodwill from how they handled their Witcher series and their new intellectual property Cyberpunk 2077 will likely bring the company to new heights. Their pro-gamer approach is certainly appreciated by the community and the company is now reaping the benefits. That, however, does not seem like a lesson that EA and its like are apt to learn soon.

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