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Sony, Microsoft, and Nintendo Will Require Loot Box Drop Rate Disclosures

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Loot boxes have been controversial since they were introduced. That controversy was turbo-charged back in 2017, when EA and DICE decided to make the entire economy of Star Wars Battlegrounds II entirely dependent on randomized loot box drops and insanely long grinds. That particular shameful cash grab may have exploded in the company’s face like the Death Star over Endor, but it kicked off an investigation into how loot boxes work across the globe. The FTC held a workshop on gaming loot boxes on Wednesday, August 7, to discuss issues surrounding this method of dispensing in-game loot. Sony, Microsoft, and Nintendo announced a new initiative at said workshop — one that will require all games published on their platforms to disclose the chance of receiving rewards.

Polygon reports that Michael Warnecke, the ESA’s (Entertainment Software Association) chief counsel of tech policy, made the announcement at the workshop today.

I’m pleased to announce this morning that Microsoft, Nintendo, and Sony have indicated to ESA a commitment to new platform policies with respect to the use of paid loot boxes in games that are developed for their platforms. Specifically, this would apply to new games and game updates that add loot box features, and it would require the disclosure of the relative rarity or probabilities of obtaining randomized virtual items in games that are available on their platforms.

Publishers have similarly rallied to state they’ll support the initiative, including Activision Blizzard, Bandai Namco, Bethesda, Bungie, EA, Take-Two Interactive, Ubisoft, Warner Bros., and Wizards of the Coast. All of these announcements and statements, however, apply to consoles — not PCs. Valve updated DOTA 2 to show loot box disclosure data last year, but it hasn’t made disclosing this information mandatory for games on its platform. Neither have smaller game stores like Epic or GoG, at least not yet.

Battlefront-Pic

Use the First National Bank, Luke!

The goal is to roll this program out in 2020, but no timeline has been published. The goal seems to be to head off any effort at government regulation, similarly to how the ESRB was formed to avoid regulation of video game content. But simply publishing the chances of earning a reward may not be enough to head off accusations that loot boxes are gambling, and it may not be as clear-cut as a ratings system, either.

Here’s a simple example of what I mean. While reasonable people may differ about what constitutes acceptable nudity, a game either contains or does not contain naked humans. If you have a 5 percent chance of getting an “Epic” quality loot drop from a loot box, is that a chance to get any epic item, or the chance that you’ll get an epic item you don’t already have? If you earn a loot box in a specific game mode, will the loot be related to that game mode? Are people spending an in-game currency to win cosmetic items, or are they paying real money for random gear rolls that will impact their in-game performance? Are these percentages communicated in-game, when players are on the loot box purchase screen, or are they hidden in an old blog post that’s buried four links deep off the game’s main page? Does the game allow you to earn the currency with which you buy loot boxes in-game at a reasonable rate, or does it dispense it like pre-haunting Scrooge handing out Bob Crachit’s salary? Are the loot boxes being marketed aggressively to children as part of a children’s game, or are they in a title intended for adults who presumably understand something about the reality of credit card purchases? Are the items you win from loot boxes resellable on a market for real money, or are they locked to your specific character?

Readers and experts broadly agree that how these issues are handled has an impact on whether or not loot boxes cross the line between outright gambling versus an entertainment mechanism. A game with cosmetic loot box items that awards a modest number of crates through gameplay with the option to buy more is acceptable to a lot of people. A game like Battlefront II’s original incarnation (the actual game today has an entirely different and more standard loot distribution system) chained in-game performance entirely to random loot crates. The internet’s response? Convulsive rage. And while the internet’s rage spasms have a definite problematic side, gamers weren’t wrong to feel as if EA was planning to take advantage of them. It absolutely was.

Responses like this may take the wind from proposals to regulate loot boxes, at least in the United States, but just publishing statistics on your chances of getting a particular drop won’t answer the larger question of whether loot boxes constitute gambling or not. Honestly, I think that’s because the answer is “It depends.” In some cases, loot crates are basically an optional way to achieve a particular look. In others, they’ve been critical to succeeding in the title. It’s hard to argue that combining pay-to-win mechanics with randomized drops you pay real money to get isn’t very close to gambling, especially if the rare contents of the loot box can be sold for a substantial amount of real money in a market. At that point, a new digital hat is basically the equivalent of a Pick 5 card. Applying a rating to a video game is also a somewhat subjective endeavor, but it’s at least a subjective endeavor with some objective standards around concepts like nudity and foul language, which either do or do not exist in a game.

The question of whether loot crates constitute gambling and, if so, under which circumstances, will need to be fleshed out in greater detail — and hopefully we’ll see Valve, Epic, GoG, and other distributors take the same stance on mandatory chance disclosures. The fact that EA attempted to defend its loot box mechanism as “quite ethical surprise mechanics” earlier this year doesn’t make us optimistic that the video game industry actually understands how much players loathe these kinds of systems.

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