Club penguin, Moshi monsters, Poptropica. These are some of the video games which defined my youth. As a kid my favourite times to play these games were before school, after school and even during school (if the teachers were not paying attention!). While these games offered users the chance to purchase a premium membership with real money, unlike today’s most popular games, consumers knew what they were getting at the point of sale and they did not have to spend large amounts of money for a ‘chance’ at what they wanted. Unfortunately, many newer video games have adopted business models which overlook user fulfilment and health to pursue profit maximisation at all costs.
Loot boxes and Gacha (ガチャ) mechanics are typical examples of this trend. The origins of loot boxes or gacha are often traced back to both collectible playing cards and Japanese toy vending machines which dispense ‘gachapon’ (ガチャポン) capsules with a toy inside. These in-game mechanics allow players to open boxes or utilise summon ‘gates’ that contain a randomised reward (characters, weapons, cosmetics). Players have the option to spend real currency to purchase more loot boxes or summons and increase their chance of obtaining their desired rewards.
Gambling can be defined as a monetary transaction between two parties based on the outcome of an uncertain event . While it seems like loot boxes could fit this definition, what is an uncertain event? Do the in-game items sold by game developers really have monetary value? If a game requires you to do x amount of summons to guarantee a character yet each summon has a tiny chance of obtaining that character, would this be classified as an uncertain event? After all, with enough money to spend on large amounts of loot boxes/gacha, players can in a sense ‘purchase’ whatever in-game item they desire. It is important to note that not all gambling is harmful, however once gambling becomes an established pattern that creates problems in an individual’s personal, family, and vocational life, intervention is required. It appears that different countries vary on their stances surrounding this issue. While Japan has laws stating Loot boxes must not be a requirement to make progress within games, Belgium has outright banned certain types of in game loot boxes for both adults and children.
There is some research which suggests a positive relationship exists between problem gambling behaviours and the amount of money spent on loot boxes. One peer reviewed journal authored by two British academics illustrates this link. After collecting 14,182 responses from gamers and narrowing this number to 11,009 due to ethical concerns, these academics found that as a gamers average monthly spending on loot boxes rose, it was more likely they would also record a higher score on the Problem Gambling Severity Index. 89% of these participants described themselves as male while 9% identified as female with nearly half (48%) being aged between 18-24 years old.
While a complete regulatory framework of loot boxes and gacha will take time to develop, perhaps governments could prioritise the protection of our most vulnerable members of society. These people would include those with a history of gambling addiction and the youth. It seems egregious that someone with a high inclination to gamble can be allowed to spend thousands of dollars on a video game unchecked. One solution could involve game developers being obligated to disclose the identities of players who are spending enormous amounts of money or are displaying erratic purchasing patterns that might indicate a gambling addiction. The government would then refer these people to a gambling prevention institution which would evaluate whether the person is in control of their spending or requires professional help.
In 2015, gaming company Activision Blizzard filed a patent for a potentially questionable microtransaction scheme. This system involves the game determining which in-game items are likely to be of interest to specific players, then manipulating these people’s in-game matchmaking in a way that subconsciously pushes them towards purchasing their desired item. An example of this could be a player who writes in their in-game profile that they want to become a skilled sniper. After reading this profile, Activision Blizzard’s game would match the player with high performing sniper players who have equipped the purchasable weapon identified to be of interest to the target player. Additionally, the game may select a map where snipers are highly effective. Having witnessed the effectiveness of this weapon in a real match (albeit a rigged one), the target player is now more likely to commit to purchasing the item with real money.
While some argue it is the buyer’s responsibility to regulate their spending, with many newer games being engineered to manipulate players subconsciously, game developers and governments must come to an agreement to draw a line between profitable and predatory. An analogy for this situation might be a bar. This bar finds itself with a customer purchasing drink after drink and on the verge of passing out. At a certain point there is an expectation that the vendor stops selling alcohol to this person as the product is no longer good for them and is doing more harm than good. Like a big night out at the bar, loot boxes and gacha have diminishing returns over time. This is because as players collect more items, a greater proportion of their loot box/gacha rewards become duplicate items, therefore forcing them to spend more over time for less rewards. Why not apply this bar customer logic to video games and provide a safety net to the small proportion of customers who may lose a sense of the broader cost of their obsessive in-game purchases?
All in all, this is a case where buyers need to beware of how loot box/gacha mechanics target consumers and manage their risks accordingly. The widespread profitability of this model (spearheaded by RPG game Genshin Impact producing $874 million USD in mobile device revenue over 5 months) suggests that many future video games will incorporate loot box and gacha mechanics into their business plans. Perhaps now is the time for gamers to decide whether they will accept loot boxes and gacha as common practise or demand these companies to transition into a more consumer friendly business model.
 (n.d.). Wikipedia, the free encyclopedia. Gashapon – Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Gashapon
 Zangeneh, M., Blaszczynski, A., & Turner, N. E. (2008). In the pursuit of winning. New York.
 Straub, Nicholas. “Every Country With Laws Against Loot Boxes (& What They Are).” ScreenRant, ScreenRant, 5 Oct. 2020, https://screenrant.com/lootbox-gambling-microtransactions-illegal-japan-china-belgium-netherlands/.
 Zendle, D., & Cairns, P. (2018). Video game loot boxes are linked to problem gambling: Results of a large-scale survey. PloS one, 13(11), e0206767.
 (2019, April 12). Problem Gambling Severity Index (PGSI). Victorian Responsible Gambling Foundation. responsiblegambling.vic.gov.au/for-professionals/health-and-community-professionals/problem-gambling-severity-index-pgsi/
 Vincent, B. (2021, March 5). NME | Music, Film, TV, Gaming & Pop Culture News. ‘Genshin Impact’ earned $874million in just five months on mobile. Retrieved from http://www.nme.com/news/gaming-news/genshin-impact-earned-874million-in-just-five-months-on-mobile-2894218
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.