Predatory monetization schemes in video games (e.g. ‘loot boxes’) and internet gaming disorder

Predatory monetization schemes in video games are purchasing systems that disguise or withhold the long-term cost of the activity until players are already financially and psychologically committed. Such schemes contribute to the increasing similarity of gaming and gambling and the potential for financial harm for those with Internet gaming disorder. Video gaming is a billion-dollar global industry which is continuously growing and evolving. An important innovation which has fuelled industry development has been the expansion of digital purchase options, including the emergence of virtual goods, that can be purchased from within the game in small payments termed ‘microtransactions’. In 2017, the game publisher Activision Blizzard reported that it had made more than 4 billion, or more than half its annual income, from microtransactions 1. Microtransactions enable players to obtain additional game content or premiums (e. g. virtual items, textures/skins, currency, levels or power-ups). These types of purchases are common in mobile game revenue models where the base game is ‘free-to-play’, but the player is encouraged to spend money to make unimpeded progress in the game (i. e. overcome a ‘paywall’). Game monetization schemes have become increasingly sophisticated and have been featured more prominently within popular on-line games. In our view, some of these schemes could be considered predatory. Predatory monetization schemes typically involve in-game purchasing systems that disguise or withhold the true long-term cost of the activity until players are already financially and psychologically committed. Such schemes are designed to encourage repeated player spending using tactics or elements that may involve, either singularly or in combination, limited disclosure of the product; intrusive and unavoidable solicitations; and systems that manipulate reward outcomes to reinforce purchasing behaviors over skillful or strategic play. Such strategies may exploit inequalities in information between purchaser and provider, such as when the industry uses knowledge of the player's game-related preferences, available funds and/or playing and spending habits, to present offers predetermined to maximize the likelihood of eliciting player spending. Some of the top-earning game publishers (e. g. Activision and Electronic Arts) have registered patents for microtransaction systems that incentivize the player to spend money 2, 3. Of particular relevance is the monetization scheme known as the ‘loot box’. A loot box refers to an in-game reward system that can be purchased repeatedly with real money to obtain a random selection of virtual items. The low probability of obtaining a desired item means that the player will have to purchase an indeterminate number of loot boxes to obtain the item. Loot boxes resemble gambling slot machines because they require no player skill and have a randomly determined outcome (i. e. prize). However, they do not meet some legal definitions of gambling because financial expenditure on loot boxes is not considered to be a financial ‘loss’ and virtual items are not considered to be ‘something of value’ 4. There is also no possibility of direct financial return in these transactions. Such predatory monetization schemes can be understood with reference to the concept of ‘entrapment’ 5 (i. e. the belief that one has invested too much to quit). In situations of this nature, players will often spend an escalating amount of money that begets further spending on the game. The investment of an irretrievable sum of money in pursuit of desirable virtual items may be seen by players as an investment to the extent that it will increase the likelihood of obtaining these items 6. In this connection, spending more and more money on loot boxes may have a ‘sunk cost’ effect that serves to justify continued expenditure. Entrapment by microtransactions may occur because the costs are less salient 7, because these transactions are represented as virtual credits or credit card debt. Sunk cost effects may also operate vicariously 8 via exposure to proximal on-line players who are entrapped and make maladaptive purchasing decisions. Observing other players’ spending and opening of loot boxes with favourable outcomes may provoke counterfactual comparisons (e. g. ‘If only I had spent more …’) that sustain players’ spending 9. Another noteworthy aspect of predatory monetization is the collection and use of individual player data to manipulate the nature and presentation of purchasing offers in ways that maximize the likelihood of the player spending money. Some schemes may exploit an information asymmetry (i. e. the game system knows more about the player than the player can know about the game) to adjust the prices of virtual items for players depending on their playing and spending habits in the game 10, 11. Players may not be aware or informed of the odds of receiving desired items from microtransactions, and the game may use pressuring tactics to incentivize purchases (e. g. so-called ‘limited time’ offers). These schemes may entice some players with access to credit cards to spend more money than they can afford 12. Younger players may be particularly less equipped to critically appraise the value proposition of these schemes. These technological developments highlight the evolving financial nature of gaming products and patterns of monetary overcommitment observed in relation to electronic gambling machines. Emerging research evidence and clinical case reports are beginning to highlight the financial risks of these schemes 13-15. Some news stories have reported on teenagers spending thousands of dollars on microtransactions 16. Individuals seeking treatment for internet gaming disorder (IGD) have reported large debts due to microtransactions 17. There are regulatory challenges, including the need for countermeasures and safeguards to protect consumers. In 2016, the Chinese government passed legislation that required game developers to disclose the odds of receiving certain items from loot boxes. In 2018, the Belgium Gambling Commission declared that loot boxes are in violation of gambling legislation 18. Such responses appear necessary, given that gaming companies have implemented little to nothing by way of social responsibility measures. More research is needed to understand the financial aspects of on-line games and their relationship to persistent play and the onset of problematic gaming. Cases of IGD involving monetized games may be more financially involved and share features in common with gambling disorder (e. g. spending more than one can afford, borrowing or stealing money). A logical next step for addiction research is to examine different types of monetization and their association with IGD symptoms and gaming-related harms. Such work has important implications for enhancing our understanding of individuals whose spending behavior in games appears excessive and who may be experiencing harm because of their gaming behavior. None. This work received financial support from a Discovery Early Career Researcher Award (DECRA) DE170101198 funded by the Australian Research Council (ARC).