New Study Shows Link between Loot Boxes and Problematic Gambling in Minors

A recent study published in the Royal Society Open Science journal has warned that there is a strong link between loot boxes and problematic gambling in minors. The paper is titled “Adolescents and loot boxes: links with problem gambling and motivations for purchase” and was published on June 19th. They found that teens age 16-18 who purchased loot boxes were more than twice as likely to show signs of problem gambling than adults who purchased loot boxes.

In the abstract, before you even dive into the study there is quite an alarming statement made. “Overall, these results suggest that loot boxes either cause problem gambling among older adolescents, allow game companies to profit from adolescents with gambling problems for massive monetary rewards, or both of the above.”

The conclusion of the study also has a couple of very alarming statements. “The more money that older adolescents spent on loot boxes, the greater their problem gambling severity. Older adolescents who spent money on loot boxes displayed more than twice as high measurements of problem gambling than those who did not. Adolescent problem gamblers spent more than five times as much money on loot boxes than those who did not have a problem.”

“There is one clear conclusion that can be drawn from these results: when video game companies allow adolescents to buy loot boxes, they are potentially exposing them to negative consequences. It may be the case that loot box spending in adolescents causes problem gambling. It may be the case that loot boxes allow games companies to monetize problem gambling in these vulnerable populations for 11-digit annual profits. We believe that both relationships may potentially lead to serious adverse consequences for younger gamers.

Loot boxes may have generated up to $30 billion in 2018. It is unclear how much of this revenue has come from adolescents. We would argue that regardless of the profitability of the loot box trade, the risks associated with them are worryingly high.”

The study was conducted by David Zendle, a media effects researcher and lecturer at York St. John University. The teens who took part in the study were gathered from more than 100 popular gaming subreddits in late 2018. Because it was reddit some survey results had to be excluded including those calling the researchers names and one who claimed to spend 1 million a month on loot boxes.

 

Source: Royal Society Publishing via TechRaptor

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MMO Money: A Week of Lawsuits and Nintendo Being Awesome

Lawsuits abound this week in the online gaming world with both Activision Blizzard and Epic Games the focus of new lawsuits. Meanwhile, Nintendo gives us a much-needed breath of fresh air with how they treat gamers and their employees. Bidding for Nexon is set to begin in April with the list of bidders reduced to just 5. Find all of this and more in this week’s MMO Money.

 

Nexon Shortlists Five Bidders for the Company

There has been quite a lot of interest in Nexon recently from major companies around the world including Disney, EA, Comcast, Tencent, and many others. But, Nexon has now lowered that list to just 5 bidders. Those five include Tencent and Kakao Corp. along with three private equity firms, Bain Capital, MBK Partners, and an unidentified firm. Quite significantly Netmarble isn’t included in this list. Netmarble had been putting together a consortium of Korean firms to bid together, believing that selling to an overseas company will damage the local games industry. In fact, this may be why we don’t see any Western-based interests in the shortlist. Bidding for the 98.64% share of Nexon that is expected to be worth as much as $13.3 billion is expected to begin in early April.

 

Source: Games Industry

 

Nintendo Asks Mobile Partners to Stop Players From Spending So Much

In a time when it seems like all game companies are after is your money Nintendo comes out and gives you a little bit of faith in the industry once more. The company is concerned with its self-image and has asked some of its mobile game development partners to adjust the microtransactions in their games so players are less likely to overspend. A source at CyberAgent, who owns the developers of Dragalia Lost told the Wall Street Journal, “Nintendo is not interested in making a large amount of revenue from a single smartphone game. If we managed the game alone, we would have made a lot more.”

This also comes less than a week after a recruitment page for Nintendo shed some light on what it’s like working for the company. The average salary is ¥9.03 million, that’s $80,000, employees can potentially get bonuses in June and December plus a pay increase every April. The average workday at Nintendo is seven hours and forty-five minutes long. As if all of that doesn’t already sound amazing full-time employees stay at the company for an average of 13.5 years. Anyone familiar with the games industry in the West will know that developers tend not to stay in one company for very long. If you’re interested in knowing more about that check out this article from Polygon.

From a personal point of view both of these pieces of news make me more likely to look at Nintendo games and support what they’re doing. Their views and the way they treat their employees is a breath of fresh air in the games industry today.

 

Source: Wall Street Journal, Games Industry

 

 

Vivendi Sells Remaining Ubisoft Shares

Ubisoft Joins Forces With Horror Movie Studio

Its been almost a year since Vivendi announced it was going to stop trying to acquire Ubisoft and finally the remaining shares it had in the company have been sold. The remaining shares it had was about 5% of the company, €429 million.

At one point in time, Vivendi owned a 27.3% stake in the company and though its attempts to own the company completely failed they did bring in about €2 billion, a capital gain of €1.2 billion. Though they failed to achieve their original goal you can hardly call the entire thing a failure. I’d love to fail my way to €2 billion, that’s about $2.2 billion USD. Vivendi has stated that they will honor their agreement and not buy shares in Ubisoft for at least 5 years.

Vivendi had previously owned Activision Blizzard but it sold the company to an investment group led by Bobby Kotick and Brian Kelly for $8.2 billion. That deal pushed Vivendi out of the games industry for 3 years until it bought its way back in with a hostile takeover of Gameloft.

 

Source: Games Industry

 

A New Law firm is Encouraging Shareholders to Sue Activision Blizzard Over Bungie Split

Another law firm is inviting shareholders to join in a class action lawsuit against Activision Blizzard, accusing the company of misleading shareholders over the end of its partnership with Bungie. The firm’s loss submission form makes the following claims:

Activision failed to disclose that “the termination of Activision Blizzard and Bungie’s partnership… was imminent”

That this termination “would foreseeably have a significant negative impact on Activision Blizzard’s revenues.”

And as a result “Activision Blizzard’s public statements were materially false and misleading at all times.”

Activision Blizzard previously said that the split from Bungie was because Destiny 2 failed to meet financial expectations. But in a recent SEC filing, the company recognized $164 million in revenue from Destiny for 2018 as a result of the split.

This comes at a time when shareholders for Activision Blizzard aren’t too happy with the company. They’ve had to warn investors that cutting hundreds of jobs (800 in total) may damage the company. They even went so far as to say there can be “no assurance that our business will be more efficient or effective” than it was before this new strategy.

Why can’t you be more like Nintendo?

 

Source: Games Industry

 

Man Sues Epic Games Over Predatory Loot Boxes

While we’re on the topic of lawsuits we should mention that Epic Games is being sued, yet again. This time though it isn’t because they used a dance in their game, instead it’s over allegations that Epic Games has engaged in predatory schemes with loot boxes in Fortnite. They allege that Epic intentionally designed Save the World to hinder player’s progress if they didn’t spend real money. They also say that Epic has “made a fortune on in-game purchases, preying in large part on minors who are especially susceptible to such predatory tactics.” The lawsuit accuses Epic of violating California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law.

What the lawsuit doesn’t mention though is that since January Epic Games now shows the contents of loot llamas in Save the World before they’re purchased with V-Bucks. So it is possible that the lawsuit won’t go anywhere since they’ve already made changes to the areas that the lawsuit covers.

 

Source: Games Industry

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Star Conflict Nightingale Ship Components Sale Going One Day Only

For one day only (today) you’ll be able to get 30% of Star Conflict Nightingale ship components in a special, limited time sale. According to the in-game lore, this is thanks to Lucas Horn, the Federation’s liaison with UMC at New Eden station. An old friend of his has arrived from the fringe sectors with the particularly valuable cargo.

Star Conflict Nightingale Ship Components

The Nightingale is a gorgeous ship that fills its pilot with pride and confidence wherever they go. The MHD generator provides your ship with increased power to your weapons if you are careful and don’t neglect engine power. However, as the news post announcing the sale says, “Speed and the ability to conceal yourself and the team are your main trumps.” If you want to get your hands on the Nightingale ship components at 30% off you’ll need to do so before March 6th. You can buy them directly from the ship tree.

March 6th is also the last opportunity for pilots to get their hands on the Elite Smuggler Bundle. The bundle of unique coloring schemes will no longer be available after March 6th which means that this will be the last opportunity for players to get the 11 coloring schemes that come in the bundle, including the Golden Dragon.

So, if either of these things appeals to you head over to Star Conflict today, to make sure you take advantage of this sweet deal and get some unique looks for your ships. We can’t wait to see what bundle is introduced next.

 

Source: Official Site

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Loot Boxes in Dutch Version of Dota 2 Reveal Contents Before a Purchase

Following a stern ultimatum laid down by the Dutch gaming commission after their findings on loot boxes were published, Dota 2 loot boxes have seen an update for the Dutch version of the MOBA.

dota 2 loot boxes

Players of Dota 2 in the Netherlands will now get to see what reward lies within the confines of a loot box before a purchase is made. Additionally, loot box purchases in the country cannot be done in bulk, forcing players to buy one at a time, and the opening animation has been completely scrapped

The move follows a decision in June by Valve to remove item trading and Steam Marketplace transfers from the Netherlands in both Dota 2 and CS:GO in response to the June 20th deadline for change laid down by Dutch governing bodies.

Time will tell whether this adjustment will be enough to appease the Dutch gaming authority, but it does appear to be aimed at countering the problems of people not knowing whether an item in a loot box is worth the cost as well as cutting out the “almost winning” sensation a box’s opening animation involves.

This is the most recent change to loot boxes in gaming from one of the larger games that use the monetization model. Other games have also followed suit, such as Rocket League’s decision to publish the drop rates of items found in its crates and big changes to loot boxes made in Star Wars Battlefront II earlier this year.

Our Thoughts

We suspect these changes to the Dota 2 loot box will go a long way towards re-establishing goodwill between Valve and the Dutch gambling authority. Ideally, other games will follow suit around the world and we’ll see this monetization scheme at least become a little more fair if not killed outright.

Source: Eurogamer

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French Government Rules Loot Boxes are Not Quite Gambling

Another country in Europe has weighed in on the loot box gambling discussion with what sounds a bit like a non-committal shrug of the shoulders. France’s gambling regulation body released a white paper on the subject, denouncing aspects of the practice but ruling that loot boxes are not gambling.

loot box gambling

According to the French regulatory body ARJEL and further broken down by Sebastian Schwiddessen of media and IT law firm Baker McKenzie, loot box practices “are undermining public policy goals for gambling” and are providing sensations closely related to gambling with its “barely missed” presentation. ARJEL also believes that combined action from European financial regulators should be considered to reign in the practice.

Despite these points, ARJEL also finds that, by letter of the law, loot boxes are not gambling by virtue of the fact that items contained from loot boxes carry no real-world monetary value.

The ARJEL white paper makes mention of a Gaming Regulators European Forum (GREF), which will release a joined position paper intended to “clarify common rules and raise awareness among game publishers” and “make consumers aware of the dangers of microtransactions” among other things. According to Schwiddessen, however, these actions by the GREF are all bluster.

“The joined position paper only shows that a combined (effective) action is rather unlikely as none of the included statements relates to any concrete plans of enforcement action,” he writes. “Any enforcement action under French gambling law is therefore unlikely and it looks like the strict Belgian and Dutch decisions will remain an exemption of two very small markets.”

Our Thoughts

Renouncement on one corner of the mouth and non-action from the other corner does smack a bit of a government looking to have its cake and eat it, too. Ideally, the GREF will hold more weight and will provide further impetus for game companies to switch up their loot box tune further.

Source: LinkedIn via PC Gamer

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ESA President Speaks in Defense of Loot Box Self-Regulation

At the Nordic Game Conference, Entertaniment Software Association president Mike Gallagher offered a few thoughts on the topic of loot box regulation, stating that recent decisions reached by Belgium and the Netherlands were based on lack of information while speaking largely in defense of loot box practices.

loot box regulation

According to Gallagher, loot box transactions are not gambling by virtue of the fact that gambling takes money without a guarantee of getting anything, while gaming loot boxes always provide something. “Players always receive an in-game feature that aids in customising their experience,” said Gallagher. “When you look at the definitions of gambling throughout the world, and how this is done and how it’s regulated in places like Las Vegas and the US, it’s quite different to the mechanism with loot boxes in games.”

Gallagher further cemented his position by pointing to official confirmation of gambling’s definition by the ESRB and the gambling authorities of New Zealand and the UK.

The ESA president also pointed to the speed with which the games industry can react to customer outcry, pointing once again to the ESRB’s decision to add loot box labeling on games. “The controversy erupted in November, and by April 1 we had implemented significant changes to the ratings system,” noted Gallagher.

Finally, Gallagher made a point to stress that loot boxes are an optional purchase and are otherwise not required to actually fire up, play and enjoy the game.

“When you look at these other decisions, we can’t go to the lowest common denominator of government around the world, and make that the standard the rest of the world has to live by, and limit the trajectory of the industry,” he concludes. “We believe it’s best to be clear about the facts, and make sure those carry the day around the world, so we drive an outcome that best extends the [games industry’s] frontiers and looks after the interests of gamers.”

Our Thoughts

With all due respect to Mr. Gallagher, he’s very wrong here. The point of playing video games is to feel a sense of reward, and if that sense of reward is hidden behind the walls of a loot box, you’re making that less of an option. Particularly when the existence of a game’s loot boxes are thrust in your face with website landing pages, in-game pop-ups or social media broadcasts. And while it’s certainly better that the industry regulates itself, it’s also clear that many companies would rather see where the envelope is than reform in a more timely manner.

Source: GamesIndustry

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Belgium Threatens FIFA 18, CS:GO and Overwatch with Punishment for Loot Box Practices

Shortly after a decisive ruling from the Netherlands regarding several game loot boxes, the Belgium loot box ruling has come down with a similarly hard line. The decision by the country’s gaming commission names three major titles as violators of its gambling laws, and is threatening fines and imprisonment if things aren’t changed.

belgium loot box ruling

FIFA 18, Counter-Strike: Global Offenssive, and Overwatch have been called out for violation of Belgian gambling laws according to the findings of the Belgian Gaming Commission. The decision was based on four different criteria: being a game, with something at stake, leading to a win or a loss, and with chance playing a role.

Star Wars Battlefront II was also under the microscope, but was exempt from the commission’s rulings due to the removal of paid loot boxes.

“Paid loot boxes aren’t an inoffensive component of games which act like games that require skill,” says the commission’s director Peter Naessens. “Players are being tempted and misguided and none of the protective measures for gambling are being applied.”

As a result of the findings, the publishers of these games must make adjustments or face fines of €800.000 or up to five years of imprisonment. The charges could even be doubled if it can be proved that those who are taken advantage of were minors. There’s no timeline for when these changes must be made.

Our Thoughts

So the screws of the vice turn a few more threads to tighten around loot box practices. There are many of us who are happy to see these firm and decisive crackdowns and we’re hoping that other countries around the globe will be following suit.

Source: De Standard via WCCF Tech

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Dutch Gaming Authority Determines Loot Boxes are Gambling

Countries in Europe continue to make connections to loot box monetization schemes and gambling, with the Netherlands making a pretty decisive ruling on the matter. After an investigation of ten different games that feature loot boxes, the Dutch gaming authority not only found what it called “addictive elements”, it even found some games circumvented the country’s gambling laws.

loot box monetization

According to a report translated by Eurogamer, the country’s gaming authority found that, of the ten titles the authority looked at, “all of the loot boxes that were studied could be addictive” and even declared four games violated the Dutch Betting and Gaming Act. The names of those four games were not part of the report, though the assumed offending titles are FIFA 18, Dota 2, PlayerUnknown’s Battlegrounds and Rocket League.

“Loot boxes are similar to gambling games such as slot machines and roulette in terms of design and mechanisms,” stated the authority. “Offering this type of game of chance to Dutch players without a license is prohibited.”

As a result of the group’s findings, demands are being brought to developers and publishers to make changes to in-game loot boxes, including changing visual effects that indicate a sense of “almost winning” and extending the time between opening consecutive boxes. They also want companies to include measures to keep vulnerable groups away from loot boxes or otherwise demonstrate that loot boxes are harmless.

Failure to comply with these demands by June 20th could incur “enforcement action” such as fines or an outright ban.

Our Thoughts

Pretty cut-and-dry sounding to us: either adjust the way loot boxes are presented, or face the consequences. This is definitely a landmark moment in the ongoing gaming loot box saga, and it certainly could pave the way for similar actions by other countries around the world.

Source: De Kansspelautoriteit via Eurogamer

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ESRB Reveals Plans to Include a Loot Box Label for Games

The ESRB’s stance on the question of loot box practices and their relationship with gambling has already been pretty well established, but it would appear that mounting pressure from US and world governments is making them change their minds a bit. The oversight organization has just announced a new ESRB loot box label to be added to video games soon, granting consumers more information on what’s in their entertainment.

esrb loot box label

“The video game industry is evolving and innovating continually, as is the ESRB rating system,” says ESRB president Patricia Vance. In step with that statement, physical and digital games will soon have an In-Game Purchases label whenever a game has purchasable features like levels, skins, loot boxes or other digital items or unlocks.

In addition to the new label, the organization has launched a new website with information about tools parents can utilize to control the games their children play and manage functions for game systems such as content or spending limits.

“We’ve absorbed every tweet, email, Facebook post and singing telegram sent our way, and we’ve been developing a sensible approach to let gamers and parents know when a game offers the option to purchase digital content” reads a statement from the ESRB posted to Twitter. “This is the first step of many! We’ll continue to discuss how to further enhance our rating system with publishers, developers, gamers and especially parents.”

Our Thoughts

This is a good first step, but ultimately the onus still falls on developers and publishers to not include aggressive and predatory loot box mechanics in their games, or to just do away with loot boxes entirely. Still, progress is progress…unless, of course, you’re of the mindset that this isn’t progress enough.

Sources: press release, Twitter

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Germany and Sweden Begin to Investigate Loot Boxes

Perhaps the initial firestorm has died down, but the heat is most assuredly still there on gaming loot box practices. In addition to moves being made by Hawaii and Belgium, it looks like we can now add Germany and Sweden to the list of governments pushing for legislative regulation of the practice.

gaming loot box practices

In Germany, a study by the University of Hamburg has found that certain gaming business models and industry sales were driven by a small portion of players – or in other words, they earned money via “a typical feature of gambling markets”.

As a result of these findings, it is “conceivable” that loot box practices violate existing regulations meant to protect children and adolescents according to Youth Protection Commissioner Wolfgang Kreißig. In response, publishers could face a blanket ban on releasing games that feature loot boxes. A decision on such a ban is expected to come this March.

Meanwhile in Sweden, Swedish Minister of Civil Affairs Ardalan Shekarabi will be asking authorities to investigate loot box practices to determine if there are enough similarities to constitute gambling.

“We are working to regain control of the gaming market as soon as possible and ensure that Swedish consumer protection rules apply to all actors involved in gaming,” said Shekarabi, who is hoping to have some form of legislation prepared for January 2019.

In spite of this, EA has confirmed during an investor’s call that loot boxes will return to Star Wars Battlefront II – the game that was the catalyst for the loot box conversation – in the coming months. “Digital economies have a place, and we will continue to drive and focus on that,” said EA CEO Andrew Wilson during the call. “The teams are working on how that context will apply to the Battlefront universe, but more on that in the months to come.”

Wilson also refuted reports that loot boxes were yanked from the game at the instruction of Disney, telling investors that the company has “a tremendous relationship with Disney” and that “you shouldn’t believe everything you read in the press.”

Our Thoughts

Don’t stop the pressure, folks! Loot boxes can see sweet, sweet death if we want it!

Sources: Welt via GamesIndustry, P3 News via VG247, VG247

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