Loot boxes and addiction

In a few short months gamers — or rather the vocal subset of gamers often mistaken for the whole — have become experts in psychology. Fresh off a righteous crusade against the addictive properties of loot boxes, there was no time to bask in their accomplishments since our fair hobby faced an even greater foe: the dastardly inclusion of gaming addiction (or gaming disorder and hazardous gaming to be precise) in the draft update to the International Classification of Diseases (ICD-11). It is sometimes expedient to forget what we know, and so overnight we began to hear that the science wasn’t in on the relationship between gaming and addiction, that there were far more important problems to deal with, and that the inclusion of such a farcical concept as gaming addiction wasn’t just an insult to the already highly bullied gaming community, but was, in fact, trivializing those with legitimate mental health issues. I have a different view.

This series began with an article describing loot boxes as a microtransaction intended to offset the increasing costs of video game development and produce a steadier stream of revenues than traditional expansions would provide. A companion article addressed the question of gambling and how arguments focusing on it gained traction due to rhetorical convenience rather than their merits for recommending policy. Some time has passed since the original article and so the opportunity I saw for an interesting discussion on addiction in gaming seems to have passed us and instead has been replaced with armchair psychology with regards to the ICD-11. In this article I’d like to address some specifics about the implementation of loot box systems, and attempt to reintegrate the discussion of addiction with regards to gaming.

Optimization

Loot boxes are a system designed to optimize for revenue. The same can be said for games in general, but specifically the design of a loot box is such that it is intended to maximize the revenue coming from a player directly for a given piece of content. This is not unlike designing a layout for a store (putting gum and tabloids at the checkout instead of furniture and appliances) or offering different subscription bundles over a la carte options, and so the practice is less sinister than it sounds. What it means is that if a feature of a loot box reduces expected revenue, it is likely going to be cut, while if it increases revenue it will be adopted.

The existence of ‘coin muncher’ style arcade games tells us that directly optimizing on revenue isn’t something new to gaming, but it is a practice that we’re becoming reacquainted with given the reduced costs of digital distribution. Often games will optimize for time, though this is more commonly described as making it more fun. As commercial products, games will want to maximize for revenues eventually, and optimizing for time is an indirect way to accomplish this. More time spent in a game generally correlates with enjoyment, and enjoyment means word of mouth which increases sales. Generally both optimizations complement each other and work in concert, since making a player want to spend more time in a game will ultimately translate into another coin being put into the machine when the game over screen appears. These two optimizations are most apparent in a subscription MMO where the game optimizes on time in order to justify the fee, but goes back to technologically constrained games that increased the difficulty (and so playtime) in order to justify the price.

Optimizing for time is part of a larger trend beyond gaming. A key performance indicator for many apps is the amount of time spent in the app, and a lot of time and attention is spent on maximizing this. Snapchat is probably one of the most manipulative examples of this through techniques such as sending push notifications when someone is typing, setting timers and reminders that you have a streak going with someone (with the attendant sense of obligation to keep the streak going), and setting various badges based on your activity. YouTube defaults to autoplay, despite the fact that you or I have never met someone who has ever wanted this feature to be enabled, and Facebook and Twitter have now taken to push notifying us about other people’s activity that does not relate to us.

While I try to quarantine my tastes when writing about these things, I can’t help but say that I’m not particularly happy with this current state of affairs. I came to this conclusion when trying to schedule out days. In it I did my absolute best to give fine detail in terms of when I would do certain things and how much time I should dedicate to it. I reflected that time in apps probably should be accounted for. From this there was a natural extension: How much time did I want to spend in those apps vs. how much time did I actually spend in the apps? I know that I spend a lot more time on certain platforms than I would want to, and that you probably do as well. In my own case, I know this extra time spent in the platform comes at the expense of really fulfilling activities: I don’t read as much as I would like to, and I have skipped scheduled writing sessions to play a game or browse through Twitter and YouTube. I’m aware of this and yet I still catch myself not spending the time as I would like. Could this be a difference between my stated preferences and what I actually want? Could it be that political economy just really isn’t as interesting as cute photos of dachshunds and that my choices reflect my true preferences? Is this anything more than a technological update over the lament that people are spending more time reading tabloids and horoscopes over local news? Perhaps, but it seems to me that a proper discussion on the regulation of techniques that optimize for revenue applies just as well to techniques that optimize for time. From this it follows that we should be talking about gaming addiction in general instead of focusing on gambling addiction.

Tricks of the trade

Added value

A player puts a coin into a slot machine. I refresh my notifications on Twitter. We both wait a completely arbitrary period of time, wondering if we’ve hit the jackpot. There is no technological reason for the wait and yet its presence is vital for both activities. What is happening during that wait?

Recall the exercise from the previous section: estimate the amount of time you believe you would like to spend doing certain activities during the day and then measure the time you actually spend doing them. The difference between your stated time and the actual time spent on apps is where the possibility for regulation lies. For money it’s a matter of asking how much you believe you want to spend on gaming vs. how much  you actually spend. In fact, this seems like a straightforward empirical exercise: take a random sample, get them to fill out a survey, dividing them into treatment (expose them to all the tricks) and control (give them versions of the apps without the tricks) groups, and then look at the difference in behaviour. Unfortunately there are some troublesome sources of error that are not easily removed. First, can we take the stated beliefs of the subjects for granted with regards to how they want to spend the time? Presumably few, if any, of the surveys will assign any value to pornography or consuming pirated entertainment, and yet we should expect these to appear in an honest accounting of how some people would spend the day. There is an interesting book by Seth Stephens-Davidowitz that illustrates just how big of a problem this is (you can get an idea by seeing some of his New York Times columns). This is more than an exercise in determining an ideal experiment, since it deals directly with the fact we do a poor job of speaking honestly about our true preferences and so makes it hard to distinguish between manipulative practices and buyer’s remorse. This is more important than enumerating specific practices we might object to, since it deals with our ability to measure the problem.

The wait should be over soon. One by one the hieroglyphics emerge, building anticipation towards a payout. Not a jackpot, but more than the player put in. My notifications display a new like and maybe a retweet. Someone cared about what I had to say! Did you happen to keep reading because I asked that question at the end of the opening paragraph at the start of this section? Anticipation is a diverse and powerful tool. Time is precious and yet so much of our entertainment relies on seemingly inefficient use of it. There are few things as universal as people’s resentment at having their time wasted, and yet when entertainment economizes on time it is derided as a jump scare or melodrama. We choose to waste our time in anticipation because the build up and payoff are pleasurable. What is happening during the wait is the creation of value.

This also factors into our problem with measurement. A new skin for my character in a game is a different product than the same skin with the attendant ritual of anticipation and payoff in opening a randomized box. The complaint that the fanfare that is associated with opening a loot box is addictive isn’t without merit. In so far as we find pleasurable things addictive, we may develop an unhealthy attachment to the elation resulting from opening a loot box. But all this says is that loot boxes create value (an experience) above and beyond their contents. It may be easy to establish that the sights, sounds, and timing of loot boxes are entertaining, but we still need to demonstrate how they are addictive and, furthermore, why these same elements are not addictive in other settings (assuming we are attempting to avoid a designation of gaming addiction).

The potential for becoming overly attached to the elation of opening loot boxes notwithstanding, creating value through appealing sights and sounds seems benign and not substantially different from adding an additional level or another subplot (though, of course, the ritual of opening a loot box doesn’t change and so the return on developing an appealing reveal is much higher than these individual pieces of content). There are, however, conscious efforts to confound the valuation of a given loot box.

Obfuscating value

We are generally not very good with numbers, especially when it comes to prices. It would take longer to determine if goods priced at $3.99, $8.99 and $7.99 cost more than $20 than it would if the goods cost $9.00, $4.00 and $8.00 (they both do). Furthermore, our perception of these numbers is frequently off as people tend to treat the $0.01 difference in the prices above as substantially larger. There is a large and growing list of cognitive biases that could serve as examples of how bad we are at getting the true value of things. Since we are discussing loot boxes, it is not a surprise that one area in which we are particularly bad are situations with probabilistic outcomes.

There is no controversy in saying that consumers are generally bad at probability (it even trips up mathematicians), but I would add that all errors are not equally severe. It will not come as a surprise to find out that most people are risk averse. From a purely mathematical standpoint, if there is only one thing in a loot box that I want (everything else is worthless), that I value at $1 and it has a 70% chance of dropping, then I should be willing to pay up to $0.70 for that loot box. Very few people actually think this way. Since there is only a probabilistic chance of getting the item, people who are risk averse and will pay less than $0.70 for the loot box. Some people are elation seeking and would be willing to spend more than $0.70 for the loot box (in essence they pay up for the fact it’s probabilistic). If you assign some particular importance to the true expected value of the loot box then you’re likely to find these tendencies a problem, but since the majority are risk averse it would mean that there aren’t enough people buying loot boxes.

Reality is more complex. First, the amount being spent and the probabilities themselves may result in different behaviors. Next, people likely do not have some clear conscious measure of the value of a given good, but instead make a decision based an estimate of the potential goods, the fact they’re probabalistic, and unconsciously assign a small premium to the fact there’s a bit of the excitement of unwrapping presents in opening it. What is important in this case is that the consumer is making a decision in terms of what they value with regards to the good and the experience associated with buying it. In this sense, while there are known biases and distortions with probabilities and psychological pricing ($x.99 prices) they are not a special case in and of themselves.

Variations

While each of these aspects of loot boxes are contentious, they do not seem to be especially concerning cases relative to other non-gaming experiences. Store layouts, price labels, coloured packaging, advertising, and good salesmanship all exploit aspects of our psychology that we have learned to live with and navigate. However, probability and anticipation are not an exhaustive list of techniques used in loot boxes. The problem with attempting to create a comprehensive list of loot box techniques is that it will not account for innovations that are being employed but remain undiscovered, meaning there will be fresh new outrages to relitigate the issue in perpetuity. Furthermore, the objections to loot boxes at least attempt to be founded on principle. As such, we would expect a robust objection to be to more than just a simple dispute over implementation. The reason I started with the appeal of the opening experience and confounding the valuation through probability is that these two techniques seem to account for the majority of cases.

For instance, some games now create an incentive to watch another player open a loot box. Given that a number of games now have integration with streaming services it is entirely possible that games may alter the probabilities of certain item drops, making rarer and more desirable items drop more frequently when a large number of potential buyers are watching in order to create the impression that the items drop more frequently. This seems to be another variation on confounding the valuation. While this scheme seems particularly nefarious, a similar effect could be simply achieved through altering the probabilities of free and introductory drops. Purchases using a special currency are another way in which layers of confusion are added between the actual value of the item to a player in dollars and their perception of that value.

Examples of added value are a bit more intuitive. The sights and sounds of opening a loot box are experiences above and beyond the contents itself and so are purely adding something. The first article was essentially about how loot boxes are a means of getting additional content into a game and so the added value should require no further elaboration. Likewise, knowing certain objects are only obtainable through real money transactions may confer some social benefit above and beyond the value of the item itself (i.e. conspicuous consumption).

Another way of considering these two categories is to see them as manipulating what you get (what is it worth to you?) and what you pay for (how much can they get you to pay for it?). Some techniques fit more comfortably in one or the other category than others, but this abstraction is helpful as it moves us beyond arguing about a particular implementation, and instead producing a more coherent set of guidelines that won’t be as fragile to technological advances. For example, the response to loot boxes bears a resemblance to disputes about DLC, which itself had different camps with regards to what was good and bad DLC. I don’t know if there were any calls to regulate, but this question seems mostly settled and, while players may resent DLC, the dispute is relegated to matters of taste (“I liked Burial at Sea” vs. “Bioshock Infinite should be legally required to provide a second single player campaign if an intern even so much as said ‘wouldn’t it be cool if we could do this in Rapture?’ during production”). DLC has not meant the end of fun and it is difficult to establish that we any worse off because of it, meaning that any regulation we might have imposed would have at least taken the resources away from more productive uses and, in all likelihood, have stifled innovation in gaming (likely through higher volatility in terms of gaming jobs).

Addiction

The characterization of loot boxes as a means of optimizing for revenues and a categorization of the techniques employed are intended to give us some insight into the question of whether or not loot boxes are addictive. There is overlap between some of the optimizations employed in loot boxes (for revenue) and the games themselves (for time/fun), and so we need to address whatever difference allows us to claim one is addictive while the other is not, or admit that the case has been overstated.

The techniques that obfuscate value receive a lot of attention, and yet these appear to be the least likely to be addictive. Addiction is compulsively seeking a rewarding stimulus no matter the consequences. If this obfuscation is as bad as claimed, then it stands to reason that there isn’t much of a stimulus since the items are worthless. These techniques are almost certainly effective at getting customers to pay more for a given piece of content, but they are not a stimulus themselves. What about the anticipation created by the uncertainty of an outcome? This is a stimulus (and one that has an easy parallel in gambling), but, while it is enabled by probability, it is better characterized by added value. The thrill of getting a rare item is value added to the item above and beyond its utility in the game.

If loot boxes are addictive, they are addictive due to the stimulus or reward aspects such as sights, sounds, and emotional payoffs. These elements are not absent from the discussion, but they do tend to have a smaller share. What is more interesting to me is that these are characteristics that have a greater similarity to features that are found inside games themselves. Games want to take you on a ride, either through spinning a good yarn, or presenting you with exciting action sequences, or any number of features that keep us at the computer or console. The missed opportunity of the debate surrounding loot boxes is to ask whether or not games themselves are addictive and what kinds of demands they make on our time.

If we are willing to accept anecdotes about people who spent staggering amounts on loot boxes, then it seems unusually callous to ignore anecdotes about time spent in games. I have personally encountered two cases of long standing relationships heavily strained by too much time in World of Warcraft, one of them ultimately breaking permanently. I have personally experienced being passed over for WoW time (separate from the cases mentioned before), and even though I should understand the context, I really do feel worthless and having empathy for the psychology of being in a raid does not tranquilize this feeling. There is a cost borne by the people who are neglected in these cases, and it is always in the name of just one more quest. Of course, we know that there isn’t just one more quest, but an endless treadmill of more things to do. This is not limited to MMOs, they just happened to be the most innovative due to their subscription model.

Does it count as an addiction? My personal inclination is to defer to the experts in terms of clinical definitions, but the conversation can at least be reduced to the demands games make on our time. I know I’d have done better in school, and I know what projects I’ve been putting aside due to the time spent in games. I have enough control to recognize this and step away, but I have also developed a preference for games that don’t constantly nag me to play. I’m not particularly fond of many of the online survival games because they seem to be structured around daily play for extended periods of time. I do, however, enjoy single player versions of these games such as Terraria and Subnautica which can be picked up and left off at any time. One feature I realized I liked about Sunless Sea was that a play session would usually involve completing a circuit to all the ports I was interested and back to London.

I am obviously reluctant to employ the analogy of gambling, but let us employ it as a worst case, be it loot boxes or gaming itself. The most common experience of gambling is someone having a good time in a controlled, responsible way. The same can be said of gaming itself (my selecting into Sunless Sea and out of, say, Rust) or loot boxes. The majority of people I know who have played F2P games have never spent a dime, and those who did were perfectly happy with what they purchased. However, we also know that there is a segment of the population who will go into a casino and even if the odds are posted or the warning signs are written on the machines themselves, they will go in and risk increasing sums in the pursuit of a rush they get from gambling.

Dealing with it

Earlier on we imagined a list of the amount of time we’d like to spend on activities throughout our day and a parallel list of the actual time spent on activities. The difference between these two lists was the place in which we could put regulation. Of course, regulation is not the only option. Should we regulate video games and not address similar demands for our time on other platforms? What kind of regulation can we implement that will allow good faith implementations of loot boxes and similar systems without allowing bad actors to circumvent the regulation? Regulators and the App Store now require probabilities to be posted (and I generally like this practice), but even beyond the necessary distortions involved in a particular drop, these aren’t likely to address addiction.

There is a certain point where we need to support what we like, maturely discuss what we don’t, and take care of the people around us. It would be nice to imagine that there’s a technological magic bullet to identify all the harmful cases and will solve them but there isn’t. Fast food franchisees will not say “Are you sure you should get the extra large? That’s the third this week…” Car dealerships will not ask “Are you sure you can afford this?” We would be insulted if they did. We step back from the ledge of a stupid decision through either reflection or the prodding of loved ones. It’s convenient to think that being in a game is some kind of special case in which we lose all reason, but we are nowhere close to establishing this is the case.

The reason why a mature discussion is especially important here because player feedback is helpful in shaping products that are both financially viable and present good value. The problem is that the dialogue has been so clogged with invective that direct feedback from players is a very noisy signal. Loot boxes optimize on revenue and seeing as the dialogue is too noisy to be useful, they simply reflect the actions instead of the statements from players, and those actions say that players like and buy a lot of loot boxes. Rage may be appealing because one can cast oneself in the light of an ethical partisan standing up to the insurmountable evil of game publishers whether or not anything actually changes. An honest dialogue entails the risk that you might hear “no” or find out that your case simply isn’t as good as you thought it was.

So far as I can tell, for all the talk of addiction, the catalysts for the current debate (Battlefront 2 and Shadow of War) weren’t especially bad implementations in this regard. Judging by the most frequently repeated complaints, the dispute was that they were too expensive, not that they were somehow more addictive than prior offerings. I suspect the people responsible for implementing the loot box system knew full well that the loot boxes cost more than what an optimal value would be, but set the pricing higher in the beta in hopes that anchoring would make the true price seem better by comparison. What I don’t think anyone expected was that it would be a flashpoint and produce a reaction such that any price would be too high. Assuming some version of this were true, I am quite sympathetic to the chain of reasoning behind it. We seem to be utterly incapable of having a serious discussion about the actual value of a game and there is an entire segment of gamers who simply will not buy a game at any price unless it’s discounted by some arbitrary amount. One need only look to the reaction to EA’s decision to discount Battlefront 2 loot boxes: Smug posts like ‘EA just removed 75% my sense of pride and accomplishment’ to see the absolute futility in attempting to form any policy around an internet mob. Either EA did the right thing by decreasing the price or they did not, and there is no information conveyed by dancing on the corpse of the publisher’s previous position to determine whether it was the right move.

What this means is that the voices being heard online are sending a clear message: They want to be lied to. The words mean nothing because the prior that says the publisher is always wrong is so strong that it is simply not worth trying to shift it. Instead, prices are shifted in advance of sales to reflect the desired revenues, turning a nominal 50% off into a real 25% off or less. This seems to be working because the practice is growing. Because any dialogue has been reduced to cheap talk, developers will have to rely on what they can observe about players, meaning that techniques that result in more revenues will dominate and players have effectively selected out of the conversation. Of course nobody will want to face the kind of backlash EA got and so quite a bit of design will focus on how to boil the frog (an especially apt cliché when judging by forum avatars). If loot boxes become more deceptive it will be because players reduced their voice to a constant whine and success will be determined by how effectively sales grow while trying to minimize or at least tune out the noise.

A more productive line of thinking would be to honestly ask exactly what kind of influence gaming has over our lives and whether there are some practices we want to discourage, either through avoidance or clearly articulating why this practice should stop. I gave Sunless Sea as an example of a game that does not put me on a treadmill and tries to extract another hour of play out of me. Ticket to Ride is arguably more successful as an app than a board game, but its origins as a board game informs a design that has a definitive end and does not nudge you to opening up a new session. These are successful games, but they also face substantially different realities in terms of costs. And if I’ve given the impression that I think fun necessarily connects to addiction, I can only say that a lot of people seem to be playing and replaying these not-fun games.

It is easy to default to dichotomies when writing a series of articles inspired by internet rhetoric, but this really is a matter of degrees. Loot boxes can be addictive and games can be addictive. Furthermore, there are strong incentives for businesses to adopt practices that appeal to short term thinking that is inconsistent with what we might want for ourselves in a more reflective moment. But we are usually unhappy with solutions that have us looking down at a tub devoid of water and infant and so it is helpful to apply this reflection to cases where the benefit is not as clear. Even if you do not feel obligated to take the economic realities of developers and publishers into account (and this is completely fine provided one relinquishes the claim that this is about the good of gaming/the hobby/the industry which necessarily includes the supply side), one voice that isn’t taken into account that of a common player who is too busy enjoying a game to be bothered getting into a fight on the internet and seems perfectly content paying for loot boxes (either as one offs, season passes, or by the gross). Data science is not mind control, and it is astonishing to see the implicit argument that major publishers have effectively brainwashed gamers into repeatedly buying a product they don’t want and don’t value.

It is most likely that there are addictive qualities in games that we haven’t really properly addressed since the discussions motivated by World of Warcraft, and there are clearly developers who implement loot box style systems in overly manipulative ways (and I am not referring to major PC publishers). Some of these cases are solved by interventions by platforms like the App Store. The impulse to regulate also seems driven by undervaluing the role we take in caring for our friends and family, even if some of those friendships are online and in the game that has become a problem for someone. While suggestions like this will generate no shortage of sophisticated eye rolling, is it really all that worse than assuming shouting at developers will make the problem go away or that legislation is somehow better at identifying people susceptible to addiction?

If heavily regulating loot boxes seems like a good idea, consider the implementation of a Cinderella Law which is basically a curfew for online gaming. Nobody under a certain age can play between 12-6AM. How would you feel about this? Beyond a certain indifference if you’re above the age where this will affect you, I’m willing to guess most readers will say that this goes too far. Without any age limitation I suspect there’d be an even greater objection along the lines of “Who are you to tell me what proper use of the internet is and at what times?” But this law has been implemented in other countries. The difference between this and the loot box case largely seems to be one of taste, and the player who doesn’t have a problem with loot boxes that has heavy handed regulation imposed is without the feature and likely without the game.

Ultimately this takes me back to why I started this series of articles in the first place. We need to talk. If the response to any pricing decision is to shout it down, then players are effectively removing themselves from the conversation, and providing incentives to be deceived. While there are clearly more benefits, games can take an undue amount of time and we should be willing to talk about it, both in terms of how we’d like our experiences to be tailored to respect our time as well as talk to each other when it seems like other important parts of our lives are being neglected. If there has to be a pro-regulatory reason to keep a civil tongue, then it’s because the case for regulation will be much more credible when there is a clear alternative and the bad actors can be identified as operating outside of best practices. The alternative is to let the algorithms speak for you.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. In this case, Amazon and Humble Links support the streamer JessyQuil.

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