"There is a Benefit for Lying [About Loot Boxes]"

"There is a Benefit for Lying [About Loot Boxes]"

THIS WEEK IN BUSINESS | The industry, academics, and watchdogs weigh in on the loot box debate for the FTC in a week full of big issues.

This Week in Business is a collection of stats and quotes from our sister site GamesIndustry.biz that sheds light on console sales, new trends, and more. Check back every Friday for a new entry!

Well that was certainly a week. Mass shootings, another campaign of absurd abuse targeting developers, and a government inquiry into exploitative and predatory business practices in loot boxes. That was a lot. Too much, probably. Certainly too much to really recap here in a handful of direct quotes and pithy attributions. Fortunately, the GamesIndustry.biz team recorded a podcast in which we dug into all these issues in greater detail, if you're interested in that sort of thing.

Even if you're not, I would suggest you strongly consider reading through our coverage of the week's loot box news linked below. Much of the FTC workshop was a fact-finding mission for the regulator, a primer to ensure it understood the basics of the issue at play before making any kind of regulatory policies around it. But it also gave various groups a chance to offer their perspectives on the topic, and more importantly, it gave us a chance to see what the FTC was hearing about loot boxes.

The ESA is mandating loot box odds disclosure on consoles. | ESA

They saw the ESA's good faith gesture of mandating loot box odds disclosure on the consoles. It's not much, but even if it trailed Apple's move by a couple years, it doesn't go into effect until some time next year. Even if most ESA members didn't co-sign a commitment to disclose odds in all their games regardless of platform, it's a step in the right direction.

The FTC also heard researchers and watchdogs explain repeatedly how that isn't enough, how there's an enormous amount of room remaining for companies to exploit customers, and how so much of this business is driven by manipulative psychological tricks. And perhaps most damning, they heard the industry's frankly weak defenses of those practices.

I've been pretty clear about where I think this is all headed, and I can't say the FTC workshop really changed my thinking on where we'll end up. But I can see the FTC weighing in on this issue and speeding the process up considerably, particularly if it agrees with the concerns of the academics and watchdogs it heard this week.

QUOTE | "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 platform." - ESA legal counsel Michael Warnecke announces early on at the Federal Trade Commission's workshop on loot boxes that the console makers will mandate loot box odds disclosures for games on their platforms by the end of 2020.

QUOTE | "Most people don't understand odds and randomness in the most simple dimensions, especially when you're talking about dynamic odds. It's almost impossible for people to figure that out. And you have to look at the people you're disclosing to. If it's a young person or someone who's vulnerable to gambling addiction, they're going to understand that information completely differently than a rational, well-informed, or non-addicted consumer." - Keith S. Whyte, executive director of the National Council on Problem Gambling, says simple disclosure of odds isn't enough during the FTC loot box workshop.

Star Wars Battlefront 2's loot boxes were extra controversial. |EA

QUOTE | "It turns out if the seller publishes some list of probabilities and lies about them, the seller can make significantly more money. There is a benefit for lying. Since there's a benefit for lying, there must be regulation around this." - Columbia University researcher Dr. Adam Elmachtoub shares findings from his research during an academic panel at the FTC loot box workshop, which involved creating a model to find what practices publishers could use to maximize their revenue from loot boxes.

QUOTE | "The problem here is that when you combine [virtual currency] with things like these bonuses that are offered, it's a lot of cognitive load on the user, creating a complex exchange rate between digital money and real dollars. It can make it easy to lose track of an object's real-world value." - National Consumers League VP John Breyault raised concerns about the use of virtual currency as a way to obfuscate the value proposition in many games with microtransactions during the FTC loot box workshop.

QUOTE | "Say you had a game set in Ancient Egypt and you wanted to buy a chariot for a big combat that was going to come up, and you went to the marketplace in Thebes. You would not want to be buying a chariot for $2.50 US. It would be a little bit jolting and a little bit odd, so instead a publisher will make it with a historically appropriate monetary currency, such as a deben of copper, which would fit in more with the game." - In that same session, the ESA's Warnecke defends virtual currency as a way to "preserve narrative integrity," which is a funny way of saying "psychologically divorce the purchasing decision from the real world."

QUOTE | "We must stop the glorification of violence in our society. This includes the gruesome and grisly video games that are now commonplace. It is too easy today for troubled youth to surround themselves with a culture that celebrates violence. We must stop or substantially reduce this, and it has to begin immediately." - President Donald Trump points a finger at the games industry after a pair of mass shootings this weekend in Dayton, Ohio and El Paso, Texas.

QUOTE | "Turn off or unplug any video game display consoles that show a demo of violent games, specifically PlayStation and Xbox units." - A Walmart internal memo instructing employees to take a number of precautionary measures after the mass shootings. The El Paso shooting took place at a Walmart store, and another Walmart store in Mississippi had a fatal shooting the week prior.

QUOTE | "The decision was made out of respect for the victims and all those impacted in the immediate aftermath of the shootings and it seemed the prudent thing to do given the swirl of that moment." - An ESPN representative explains why ABC and ESPN will not be airing a scheduled program of tournament highlights from the Apex Legends EXP Invitational this weekend.

QUOTE | "I recognize that none of this post equates to an apology in any way that a lot of the mob is trying to obtain, and that's by design. While some of what I've said was definitely bad for PR, I stand behind it. A portion of the gaming community is indeed horrendously toxic, entitled, immature, irrationally-angry, and prone to joining hate mobs over any inconsequential issue they can cook up." - Glumberlands developer Ben Wasser talks about the anti-Semitic, homophobic, racist abuse the studio received after announcing Ooblets would be an Epic Games Store exclusive. (On PC. For a limited time. It's still launching on Xbox, and will almost certainly hit other PC storefronts eventually.)

QUOTE | "I've realised that I'm just doing D&D [Dungeons and Dragons], but in a Discord server." - No More Robots' Mike Rose talks about marketing tactics for games like Not Tonight and Nowhere Prophet, which have involved running elaborate social games within Discord communities that never get talked about or promoted elsewhere.

QUOTE | "A lot of games are becoming increasingly time-hungry and I think that's bad for the industry because they literally want to eat up all your spare time, and that means you don't have time to look at other people's games or other experiences." - Andrew Crawshaw, designer on games like Amnesia: A Machine For Pigs and Everybody's Gone to the Rapture, explains why his new studio Thunkd is making games people can finish in an evening.

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Brendan Sinclair

North American Editor

Brendan joined GamesIndustry International in 2012. Based in Toronto, Ontario, he was previously senior news editor at CBS-owned GameSpot in the US.

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