Major issues with Microtransactions

GLITCH is our jointly-run column for all things technological, from deep explorations and commentary of the gaming industry to guides on building your own computer. Get your mouse poised and your hardware running to uncover the ever-shifting landscape of technology with writers Artiom Cvetkov and Chang Hui Tze!

The video game industry has ignited a global controversy surrounding microtransactions in
gaming. These features include “pay to win” or “loot boxes” which are randomized rewards with
potential real-world value. They are very lucrative for the industry – providing funding for game
development and giving rise to low-cost games of high quality. Some critics view them as similar
to gambling as these popular features involve real money and an element of chance. The
criticism has resulted in regulatory scrutiny, legislative action and most recently a self-regulation
commitment to disclosure from the largest players in the video game industry. This article will
explore both sides: the criticisms and the support of this controversial part of the gaming
industry.

What are microtransactions?
Microtransactions refer to any purchases made during a game. The idea being, players don’t
have to pay anything if they don’t want to, but if they would like to expand their experience, they
can spend money. This seems to work well in mobile gaming where titles such as Clash of
Clans can attract a lot of players because of their low cost/ free aspect of the game – leading to
a large player base, making the game more fun to play. By making the beginnings easy and free
to play, they entice players, but as the game progresses, spending becomes increasingly
tempting.
 
In certain games, through microtransactions, players can purchase loot boxes. Opening a loot
box is an event in itself, typically accompanied by lights, sounds, and other effects intended to
make the experience exciting. As a result, a sort of cottage industry has emerged on YouTube
and other sites in which players record videos of themselves opening loot boxes for viewers’
entertainment.

Problems
The problems with microtransactions came to a head in November 2017 with the beta test of
Star Wars Battlefront II which initially placed major emphasis on loot boxes but confirmed right
before its release date, in a blog post, that it has been removed “all-in-game purchases”
following a week of furious criticism regarding the game’s economy and progression system. In

financial terms, EA is thought to have lost $3.1 billion in stock value following consumer
protests.
 
The saga drove a stake into the ground, for both players and Electronic Arts. On the one hand,
players catapulted predatory microtransactions such as loot boxes into the global spotlight. On
the other hand, EA refused to acknowledge any wrongdoing, comparing loot boxes to “blind-bag
toys such as L.O.L Surprise! figures.”
“We do think the way we’ve implemented these kinds of mechanics is quite ethical and quite
fun,” Kerry Hopkins, VP of Legal at EA stated in June 2019. “They aren’t gambling and we
disagree that there’s evidence that shows they lead to gambling.”
It seemed that the controversy did not spur the end of predatory microtransactions. It only
bought consumers a bit of time. According to McCaffrey, “loot boxes are innovations that cannot
easily be understood in light of laws and regulations that were written in light of radically
different technological and business possibilities.”
 
Currently, the Entertainment Software Rating Board (ESRB) system – an American self-
regulatory organization that assigns age and content ratings to consumer video games, has two
content descriptors related to gambling: “simulated gambling” and “real gambling” (ESRB,
2018a). Any game featuring the latter always receives an Adults Only rating. Thus far, however,
the ESRB has taken the stance that loot boxes are not gambling (Schreier, 2017, p.11). To
complement this descriptor, in August 2018 Pan European Game Information (PEGI), a
European video game content rating system, also introduced a label for “in-game purchases,” to
be applied to physical games. The same descriptor was already in place for digital-only games
(PEGI, 2018b.1, p.13). 
However, it may be argued that more often than not, people are still heavily encouraged or
enticed to spend money to take part in a system that works on a similar basis as gaming
machines in casinos. For example, Fortnite is PEGI rated 12, yet it has in-game currency (V-
Bucks) and the same system of loot crates. And while the system does allow players to earn the
currency by playing the game, paying real money for in-game currency is encouraged to attain
rare and niche cosmetic items, or ‘skins’. This is not considered gambling as these items cannot
be redeemed for real tangible currency. However, children over 12 are still encouraged to spend
money to take part in the system and this may be a breeding ground for unhealthy addictions or
spending habits.
 

CSGO is another game in which there is an option to open loot crates. The game is rated 18+,
and for valid reasons, as it is a game that contains a more controversial form of loot boxes and
in-game purchases. Here there is no in-game currency with a convoluted name. Instead, money
is drawn from your ‘Steam Wallet’, a balance that is used only exclusively within the Steam
ecosystem to buy games or in-game purchases. 
Unlike Fortnite, the items obtained in CSGO can range in value from three pennies to £1600,
and with the advent of third-party gambling websites these items can be gambled on.
Thus, we arrive at the crux of the issue, from personal experience we can tell you that the
community on CSGO is certainly not made up of adults entirely. Many children play this game
and can access both the in-game purchases and the third-party markets with little to stop them
from spending real money on the game.

Questioning Ethics
As we enter a new phase of the gaming industry, the edges of the perspective on
microtransactions and loot boxes are jagged. Although lucrative, it leads us to question the
ethics behind microtransactions and the exposure of young children to games that may breed
potential unhealthy habits. Microtransactions could be spinning that sordid wheel of betting, and
as for the long-term effects of it, we’ll only have time to tell.

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The GLITCH column is uniquely run by two fantastic writers and technology fanatics: second year historian Artiom Cvetkov and law student Chang Hui Tze, offering different perspectives on the subject.

Cover image from Unsplash.

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