FTC To Investigate Predatory Loot Box Practices Sweeping Gaming Industry

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The United States Federal Trade Commission (FTC) has agreed to investigate the practice of "loot boxes" in video games following a formal request by Senator Maggie Hassan. She had brought up the issue earlier this year, noting that most of her fellow members agreed at the time that loot boxes could use some additional oversight by the FTC.

"Loot boxes are now endemic in the video game industry and are present in everything from casual smartphone games to the newest, high-budget video game releases," Senator Hassan said. "Loot boxes will represent a $50 billion industry by the year 2022, according to the latest research estimates. Children may be particularly susceptible to engaging with these in-game purchases, which are often considered integral components of video games."

A loot box is a sort of catch-all term describing the purchase of mystery in-game items using real currency. Critics of loot boxes fear that it's a predatory practice that essentially exposes children to the idea of gambling.

The topic gained widespread attention last year when Electronic Arts released Star Wars Battlefront II, which drew intense criticism from the gaming community for the use of loot boxes. Following its release, Belgium's Gaming Commission determined that loot boxes constituted a form of gambling, and not long after that Hawaii proposed a bill to ban the sale of video game loot boxes to gamers under the age of 21.

Senator Hassan has been spearheading an effort to regulate loot boxes in the US. She wrote the Entertainment Software Rating Board (ESRB) earlier this year to ask how it rates games with loot boxes, and in response it introduced an "in-game purchases" label. However, the ESRB does not agree with Senator Hassan that loot boxes are a form of gambling.

"Loot boxes are one way that players can enhance the experience that video games offer. Contrary to assertions, loot boxes are not gambling," the ESRP told Polygon. "They have no real-world value, players always receive something that enhances their experience, and they are entirely optional to purchase. They can enhance the experience for those who choose to use them, but have no impact on those who do not."

It will be interesting to see what comes of this. Loot boxes are part of the broader and lucrative world of microtransactions, which generates tons of cash for companies. For example, Activision Blizzard made over $4 billion in revenue from microtransactions in 2017, which included revenue from DLC sales, in-app purchases, and loot boxes.
Tags:  Gaming, FTC, loot boxes