lootbox

Video Games Are Getting Kids Hooked on Pay-to-Win Mechanics

Microtransactions started as a way for free video games to garner revenue from players who want shortcuts. But for many, they’ve turned into an addiction.

Redditor Kensgold never expected to spend $10,000 on video games in just two years. 

Then again, he never got a full grip on the magnitude of his habit. It became as easy as buying a snack: Spending $5 and $10 here and there, for everything from upgrades in his smartphone city-building game to decorative “skins” for weapons in Counter Strike: Global Offensive. It escalated from the age of 14, when his mother noticed he was spending all of his cash on gaming and he got a part-time job instead of quitting. Checks for $400 every other week meant $400 more to sink into gaming.

Kensgold’s problem wasn’t that he was buying a bunch of different games. Instead, the problem lay with microtransactions, or small purchases players can make in-game, using real cash, to hasten progress in the game, make a player stronger or tweak the aesthetic of a favorite weapon. Microtransactions started as a way for free mobile games to garner revenue from players who wanted shortcuts. In the last decade, however, the feature has morphed into a beast that appears in a majority of major video games. 

You can spend cash to buy “card packs” in FIFA, with the hopes of landing a rare Lionel Messi who can dominate online opponents. You can spend cash to buy “gold” in the Wild-West simulator Red Dead Online, which gives you access to faster horses, bigger guns and fancy outfits. You can spend cash to buy “loot boxes” in the fantasy shooter Overwatch, clicking on a virtual dice roll to see whether you won a rare character costume (or just another shitty “victory pose” you don’t want). More and more games, regardless of their genre, are arriving built-in with microtransactions. 

It’s hard to get a total figure for how much revenue microtransactions have brought the video game industry, but the headlines are staggering: Revenues from PC game microtransactions have doubled since 2012, racking up $22 billion in 2017 (against just $8 billion in actual game sales). Microtransactions and other downloadable content brought in $203 million in the first half of 2017 for juggernaut studio Ubisoftcomposing 51 percent of the company’s entire revenue in that time. Take-Two Interactive did even better, reporting that microtransactions composed 66 percent of the $388 million it generated in the first fiscal quarter of 2019. 

And for those studying the impacts of this new business model, it’s becoming clearer that spending cash to gain achievement can be a dangerous temptation. Previous research has borne a link between microtransaction use and problem gambling, in which a person continues gambling despite tangible negative consequences. Similarly, a new study released last month suggests that getting adolescents hooked on microtransactions can be a predictor for broader problem gambling in adulthood. The data show the link to problem gambling is stronger with adolescents than adults, and the authors noted that loot boxes in particular “100 percent allow for (if not actively encourage) underage players to engage with these systems.”

It took half a decade for Kensgold to come to terms with the fact that a habit had bloomed into an addiction. He chose to come out on Reddit. “I am 19 years old, and I struggle with a gambling addiction. My addiction started when I was 14, and starting my career as a high school student. The stress of fueling my addiction, and the depression that was present throughout nearly caused me to fail/dropout of high school,” he wrote in late 2017. 

Hearing him discuss the progression of his microtransactions feels almost like hearing an addict talk about chasing bigger, stronger highs — even when those highs had zero effect on the gameplay Kensgold experienced. “I think it stems from the fact that I had set a precedent in those mobile games that a hundred dollars isn’t all that much,” Kensgold told Kotaku in 2017. “It’s not a really big deal if I see that skin and I really want it, because it looks awesome. And if I just drop 100 bucks I’m pretty much guaranteed to get that kind of thing.”

He’s not alone in taking to the internet to confess. Another redditor, based in the U.K., detailed how he began spending all of his spare cash, roughly $180 a month, on FIFA player packs since the age of 18. That continued until he got approved for a credit card at age 23 — and maxed out the $5,000 limit within three months. He was saved by his girlfriend, who paid off the full amount. Bullet dodged, but he got right back to buying player packs, maxing out his card again. Combined with overdraft fees and a payday loan, he owed nearly $10,000 by the end of 2016. 

“It got to the point where my family were starting to notice and my dad asked to see my accounts. I was reluctant, but I showed him. He was mad and took all control of my bank from me, taking my bank card and changing my online banking password,” he wrote. “He took out a loan to pay off all my debt, as I couldn’t get any credit to pay this amount off. I agreed to pay him back at £200 a month, going up to £300 a month when I had a pay rise in September 2017.” When asked what justified such a massive spend, the redditor says he has no excuses: “For me, it was about… having the best team and using it.”

These tales and others serve as glaring red flags rising amid an industry-wide shift toward microtransactions. Gamers form a demographic disproportionately composed of young men, and research suggests that men are seven-and-a-half times more likely than women to become problem gamblers, unable or unwilling to quit despite damage to their finances, professional lives and personal relationships. 

Reef Karim, a mental health expert in L.A. with extensive experience treating addiction, says he first began noticing the ubiquity of microtransactions, and in particular purchases with randomized rewards, around 2015. He heard about it from a patient, and then spotted it in his own life when he noticed his young nephews were scrolling past “player packs” on sale for FIFA. “I was surprised that you can buy something with real money that has total uncertainty in what you actually get. You could land something scarce and rare, or a total throwaway. It looked just like a slot machine. Very much like true gambling, in other words,” he recalls. 

He had worked with a number of patients with a general addiction to video games, which has been well-studied: Gamers display weakened coping skills, less focus on homework or other responsibilities, and lose their desire to build relationships in the “real world.” These problems still exist with games that offer microtransactions, Karim says, but the temptation to spend real cash unlocks another path to disordered thinking. “You’re tapping into the neurocircuitry of reward, specifically with the impulse to do something uncertain. You’re testing someone’s impulse control over and over again,” he says. “The adolescent brain is going to be more vulnerable, because we know kids’ brains are more motivated toward action, but less able to restrain or say no to the bad actions. It’s a recipe for longer-term problems.” 

The identity and ability of an in-game character gets tied up with a player’s own view of themselves, which is why there are instances of young people committing suicide under the stress of losing or dying-in game, Karim adds. 

The opposite can be true, too: Young men can plunge themselves into a game — and its marketplace of shiny things to buy with cash — when faced with trauma from the physical world. Karim tells me about a 13-year-old boy whose problematic gaming habit collapsed into full-fledged addiction after being rejected by a girl. “He had sneaked his parents’ credit card a few times, but once he got broken up with, he couldn’t handle it. He retreated from that pain. Suddenly he was losing friends, wasn’t eating, wasn’t sleeping. His relational skills fell apart. He had no interest in other people. And he was spending money all along,” Karim explains. 

It’s hard to pin down the origins of microtransactions, although industry experts often point to the mobile game market, and its love of so-called “free-to-play” or “freemium” apps, as a critical player. South Korean developer Nexon pioneered the model in the late 1990s, creating a system that encouraged players to pay a fee for access to lag-free multiplayer servers and to cop in-game swag. That model took off across the country and its massive neighbor, China, where multiplayer gaming exploded in popularity in the early 2000s. 

By 2005, Microsoft was already planning microtransactions for its Xbox gaming console, devising a system where people could spend cash for credits and then use those credits in a variety of games. Critics worried that letting players pay for advantages could lead to unfair play. “If you don’t believe in the self-expression thing, so be it,” J. Allard, a Microsoft corporate vice president, told Wired in 2005. “Let’s let it play out in the market.”

There were some high-profile microtransaction stumbles, as with the “Horse Armor” controversy, in which developer Bethesda offered, well, virtual horse armor for $2.50 a pop in its megahit Xbox 360 game Oblivion. That led to a fierce and often humorous outcry, but players bought it anyway, making horse armor one of the most popular purchases. 

At least a player could pick the horse armor they wanted before spending money. The 2000s also saw the rise of “loot boxes,” starting with the Chinese game ZT Online and expanding to all sorts of mobile, console and PC games. Industry darling Valve, known for acclaimed blockbuster titles like Half Life and Counter-Strike, decided to implement the freemium model on their popular shooter game Team Fortress 2 in late 2010. Making the game free grew the player population by a “factor of five,” company head Gabe Newell said in 2011. Critically, he also cited a 20 to 30 percent rate of players going on to use the game’s loot boxes to win hats, costumes and other cosmetic swag — a big bump over the single-digit numbers other devs had seen. “We don’t understand what’s going on,” he said. “All we know is we’re going to keep running these experiments to try and understand better what it is that our customers are telling us.”

It’s easy to assume that these purchases are made by hardcore gamers who put in hours a day, but research suggests that microtransactions attract all stripes of humanity. For instance, I was surprised to find out my colleague, C. Brian Smith, had recently developed his own habit. His game of choice is the Scrabble-like mobile game Words With Friends. Smith says he’s spent somewhere around “$300 to $400” in the last year — more than he ever planned when he first logged on. 

“I began playing with my mother, who is a Words With Friends ninja, so to compete, I felt like I needed any edge I could get,” Smith tells me. His favorite purchase is the “Word Radar,” which flashes different word options on the board and dramatically cuts down on wasted time. “I’ve come to rely on the Word Radar. I use it every move. But Words With Friends taps into my ego. I find myself needing to prove myself intellectually, to myself and others — namely my mother. That costs money,” he explains. “I shudder to think of the exact amount of money I’ve spent. I wouldn’t be surprised if it was more than $400. It’s like trying to count how many packs of cigarettes I smoked in my 20s.” 

It certainly feels like game companies are expecting, and even hoping, that their top users simply ignore how much cumulative cash they’ve sunk into a game they could play without extra cost. A groundbreaking analysis of mobile games found in 2014 that only 0.15 percent of players account for 50 percent of all in-game revenue. The industry nickname for these power users? Whales. But where accountants and execs see lifesaving dollar signs, mental health experts like Karim see addiction and exploitation. In an infamous conference presentation dubbed “Let’s Go Whaling,” Tribeflame CEO Torulf Jernström declares the future of mobile games is “making sure your games aren’t too skill-based” and “to put morality aside, for a bit” when designing mechanisms that lure players into spending more money than they could ever anticipate (like this guy, who spent more than $17,000 and has no regrets). 

No feature does this better than loot boxes, which come in all sorts of designs but ultimately boil down to a dice-roll like mechanism (the games themselves often present loot boxes as a slot-machine or spin-the-wheel task). The video game industry didn’t invent this model — collectible baseball cards and trading card games like Magic the Gathering have long enticed people to buy a pack of cards in hopes of finding a rare one — but the difference in a game like FIFA or Fortnite is the scale and ease of churning through loot boxes, and therefore, cash. In most titles, you only need to enter a credit card number once. 

Developers like Electronic Arts have publicly defended loot boxes by claiming that audiences enjoy the element of surprise. This rationale has been char-grilled by gamers across the internet, including the streamer Cr1TiKaL, who recently dropped a video tearing into EA. “No one is having fun opening microtransaction boxes and not getting the rare shit. Most of the time you’re just getting the same duplicate common shit over and over again. What’s fun is getting the rare thing that they always wanted, which was locked behind thousands of dollars of microtransactions,” he says in the video. “It isn’t ethical. It’s getting kids, and already susceptible people, hooked on gambling. That’s exactly what the loot box mechanic is. Getting people to keep coming back to spend money on a game they’ve already paid for, full retail price, so that they can keep making money off it.”

Being tempted by loot boxes isn’t merely a personal problem, but one that’s built into the gameplay itself. You can win loot boxes by simply playing the game, but titles like Madden and Overwatch feature broken value systems that overwhelmingly favor a cash purchase instead of manual work. Forbes writer Paul Tassi did the math and found that in order to win five loot boxes in Overwatch, you can either pay $4.99 or spend 4.3 hours playing

I’ve fallen for this trap myself, in Madden 2019 and Red Dead Online, because of the maddening impossibility of leveling up or getting decent characters, no matter how well I played. Loot boxes and microtransactions take the idiom “time is money” and make it literal in irresistible ways. It doesn’t help that there’s a massive economy of gaming streamers and YouTubers who post themselves losing their minds while winning incredibly rare and valuable cards on a whim. (No wonder that a popular theory suggests that developers bestow these streamers with much better odds at “winning” a good item in a loot box, as a marketing tactic.) 

This issue hasn’t gone unnoticed by parents, health professionals and lawmakers alike. In May, Sen. Josh Hawley of Missouri introduced a bill that would ban “manipulative” features in video games for underage audiences, in particular prohibiting loot boxes for anyone under 18. It’s one of a number of regulatory rules and lawsuits that studios like EA and Blizzard are now facing, but the push for change in the U.S. is slow compared to nations like South Korea, China and Belgium, where lawmakers have cracked down on loot boxes as unregulated gambling and forced companies to disclose the odds of winning rare items. 

Mental health experts like Karim are, for now, somewhat cynical about whether revenue-driven companies will back down and make changes in the U.S. “At minimum, I’d like to see some kind of guideline or warning on game labels. But honestly, I can’t see more than that, even though I want regulations there. It’s a capitalistic society, and we know all sorts of industries, including food manufacturers, are doing neuroscience research on how to get us addicted to their product,” Karim tells me. “I wouldn’t be surprised if the gaming industry knows exactly what’s going on and the risks, but expects nobody to stop them.” 

Parents also need to stay vigilant, he says, given that a lot of young people discreetly use mom or dad’s credit card to rack up purchases online. So it was with the young man he helped treat. “His resources were credit cards and his money, so when that locked up, it shifted him from microtransaction-dependent games to other titles. Then we had to force him to engage in more human-to-human interaction,” Karim explains. “We call it ‘contingency management,’ but basically he was given actual monetary rewards to, say, play basketball with friends or try a Brazilian martial arts class.” 

The parents and therapy team worked to recondition the boy’s reward system, and found that martial arts scratched his itch in a more productive, less isolated way than games. Other people who fall into a microtransaction addiction continue to game heavily, albeit with strict cautionary rules. Kensgold didn’t get back to my requests for an update, but on Reddit, he described how he found a therapist last year, liquidated his inventory of loot and made a commitment to avoid all titles with loot boxes. “It helped me immensely to see the damage I was causing. Not damage to myself, but to my family,” he wrote. 

It’s no surprise that he posted his story of addiction on the subreddit for the video game Star Wars Battlefront 2, crafted and sold by DICE and EA. “Please take a moment to reflect on my story. You are building a game from the Star Wars universe. There will be kids playing,” he urged. “They will learn to love the rush of getting a good card out of a loot box…There are no laws in place to protect the youth of our nation and others like it. I was one of the many who was hurt because of that.” 

Months later, facing broad outrage over microtransactions, EA announced it would ban real money from the game. In its biggest titles like FIFA and Madden, however, the slot machine spins on.