You Won’t Like the Solution to the Loot Box Problem

Nov 14, 2017

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There’s no such thing as a good loot box, all of them are capital ‘B’ for Bad no matter which way you slice them. We’ve established that much: so what are we going to do about it?

As NPD analyst Mat Piscatella outlined to GamesIndustry.biz, for all the furore and the calls for boycotts, the microtransaction and loot box controversy is not affecting game sales. Since video game marketing budgets and the strength of the Star Wars, The Lord of the Rings and Assassin’s Creed brand names will win out over capslock forum posts, it’s unlikely that this will ever work.

An actual solution that might work, though? Raising the prices of games.

Development Costs Are On the Rise

Call of Duty WW2 loot boxes supply drop — Call of Duty: WW2’s ‘Supply Drop’ loot boxes saw backlash from some fans of the shooter series.

Loot boxes and microtransactions are not the money grab that you think them to be. Rather (in many cases at least) they’re a direct result of ballooning game development sizes and rising expectations.

By Kotaku‘s estimates, developing a game costs $10,000 per person per month. It means that a game from a major publisher (your Assassin’s Creeds, your Destinys and your Call of Dutys) could cost upwards of $140 million to make. And this is even before you consider the live services and post-launch content that have become almost mandatory at this point.

Take this quote from Marcuss Nilsson, the executive producer of Need for Speed Payback, in a recent interview with Rolling Stone‘s Glixel:

“It’s clear prices [of video games] haven’t really gone up. That’s clear. I also know that producing games is more expensive than it has ever been. The game universe is changing in front of us now. We see more people playing fewer games for longer. Engagement is important. But how do we deliver longer experiences?

The bottom line is that it’s very hard to find this golden path that’s liked by everyone. We make games that are $60 and some might think that it’s worth $40. What’s the value in the package delivered? Something like GTA 5 and GTA Online versus The Last of Us, which you can play through in 10 hours. How do we value that? That’s probably a long discussion.”

More Money Than Ever from Microtransactions

Ubisoft digital revenue data — Ubisoft reveals exactly how much it makes from loot boxes, microtransactions, and DLC.

And compare this to data recently revealed by Ubisoft: in the first half of its financial year (FY2018), Ubisoft made more money from DLC, microtransactions, and loot boxes (51%) than it did digital game sales (49%).

According to NPD (via ESA), digital game sales already make up 52% of overall game sales in the United States. Presuming that Ubisoft game sales are split similarly, it means that a significant portion of its game revenues (overall) are thanks to the very same loot boxes that you hate.

Loot boxes and microtransactions seem to be an unfortunate result of a growing games industry but is raising the entry free a more desirable solution? Doing so would mean that developers and publishers would no longer have to rely on recurring payment models and systems as the initial purchase price would help to immediately recoup that cost.

But would you be willing to pay $120 instead of $60 if it meant that you wouldn’t have to face exploitative RNG mechanics? This is the question that players will have to face if they are to demand loot box-free games.

You can answer in the comments.

Bio
Latest Posts

Jasmine Henry

Staff Writer at New Normative

Jasmine Henry is a games and technology writer from the UK who has been playing video games since before she could tie her own shoelaces. She is also a serial games hoarder (thanks Steam sales!) and dreams of a day when the representation of women and minorities in games is no longer debated and is simply just the ‘norm’.

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Call of Duty WW2 EA loot boxes Microtransactions Middle-earth: Shadow of War Need for Speed Payback NPD Star Wars Battlefront 2 Ubisoft

Comments

2 responses to “You Won’t Like the Solution to the Loot Box Problem”

Rowan Idris Carmichael

November 15, 2017

A solid point. Recent I’ve been reconsidering my buying habits. (always using steam sales/bundles or general PSN discounts) and the message that sends.

Its almost more a question of “would I even pay full price” so next year I’m making it a bit of a weird personal mission to try buying games at full price to send the right messages.

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Gizensha

November 15, 2017

Unfortunaely, no. I’m not against increasing the base cost of a game – I play board games where the costs have been increasing. $70 used to be a premium price for general availability games rather than ones from niche publishers that do small print runs, or collector editions, which has risen to $100 over the years in the States, and I just purchased an £80 board game where the standard price for a video game is £50 these days – I’d absolutely pay more for a game, and I know I would do because I already do. However, raising the price of entry wouldn’t kill loot boxes.

Firstly, game prices having frozen is a US specific thing, not a universal thing – They have risen £5 every generation since the PS2 here, both PC and console, with PC games consistently costing £10 less than console gaming, so game prices not raising is a US centric narrative that just doesn’t apply elsewhere.

Secondly, even in the US, game prices have been raising over time via season passes special editions and DLC – $80 is typically the US price of games these days rather than the $60, with some versions of games that don’t even come with physical collectables, but additional in game content only, getting to $150.

As such, loot boxes emerged in an era of increased game prices, not the stagnant ones developers sometimes claim.

Thirdly, the reason development costs are increasing as much as they are in cost to develop seems to be poor project management and/or unrealistic sales projections. When we hear of games that have sales targets of 7 million copies… Yeah, no. That’s just not a realistic sales expectation, and either you need to not be assuming every game is going to sell COD numbers or getting your budgets under control for realistic sales expectations you set before hand. Gaming is the only entertainment industry I can think of that whines that development costs are too expensive compared to the price point consumers are willing to pay for, rather than controlling budgets so that you can expect to make a profit at the price point consumers are willing to pay for.

The original Splatoon on the Wii U released in a similar unfinished state to the previous Battlefront. The original Splatoon promised free DLC like Overwatch did rather than the paid for DLC of the previous Battlefront. Splatoon sold less well than either (It’s not Star Wars, it was for the Wii U, of course it sold less well than either)… And exceeded sales expectations so much it got it’s free DLC support extended by six months to a year. And Splatoon 2? Promises a year of free weekly DLC, an additional year of support via community events beyond that, and has no microtransactions, loot box or otherwise. So, why, exactly, does Star Wars Battlefront 2 ‘need’ loot boxes to profit, why did the previous entry ‘need’ to sell it’s DLC rather than provide it for free, and why did Overwatch ‘need’ the loot boxes to fund the free DLC?

Fourthly, it’s not usually the games that might not be profitable that get the most aggressive, most exploitative post-purchase moneterization. If loot boxes were to off set the cost of development, so raising game prices wasn’t necessary beyond what they’ve already risen, we wouldn’t see them in games like Star Wars Battlefront 2, which is basically guaranteed 10 million sales given the last one got 16 million. That’s a guaranteed profit unless EA really cocked up their budgeting for the game even more than AAA publishers tend to.

Fifthly, The reason loot boxes exist in full priced games is that they increase profits, not because they’re needed to make profit. Particularly for US based publishers. Henry Ford wanted to sell cars for cheap (Lets not paint him as a good guy, mind, the man was a fascist), was sued by his shareholders because they thought they could make more profit if the cars were sold at a higher price, and the US supreme court ruled that companies owned by shareholders existed solely to maximize profit, and if they could do something that they’re not currently doing that would turn profitable into more profitable, they are legally obligated to do so.

Increased prices (Which we already have, but increased base sticker prices in the US) won’t eliminate loot boxes, they’ll get us $80 or $100 base price games with the $20-40 season passes and the $90 more for the gold editions, now at $170 or $190… And loot boxes on top of all of that. What will change this is either regulation making it nonviable (And… They should be regulated – they exploit the same psychological vulnerabilities as gambling, an already heavily regulated industry), or consumers collectively causing a realignment of the video game market (Which is a long ways off, and these boycotts, as you point out, aren’t going to do that). What I suspect we see first is companies realizing that when they’re treating games as service and making the bulk of their profits off of microtransactions, loot box or otherwise, they see more profits by making the games free to play due to reducing the barrier of entry of coming into the store and either being content for the ‘whales’ (Hate that term) or spending money while in the game.

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