Video game publishers are subject to close scrutiny on the use of padlocks.

When the lights flash and virtual fireworks burst, a blank card opens.

"Come on, just once," shouts a young player, opening card packs on which he has just spent $ 250. An elite player could change the fate of his Madden virtual football team.

"We have nothing," he screams with disgust. "Honestly, I can not forget all the money I just wasted."

His frustration, captured on YouTube, concerned "chests of objects" – treasure chests that players earn either by playing or using digital currency by spending real money, usually a few dollars. Each loot box offers a chance to win digital costumes or better players that help their teams perform better.

Loot chests are extremely lucrative for game publishers, generating billions of dollars in high margin profits. Cowen analyst, Doug Creutz, estimated that one-third of
Electronic Arts

'(Ticker: EA) annual sales come from mechanisms related to the loot box, compared to 18% for
Activision Blizzard

(ATVI) and about 11% for
Take-Two interactive software


Although the booty boxes For years, the monetization strategy has been the subject of further examination, with critics comparing it to a game for young people. He also faces a possible reaction from annoyed customers.

The Federal Trade Commission announced that it would hold a workshop in August to examine consumer protection issues related to loot boxes, the first time a federal regulator does this.

Senator Maggie Hassan, a Democrat from New Hampshire, urged the agency to investigate the practice of monetization. "I am encouraged by the fact that the FTC has scheduled a public event," said the senator Barron in an email. "It is important to protect young video game players from surprise boxes and other microtransactions that can be predatory and often imitate the game."

Although most people understand that casinos use sound effects, lighting and temperature to entice guests to spend more money, many parents may not know that their kids can be subject to similar psychological mechanisms in video games, say psychologists.

"Many features of chests are similar to slot machines," says Keith Whyte, executive director of the National Council on Problem Gambling. "The factors common to many vaults and slot machines include random price distribution, variable price value, and visual and sound cues associated with participation and reward. These features are well known for triggering cravings to play with increased excitement. "

Asked about the Craft Boxes and the FTC Workshop, Electronic Arts, Activision Blizzard and Take-Two declined to comment. All three referred Barron to their professional group, the Entertainment Software Association.

The industry "provides robust parental controls that allow parents to keep control of spending in the game," the association said in a statement. "We look forward to bringing this information and resources to the FTC."

Industry leaders have previously said that chests are not a form of play.

The share prices of the three publishers are well below their 52-week highs, due to investor concerns about the aging console cycle. Any further failure in profits could further hurt their stock.

Evan Wingren, an analyst at KeyBanc Capital Markets, said revenue from Electronic Arts sports games would have risen to more than $ 1 billion in 2018 compared to $ 800 million in 2016. Nevertheless, it is unlikely to be the case. is not worried. "I would not expect that the boxes are regulated by these companies," Wingren said. Barron.

But there are risks. Belgium banned last year the music boxes under its legislation on gambling, forcing EA to stop offering the opportunity to buy FIFA Ultimate Packs, chests to surprises from his football game, with real money.

And as politicians and parents lobby for guarantees, especially for children, regulators may be persuaded to end their activities.

In February, Electronic Arts commercialized Apex Legends, his last game, by paying streamers on the Twitch online platform. The game uses loot boxes to generate revenue and has been downloaded by 50 million players just one month after release. But his focus on Twitch as a marketing tool can raise questions about the use of surprise boxes, given the younger demographics of the platform.

The FTC's workshop "will examine consumer issues related to gambling and selling surprise boxes and raise public awareness of these issues," a spokeswoman for the agency said. Barron. "Of course, as part of our current authority and consumer protection mission, the FTC can examine case by case whether specific marketing practices are misleading."

Regulation or not, the sausage train can disintegrate if more players are exasperated.

"Players will be turning against companies they see as an attempt to exploit their base of players and acquire money in vaults," says Nathan Pratt, 26, a lab technician.

One player, who refused to give his full last name, said that he would spend a lot less. "For FIFA 19, I spent more than 2,000 euros [$2,300] Christian K., a 40-year-old German player who says he works in finance, said Barron in an email. "I would not want to spend so much money again because of the disappointments of the players that you get packs.

It's probably a better long-term strategy to delight your customers with performance and value, instead of trying to take out the last dollar. Gaming companies and their investors should take note.

Write to Tae Kim at [email protected]

Source link