OPINION: The Lootbox Ban Is Bad For Business

With Republican Senator Josh Hawley’s proposed bill gaining bipartisan support from Democratic Senators Ed Markey and Richard Blumenthal a few weeks ago I felt it was finally time for me to address my thoughts on this legislation.

While consumers are elated at the thought that the games industry is possibly going to be reined in by the United States government I cannot help, but feel rather conflicted about it. Yes, it is great that people in politics are united on something for once. Yes, it is great to see gamers come together instead of being so divided on something like we typically are. Especially with an issue as sensitive as microtransactions and gambling based loot boxes, which they’ve constantly requested to be curtailed for years now. My concern here is that I am not absolutely certain whether the United States government is suited to the task of developing and enacting legislation that is effective. Unfortunately, this has lead me to somewhat agree with arguments made by those like the Entertainment Software Association who have come out to reject this legislation, which would be the publishers/developers that will be affected by Senator Hawley’s Protecting Children From Abusive Games Act. There is some validity to their arguments that I do not think can or should be ignored.

While I have largely been vehemently opposed to non-cosmetic microtransactions and gambling loot boxes like a majority of people, I just do not believe that members of Congress have enough information on this particular industry at their disposal to make the right decisions as this bill progresses through the legislative process before and if it becomes a law. The verbage of Senator Hawley’s bill is proof enough of that lack of information because it is both vague and broad at the same time, which means that his fellow members of Congress are going to fill in the gaps based on whatever they may think they know about the games industry. Here’s a description of the bill as it has been described by The Hill:

The Protecting Children from Abusive Games Act would prohibit games geared toward children from implementing features that prompt users to pay real-world money to advance in the game, called “pay-to-win,” or receive rewards at random for a fee, called “loot boxes.”

This aspect of the bill is what has made everyone excited. It is straightforward in its intent to protect minors by acting as a ban on “pay-to-win” loot boxes, which does include in-game cosmetics. It is not trying to distinguish some kind of difference between the two, which is fairly accurate. Loot boxes for a lot of AAA titles tend to randomize the cosmetics you get from them to the point that minors will get addicted to gambling until they get that one specific camouflage for their gun. Here is what a lot of this bill’s supporters are seemingly ignoring when they come out to endorse it. As a proposed law, it does not provide a practical definition for certain key terms, which does include loot boxes. As someone who has interned with actual US policymakers in school, I would have to ask Senators Hawley, Markey, and Blumenthal what exactly does a loot box look like to them in practice? Particularly when it comes to mobile games such as Marvel’s Battle Lines, which do have card packs that you have to purchase with real currency. If not, would the companies behind those titles have to make revisions to their present models? These are genuine questions that affect a section of the games industry such as the mobile games industry, which has largely based its entire economy on in-game transactions. If they were to try and change their models I do not think it is conceivable that they would stick around, which would mean that dozens of skilled developers will be left unemployed and potentially out of the games industry as a whole that could go elsewhere. After all, it is no secret that developers who are laid off or mistreated by these companies tend to leave the industry as a whole because of the bad taste it may leave in their mouths.

Another term within this legislation that lacks a clear definition would be “pay-to-win” and when you use broad wording like “paying money to advance in game” it becomes broad. In-game advancement has a plethora of meanings behind it and not all of them may be what Senator Hawley is thinking to himself. This in particular could have an adverse affect on the MMORPG genre of games, which like mobile games have based their economies on a “pay-to-win” model of some form or another. A lot of these games such as DC Universe Online, League of Legends, and World of Warcraft often offer expansion packs that give players access to new levels, playable characters, weapons, and increased gear scores. DC Universe Online has an in-game marketplace where players can buy memberships that let you play all of its DLC for the duration of the membership and an increased number of inventory slots that come in handy when you’re on a grind. Players can also purchase extra space without the membership as well, but either way players are spending money to get ahead of the curve in some way. Some which may not be as advantageous if you don’t understand the mechanics of the game, which will just leave players in a spot where they may not advance and still be handing over cash to the game’s publishers/developers. There’s just far too many legal loopholes that the Entertainment Software Association and the games industry overall can and will exploit to the ninth degree. Going back to the DC Universe Online example, there are promethium lockboxes that are obtained by playing normally through the game which include special cosmetics and sellable gear that can be unlocked with an unlimited of keys, provided they have a membership that’s above premium membership. Keys that can open these lockboxes can also be purchased separately through the marketplace as an alternative. These are common practical work-arounds that the industry has started to use in recent years and even more-so now as numerous titles are following the games as a service model (GaaS). Does the bill’s definition of “pay-to-win” as it is presently written ban this? If so, how would these particular titles survive and keep certain developers employed while making consumers feel less like they are being exploited? What sort of model would they now be forced to adopt in order to generate profits?

Is there a chance that this legislation will improve the quality-of-life for the console and PC gaming market and restore it to its former status before they saw the mass profitability of microtransactions? Possibly, but at this point we have to address it appropriately as speculation. The only impact that we know that this legislation will have is be of great harm to the mobile gaming  and MMORPG markets, which are far more upfront in how they have nickled-and-dimed consumers. All of the leading titles like Pokemon Go and Candy Crush are best sellers because of the opportunities players have to get raid passed and/or additional lives. If this bill were to be passed and the duties of enforcing it were passed on to the Federal Trade Commission, I cannot possibly see any positive result for them. As I stated earlier, we would literally see an entire industry collapse right before our eyes and their unfortunately will be a human cost that I personally am not comfortable with. While I am obviously a critic of that sort of greedy business model, this is what I mean by the government not having an easy time shepherding this bill to the finish line. The legal terminology is too vague and too far reaching to the point I can’t see any amicable compromise being made that won’t directly incite the closure of entire companies that employ people who aren’t responsible for the decisions made by C-Suite executives and share holders who are out to make the maximum profit at a far greater expense. They don’t have an adequate degree of information to make those decisions and I doubt they will listen to the experts who will arguably state the same things that I have in this op-ed.

Now here is the part of the bill that in my opinion serves to set a problematic precedent for consumers of all walks of life and would give the government the ability to overstep its boundaries. Like a lot of legislation passed through Congress this bill’s ultimate outcome is to create a system that will serve a protected group of people. It implies that the FTC would concentrate the enforcement of regulation on games whose target audiences are minors who are the protected group of people in question. These games will be defined based on the “subject matter, visual content, and other indicators.”

Let’s dissect all of that. How is subject matter being defined? Does this mean that titles that have a more animated appearance like Apex Legends, Overwatch, and Fortnite will be the target, but not M-rated titles? They all have microtransactions in them, which are largely cosmetic. However, those high profile titles aren’t the only games that include microtransactions and aren’t the only ones with a juvenile playerbase. It isn’t some top secret thing that a large majority of juveniles in countries all over the world play adult-oriented titles like Call of Duty, which has constantly come under fire for how Activision has employed microtransactions and gambling-based loot boxes in the first-person shooter. You also have to ask about the T-rated titles such as Destiny. Are underage teenagers considered kids and therefore protected from it because it doesn’t look like like a cartoon? How can the FTC accurately figure out who they’re supposed to pursue if these set regulations are violated?

As a result of that vagueness, what we’d be left with is hollow regulations where the enforcement is going to be far from consistent and only protects children without considering its impact on legal adult consumers that will be left to deal with the industry’s biggest offenders like EA and Activision who nickel-and-dime them like there’s no tomorrow through popular titles like FIFA and Call of Duty. If they are to try and better define that criteria they are going to have to do something that a lot of politicians aren’t going to be happy to do because they want to maintain the appearance that they know it all, even if they don’t. They are going to have to seek guidance on the matter from the Entertainment Software Rating Board, who largely deal with that exact topic and would likely be able to get them on the right track. This does indeed imply that any of these politicians have any idea what the ESRB is or does, which I am skeptical of considering how President Donald Trump pitched the idea to form a committee that reviews the content in games before selling them to minors last year. I can’t imagine he is the only person in government like that either considering how many attempts have been made over the years to trample over the ESRB by pitching bans on T and M-rated titles. One of the most notable ones being the one that Arnold Schwarzenegger proposed during his time as the governor of California.

More importantly, this legislation would give the government potentially unrestricted access into an industry that they’ve wanted to control heavily for decades now as stated in the previous paragraph. To reiterate my experience with the legislative process I can tell you right now that when this bill goes through committee it is going to have all sorts of additions and subtractions made to it. Some which may be conducive and helpful for all of us. Some that may not and one of those non-conducive things would be them trying to regulate not just microtransactions, loot boxes, and the “pay-to-win” model, but rather the overall content produced within a title. Is this truly something consumers want to see? I, in all honesty do not.

With all of these facts laid bear it is clear that this bill offers too many questions with very few answers, if at all. This is why I am ultimately skeptical of it passing and frankly hope it does not. There would be precedent for that as well. In 2017, Hawaii state representative Chris Lee pushed for a ban on the sale of titles like Battlefront II to those under the age of 21. Like with Senator Hawley’s bill, Lee’s version of a ban on anti-consumer practices in the games industry didn’t provide a lot of answers like it did questions and it died in committee instead of becoming a Hawaii state law. It came off as more bravado to persuade the games industry to self-regulate like they did with the ESRB so that the government, even at the state level wouldn’t get involved in a matter that they know they lack knowledge on. Usually because there are far bigger governmental matters that these politicians at all levels care far more about than video games. That and re-election for another term.

In conclusion, there is no doubt in my mind that the games industry has gone past what is acceptable for how it makes its profits, whether that be through loot boxes or microtransactions, or a combination of both. The industry does need to be held accountable  but the government has shown time and time again that it doesn’t have the knowledge to do that or the capability to enforce regulation in such a manner that wouldn’t impede an industry that we all care deeply about from functioning as it normally would. This bill and representative Lee’s iteration of it both highlight how a total ban on microtransactions and loot boxes could do one of two things, nothing because of the broad and vague wording or cause mass employment after leveling whole companies who base their entire economy on the model. At this point, consumers should not lean on the government for a solution on this particular matter. They don’t realistically have one that anybody will be happy with when it is all said and done. Now am I advising that we as consumers sit down and do nothing while we are being sold poorly designed products that have an emphasis on monetization? No, I am not. That is something I would never advise under any circumstance and something I have always made clear when I stand by my colleagues in gaming journalism whenever we spotlight the unethical practices of these companies. At most, I would like to remind consumers that at the end of the day we hold far more authority over these companies than they realize because we hold the power of the purse. We vote with that power by not buying titles that have a monetization model that we do not agree with and advise others to do the same. Some would argue that this may not be enough, but I wholeheartedly disagree with that sentiment. This process of voting with our wallets has worked in the past and produced great results such as EA walking back the microtransactions/loot box model in Battlefront II. That is the course we have to stay on at this point in time.

What do you think of this analysis? Do you support the loot box ban? Let us know in the comments section below and come join the discussion with me at @SimiMiller007 on Twitter.