A 90-page report released this Tuesday by the Australian Senate Environment and Communications References Committee calls for the Australian government to pursue a “comprehensive review of loot boxes in video games”. The report is the result of a months-long investigation that started back in June 2018.
Reporting on the report
The 90-page report starts by defining microtransactions as a “broad concept extending to any model that provides a consumer with the option of making small purchases within a game or other application” by using real money or “game points”. It also touches upon the history of revenue streams for game companies, notes the importance of the games industry to Australia, and the importance of loot boxes to the games industry. A piece from the report talking about the evolution of loot boxes and DLC in general (starting at 1.20) reads:
Loot boxes represent the evolution of revenue streams in the gaming industry. Previously, game titles were sold as a complete stand-alone product. As a title gained popularity, a sequel or ‘expansion pack’ may have been offered, however the sale of a title was largely considered a single transaction without ongoing interaction between the purchaser and the developer. As the industry evolved, developers began offering Downloadable Content (DLC) which, though smaller than expansion packs previously offered, would nevertheless offer new characters, costumes, additional missions or storylines.
According to Blake Mizzi of the Game Developers’ Association of Australia, a major problem facing the industry is that video game prices haven’t increased meaningfully over the past 20 years. However, production budgets have skyrocketed. Because of this, games have become reliant on systems like loot boxes to get more money, especially from “whales”, players who spend a lot on microtransacions.
However, the report does acknowledge the concerns on how loot boxes may affect children. A submission from the Office of the eSafety Commissioner says:
…we are particularly aware of growing community concern and debate that this feature may normalize spending behavior and potentially act as a gateway to more traditional forms of ‘online gambling’.
The variety of implementations makes blanket regulation of loot boxes difficult. However, there is consensus that when real world currency is exchanged, “loot boxes may most closely meet the definitions of gambling (both regulatory and psychological), and therefore a range of risks to players may exist”.
The report ends with two recommendations
- The committee recommends that the Australian Government undertake a comprehensive review of loot boxes in video games. This review should be led by the Department of Communications and the Arts in conjunction with the ACMA, the ACCC, the Office of the e-Safety Commissioner, the Classification Board, and the Department of Social Services.
- This review should commission further research into the potential for gambling-related harms to be experienced as a result of interaction with loot boxes; identify any regulatory or policy gaps which may exist in Australia’s regulatory frameworks; examine the adequacy of the Classification Scheme as it relates to video games containing loot boxes; consider if existing consumer protection frameworks adequately address issues unique to loot boxes; and ensure that Australia’s approach to the issue is consistent with international counterparts.