Ethical Loot Boxes …

Continuing their theme of talking about monetization schemes and why they are necessary, Extra Credits has started a multi-part — maybe two, maybe more — on ethical loot boxes. They seem to, in general, like loot boxes, but their view of its biggest benefits is … odd, to say the least. They present loot boxes as essentially being rich, frivolous gamers subsidizing gamers who aren’t rich by buying things that they don’t really need — and that the Extra Credits team things no one should really want or need — and providing that extra income that allows the gaming companies to keep prices low. They compare this to rich people buying a Ferrari, and point out that we generally allow rich people to spend their money in these ways without too much complaint, and so it should be fine here. The problem is that they misunderstand to a large degree what rich people tend to be doing when they make these luxury purchases, mischaracterize what is happening in games, and are appealing to a model that has never actually existed anywhere ever to make their claim that this is good and beneficial to gamers.

First, it isn’t really accurate to say that it’s rich people subsidizing people who are not rich when it comes to the gaming market. What’s really happening is that people who have more disposable income to put towards games or who are willing to pay more for games and subsidizing the people who don’t have as much disposable income or who are not willing to pay more for games, if their model is correct. This may seem like a subtle difference, but it matters because you may have “rich” people on either end here. It comes down to what someone is willing or able to pay, not how much money they actually have. And the question at the convention about how many people would buy the same number of games if they were $80 instead of $60 should be seen to reflect that. When it comes to gaming, most of the people purchasing games have some kind of budget. If we assume that someone, say, has a budget that would let them buy a game a month, at $60 that comes to $720. So, twelve games a year for $720. If the price increases to $80, then for that same amount they could only purchase nine games. So they’d be forced to either increase their budget by a third or decrease the number of games they buy by a third. While in the earlier videos and even here it was implied that this might be psychological, in general it’s more budgetary: they either can’t afford the increase or don’t think the extra games are worth increasing their budget for. And if they figure out that things like loot boxes and monetization schemes are causing them to blow their budget, they’ll start reconsidering these as well.

And this leads into how they don’t understand the mindset of those “rich” people that they are relying on to subsidize the others, because they are appealing to a model that has never existed. There is, as far as I know, no case outside of maybe FTP gaming — MMOs and the like — where this has ever been the case. To use their car example, the closest we can find are companies that have luxury lines as well as standard and economy lines, so Cadillac for Chevrolet and Lincoln for Ford, for example. But it was never the case that the luxury lines subsidized the regular and economy lines. Instead, all of those lines were expected to — and generally do — make their own profits and carry their own weight. They’re meant to be lines aimed at different markets, and so have significantly different design goals that attempt to fit in with each other where ever they can. Luxury models tend to be ones that focus on comfort and, well, luxuries. You get the best materials and the newest technology. The standard models and economy models tend to strip a lot of that out, and strip it down to what customers really need. For the most part, the idea is that most drivers might like many of the things you get in the luxury cars … but not enough to pay that much money for it. They can get what they need — and some of what they want — from the standard cars, and that’s good enough for them.

What you have to notice here, though, is that the “rich” people aren’t generally buying these things and spending money on them just because they want to spend money. They are always getting something out of it that they value enough to pay that much for, just like everyone else does. Sure, the more money you have the less you care about the sticker price — it’s not like they’re risking their rent to buy that luxury car — but they definitely get something out of the deal. A Ferrari, to use their example, is a very well-engineered performance vehicle, and also comes with a lot of bells and whistles that some car buffs might really want. If they like that enough and can afford it, they’ll buy it. So one of the things that luxury makers will try to do is actually give their customers some functionality that benefits them. In short, they will try to make it an overall better product to justify the extra cost so that people with money are more likely to purchase it.

You can, of course, say that even with the added functionality and even taking into account that they don’t have to worry about the price as much, there are a lot of luxury purchases that still seem excessive. But there’s another benefit that people can get from luxury purchases, which is the social benefit. By being able to purchase such seemingly frivolous things that they can display in public, they signal that yes, they are that rich and have access to those things. And this can be incredibly important, as the image of being wealthy can help one achieve and maintain wealth. If someone wanted investors for their next big project and showed up in a beat-up Honda, those investors might wonder if that person really has the wealth to make this project work, and wonder if they were any kind of success at all. Sure, the idea should be paramount and someone who didn’t spend money on frills is likely to be more of a success than someone who does, but the image of being wealthy and successful can be very important. Many “rich” people buy the things they do to present an image of success, and being able to buy those luxury items and get “the very best” is a big part of that.

And from here we can start to see, I think, the disturbing result they saw in the science, where people spent more than they could afford on these sorts of things because they were afraid of being tossed out of their guild or to maintain some kind of top-dog status. Even if this was just aimed at rich people, it would be important for these things to provide something of value, something that rich players or players in general might want. When it comes down to what people are willing to pay, then this becomes even more important. So, perhaps they provide some kind — even if small — of mechanical advantage in the game … and then people who can’t afford them worry that this will just make them fall behind enough so that other players will be chosen ahead of them. The more competitive the game, the bigger a worry this is. Or you can give it a social appeal, where people look at those players and think how cool those cosmetic things are and want them themselves. This then could engender envy, and could also have it be the case that people who got ahead and got recognition for this using these schemes now feel they have to keep doing this to live up to that image (we see the same thing with rich people who lose money but keep spending so they don’t look “poor” to their social circle).

The only way to avoid this at least being a significant problem is to return to the general “luxury” model, where you aim these things at different markets. What you want is to have one market think those things are cool but not worth paying for, while the other market is willing to pay for it. I don’t know what sorts of schemes they’ll talk about in the next parts of this — I’m writing this before that video is out — but one thing that I thought of while musing on this is something like the Dragon Age Keep. Dragon Age had a number of different scenarios that could impact the world, and so when Inquisition came out they provided a way to build the world with the conditions that you wanted to see. While it was free — as it replaced the ability to import the state of the world from previous games — it would be easy to imagine keeping the importing but having this as a separate service to allow people to create the world state they wanted. If you want to start in a certain state, you can either play through the previous two games again making those choices, or drop $20 and create it (preferable with an easier to use interface and with the importing being a lot easier than it was). This seems to be ideal, as people who might want that — and I would count myself in that number — generating more income, people who don’t think it worth it being able to skip it, and all of this using mechanisms that you pretty much need to have anyway.

Another example might be the old City of Heroes extras model. Pretty much all of the stuff in there was cosmetic, but one of City of Heroes’ great strengths was the cosmetics. The game started with an abundance of options and when it went FTP and added its shop all it did was add more options. If you didn’t want to pay or didn’t find anything incredibly cool, you could still build a wide variety of characters, but if you found a cool set or combination of items you might be willing to pay to be able to play as that. Contrast this with the Cartel in The Old Republic where I hardly ever bought anything because they had nothing I liked or wanted.

Ultimately, though, how “ethical” you can get these things will depend on the features of the game itself. You will always have to provide some benefit to those who pay for these things or else no one will pay for them. Even rich people don’t buy things just for the sake of buying them and the games model cannot rely on rich people. The more beneficial these things are, the more tempted someone will be to buy these things when they can’t afford it, or will feel pressure to buy it because they’d be too weak or the game would be too hard if they didn’t. Any system that doesn’t take this into account is doomed to failure.