Markets Wired

Staff of the Federal Trade Commission issued a paper detailing key takeaways from the agency’s August 2019 “Inside the Game” workshop, which examined consumer protection issues related to video game “loot boxes.” 

The staff perspective paper describes the workshop discussion of loot boxes, which are random rewards that players may buy within a video game for a small fee or earn through game play. It summarizes discussions of loot boxes, including that players may use them, for example, to change a character’s appearance or to “pay-to-progress” in the game. It also summarizes comments made about how these types of in-game microtransactions have become a multi-billion-dollar market, accounting for a significant percentage of revenue derived from video games, particularly for free video games downloaded via mobile apps.

The paper highlights public concerns raised about loot boxes, emerging academic research, and industry self-regulatory initiatives discussed at the workshop and in comments submitted to the public docket. As summarized in the paper, concerns raised about loot box marketing techniques include that they may encourage players to overspend or mask the real costs to players through confusing terms or inadequate disclosures. Another public concern was the impact of loot box monetization models on children and those vulnerable to compulsive spending.

Participants called for meaningful disclosures to help players make informed decisions, additional research and consumer education, and improved industry self-regulation.