What is a lock-box? The Lock-Box Debate, Part 1

Because why not beat a dybbuk that just won’t die? 

For a hot minute back when I was in 7th grade, I got really into Magic: The Gathering. A group of us used to play during a study hall (we were definitely the cool kids). I loved the artwork and the premise of the game and it was generally fun. But I began to realize something–my friend who would bring a 10-gallon garbage of cards to school on our battle-days seemed to always win.

I was a pretty sharp kid. I made the connection pretty quickly that he was spending more money, had better cards, and therefore had a better chance of winning. I would still win some of the matches against him, but he won more often than not. Once I realized that money invested had a large impact on your success in the game (as opposed to skill), the whole thing lost its appeal for me.

Fast-forward to today, Game Publishers have discovered a new golden goose –lock-boxes. What are lock-boxes you ask? They are boxes you purchase in video games using in-game or real world currency, that contain items to help your game-play. You always “win” in some sense of the word in that you will never open a lock-box and have it be empty. Lock-boxes in games typically work something like this:

  1. You purchase whatever currency of the moment the game asks of you – whether gems, N-Coins, Wacky-bucks whatever. You are trading real world currency for currency that you then redeem in game.
  2. Then, you use this currency to purchase lock-boxes or alternatively, a key to open a lock-box that drops in the world
  3. That lock-box opens with a ‘random’ collection of ostensibly beneficial items, most of which are un-tradeable

Hre’s where it gets messy. Developers lock exclusive content inside the lock-boxes. Whether they are weapon skins, armor skins, pets, mounts or any number of other things, they are only obtainable by opening lock-boxes. So you might see this great skin you’d love to have, but you can only get it via random chance in a lock-box, instead of buying it directly.

So from a revenue perspective, this makes sense.  Because of the prevalence of this type of mechanic, it’s safe to assume the developers are making more money than just putting items up for sale directly. So let’s start with some math.

I lied – let’s start a with disclaimer. This information is purely extrapolated and used for demonstrative purposes. The drop rates, and any revenue calculated as rough models and should be treated as such. I have no insider information into ArenaNet or any other developer.

Simple revenue generation models show that putting a desirable item in a lockbox can dramatically increase revenue for that item. For example – selling a relatively inexpensive item, a Instant Bank Access token from Guild Wars 2, directly versus putting in a lock-box, with an 18.2% drop rate:

Direct Sales: 
Per Item Cost: $0.44
Total Direct Purchase Revenue: $91.44
# Items Acquired: 209
Lockbox Sales:
Per Item Cost: $6.36
Lock Boxes Purchased: 1067
Total Lockbox Purchase Revenue: $1,328.42
# Items Acquired: 209
# Losses: 858

So the revenue generated from acquired 209 of the inexpensive item directly, meaning I just went to the store and bought it, is $91.44 — literally just the revenue generated by buying 209 of the item.

(If you are wondering where I pulled the numbers from, check out the Bank Access token found on the GW2 Drop Rates Page).

The lock-box revenue however is significantly higher–almost 1,500% higher than the direct purchase. To acquire 209 of the item, I had to purchase 1067 boxes. This creates a theoretical revenue of $1,328.42. I say theoretical because it’s impossible to determine what the actual revenue is without knowing more about the probabilities and my math makes all kinds of assumptions — and as such should be taken as a “ballpark” figure, maybe even a city-scoped figure instead of a laser focused value.

So its not hard to see that lock-boxes theoretically generate orders of magnitude more revenue than direct sales. From a business perspective, locking desirable items behind chance mechanics just makes good sense. But at this point, trading real money for a chance at a valuable object makes lock-boxes seems a little bit more like gambling than video games.

In my next post, I’ll tackle the legal definition of gambling and investigating whether those legal definitions apply to lock-boxes.

 

 

 

 

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