What’s Next – The Lock-box Debate – Part 4

Poker Chips

It’s been a very bad week for EA. If I had to pick a company whose greed was going to come back and dropkick them in the head — it would have been EA. That faith in EA’s greed and ineptitude was well placed. Last week, EA’s ham-handed attempt to turn millions of gamers into foaming gambling addicts whilst planning their own Scrooge McDuck-style tower full of gold backfired as gamers finally freaked out because EA pushed the buck too far with Star Wars Battlefront II and lock-boxes.

While this was happening, several countries in Europe started investigations into lock-box mechanics in games, again because of Star Wars Battlefront II. All in all, it’s not been a great few days for EA. But what about for gamers? What can we expect now that the larger public eye is turned on the issue of lock-boxes?


Regulation is the name of the Game

I think the inevitable conclusion of this saga is that lock-boxes and gambling mechanics become regulated. How they are regulated is a bit up in the air. Currently, the courts rely on the premise that digital goods don’t have legal value, therefore it’s not gambling (it’s worth noting, there is no question that lock-boxes have all the mechanics of gambling they just lack the risk and reward).

Our legal system doesn’t really handle virtual anything well. So much of our law is predicated on a meatspace presence that there’s almost no reasonable or direct correlation in precedence to rely on when legislating and regulating virtual spaces. It’s going to be hard to predict exactly how things are going to shake out, but I think these are a couple of reasonable scenarios.

The courts could declare the digital goods have legal value which immediately makes lock-boxes gambling, as it would then satisfy both the risk and reward requirements. But it also creates other questions–how do they handle loot drops from bosses/mobs in game if we establish that virtual goods have value?  Do ALL virtual goods have value or just some?  Or are loot drops from mobs in-game taxable if they have value? What kind precedent does that set for other games, both in video games and outside video games.

I don’t think the courts will go the full ‘every virtual good has legal value’ route because that would effectively destroy the video gaming industry, which substantially contributes to the economy, not to mention that gaming is ubiquitous now. If every drop in-game has legal value and was taxable, video games would be taxed out of existence. The chilling effect across all of gaming, including card games and board games.

What is more likely to happen is that the courts will attempt to craft legislation that targets a subset of virtual goods and assign them legal value. I think we will probably see something along the lines of ‘virtual goods that are purchased directly with either legal or in-game premium currencies purchased with legal currency have legal value’  Legislation like that would still make lock-box mechanics gambling, but wouldn’t impact just boss loot in games.  Other micro-transactions are already taxed through the initial premium-currency purchase, and something like this would likely not have a lot of impact.

If they do decide to grant legal value to all virtual goods, another possible interpretation the courts could rely on is that loot drops in-game are considered part of the subscription/box price and therefore not taxable/gambling — because their legal value was accounted for in a previous purchase or the subscription or the box price.  Either way, it’s not sustainable, advisable or desirable to classify every virtual item as having value, so I think the courts will steer away from that.

Less is More

Once things start to heat up in earnest, I think we’ll see a lot of MMOs who rely primarily on lock-box / gambling mechanics to stay afloat start to close, which will be sad because there are some good games (or at the very least, good ideas in bad games) that will go by the wayside. In the end, I think the games that are left and the future games will be better for it. Lock-boxes are the epitome of creating reasons to pay instead of reasons to play. The more we move away from that, the better.

More than MMOs, I think we’ll see the cesspool of games in the mobile markets culled en mass, and the mobile game market might actually be worth caring about it in the future. For as bad as MMOs can be, most mobile games reply on gambling / lock-box mechanics to stay running and profitable. I refuse the mourn the loss of the drivel that are most mobile games

Overall, I think we’ll see a great contraction in the number of games across the entire gaming genre. I think what is left at the end of that will be better on average and that the game industry will be stronger for the culling.

Nothing Immediately

I feel pretty confident in saying now that Pandora’s lock-box has been opened, the issue isn’t going to go away, and scrutiny is only going to grow. But that doesn’t mean we’ll see any drastic changes immediately. There will be investigations, committees — all that fun bureaucratic non-sense that will tell our elected officials what we’ve been saying for years – these mechanics are exploitative, abusive, and anti-consumer. From there, we’ll likely go through a period of legislation at the state and/or the federal level that regulates the use of lock-boxes.

Once legislation passes, companies will likely have a grace period to comply with new changes before being penalized. Likely, we are looking at 18-24 months before we, as gamers, start to notice a different in our games.

But I think last week marked the start of the end of lock-boxes in games — and I couldn’t be happier.


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