The Psychology of Loot Boxes: Exploring the Evidence

In the later stages of 2017, the world was griped by discussions on loot boxes. Not only were countries such as Belgium considering legislation for loot boxes, but gamers were so frustrated with loot boxes that petitions to legislate them reached over 10,000 signatures. In November 2017, I published an article on the psychology of loot boxes. As no academic research on loot boxes had been published at this time, I used my experience teaching the psychology of gambling to explain why people compared loot boxes to gambling.

Nearly four years have passed since that original article, and loot boxes remain a hotly-debated topic. But one thing has changed: we can now arm ourselves with academic research on the effects and consequences of buying loot boxes. Well-aware that a lot of academia still remains behind a paywall, my goal is to share as much research on loot boxes as possible for readers to access for free.

As usual, there will be a summary at the bottom if you do not wish to read everything. Now, let’s begin.

Contents

1. 1. The Story So Far
   2. Loot Boxes and Gambling Addiction
      2.1. Literature Reviews and Meta-Analyses
      2.2.  Additional Research
   3. Loot Boxes and Gaming Addiction
      3.1. Literature Reviews and Meta-Analyses
      3.2. Additional Research
   4. Miscellaneous Research
      4.1. Why People Buy Loot Boxes
      4.2. The Social Nature of Loot Boxes
   5. Critiques
   6. Recommendations for Ethical Loot Boxes
   7. Summary
   8. Credits
   9. References

The Story So Far

The video game industry has received a large financial injection in the past few years from loot boxes. In 2018, loot box revenue was estimated at $30 billion [1]. To contextualise this amount, the entire online casino industry made $3.2 billion in this period [2]. More recent figures indicate that the video game industry can earn more than $528,000 per day, per game, per country from loot boxes [3], and this is predicted to rise by 33% by 2025 [4].

Information from patents and whistleblowers indicates that the industry is changing to increase loot box revenue. Publishers such as Activision and Electronic Arts (EA) have registered patents to encourage players to spend more [5-6]. Alleged internal documents at EA suggest that this will be achieved through a combination of content teasers, targeted advertising, and frustrating players into spending money to avoid a monotonous grind [7].

While loot boxes are tremendous earners for the industry, they can also be publicity nightmares. In 2017, an EA representative left a comment on Reddit stating that they wanted players to feel a sense of “pride and accomplishment” when it comes to unlocking characters either through a monotonous grind or winning them in a loot box. Despite being posted in 2017, this comment remains the most downvoted comment in Reddit history. If a company makes a simple announcement that their game will not contain loot boxes, they can earn thousands of supportive upvotes on Reddit.

Perhaps the largest publicity nightmare for loot boxes comes from government debates on whether they can be considered gambling. Loot boxes were banned in Belgium in 2018 [7], and legislation on loot boxes has been discussed and/or introduced in Germany, the Netherlands, China, Hawaii, Denmark, Australia, Singapore and Japan [1; 4; 8-10]. Locations such as the UK and New Zealand have ruled against classifying them as gambling [11], arguing that a tangible reward cannot be cashed out. During testimony in the UK Parliament in 2019, EA representative Kerry Hopkins described loot boxes as “surprise mechanics”, spawning yet another wave of negative publicity for EA.

So let’s take a look at these fun “surprise mechanics” and what research has to say about them.

Loot Boxes and Gambling Addiction

Loot boxes began to be linked to the concept of gambling addiction for two main reasons:

1. People began to notice the similarities between loot boxes and types of gambling such as slot machines, particularly in their psychological effects [12]. These include factors such as the opening of a loot box being suspenseful and exciting, and being tantalised by the intermittent wins and victories that loot boxes can offer us [7; 13-14].
2. Players can spend a lot of money chasing these victories and trying to recoup losses, leading to high publicity stories of how much money was spent on video games. This is particularly true of young people, where parents may have to cover thousands in fees for their children’s purchases. In games where players can sell their loot box rewards, more than 90% of sellers fail to recoup the cost of a single loot box [15]. In studies of whether people consider loot boxes to be gambling, this belief can range from 68% to 86% [16].

While consumers wondered about the ethics of these practices, we sadly had to speculate while awaiting evidence. Thankfully, we can now examine several years worth of research on the topic, including both literature reviews and meta-analyses. While a literature review tries to collate as much research on a particular topic as possible, a meta-analysis analyses data from multiple studies to create a ‘big picture’ of a topic using data. So let’s dive into them.

Literature Reviews and Meta-Analyses

The literature review in question was conducted by Yokomitsu et al. [17] and explored a total of 20 studies on the topic of loot boxes and gambling addiction. As an aside, this paper is free to access and I highly recommend for people to check out this wonderful piece of work – the full reference is available in the reference section. In total, this review found a relationship between loot boxes and gambling in 14/20 studies:

The relationship between loot boxes and gambling could take different forms. Those who bought loot boxes were more likely to have gambled before, tended to have longer and more frequent sessions of online gambling, and were more likely to have problems in their life due to their gambling frequency [1; 18-19]. Those who bought loot boxes tended to have similar thoughts and beliefs to those who gambled, including thoughts like strings of losses having to be accompanied by a win, and that it is difficult to stop once you get started [16].

Studies were also able to find interesting relationships within the link between loot boxes and problem gambling. In research by Zendle et al. [20], they found that limited-time loot boxes actually strengthened the relationship between loot boxes and gambling. It seems that in an attempt to capitalise on the fear of missing out by offering things such as seasonal loot boxes, game developers are inadvertently encouraging problem gambling behaviours.

The meta-analysis on loot boxes and gambling used data from 15 studies totalling 16,229 participants [21]. From this analysis, they found a small-to-moderate relationship between loot boxes and problem gambling. The combined effect size (on a scale of 0 to 1) was 0.26, and effect sizes of over 0.20 are suggested to be clinically relevant to practitioners and policy makers [22]. The fact that this is clinically significant reaffirms that this relationship may have real-life consequences that need to be considered.

Additional Research

While a lot of studies were covered in both the literature review and meta-analysis, I will also share research published after these reviews, alongside highlighting aspects of previous studies that may be interesting to readers.

Through a type of data analysis known as path analysis, Li et al. [1] were able to identify a linked relationship between purchasing loot boxes, problem gambling behaviours, and psychological distress. Further studying the idea of loot boxes and psychological distress, Hall et al. [23] investigated the impact of the COVID-19 pandemic on self-isolating gamers. They found that the relationship between loot box purchases and problem gambling symptoms was stronger in those who were self-isolating. The researchers speculate that problem gamblers may alleviate stress and negative emotions from the pandemic with loot boxes. However, as this is such a novel topic, more research is needed.

David Zendle [24] conducted a study with 112 Heroes of the Storm players before and after the removal of loot boxes from the game. He found that following the removal of loot boxes, players who showed problem gambling behaviours spent significantly less money on the game than when loot boxes were available to purchase. It is possible that the adrenaline and tension associated with loot boxes are enticing to people who gamble, so will spend less when this option is no longer available.

If you have read enough debates on loot boxes, you will eventually come across comparisons such as Kinder Surprise eggs and traditional card game booster packs. I would be lying if I said opening packs of Magic the Gathering cards wasn’t a fun pastime for my family. We get excited to look at the nice art and the potential for a shiny – so is this similar to loot boxes? Should we consider regulating card game booster packs as well?

This idea was explored by Zendle et al. [10] who examined the relationship between buying card game booster packs and problem gambling scores. They were unable to find a clinically significant relationship between booster packs and problem gambling. The researchers speculate that the physical nature of booster packs do not elicit the same irrationalities and impulses as loot boxes. If someone opened several packs and didn’t receive what they wanted, they may need to travel back to the store or wait several days for delivery. In contrast, more loot boxes can be purchased with only a few clicks or button presses.

I would like to end this research roundup by discussing the concept of ‘whales’. For those unfamiliar with the term, a whale is a high-spending customer that companies can rely on for profit. The idea of a whale has been the subject of debate: while some believe whales are high-earning customers choosing how and where to spend their earnings [25], others believe that whales reflect problem gamblers and those at risk of becoming problem gamblers [26]. Studies have made some interesting revelations on the spending habits of those who buy loot boxes:

• No relationship was found between loot box expenditure and income [17]. In fact, 5% of customers generated over half of the identified loot box revenue, and nearly one third was attributable to only 2% of players. Those spending the most on loot boxes had the highest problem gambling scores.
• In China, over 50% of loot box expenditure for Counter Strike: Global Offensive was enacted by around 10% of players [3].

These findings indicate that while ‘whales’ are profitable for companies, these individuals are doing so to their own detriment as they aren’t exactly the high-earners that people may think they are.

Loot Boxes and Gaming Addiction

There’s a saying in the world of gambling that ‘the house always wins’. This refers to traditional gambling being designed around the house (e.g. the casino) maximising their profits even if people sometimes cash out. However, you could argue that there is nowhere this is more true than in the world of video game loot boxes.

When people purchase loot boxes, they are doing so to obtain something they want from a video game. Every purchase goes directly to the publisher who never has to traditionally cash out. If the game allows the trading of loot box contents, it is other players who are technically doing the cashing out, but we know from research that the contents of loot boxes are rarely profitable to players [15].

With the lack of a cash payout and the typically low return that comes from loot box items (if tradeable), this has prompted academics to speculate why exactly people buy loot boxes. This is where the hotly-debated world of video game addiction enters the discussion. For example, loot box items may offer players a competitive edge to their game of choice, increasing their involvement and dedication to the game [1]. We also know from previous research that there is a relationship between disordered gaming and feeling very connected to your character, so players may chase certain items to adorn their beloved character with.

The relationship between loot boxes and problem gaming behaviours was explored in both the literature review and meta-analyses mentioned above, so let’s take a look.

Literature Reviews and Meta-Analyses

In the literature review, half of the examined studies found a significant relationship between loot boxes and problem gaming [17]. Gamers who purchased loot boxes had longer gaming sessions (e.g. >7 hours in one sitting) and were more likely to meet the criteria for Internet Gaming Disorder [1, 27]. Those exhibiting disordered gaming spent significantly more money on loot boxes and were more likely to buy loot boxes containing items that granted a competitive edge, but were not more likely to buy loot boxes with limited-time items [17; 28-29]. This finding is interesting as research found a relationship between limited-time items, loot box purchases and gambling addiction, but not gaming addiction [20].

The meta-analysis on loot boxes and problem gaming yielded very similar results to the meta-analysis for gambling addiction. Using data from seven studies with 3,436 participants, they found a small but clinically significant relationship between loot boxes and problem gaming [21].

Additional Research

In the interest of keeping things balanced, I would like to point out that King et al.’s [30] study of Fortnite gamers who purchased loot boxes failed to find a significant relationship between loot boxes and symptoms of Gaming Disorder.

While briefly mentioned above, I would like to explore some interesting findings from Ide et al. [27]. This study explored loot boxes and gaming addiction symptoms in both Japanese adolescents and their caregivers. The study found no relationship between the spending habits of children and their parents, and it also found that children who bought loot boxes were almost four times more likely to exhibit four of more symptoms of gaming addiction. However, some of the symptoms the study used to gauge gaming addiction are a bit contentious. For example, a lot of participants met the symptom of returning to a game the next day if they did not beat a certain challenge. Surely that’s just the nature of video games, especially when it’s a good idea to take a break if you’re not beating something and feeling frustrated.

Miscellaneous Research

For this section, I would like to discuss studies on loot boxes that do not exactly fit into the dichotomy of ‘gambling addiction’ or ‘gaming addiction’. So let’s get right into it.

Why People Buy Loot Boxes

So far in this article, I’ve presented a lot of data and talked about things like clinical significance and effect sizes – numbers that we use to quantify human behaviour.

But what about…asking people? Actually talking to them about why they buy loot boxes and what they are attracted to?

This is what was achieved in research from Nicklin et al. [9]. In this study, 28 people from the UK were talked to about their loot box buying habits and what motivated them to do so. After going through all of these interviews, the researchers organised why people buy loot boxes into six different categories. These categories then have their own subcategories, so I recommend giving the full paper a read as it is available for everyone to read. For the sake of brevity, I’ll summarise them below:

• Opening experience: Players reported enjoying the experience of opening a loot box, including factors such as the sights, sounds, and the rush of excitement while waiting to see if you got something good.
• Value of content: The value of a loot box was determined by factors such as getting away from the “shame” of having a default skin, avoiding a grind, and the potential to sell a rare item. But as we know from other research [15], this is rarely profitable.
• Game-related: Gamers would buy loot boxes in an attempt to win more games, to bypass tedious grinds, and/or to improve their general gameplay experience. As one interviewee says, “If you don’t buy packs or you don’t grind the game for hours…it’s just not possible to be competitive”.
• Emotive/impulsive: This related to factors such as fighting off boredom and lack of self-control.
• Fear of missing out (FOMO): Not purchasing a loot box during promotions or limited-time events triggered a sense of FOMO in participants that they wished to avoid. Avoiding this was facilitated by how easy it was to purchase loot boxes with saved purchase details.
• Social influences: A range of social influences encouraged the purchasing of loot boxes, ranging from friends buying them to their favourite content creators buying them. People would brag to their friends about the contents of their loot boxes, and one interviewee described how their friends would decide to all buy loot boxes while in a bar together. Regarding content creators, participants would get tantalised by YouTube reaction videos and would seek the same thrills that they had just witnessed.

Some of these motivations were also found in research by Zendle et al. [31]. The most commonly-described motivations for buying a loot box were wishing to gain a gameplay advantage, seeking a particular item that they wanted, and the excitement and thrill of opening a loot box.

As interesting as these motivations are, there’s one in particular that further research has elaborated on.

The Social Nature of Loot Boxes

So much of gaming is inherently social. If we get a cool skin from a loot box, we get to show it off to our friends. If we obtain an item from a loot box that gives us a competitive edge, we may win more in front of our friends. But in doing so, we may be encouraging our friends to buy loot boxes, almost creating a social contagion. This is supported by research by King et al. [30]. In this study, Fortnite gamers were more likely to buy loot boxes if they also had friends who spent money on loot boxes. In fact, it was the single largest predictor of buying loot boxes in the study. So how might this happen?

This could be due to something called visual authority. Back in Nicklin et al.’s research [9], we saw how people were teased for having a default character or weapon skin. But the opposite can also happen: if you have something big and shiny and rare, that can make you look more impressive and can even give the impression that you’re better at and more dedicated to the game. This desire to seek visual authority and to look impressive to others was also a common reason for buying loot boxes in the study.

Critiques

When presenting research, I try to take a balanced approach and provide information for you to make your own informed decisions. In this pursuit, I’d like to present some critiques of the research on loot boxes.

Something that is difficult to pinpoint in research is the cause and effect nature of things such as gaming and gambling addiction. While we know from research that gamers who buy loot boxes are more likely to gamble outside of gaming, we don’t know whether buying loot boxes kickstarted this gambling, or if this person was always a bit of a gambler. For gaming addiction, we’re also not sure if gamers ramped up their gaming to make their purchases feel ‘worth it’, or if purchasing loot boxes are a side effect of pre-existing disordered gaming. It would be helpful for future research to ask participants about their gambling and gaming time before beginning to buy loot boxes, but I appreciate that this has its own problems such as inaccurate memory recall.

When reading through research, I noticed that quite a few samples were recruited using Reddit. This was interesting to me as Reddit can be quite hostile to loot boxes, ranging from massively downvoting posts justifying loot boxes to upvoting announcements of games not having loot boxes. It would be great to see a wider range of samples as pervasive anti-lootbox sentiments on Reddit may contaminate viewpoints surrounding loot boxes and may not represent the number of loot box consumers in the general population.

As part of Yokomitsu et al.’s literature review [17], two reviewers independently assessed the quality of loot box research using the Quality Assessment Tool for Observational, Cohort, and Cross-Sectional Studies [32]. Examples of questions from this assessment tool include having a clearly-defined study population and variables clearly defined. On a scale of ‘poor’, ‘fair’, ‘good’, and ‘excellent’, they found that loot box research tended to be ‘fair’ in quality, with no study meeting the criteria for an excellent study.

While on the topic of research quality, I’ll throw my own two cents in. I noticed that while going through these studies, there were many different methods, questionnaires, and techniques used to quantify things such as gaming and gambling addiction. This can reduce the reliability of the research. For example, think back to the earlier study which believed that returning to a challenge you couldn’t beat the previous day was a symptom of gaming addiction [27]. Greater efforts to use the same or similar resources can increase the reliability of the field and can make results more comparable across studies.

I will end this section with a critique of my own that hasn’t necessarily been covered by other academics. I noticed that in research, the types of loot boxes that were researched included those that provided a gameplay advantage or those that could personalise our gaming experience through skins and decorations. However, I think there is another type of loot box that requires further research – playable characters.

The greatest example that I can present for this is Genshin Impact. Following the launch of the game, miHoYo have progressively released new characters with their own unique designs, unique gameplay, and unique backstories that are woven into the world of Genshin Impact. When a new Genshin Impact character is released, I often see players using affectionate language such as talking about them “coming home”, and may even do things like create joke shrines to try to manifest them. Part of me wonders how much this affection and dedication to the world of Genshin Impact increases the likelihood that they’ll reach for their wallets. I think it will be a very interesting topic to explore, but unfortunately research does take its time!

Recommendations for Ethical Loot Boxes

Throughout the years, loot box discussions have gotten a bit…heated. This heat usually surrounds the idea of completely banning loot boxes, with players feeling that they are being infantalised and not trusted to make their own decisions.

If loot boxes are indeed here to stay, that doesn’t mean they can’t be improved. In this final part, I would like to share ideas from academics on how to make loot boxes more ethical and pro-consumer.

One method of making loot boxes more ethical is to clearly outline the odds for obtaining items within the box. This approach has been adopted in China, and has been praised for empowering consumers with information that can reduce harmful gambling, while also respecting freedom of choice [33-35].

At the beginning of this article, I described a testimonial from a whistleblower on how player data is harvested to push players into buying loot boxes. It almost feels too obvious to say, but not using player data in this manner would certainly be more ethical.

The final four recommendations are elegantly described by Xiao et al. [36] and include the following:

• Limit the amount of available combinations of loot boxes within a game. If this is done, it will be easier for gamers to make an informed decision about their chances of obtaining what they want. For example, people can easily work out in a traditional roulette wheel that their chances of winning on a single-number bet are 2.7%.
• Limit the amount of available prizes within a loot box. One time when I played Overwatch, I opened a free seasonal loot crate and received…the Overwatch logo in inverted colours. I still remember this experience because it was so underwhelming and so unsatisfying – who wants to spray the game’s logo in inverted colours!? Unsatisfying items like this artificially reduce the odds of getting something the person actually wants, encouraging them to buy more.
• They propose making the odds of receiving a certain item consistent. This is in response to something known as a ‘pity’, where your chances of receiving a rare item will increase the more you buy loot boxes. This would disincentivise people from buying a certain amount of loot boxes in an attempt to reach this ‘pity’ point where the game becomes more lenient to them.
• Finally, they propose removing the ability to receive duplicate rewards. Again from my own Overwatch experience, I remember duplicates yielding an absolutely pitiful amount of the in-game currency, meaning a lot would need to be saved up to purchase the item I actually wanted. Removing duplicates brings the person closer to what they actually want, although I can imagine this would cut into some profit margins…

Summary

• Loot boxes earn publishers billions of dollars each year, and their revenue is only expected to increase as companies try to frustrate gamers into purchasing them. Despite their earnings, loot boxes can be publicity nightmares and have been the subject of legislation and debate in multiple countries.
• A literature review found a relationship between buying loot boxes and symptoms of gambling addiction in 14/20 studies, and an analysis of published data (known as a meta-analysis) found a small but clinically significant relationship between loot boxes and gambling. Those who bought loot boxes were more likely to have gambled before, tended to have longer and more frequent sessions of online gambling, and were more likely to have problems in their life due to their gambling frequency. Those with problem gambling symptoms were more likely to purchase limited-time loot boxes and had poorer mental health. Loot boxes were not found to be similar to traditional trading card game booster packs as no relationship between packs and gambling symptoms was found. There was no relationship between loot box purchasing and income, suggesting that heavy consumers of loot boxes (known as ‘whales’) spend an excessive amount of their income on loot boxes.
• A similar relationship was found between loot box purchases and symptoms of gaming addiction. Those exhibiting disordered gaming spent significantly more money on loot boxes and were more likely to buy loot boxes containing items that granted a competitive edge. However, some studies failed to find a relationship between loot boxes and gaming addiction, and some studies that did find a relationship used some contentious indicators of gaming addiction (e.g. classifying returning to a game the next day after failing a challenge as an addiction symptom).
• Studies indicate that people are motivated to buy loot boxes for the following reasons: to avoid the “shame” of using a default skin; to avoid a monotonous grind; to gain a competitive advantage; to fight off boredom; to avoid fear of missing out when it comes to limited-time events; and social influences such as friends and content creators buying loot boxes. One study found that the largest predictor of buying loot boxes was our friends also buying them, indicating a social contagion aspect to loot boxes.
• Loot box research suffers from several limitations. These include the inability to establish a cause-and-effect relationship with addiction, studies often being of ‘fair’ quality (and none being ‘excellent’), over-reliance on platforms such as Reddit for participant recruitment, inconsistent and contentious methods of measuring addiction, and lack of research on games such as Genshin Impact where fan favourite characters may be locked behind loot boxes.
• Recommendations to make loot boxes more ethical include: making the odds of obtaining items more transparent; not using player data to manipulate purchase behaviour; limit the amount of loot boxes available in the game; limit the amount of prizes available in a loot box; making the odds of receiving an item consistent (i.e. getting rid of ‘pity’ mechanics); and removing the ability to receive duplicate rewards.

Credits

A big thank you to DECosmic for designing my header image and to LoopyGc for drawing the header art. A special thanks to Harshil Sharma for their work on this project.

This hard work would not be possible without the support of my wonderful Patrons. I would particularly like to thank my Platinum Patrons: Albert S Calderon, Kyle T, redKheld, Dimelo ‘Derp’ Waterson, Hagbard Celine, Aprou, Austin Enright, NotGac, Shaemus, Joey Rodriguez, Marcus Lo Re-Sant, DarrenIndeed, Thomas Meszaros, Dr. Jhin, Mulgar, Tobias Svensson, RK_Rammy, and John Bauman. Thank you!

 

References

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