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The macro problem of microtransactions: The self-regulatory challenges of video game loot boxes

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  • McCaffrey, Matthew

Abstract

The video game industry has ignited a global controversy surrounding microtransactions in gaming, especially the use of loot boxes: randomized rewards with potential real-world value. Consumers and legislators are calling for the regulation of these revenue models on the grounds that they are unfair, predatory, or could be considered gambling. This article examines the controversy from a management perspective. First, I outline current regulatory responses to the controversy and what they mean for business practices. Then, I explain ongoing industry-level and firm-level attempts to self-regulate as a way to placate consumers and governments. These tactics highlight a wide range of broader strategies that game developers and other stakeholders can pursue in order to improve customer relations and, more publicly, signal their commitment to self-regulation and avoiding consumer harm. These practices can be applied more broadly to firms that offer controversial products or services that do not yet fit within current regulatory frameworks.

Suggested Citation

  • McCaffrey, Matthew, 2019. "The macro problem of microtransactions: The self-regulatory challenges of video game loot boxes," Business Horizons, Elsevier, vol. 62(4), pages 483-495.
    • Handle: RePEc:eee:bushor:v:62:y:2019:i:4:p:483-495
    DOI: 10.1016/j.bushor.2019.03.001
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    References listed on IDEAS

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    1. Parent, Michael & Plangger, Kirk & Bal, Anjali, 2011. "The new WTP: Willingness to participate," Business Horizons, Elsevier, vol. 54(3), pages 219-229, May.
    2. Aaron Drummond & James D. Sauer, 2018. "Video game loot boxes are psychologically akin to gambling," Nature Human Behaviour, Nature, vol. 2(8), pages 530-532, August.
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    Cited by:

    1. Suzanne Lischer & Emilien Jeannot & Lukas Brülisauer & Niels Weber & Yasser Khazaal & Samuel Bendahan & Olivier Simon, 2022. "Response to the Regulation of Video Games under the Youth Media Protection Act: A Public Health Perspective," IJERPH, MDPI, vol. 19(15), pages 1-11, July.
    2. Xiao, Leon Y., 2020. "Regulating Loot Boxes as Gambling? Perspectives from Psychology, Behavioural Economics and Ludology," LawArXiv cdr69, Center for Open Science.
    3. D. Leahy, 2022. "Rocking the Boat: Loot Boxes in Online Digital Games, the Regulatory Challenge, and the EU’s Unfair Commercial Practices Directive," Journal of Consumer Policy, Springer, vol. 45(3), pages 561-592, September.
    4. Kostić Zorana & Tomić Nenad, 2022. "Implementation of the Game as a Service Research Model: Microperspective," Economic Themes, Sciendo, vol. 60(1), pages 57-75, March.
    5. Anthony King & Gloria Wong-Padoongpatt, 2022. "Do Gamers Play for Money? A Moderated Mediation of Gaming Motives, Relative Deprivation, and Upward Mobility," IJERPH, MDPI, vol. 19(22), pages 1-21, November.

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