Last update: May 2021

4 mins to read - 2020/07/03

What Are Loot Boxes? And Why Is the UK Regulating Them?

Loot boxes, the monetization mechanism for free-to-play mobile games, are under attack in the UK. The House of Lords is pushing to bring them under the classification of gambling. If this happens, then Parliament would be able to regulate them. This legislative move has been a long time coming. Previous, both the Children’s Commissioner and the NHS director of mental health have spoken in favor of banning loot boxes. But what are loot boxes? And why is Parliament pushing to regulate them now?

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treasure chest loot box

What Are Loot Boxes? A Quick History

With the rise of free-to-play or “freemium” games, developers have had to innovate with monetization tactics. The concept of loot boxes, which are digital boxes players that have rewards that can boost their gameplay experience. They can include necessary tools such as weapons or in-game currency, or they can include skins or other cosmetics. Players generally pay for them, but they can also receive them as rewards for completing actions in-game, such as leveling up.

The randomized nature of the contents of loot boxes means they have the similar addictive effect on players as slot machines. And many regulatory bodies across different countries have classified loot boxes as gambling. However, those who argue in favor of loot boxes point out that they’re a great way to give mobile game players across the board the gaming experience they want – those who just want a free game to play can install and get to it; those who want a more premium gaming experience can pay for it. All the while ensuring the game generates profit for the developers who created it.

Regulation against Loot Boxes in the UK

According to a report by the House of Lords’ Select Committee on the Social and Economic Impact of the Gambling Industry:

The liberalisation of gambling by the Gambling Act 2005, the universal adoption of smartphones, and the exploitation of soft-touch regulation by gambling operators has created a perfect storm of addictive 24/7 gambling.

15 years ago, nobody could have predicted how great a phenomenon mobile devices would become. So it makes sense that certain regulations be updated to take into account the addictive qualities of cellphones, social media, and mobile phones. And especially in mobile games that are targeting children, having infinitely renewable, infinitely clickable in-app purchases can be a danger. The UK trade group UKIE has launched a Get Smart about Play campaign, to help families be aware of setting boundaries for kids’ spending in-game.

What’s more, an over-importance of loot boxes can start to skew game design. Many critics of the system point out that gaming is starting to veer more heavily towards a “pay-to-win” design, where high scores are a result of how much cash players are willing to drop, rather than their skill at gameplay. And many purists worry that this will undermine and weaken gaming mechanics to boot.

loot box

Push Notifications: An Alternative Monetization Tactic

While games developers are understandably nervous about the UK Parliament setting their sights on loot boxes, this is nothing new. Many countries have drawn parallels with loot boxes and gambling. Although the UK may be the first to actually pass concrete regulations against them. If this does come to pass, mobile games will have to come up with more creative monetization tactics.

And push notifications should be at the top of their priority list.

While not exactly a new technology, they have a wealth of untapped potential when it comes to monetizing mobile games. For one thing, there is no global move to clamp down on push notifications, so already they have loot boxes beat. What’s more, push notifications are naturally extraneous to the core mobile game, which makes them the perfect vehicle for LiveOps. Push notifications are versatile and personalizable from user to user. And there is no need to design your game around your push campaign.

Push Notifications: Bring the Heart Back to Mobile Games

Where loot boxes are completely randomized in their rewards, push notifications are personalized toward individual users. For example, there is only, say, a 50/50 chance that a player opening a loot box will get something worthwhile. Meanwhile, a push notification (when done correctly) will always be targeting that player with the information, bonus content, or promo that benefit them most.

Push notifications can also be used to monetize your F2P game in a similar way as loot boxes. The plus side is notifications don’t have the gambling-esque drawbacks. For example, if there is a cosmetic item a player wants for their RPG avatar, a player might get drawn into a downward spiral of purchasing loot boxes hoping to stumble across it. A push notification could alert them when the cosmetic is available to buy. Or it could even sweeten the deal with a discount code.

Push notifications are also great for spreading word about community events, AMAs, competitions, or raids. Or they can be used as an alarm to draw the player back into the game, with news of bonus content or new levels. Really, push notifications are a great tool for sparking any type of user engagement, within or outside of the mobile game. A creative marketing team can even write notifications to act as extensions of the game. They can include rich content and dialogue in the voice of game characters. Deep links can then convey the user directly to the page in the gaming app where they were last playing.

Ultimately, push notifications bring the focus of gaming back to gameplay and engagement, where pay-to-play is an option, but not central.

To read more about how to use OpenBack to boost player retention and maximize revenues, download our Case Study: Dreamworks How To Train Your Dragon App, School of Dragons

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