According to Fogg’s behavior model, a user’s behavior is a function of that user’s motivation, their ability in performing that behavior, and whether a trigger is present. If one of the variables is missing or lacking, users will fall below the theoretical action line, thus not performing the action.

How do most video games make it easier for gamers to take action? To increase motivation when gamers start a game, some developers initially set the odds of winning better items to be higher in order to create the façade that future boxes will also contain the same level of rewards. However, doing so is unsustainable for the development company because if players only get rare items, then they will be less inclined to spend real-world money on the game. To tackle this issue, less ethical games decrease the odds of obtaining rare items after the few first boxes to get gamers to pay for additional boxes.

For example, in the case of Bungie’s Destiny 2, players discovered that developers purposely throttled the amount of experience points players would get after the first few initial times a player finishes an activity. The reasoning for implementing this system is so that players will not grind the game to win all the remaining items, thus rendering the game less interesting and making it less likely for players to continue playing. The following quotation from Kirk Hamilton, a reporter from Kotaku, discusses the motivation behind Bungie’s decision to modify their existing system.

“[The development company behind Destiny 2] wants players to feel like they’re making progress more slowly in order to encourage them to spend money to get [loot boxes] faster.” (source)

Similarly, games sometimes provide starter packs or a set amount of in-game currency so that users can take that first action without having to expend much effort or money. For example, Yu-Gi-Oh Duel Links and several other free-to-play games provide users with enough coins to complete their first purchase without having to spend real-world currency. By providing this incentive and making it easy for gamers to take the first initial action, all of this buildup leads to the next step of the Hooked Model, the variable reward.

In the case of Yu-Gi-Oh Duel Links, players start the game with a starter box and a set number of gems that they can use to spend on in-game booster packs. The game also uses the psychological tactic of scarcity (Purchase Limit: 1) to make users believe that the one-time special deal of $2.99 contains unique items not found in the free packs.

3. Variable Reward

The third step of the Hooked Model is the variable reward phase, which is when users are rewarded for solving a problem or performing an action. This phase reinforces the action that’s taken in the previous phase. Results from a study conducted by Stanford Professor Brian Knutson determined, startlingly, that the part of the brain that becomes stimulated and is responsible for most of the pleasure we receive is not activated when a reward is received, but in anticipation of it.

The nucleus accumbens, highlighted by the red dot, is the part of the brain associated with pleasure (source: Neuroscientifically Challenged)

For humans, this induces higher levels of stress but also keeps us on edge. The variability that comes along with most successful products ensures that we never know what to expect. More often than not, the odds of winning or losing are unannounced, because knowing beforehand is less interesting and will likely detract from the novelty of winning a variable reward if users know what they’ll get in advance.

Most video game designers keep this in mind when building their games, and we see it everywhere in today’s gaming models, but especially when it comes to loot boxes. If you take a look at the following animations, you’ll notice a common theme among all of them. You’ll realize that all of the opening animations have some sort of delay. This minuscule delay in how the rewards are unveiled adds that tiny bit of extra excitement and makes anticipate and even yearn for the actual prizes.

COD WW2’s supply drops (loot boxes) are a bit underwhelming compared to those of other games. The animation is instantaneous and users have no clue what the rarity of an item is until a card is flipped and the color is shown.

Opening a loot box in Overwatch shoots the rewards into the air, where the color of the coins denotes their rarity. However, users don’t know exactly what item they’re getting, so the excitement gets amplified when the coins turn into the actual rewards.

Hearthstone, another Blizzard game, does a really nice job of allowing players to figure out the rarity of an item when hovering their mouse over a card. This is another example of providing that extra layer of excitement when opening a new pack.

The variable reward phase of the Hooked Model is akin to pulling a slot machine and trying to figure out what you’re going to win. Slot machines are designed to fixate gamblers through the slowing down of the different reels as the machine approaches the end of a turn. This buildup and anticipation is part of the appeal of the feeling of opening boxes with variable rewards.

Companies have to continue nurturing players’ interest and get them to reinvest in new offerings. That leads us to the next and final phase of the Hooked Model — the investment phase.

4. Investment

The final stage of the Hooked Model is the investment phase, in which players complete an action that makes them more likely to use a product in the future. These investments can come in a variety of forms, ranging from the more psychological (such as emotional commitment and social capital) to the more material (money and personal data).

These investments make users more likely to come back to the product because they load the next trigger of the Hooked Model and also store value for the user, thus improving the product the more a user interacts with it.

A psychological bias called the, “escalation of commitment” helps explain why people are reluctant to abandon a game given their prior investment. Examples of investment that make it more likely for a players to keep playing include the number of hours logged, the amount of money spent, and the number of friends on the platform.

Take for example most progression-based mobile puzzle games, such as Candy Crush Saga. Players start with five lives and only lose lives when they are unable to complete a level. Most players can get through the first few levels without much difficulty. However, by deliberately making the first few levels easier, the game’s designers allow players to play for longer during the first few times they open the app. By doing so, players become more acquainted with the game and are less willing to give up because they’ve already invested so much time into it.

The more time people invest into a game or product, the more willing they are to pay. (Source)

To make players more likely to invest in power-ups and loot boxes, video game companies can use a variety of tactics (such as artificial scarcity or concealment of odds) to make it seem like the items they are selling are novel or unique, compelling users to buy them before they’re off the market.

An example of a limited time offer from Star Wars Commander, a free-to-play strategy game for mobile with in-game purchases. (source)

Once a player invests, either through an in-game purchase or other actions, the Hooked Model repeats itself when another external trigger is presented or an internal trigger is innately prompted.

Ethical or Not?

Are loot boxes tantamount to gambling? Various agencies and groups are starting to take legal actions against loot boxes. The Netherlands passed a law in early 2018 ruling that certain loot boxes could be construed as gambling. In December of 2017, China’s Ministry of Culture passed a set of rules forcing multiplayer games that offer loot boxes to disclose the odds of winning particular rewards. In the United States, bills have been introduced by state legislators with the hope that the Electronic Software Rating Board (ESRB) will step in and implement regulations that require either full disclosure of drop rates, acknowledgment of the addictive nature of such purchases, or restrictions on certain age-groups.

So what’s next for the game industry? Many companies have migrated from one-time game purchase business model to a freemium model with purchasable in-game content making loot boxes all the more attractive. It appears government agencies will begin requiring greater transparency and more ethical practices. In addition, some players are beginning to complain about particularly slimy strategies and warn other players. Loot boxes are still an ethical gray area, but consumers have the power to vote against these practices by holding back their wallets.