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FTC Loot Box Odds Disclosure Is Not Enough And Reveals Troubling Relationship Between Streamers And Loot Box Creators

Yesterday, an FTC hearing on loot boxes in games concluded with a final session focused on consumer protection measures, in which multiple advocates maintained that while loot box odds disclosure is a good start, the industry needs to do more to temper the monetization mechanic. The third panel at “Inside the Game: Unlocking the Consumer Issues Surrounding Loot Boxes” was entitled “A Level Playing Field – What’s Fair Game?” and it opened with an overview of the ESRB’s existing ratings system and parental guides delivered by ESRB president Patricia Vance. Her primary argument was that the issue with loot boxes as they stand now is a lack of knowledge, particularly from parents, on when they’re included and how they work.

She then pointed toward current ESRB measures such as the “in-game purchases” label on physical games that contain micro-transactions and a new push from all three major platform holders to require loot box odds disclosure as ways in which the industry is solving the awareness issue. 18% of all rating assignments for physical games, she said, now have the “in-game purchases” label.

That wasn’t good enough for Consumer Reports’ director of financial policy Anna Laitin. Her presentation came second, and centered on the argument that the goal of micro-transactions in general, including loot boxes, is for people to purchase them, and that companies will use “subtle tactics” to manipulate players into buying more of them. Because of that, she said, simply letting consumers know that the purchases exist in a game isn’t enough.

She then pointed toward current ESRB measures such as the “in-game purchases” label on physical games that contain micro-transactions and a new push from all three major platform holders to require loot box odds disclosure as ways in which the industry is solving the awareness issue. 18% of all rating assignments for physical games, she said, now have the “in-game purchases” label.

“There’s a label for ‘in-game purchases,’ and that can mean a huge range of things. That’s everything from, ‘You can buy a new character when it’s released,’ to ‘We have surprise loot boxes.’ A whole, wide range. I know when I look at a game, there’s a lot more detail that consumers need to understand how they might be presented with the option to spend money.”

Next up was Keith S. Whyte, the executive director of the National Council on Problem Gambling (NCPG). He opened by noting the many similarities between loot boxes and gambling, specifically slot machines, saying that “whether or not loot boxes meet criteria for a gambling device in a particular jurisdiction, and whether or not players recognize or understand the risks, additional consumer protection features must be put in place to prevent users from developing gambling problems.”

That protection, he said, was especially important for high-risk groups such as men, youth, and active military as well as veterans, all of whom statistically have higher risks of gambling addiction. Whyte noted that the issues go both ways, with problem gamblers being more inclined to make in-app purchases, as well as people who make in-app purchases potentially being more likely to take up gambling.

Whyte then suggested that while informing consumers about odds disclosure (as the ESRB is doing) is a good first step to solving these problems, that alone doesn’t go far enough.

“Nobody in the gambling issue would ever trust a slot machine manufacturer to self-certify that their machines and the odds and randomness of their machines perform as they say. We use independent testing labs to verify that the odds are as stated. And they often find machines that don’t perform adequately. It’s an important consumer protection feature. So if the industry is going to provide us information on odds and randomness, take a lesson from the gambling side. You’ve got to get it done independently. It’s not going to be effective if you’re just saying, ‘Trust us, these items drop at this rate.”

FTC Panel Reveals Troubling Relationship Between Streamers And Loot Box Creators

During the Federal Trade Commissions panel about video game loot boxes, a streamer management agent revealed that one publisher offered to boost loot box odds for sponsored streamers. The panel was followed by the announcement that Sony, Microsoft, and Nintendo would make video game publishers reveal loot box odds.

As part of the FTC panel Brittany Frassetto asked Omeed Dariani, CEO of Online Performers Group, a streamer management agency, if video game publishers often pay streamers to do loot box opening videos, if they pay for the loot boxes, and if they give the streamers better odds. Dariani revealed that “Companies do pay for that sort of thing,” and that it is odd for publishers to just pay a streamer to make a loot box unboxing video. On one occasion, said the CEO, he was in a room where a publisher said “We could do better odds on the packs that this person opens for promotional purposes.” It’s unclear if this is a widespread practice and that other talent managers like Dariani have been offered this too.

“Content creators very often open the loot boxes because audiences really enjoy that,” Dariani said. “It’s exciting, right? You don’t know what’s gonna come out. You don’t know if they’re going to get the rare stuff and hey, I don’t have thousands of dollars to spend on buying my own loot boxes, so I can watch someone else do it and sort of live vicariously through them.”

At the same time, he said that streamers are very proud of their sponsorships and disinclined to hide them.

“What’s really interesting about it to me,” Dariani said, “they’re not ashamed to admit that they’re being paid for these things. In fact, it’s actually a benefit to them in a lot of cases [to be able to say to their audience], ‘Look, EA is recognizing that my content has value. They’re paying me. They’re supporting my channel because of the work that we’ve done, that the community that we’ve grown together with our audience.’ These big companies are involved now and that, for many people, can be a source of validation, a sign of growth, a badge of honor.”

Later in the same exchange, Dariani expressed dismay over the inadequacy of platforms like Twitch to enforce stricter disclosure standards. A single live-stream may last for hours, and he said that it’s cumbersome for hosts to continually remind viewers who might be joining mid-stream that the content they’re watching is sponsored. He expressed surprise that platforms like Twitch don’t already require proactive measures, not unlike age gates, to ensure that sponsorships are made clear before someone elects to tune into a live-stream.