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Micro-transactions dominating the gaming industry: Gambling becoming a major issue

Micro-transactions have dominated the gaming industry in recent years, largely due to their ability to generate an income for games developers throughout the life-span of a game, rather than being dependent on the one-off payment at the point of sale. This new model facilitated revenues to sharply increase and has begun a new wave of ‘free-to-play’ games, whereby developers make profits based upon the additional features players can purchase within the game.

From a business perspective in-game purchases have been a tremendous success; some companies have doubled their profits. However, ’loot-boxes’ have emerged, which has raised questions regarding the ethics of such forms of monetizing. Gambling has become one of the biggest problems for young people in modern society, with loot-boxes reported to be encouraging children to use real money in return for a ‘lottery ticket’, whereby random rewards are generated that can be used in the game.

The gaming industry has been heavily scrutinized for these gambling issues, with Belgium and the Netherlands in April 2018 going so far as to announce that loot boxes are an illegal form of gambling.  Moreover, the International Game Developers Association issued a warning to the whole industry, displaying its concerns for the dangerous format. However, the US and UK both have announced that loot-boxes are not a form of gambling, which raises serious questions.