ESRB Defends Loot Boxes to U.S. Senator, Launches New Label, Education Effort

Loot boxes won't be called out, odds listing not required

Video games will soon list on boxes and in online descriptions if they include in-game purchases, the Entertainment Software Ratings Board announced today. That information will not, however, differentiate what sort of purchases - such as loot boxes - are included. The news comes after months of gamer anger, vocal discord and threat of political intervention all centered around the use of loot box microtransactions.

The head of the ESRB also released a letter defending loot boxes which she sent to a senator who was calling into question the practice of selling loot boxes, which deliver randomized awards to players through a purchase or earned item box. In the letter, ESRB president Patricia Vance says that loot boxes aren't gambling and are more comparable to baseball cards, "where there is an element of surprise and you always get something."

In announcing plans today for a new initiative to label games with microtransactions and educate parents about them, Vance said the move was just the latest in the board's continued efforts to keep up with the state of an ever evolving industry.

“The video game industry is evolving and innovating continually, as is the ESRB rating system," said ESRB president Patricia Vance in a prepared statement. "ESRB’s goal is to ensure that parents have the most up-to-date and comprehensive tools at their disposal to help them decide which games are appropriate for their children. With the new In-Game Purchases interactive element coming to physical games, parents will know when a game contains offers for players to purchase additional content. Moreover, we will be expanding our efforts to educate parents about the controls currently at their disposal to manage in-game spending before their kids press ‘Start’.

While the new labeling and outreach program seem aimed at informing parents and users about the inclusion of a wide variety of in-game purchases, it won't specifically detail the sort of purchases available in a game. Nor will the addition of this label, which will be listed as one of many available unrated online interactions, have any impact on the game's rating.

In coming up with this new policy, Vance told a group of journalists in a conference call earlier today, that the ESRB has done a "lot of research over the past several weeks and months, particularly among parents." What they board learned was that a lot of parents they spoke to didn't know what a loot box was and those that did were still more interested in the money being spent, not how it was spent.

"It's important to not harp on loot boxes," Vance said. "As their primary concern is their children spending money. When combined with parental controls, [this new initiative] is an effective response to loot boxes and in-game spending."

The issue of loot boxes specifically, which award randomized prizes to players after they are purchased or earned, is important because lawmakers in several states, along with one federal law-maker, are either seeking laws to control the use of this specific sort of in-game purchase or asking for federal regulators to investigate the issue.

Senator Maggie Hassan (D-NH) sent a letter to Vance earlier this month, asking the Entertainment Software Ratings Board to review the ratings process as it relates to loot boxes, examine the marketing of loot boxes to children and develop best practices for developers around the toxic form of microtransactions. The Senator also asked the board to conduct a study that further delves into the reach and impact of loot boxes in games.

In Hawaii, state law-makers recently introduced four new bills that may change the way video games with loot box mechanics are bought and sold in Hawaii.

We've reached out to the Hawaii state legislators and the senator for comment. Specifically, we're asking the senator if today's response, which seems to only touch on one aspect of the letter, satisfies the request or if the senator still plans to ask the FTC to investigate the issue. 

The letter from Hassan to Vance came the same day that Hassan brought up the issues of video game addiction and loot boxes during a Senate Commerce, Science and Transportation Committee hearing. The committee has oversight of the Federal Trade Commission.

Senator Hassan asked four FTC nominees at the time if they belive “that children being addicted to gaming - and activities like loot boxes that might make them more susceptible to addiction - is a problem that merits attention?” and if the FTC would be willing to look at loot boxes as an issue independently, depending on the ESRB's response to the senator.

Specifically, Hassan said she is talking about in-game microtransactions that lead to surprise winnings, which she says in many cases are being marketed to children. She also pointed out that last month the World Health Organization's call to recognize gaming disorder as a diagnosable disorder. "We should be doing all that we can to protect our children and to inform parents about their options when it comes to these types of games," she said.

Vance says that the ESRB's response to Hassan has been preared that she believes this new initiative is responsive to her concerns. "We think our response is pretty complete," Vance said. "We encourage an open dialog with her office and hope to work with her in the future." 

ESRB Response to Senator Hassan by Brian Crecente on Scribd

Vance added that she thinks state lawmakers will also be satisfied. Noting that this is just a first step. "We are going to continue to look at this issue," she said, "continue to see if additional measures, additional guidelines are of concern to the gamer community and to look at what we can continue to do." 

Vance also noted that the ESRB doesn't view loot box sales as a form of gambling, but rather as a "fun way to acquire items. There is always an element of surprise, but you always get something and there's no way to cash out."

The In-Game Purchases label will become one of several interactive elements that ESRB currently assigns to notify consumers about the interactive or online features of a digital or mobile game. Consumers can expect to start seeing this new notice on all games that can be purchased in stores and wherever those games can be downloaded in the near future, according to the ESRB.

The new In-Game Purchases label will be applied to games with in-game offers to purchase digital goods or premiums with real world currency, including but not limited to bonus levels, skins, surprise items (such as item packs, loot boxes, mystery awards), music, virtual coins and other forms of in-game currency, subscriptions, season passes and paid upgrades to do things like disable in-game ads.

“We are delighted to support ESRB’s continuing dedication to safeguarding children from inappropriate experiences both online and offline by providing parents with essential information about video games,” Stephen Balkam, Founder and CEO of the Family Online Safety Institute said in a prepared statement. “ESRB’s decision to add the In-Game Purchases label to game boxes further empowers parents with the tools they need to make informed decisions for their families."

While the ESRB addition of the in-game purchase label is a step forward, the approach comes nearly five years after Apple started requiring apps to show when they include in-app purchases. Apple's move to highlight those microtransactions came after it settled a class action lawsuit surrounding in-app purchases which was brought by parents whose children racked up huge bills buying in-app content on otherwise free apps.

In December, shortly after the loot box issue and complaints surrounding their use came to a head, Apple changed its policy on the sale of randomized microtransactions, requiring developers to list the odds of winning specific items. Some game developers followed suit on their own, but the ESRB's new system doesn't seem to address this. Vance noted that some developed have already started doing this on their own and that they aren't taking any action currently on disclosing drop rates.

The ESRB is launching a new educational outreach program aimed at explaining the new "In-Game Purchases” and other interactive element labels, how to set up parental controls to manage different aspects of video game use including money and time spent playing limits and a link to the ESRB ratings guide.

The ESRB says it also plans to conduct a nationwide campaign to help educate parents about how they can use tools like ESRB ratings combined with parental controls to manage the games their kids are playing and with whom. A new PSA will be posted on ParentalTools.org and other supporting websites.

While the specter of government intervention into video games continues to threaten the game industry's long-fought independence from government oversight, the industry's major publishers and organizations all remain relatively quiet about any form of self-regulation when it comes to the use of microtransactions in video games. That could be in part because microtransactions represent such a large portion of the video game industry's income. Analysis group Superdata estimates that the transactions tied to free-to-play PC games accounted for $19 billion dollars of the industry's revenue in 2016, while traditional PC and console game sales only accounted for $8 billion.

Electronic Arts found itself at the heart of the controversy earlier last year when it released a beta for Star Wars Battlefront II that contained what players believed was an overly aggressive use of microtransactions.

While the game sells as a full-priced retail title, it was originally set to have a microtransaction system that asked players to invest extra time or money to unlock major playable heroes. The outcry, which resulted in the most downvoted comment (by EA) in the history of Reddit, led the company to temporarily pull the microtransaction system on the eve of the game's launch. It also led to comments from both LucasFilm and Disney, seemingly condemning EA’s approach to microtransactions in the game.

At the time, EA said that microtransactions would "become available at a later date, only after we've made changes to the game." Glixel reached out to EA for comment on the current status of loot boxes in the game and its thoughts about the ESRB's new rule.

Also last year, Activision drew some heat after it came to light that it had investigated systems to help empower microtransaction purchases through matchmaking. Glixel reached to Activision as well.

Asked whether loot boxes, while not gambling, may still feature an element of the same addictive nature found in gambling, Vance said she saw no evidence of that. "We've tried to find research, but can't find any evidence that shows children are impacted by loot boxes, leading them to have a tendency to gamble."

Vance added that the ESRB has no plans to conduct its own research into the matter. "We will continue to measure parental concerns about loot boxes as well as other scientific research," she said. "But we're not qualified to do our own psychological research."

Wrapping up the call, Vance was asked why, in labeling games that have in-game purchases, the ESRB isn't listing out what those purchases are. Many, if not most games do have some form of in-game purchase, which could lead to a sort of blanket labeling that would make the new system useless.

"Parents need simple information we can't overwhelm them with a lot of detail," she said. "We need to be clear and concise and make it easy for them. We haven't found that they are differentiating between mechanics. Nine out of ten parents require kids to get permission to make purchases. With that stat alone it shows that providing general information is useful. At end of the day, if a parent is concerned on the impact a game may have on their children's money or time, we have parental controls and that’s why we’re launching ParentalTools.Org today."