Talking Point: What Does That New ESRB Loot Box Warning Actually Mean?

A few days ago, the ESRB made a blog post detailing a new descriptor it will be adding to many game ratings going forward, which essentially is going to be a loot box warning. Many have praised this move, as the prevalence of loot boxes in modern games is something that’s met with casual indifference at best and substantial ire at worst. Nobody hopes an upcoming new game will feature loot boxes prominently.

However, this new announcement raises questions about how this will affect the industry as it moves into a new generation of gaming. Like it or not, loot boxes aren’t going anywhere anytime soon, and publishers have become quite adept at utilizing devious tactics to minimize or obscure their application of them. The hope is that this new rating will curb the usage of such tactics and make it easier to see what publishers are doing in their in-game economies, but the reality may not be nearly as optimistic.

So, what does the new change entail? According to that blog post:

This new Interactive Element, In-Game Purchases (Includes Random Items), will be assigned to any game that contains in-game offers to purchase digital goods or premiums with real world currency (or with virtual coins or other forms of in-game currency that can be purchased with real world currency) for which the player doesn’t know prior to purchase the specific digital goods or premiums they will be receiving (e.g., loot boxes, item packs, mystery awards).

Notably, this does not cover conventional DLC purchases or even microtransactions, as those are already covered under the “In-Game Purchases” descriptor that will continue to be used. This new descriptor was brought about in the wake of substantial pressure from gaming enthusiasts demanding that the ESRB enforce a means of greater transparency as to what kind of DLC some games have. Loot boxes are seen as a more predatory form of DLC compared to the more conventional kind, thus the gaming community called for a clear distinction to be made. In the ideal situation now, companies using loot boxes in their games won’t be able to hide that fact as easily, and people will be able to easily see right there on the rating what the marketing materials might have ‘conveniently’ left out. However, real life often has a way of complicating such matters, and as a recent example of this, let’s take a look at the recent example of Crash Team Racing Nitro-Fueled.

In the lead up to release, the developers of Crash Team Racing Nitro-Fueled explicitly stated that there would be no microtransactions in the game and this statement was naturally met with plenty of praise from fans. However, barely one month after release, the developer pulled a complete one-eighty and introduced a microtransaction economy to the game. Indeed, this is a particularly heinous example, as it arguably indicates a cunning and predatory mindset on the part of Activision. The company was able to have its cake and eat it, too. Ahead of launch, the game benefitted from all the good press that comes along with “no microtransactions” and at launch it benefitted from positive reviews across the board as the reviewers focused solely on the high quality of the game content. Then, a month later, after the reviews were out and the initial big wave of sales passed, the company was able to throw in the microtransactions and benefit directly from the extra profits, regardless of the havoc and imbalance it brought to the in-game economy.

Ahead of launch, the game benefitted from all the good press that comes along with “no microtransactions” ... a month later, after the reviews were out and the initial big wave of sales passed, the company was able to throw in the microtransactions

What should be raising more red flags, however, is the fact that Activision got away with it. When asked about their stance on this, the ESRB simply stated that all future copies of the game would be updated with an amended rating to reflect the change, and it didn’t mention anything about fines or consequences. Now, this could perhaps be seen as an acceptable response if the microtransactions were added long after launch and well past the game’s initial sell-by date, but the fact that these microtransactions were added only a month post-launch indicates that this was the plan all along. The design of the in-game Pit Stop store at launch already seemed suspiciously similar to one that would require real currency and that combined with the speed at which microtransactions were added make it naïve to assume that Activision introduced them purely on a whim. This was a direct example of a company deliberately obscuring its intent to include a much-maligned element of modern games so it could minimize the bad press that would inevitably follow and circumvent an undesirable rating from the ESRB, both of which would likely contribute to a drop in sales numbers. That’s unacceptable.

Granted, this matter with Crash Team Racing Nitro-Fueled was relating only to microtransactions, not loot boxes, but the ESRB’s reaction to it nonetheless sets a precedent. If a publisher doesn’t want to get that ugly 'In-Game Purchases' moniker affixed to their family-friendly “E” rating, they can simply wait a bit past launch and then add the offending content at a later update. Subsequent copies will be updated with the new descriptor, but the bulk of the game sales and good press will already be in hand. Activision has demonstrated that this works quite well, so why shouldn’t other developers follow suit? This new rating will certainly give more developers pause before throwing in loot boxes, but there’s already a clear path to sidestepping any potential obstacles that it poses to a game’s success. If the ESRB continues to allow this loophole to exist, it will effectively invalidate the point of the rating to begin with.

The next question, then, is whether this rating has any real teeth to it to begin with. Let’s say that the ESRB does close that loophole and makes it so that adding loot boxes in a post-launch update within a certain window after launch incurs fines and penalties on the publisher. Loot boxes are an extremely lucrative practice, so if the publisher could just ‘eat’ the cost of a fine in favor of the extra profits there wouldn’t be any point to the fine existing. Take a look at the ESRB’s website, and you’ll find that it does have some safeguards in place for non-compliant developers:

The display of rating information on physical games is far more difficult to modify after a game ships. As a result, our enforcement system includes sanctions and fines (up to $1 million) that may be imposed on publishers who don’t fully disclose content to us during the rating process.

$1 million dollars already doesn’t sound like a whole lot to lose for most big companies relative to the gains they’d stand to make, but that “up to” makes things worse. If you take a look at the Enforcement System Summary, you’ll see that any loot box related shenanigans would likely be considered a Class A Violation, meaning that the publishers would get a warning for the first offense, a $5,000 fine for the second, and a $10,000 fine for the third and on. Also, each instance would accrue a ‘point’ against that publisher’s record. If it were to get five points for the same class of infractions, an additional $10,000 fine would be added to any new infractions. If it were to get seven points across multiple classes of infractions, another $10,000 would be added to that. Also, there’s no risk of the ESRB revoking it rating services—temporarily or permanently—for a publisher, as long as they comply with any ESRB sanctions or investigations. Bearing all this in mind, if the Crash Team Racing Nitro Fueled scenario were to play out in a timeline where the ESRB did take action, Activision would be paying out $30,000 at worst for its actions. Not a tough fee for the fastest selling game in a multi-million selling franchise, eh?

The key thing to take away from all this is that while this new loot box descriptor signals a promising step forward towards cutting back on predatory practices in games, it doesn’t carry enough consequences to keep most publishers in check. Until the ESRB tightens up its loopholes and drastically steps up the amount it demands with its fines, publishers don’t have much to worry about regarding potential blowback for sneaking in loot boxes. As we move on into a new generation of gaming, rising development costs will all but ensure that more publishers turn to alternative means of generating revenue. Hopefully, this new descriptor only represents the first step in the ongoing campaign against predatory practices and not the end of the road, as there’s still much more work to be done on this front.

Let us know your thoughts on the ESRB's new rating and the potential effect it will have below.