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Exploring the Ethical Landscape of In-Game Purchases in Modern Gaming

This guide explores the intricacies of loot boxes and microtransactions and suggestions for dealing with potential problem gambling behavior in youth communities.

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Video games, once straightforward one-time purchases, have evolved into complex ecosystems primarily funded by in-game purchases such as microtransactions and loot boxes. This shift has not only transformed the gaming industry's revenue models but has also raised concerns about the impact on players, particularly children and adolescents. Though recent research has found associations between loot box interactions and problem gambling behaviors, the question of whether loot boxes or microtransactions are actually harmful to players is a complicated one. This guide explores the intricacies of loot boxes and microtransactions and suggestions for dealing with potential problem gambling behavior in youth communities.

Exploring the Dynamics: Microtransactions, Loot Boxes, and Player Experiences

In the early days of gaming, purchasing a video game was a one-time expenditure. You paid the money that it cost, and received the entire game with no limitations. However, with the advent of online gaming and the opportunity to create continuous revenue streams, developers introduced microtransactions and loot boxes. This progression led to many basic versions of games being available for free or at reduced prices to consumers, who are then encouraged to spend money in order to receive game enhancements.


Generally, in-game purchases offer consumers opportunities to spend real or in-game currency in order to receive items that improve the experience of the user. Microtransaction or loot box features may include cosmetic items such as “skins” or “emotes” which change the appearance of players’ characters, “card packs” which contain items or characters of differing value, “pay to progress” purchases such as extra energy or time, or “pay to win” transactions such as stronger characters or weapons that give players an advantage over those who do not purchase upgrades. 


The difference between microtransactions and loot boxes is that a microtransaction is a straightforward purchase wherein the consumer is explicitly aware of what they will receive. On the other hand, a loot box provides a random reward based on chance characteristics specific to each game, and the player is not aware of what they will receive before making their purchase. 

Current Trends

For better or worse, in-game purchases have become a staple in modern gaming. A 2020 survey conducted by Central Queensland University in Australia found that a majority of best-selling video games incorporate loot boxes and microtransactions. Furthermore, nearly all of the adolescents in the study reported having engaged with games featuring these randomized virtual items.

Such prevalence of in-game purchases in games should really be no surprise at this point.  Research conducted in 2018 indicated that the video gaming industry projected to generate upwards of $30 billion from in-game transactions that year alone, and few gamers today are surprised to be offered in-game purchases after downloading a game.

Navigating the Pitfalls: Ethical Concerns Surrounding In-Game Purchases

It is important to remember that having an interest in sex and having curiosity in seeing (or even sending) naked pictures are absolutely developmentally normal for tweens and teenagers. Not only that, but it is normal for many adults to share nudes or sexual texts with their romantic
partners, and can even be a healthy way to foster sexual communication and excitement
between them. Acknowledging the natural curiosity and desires of tweens and teens to explore their sexuality is an important step in facilitating effective communication with tweens and teens regarding digital intimacy. It is important that the conversations you have with your child are non-judgemental and do not come from a fear or shame-based perspective. Normalizing the desire to explore sexuality helps remove stigma, making it easier for caregivers to approach the subject and better facilitate important conversations.

Peer Pressure: Navigating External Influences

The pressure that some players feel to spend money for in-game purchasing through both microtransactions and loot boxes has become a cause for concern for some. Worries regarding peer pressure to purchase particular skins or other game enhancements, plus the randomization of the rewards from loot boxes in a way that so closely resembles gambling, has fueled controversy over ethical considerations in modern gaming. Moreover, the use of in-game currencies adds complexity, requiring players to navigate exchange rates between actual and game specific currency. This may lead to impulsive spending on the behalf of some consumers and is also potentially confusing as to how much real money they have spent. Such pressures and complications have become a concern and a new area of research, as many games with loot boxes and microtransactions are available to, or targeted towards, children.


Opponents of in-game purchases point to research that has drawn parallels between gambling and loot boxes. A 2021 study on in-game spending concluded there is "robust evidence" that microtransactions, and loot boxes in particular are "structurally and psychologically akin to gambling." Indeed, both loot boxes and some of the more popular forms of gambling such as slot machines use what is called a “variable ratio” schedule of reinforcement. Unlike, for example, a “fixed ratio” schedule wherein consistent behavior results in predictable results, a variable ratio schedule rewards behavior in a random manner. This random reward pattern tends to result in a high, steady response rate in people and other animals alike, and may facilitate addictive behavior.


Particularly with online gaming, there are a myriad of both social and practical reasons that players may feel pressured to spend money. From a practical perspective, in cooperative gaming, players may not want to let their teammates down by having equipment that is not up to the quality of the other team members’. In competitive games, players may feel the need to spend money in order to keep up with their opponents. 


Additionally, both real and perceived class issues come into play regarding the appearance of players’ avatars. A government commission report from the UK indicated that some players fear that if they are wearing a free skin in the popular online game Fortnite, others will not want to play with them, or they may be targeted as default skins can be seen as a symbol of a player being new or bad at the game. Players who use free skins also may be considered financially poor or uncool by peers or other players.


In researching this topic, I spoke with friends of mine that play Fortnite regularly.  Similar to the UK report, they stated that  when they see a player using a free skin in Fortnite they assume it may be a new unskilled player who may be easy to eliminate. On the other hand, they also said that often very good players will use the default skin as an intimidation factor or as a way to intimate that they have been playing the game since the beginning.

Chill Out Everybody!

Before we all get too alarmed though, there are important specifics to consider! Video games have long been dogged by controversy regarding their impact, and have been regularly scapegoated for a variety of societal ills. Given the historical context, it is important to interpret any concerns about psychological distress and video game playing with some level of caution. For example, for a number of decades much public alarm as well as research focused on whether violent video games increased aggressive behavior amongst players. Eventually, due to consistent findings that there was little data to back up the concern, the American Psychological Association summarized the research by stating there is “scant evidence” that the games increase violent behavior. As a matter of fact, my own doctoral dissertation was focused on whether an association could be found between excessive video game use and symptoms of adult ADHD. After all the sweat, blood, and tears necessary for any doctoral dissertation, I ended up uncovering nothing whatsoever. The results concluded that, at least in the study I conducted, there were no concerning or even observational correlations between video game engagement and ADHD symptoms. 


An interesting fact is that a substantial portion of the revenue that the video game industry receives is due to a very small group of gamers (colloquially known as "whales") who contribute disproportionately to in-game purchases. In fact, a 2023 study by Amano and Siminov out of Harvard University found that 1.5% of video game players accounted for 90% of games’ revenues. Furthermore, the organization Change the Game which raises awareness about youth gambling, reports on their website that 2.5% American youth aged 14-21, struggle with “problem gambling.”  These numbers are interestingly similar to recent statistics reported by Yale University which indicate that approximately 1% of American adults and 2-7% of youth struggle with a gambling addiction.  


While clearly gambling addiction is a serious and significant problem to those that suffer from it, these numbers indicate some good news in that a grand majority of both adults and youth are able to manage their gambling behavior. 


What about the higher rate of gambling addiction among children versus adults? Children play video games much more than adults, is this an indication that microtransactions are causing children’s gambling behavior to outpace adults’? Well, probably not. I looked into some research from the 1980’s and found a robust survey of 2700 high school students across four different states, which took place between 1984 and 1988 - well before the development of microtransactions and the ubiquity of video games in our culture. The results indicated a problem gambling rate 4-6% for youth and 1.4% of adults- quite similar to contemporary numbers. Not only does it appear that gambling rates in general have not changed much over the past forty years, but that children have generally struggled with problem gambling more than adults, regardless of the advent of video games. Rather than there being an indication of current technology harming our youth, the data seems to suggest that youth exhibit a naturally higher rate of risk-taking, and that most of those that develop problem gambling behavior as children, grow out of it by the time they reach adulthood.

It is also important to note that despite the fears, much research has concluded that video games are actually good for your brain (told you so, mom and dad!) As microtransactions and loot-boxes have increased accessibility to games by significantly decreasing their cost, a good argument can be made that in-game purchases are actually a net positive. In fact, this view is aligned with the Harvard study referenced above, which concluded not that loot-boxes or microtransactions should be eliminated, but with increased research and clearer spending caps, they may continue to be a positive inclusion in games by increasing accessibility to gamers who otherwise would not be able to afford to play. 

Okay Yeah… But What If?

So, to recap so far, in-game purchases are ubiquitous, increase access to games to those who may not otherwise be able to afford them, and pressure players to spend money using tactics akin to gambling, do not appear to be increasing the overall gambling rate of children, and the grand majority of players that engage with them do not end up developing any problems. 


But some children do develop gambling problems, whether via engagement with loot boxes, lottery tickets, sports betting, or other methods. The following are some warning signs that your child may have a gambling problem:

  • Increased interest in sports and checking scores from many games

  • Checking their phone constantly during sporting events

  • Intense interest if other people start talking about gambling

  • Major mood swings 

  • Owing money to others

  • Spending a lot of money or suddenly having new or expensive things

  • Frequently asking for money

  • Being secretive about online activity

  • Stealing

  • Having gambling materials such as betting sheets, lottery tickets, or casino chips

  • Becoming very interested in odds and sudden knowledge of gambling terms, like “over-under”, “spread,” “line,” and “parlay.”


If you believe your child has a gambling problem, it is important to approach them with empathy, concern, and understanding rather than using anger or fear-based tactics. Set firm and clear boundaries with your child regarding finances and expectations regarding gambling behavior. Search for resources to learn more about gambling addictions, and never shy away from seeking the help of a mental health professional if you are concerned about your child’s well-being.

To Conclude

In conclusion, the landscape of video gaming has undoubtedly transformed with the advent of microtransactions and loot boxes, ushering in new revenue models and raising significant concerns about their impact, particularly on younger players. While research has drawn parallels between loot boxes and gambling behaviors, it's important to approach these concerns with caution and context. As history has shown with past controversies surrounding video games, alarmist claims must be scrutinized, and empirical evidence must guide our understanding.

The prevalence of in-game purchases underscores the need for continued research and critical discourse within the gaming community and beyond. While concerns about peer pressure, impulsive spending, and potential addictive behavior are valid, it's essential to recognize that the vast majority of gamers navigate these variables responsibly.

Moreover, insights into gaming demographics and gambling addiction rates suggest that the correlation between microtransactions and youth gambling behaviors may be more complex than initially assumed. Rather than solely attributing increased gambling rates among children to modern gaming practices, historical data suggests a natural propensity for risk-taking among youth.

As we navigate the evolving landscape of gaming, it's imperative to strike a balance between innovation and consumer protection. Education, regulation, further research, and responsible gaming initiatives can empower players to make informed decisions while preserving the benefits that gaming offers. By fostering dialogue, conducting rigorous research, and prioritizing player well-being, we can ensure that gaming remains a source of entertainment and enrichment for players of all ages.

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