Game Theory: WARNING! Loot Boxes are Watching You RIGHT NOW!

Matpat presents a satirical apology about Theory Crates, a fictional loot box feature, to introduce the serious topic of how loot boxes manipulate players into spending money.

The episode explores whether loot boxes are truly evil or just an obnoxious business practice, and whether game makers are manipulating players into gambling their money away.

Game makers target not just players as humans, but as individuals by watching when and how you specifically play to capture you when you're most susceptible.

It's essential that gamers be made aware of these targeted, very real practices happening directly to them.

Caesars Entertainment Corporation introduced the Total Rewards card in 1997, a membership card allowing casino guests to earn perks by gambling, which became instrumental in making Harrah's one of the most profitable casino chains.

• Players swiped their card into machines when they arrived and left • The casino tracked individual player movements and habits over time • Casinos identified favorite games, preferred themes, and breaking points for each player

• Casino layout optimized so favorite slots were always within arm's reach • Casinos pinpointed when gamblers reached their breaking point and offered free meals, drinks, or show tickets • Players stayed longer and left feeling positive despite losing hundreds of dollars

Loyalty programs created sunk cost mentality where players felt obligated to stay at one casino to avoid losing accumulated reward points.

Unlike casinos, video games can legally adjust odds of getting good drops anytime they want because loot box systems aren't classified as gambling.

• Gradually increases odds of getting five-star heroes after rolling three or four-star characters • Ensures players get rewarded after bad rolls, renewing their sense of hope • Encourages continued spending due to sunk costs of accumulated progress

Scientific Revenue provides game developers with software that tracks player behavior and dynamically adjusts microtransaction pricing based on what each individual player is willing to spend.

• Goal is turning free users into paid ones and keeping high-spending players (whales) • Software boasts 20-40% boost in in-app purchases • Company explicitly uses data to read player minds and encourage spending

Kotaku discovered an Activision patent that uses player information to push gamers into buying microtransactions and loot boxes by matching them against skilled players who own specific items.

Players see items used effectively by better players in matches, desire those items to improve their own performance, and are motivated to purchase them.

As games track more player data and technology better understands gamer behavior, games are tuned more precisely to get players to spend money.

Combination of player metrics and psychological science working against players makes it difficult to resist spending, even for those who typically don't spend money on games.

• Skinner Box reward models • Free trials that overcome loss aversion and create sunk cost mentality • Illusion of control • Dynamic odds tuned to individual play habits • Flexible pricing tailored to personal spending capacity • Matchmaking services designed to excite players about new items

The underlying question remains whether loot boxes constitute gambling and whether they're dangerous to players.

Companies appear to be squeezing players by exploiting desire for rare items from random boxes, but the issue has nuance that doesn't fit into simple sound bites.

Understanding the complexity requires stepping back from heated debate to examine the actual mechanics and their psychological impact.

Loot boxes have existed in some form for over a hundred years, starting with baseball cards that came in packs shortly after World War II.

• Topps inserted special gold foil cards into select baseball card packs in 1992 • Cards were identical to regular ones except for gold lettering • Became such a massive craze that Topps had to make packaging tamper-resistant and add counterfeiting prevention

• Topps created super premium and ultra premium card sets to keep collectors collecting • Competitor companies created similar gimmicks to encourage buying more packs • Players collected same players multiple times with variations like different fonts, heavier stock, or shiny labels

Anyone who opened baseball cards participated in the same psychological phenomena as modern loot box players, including dopamine anticipation, sporadic rewards, and loss aversion.

• 1996: Wall Street Journal criticized baseball card collecting as gambling • 1999: New York Times raised same concerns about Pokémon cards • Both criticized these systems as forms of gambling for children

The argument repeats with each new toy craze, with major collectible crazes from recent decades all based on random prize systems or gambling-like mechanics.

Genuine differences between casino gambling and card packs/loot boxes have kept these issues from progressing legally for nearly thirty years.

Despite these debates occurring repeatedly, the fundamental issues remain unresolved and are cycling through again with modern loot boxes.

• Casino gambling: you bet money and leave with nothing if you lose • Loot boxes: you always receive something, just not necessarily what you wanted • Game companies always provide items in exchange for money, never leaving boxes empty

Items a player doesn't want might be exactly what another player was looking for, so no system exists where players give something and get nothing in return.

• Regulate loot boxes as gambling only if they give nothing, making them unregulated now • OR regulate them as gambling as they exist today, which would also require regulating Magic cards, baseball cards, and by extension any random product like bags of Skittles • The slippery slope makes drawing legal lines increasingly difficult

Any product involving random chance falls into a gray area, making it hard to clearly distinguish what qualifies as gambling and what doesn't.

Loot boxes present scientific arguments against them alongside philosophical rationale for them, making it not an easy debate with a clear answer.

Most important is that players stay aware of the psychology going into every game they download or pick up, recognizing the tactics used to separate them from their money.

• Knowing and understanding systems in place helps you avoid them • Ensures in-game decisions are made by you, not by companies manipulating you • 2018 should be the year players get smarter and educate other gamers on manipulation tactics

Understanding the mechanics and psychology behind loot boxes allows players to make informed decisions about their spending and resist manipulation.