All Fun and Games?

EA Games’ Loot Boxes and the age of Pay to Win gaming.

EA Sports’ FIFA 18 Launch Event. Image: Wikimedia Commons

SID: 470389678

Preface:

 

With a focus on the popular soccer title ‘FIFA 18’, this critical analysis aims to investigate EA Sports’ Loot Box systems and their influence across the internetworked gaming community.

Backgrounder – EA Games:

  • Electronic Arts (EA) are an American video-game developer based in California.
  • The firm sits as the second largest gaming company behind Activision Blizzard.
  • Founder: Trip Hawkins, Current CEO: Andrew Wilson.
  • Noteworthy Games Series: Battlefield, Need for Speed, The Sims, Star Wars Battlefront, Dead Space, and of course – FIFA.
  • Total Equity: 6 billion USD (2018)
  • One of the most hated companies in gaming:  Exemplified – by a 2018 Reddit post which chastised Star Wars Battlefront 2’s loot-boxes, demanding to know why so much content was locked behind paywalls, even when they’d paid 80 USD for the game. Indeed, Darth Vader was used heavily in the games marketing, but took over 50 hours of play to unlock him, without spending extra money. In response, EA support replied “the intent is to provide players with a sense of pride and accomplishment for unlocking different heroes.”  The comment went on to garner over 680,000 down votes on Reddit, a record number for the site.

 

 

EA are pioneers on profit-driven game development. A title which damages their image. Image: Wikimedia Commons.

 

FIFA 18

FIFA 18, is the 27th title in the popular football simulation game developed and released annually by Electronic Arts under the label ‘EA Sports’. The game holds an official “FIFA” license, giving the franchise the rights to almost all real-world football players, managers and clubs. Through the course of it’s year-long cycle, FIFA 18 sold over 24 million copies worldwide, making it one of the best selling sport-game titles of all time. However, for all the fun and games FIFA18 offers, the title also covets a heavy reliance on micro-transactions and loot-boxes. It is these transformative, albeit predatory mechanics in their online games, which is changing the industry, and has earned EA both soaring profits, as well as widespread backlash.

History of Gaming

Characterised by the static buzz of weary CRTV’s, Donkey Kong, Super Mario Bros. and other seminal video games enraptured an entire generation to the immersive concept of video-games. Yet it’s hard to imagine any of those 80’s teenagers, draining quarter-after-quarter in pursuit of a space invaders high score at their local arcade, would have ever dreamt these digital gimmicks could ever evolve into the most lucrative entertainment market in the world.

 

Gaming has come along way, for better and for worse. Image: Flickr

According to the Australian Digital Media Report 2020, nowadays, 67% of all Australians are now gaming, which suggests the past-time, oft criticised for being anti-social and mind-rotting, is shedding the shackles of it’s ludic stigma, universalising the platform as an irrepressible heavyweight of digital culture. Yet gaming’s latest transformation comes in the crux of a firm commercial vice, steering the medium towards overtly exploitative discourse.

In the past year, the video-gaming industry generated 135 Billion USD, a figure which surpasses the revenue of more traditional media genres such as film and music… combined. A margin, which is actually widening as the games industry has grown in profitability by about 13% year-on-year since 2014, while mediums like broadcast television, are in decline (Wijman, 2018).

Yet what has triggered this economic boom? As mentioned prior, FIFA 18 sold about 24 million copies in total, amounting to a sales figure of around 3 billion USD (Valentine, 2018). A curious figure, particularly when one considers games tend to retail for around 70 dollars at launch before stagnating to about 30-40 dollars at the end of their relevancy.

So let’s assume most copies of FIFA 18 were bought for about 55 dollars, at that price, 24 million sales amounts to roughly 1.32 billion dollars. Suggesting that around 1.7 billion dollars, over half of FIFA 18’s revenue, came after the initial point of sale.

In FIFA 18 the only means through which to spend additional money post-purchase, is in the facilitation of loot-boxes, this suggests that for each copy of FIFA 18 sold, EA is generating 75 dollars of extra income, purely through these systems.

 

That’s a lot of extra dough, at no extra cost for EA. Image: Flickr

What is a Loot Box?

So why on earth are people spending so much on these ‘loot boxes’, what are they? And how do EA pull over a billion dollars every year from them?

Put simply, ‘Loot-Boxes’ are a consumable form of in-game micro-transaction, which offer a ‘lucky-dip’ of sorts, where gamers are arbitrarily gifted a group of items to use in-game (Freedman, 2019)

Loot-Boxes can gift players rare, or advantageous items to use online, like faster cars in a racing game, better weapons in a first-person-shooter, or in the case of FIFA, better footballers.

In FIFA 18, loot-boxes manifest themselves in the form of ‘player packs’, which can be bought for around 12 AUD. These packs are the lifeblood of FIFA 18’s flagship game-mode, ‘Ultimate Team’. Wherein gamers strive win online games and rise through the online leader boards. Naturally, this process is made easier when you have a team of the best soccer players in the world. Henceforth, there is a systemic reliance on Loot-Boxes, with most FIFA players viewing them as a necessity, cultivating a pay-to-win environment, wherein those who are willing to spend more, have an unfair advantage.

To gain an understanding of how these systems look and work, you can try your luck at opening a few simulated FIFA packs here. Just keep in mind that each of these cost 12 AUD…

Alternatively, you can watch YouTuber ChrisMD descend into madness as he spends 5000

POUNDS on packs instead. Fun fact, in doing this, Chris suffered a 500% loss on his investment:

 

 

Monetising play:

Simply put, the function of Loot-Boxes in the modern gaming industry is to generate extra income. Nowadays, games are bigger than ever, with dozens of games costing upwards of 150 million USD to develop.

Perhaps the biggest release in recent years was Rock-star’s ‘Red Dead Redemption 2’, a 2018 sequel to the hugely popular wild-west video game.

To say the project was massive is an understatement. In total, Red Dead Redemption 2:

  • Was worked on by over 2200 designers, across 17 studios.
  • Took 7 years to design and produce.
  • Cost about 250 million USD to produce (excluding marketing costs)
  • Features over 130 hours of story missions.
      • (Crecente, 2018)
The much anticipated Red Dead 2 released to critical acclaim late last year. Image: Flickr

Yet despite the hefty process, Red Dead 2 still retails for an industry standard $60. Indeed, as video-game production standards grow rapidly, the price of buying these games remains the same, if not lower, as two decades ago, when games took far, far less effort to develop.

For example, MarioKart 64, an objectively much, much simpler game, retailed for $70 on release in 1996 (115 USD when adjusted for inflation), but took just 13 months to develop (Riendau, 2017).

 

Imagine having to pay 40 bucks to play as Donkey Kong. How times change. Image: Flickr

Couple this relatively low product-pricing, with modernity’s extremely competitive triple-a gaming market, and it’s easy to understand why consistent avenues of income through systems like loot-boxes are implemented, games are expensive now.

 Internet Ecology

 Looi’s notion of internet ecology (2001), defines the phenomena as a reflection of an organised system, wherein interacting agents and entities rely on information technologies to influence and support each other in carrying out their operations. EA Games, through it’s lucrative franchises situates itself safely as one of the largest and most profitable gaming companies in the world, giving it the financial and propertied superiority to dominate key competitors, as well as co-ordinate a gargantuan web of digital interconnectivity between it’s player base, suppliers and all other key stakeholders.

 

 Competitors:

 Direct:

Konami’s Pro Evolution Soccer series, direct competition to FIFA, EA’s most lucrative asset.

Indirect:

Triple A Game developers – Ubisoft, Blizzard, 2K, Rockstar, Nintendo.

Free to Play alternative games – Fortnite, Team Fortress 2 etc.

Alternative entertainment media – Television, Films etc.

Users:

 Players: Individual gamers playing FIFA.

Streamers / Influencers: Micro-Influencers who play the game for networked viewers.

Viewers: Consume FIFA content, even when not playing the game.

Partners:

Console Platforms: PS4, XBOX One, Nintendo Switch, PC.

Payment Providers: Visa, PayPal, PlayStation Network, XBOX Live, MasterCard etc.

FIFA License: Provides rights to the names, images and likeness of all players, clubs and competitions in over 20 different world leagues of soccer. As well as commentators, women’s football, and team managers.

Regulators:

Classification and rating board (ESRB)

Government regulations (Loot-Box Specific)

FIFA – Controls license.

Owners:

CEO EA: Andrew Wilson

Founder EA: Trip Hawkins

COO EA Sports: Daryl Holt

Lead Designer (FIFA 18): Sam Rivera.

Suppliers:

EA Games (Parent Company)

PlayStation, XBOX, Nintendo, PC – Origin.

Internet Infrastructures, EA Games Servers.

Economic Influence: The EA Loot Box Business Model

A firm’s business model incorporates all sources and structures, which are involved in it’s operations that contribute to capturing value. Be it in cultural transformation, or financial boost. Or, in the case of Loot Boxes, both. (Mikhalkina, Cabantou, 2015)

120 AUD let’s you open about 8 virtual packs. Image: Flickr.

With more than half the game’s income attributed to loot-box purchases, FIFA 18’s approach has garnered mass scrutiny, particularly over it’s efficacy. But how are players so willing to purchase virtual items, which become redundant at the end of the year? It’s all owed to the structural design of the game, which has specific discourses in place to maximise your desire to spend. To such an extent where a choice, is eventually deemed a necessity.

In owning the rights to global football, EA sports have acquired the most lucrative contract in sports-gaming. Football might as well be considered a major religion at this point, with over 3.5 billion people tuning in to watch the world cup final in 2018 and even more watching the game year-round. Consequentially, it’s a given that a gaming product owning the rights to almost every team in world football would be able to structure a cash cow system around it’s popularity. Wisely, EA have commercialised the world’s infatuation with the game.

But how do we repeatedly indulge in opening loot-boxes? Well, EA implement grind-walls, which force the hand of the player by locking their desired players behind extortionate amounts of game time. Essentially, if you were playing Ultimate Team and wanted Cristiano Ronaldo, you could ‘technically’ achieve this without spending any money. To earn Ronaldo without spending money, you would have to win at least 20,000 games of online Ultimate Team, which roughly equates to 5000 hours, or 208 days of constant, sleepless FIFA. Worse still is that by the time you’ve managed to earn a good FIFA 18 squad; FIFA 19 would be weeks away from being released.

EA understands that any player willing to grind for an absurd amount of time into the game just to open one pack pack, would be more than willing to open 2 or 3 of them in a five minutes by forking over fifty bucks. EA also knows that players who don’t spend money on their teams will also find it very hard to win games, as they’ll be consistently floored by players who’ve invested hundreds of dollars into the game. It’s a pay to win system, and if you can’t beat them, you simply have to join them.

Additionally, a variety of presentational and structural designs are implemented to make the sensation of opening loot boxes addictive, in the video below, the game theorist elaborates on some of these mechanics, namely the sunk-cost fallacy.

 

Through EA’s loot-box standardisation, players are nowadays entirely content and almost expect to have to fork over some extra dollars to get the best experience from their games. As mentioned prior, this transformative indoctrination of the industry to accept micro-transactions as standard is the driving force behind the economic boom of the industry.

Socio–Cultural: Concerns over links to gambling.

You may already be piecing this together but to break it down.

FIFA 18 is a game which is G-Rated

Wherein the only way to be competitive online.

Is to spend real world money,

On a virtual lucky-dip

Which has a random outcome.

Where your odds are negatively skewed…

Hmmm, sounds a lot like… gambling?

The UK Government’s Department for Digital, Culture, Media & Sport Committee released a report condemning the “lack of honesty and transparency” on behalf of  gaming industry representatives about the potential harms of game mechanics like loot boxes. The report also recommends that games containing loot boxes be regulated as gambling and not be sold to children in particular.

A wise recommendation, as the major concern of this link to gambling lies with impressionable younger gamers. Those without a true comprehension of money-value. You see, In the vicious realm of the schoolyard, childish concerns like being the best at a game is exactly that, childish. It all plays into schoolyard politics and what matters most to kids, and as far as they’re concerned, the cultural capital behind being the best at FIFA is a sure-fire way to be cool. Couple this frightful premise, with a lack of understanding from parents, which was made apparent through a 2018 study by McAfee, which found around 15% of Australian parents don’t monitor their child’s online gaming behaviour whatsoever (Fenech, 2018).

According to a further study by the Australian eSafety commission, 70% of kids aged 7-16 play online games, with 60% of kids making at least one in-game-transaction a year.

Now imagine these kids in an online environment like FIFA’s, where paid, randomised chance is deemed necessary, and it’s no wonder why Australia’s in-game transaction expenditure increased by 190% from 2017 (Digital Australia Report, 2020).

 

Through the transformative introduction of loot-boxes, stories such as this are becoming commonplace. Image: pxhere

Finally, a key tactic of EA Sports in cultivating their pay to win environment, was through their promotion and support of the FIFA YouTube community. By sponsoring YouTubers with millions of subscribers and views, EA vicariously encouraged users to play and spend money on FIFA. Through this funded content such as multi-thousand dollar pack openings, EA popularised their Loot-Box systems, seemingly normalising them as a necessity to millions of networked, potential consumers.

 Political: Regulating Loot Boxes

Loot-Boxes such as FIFA’s have garnered widespread attention, with Belgium and the Netherlands outright banning any games from implementing such mechanics whatsoever, due to their governmental bodies deeming them to be gambling (Lee, 2018).

Other governments are also following suit, with formal investigations into Loot Boxes currently underway in America, England and Canada. Meanwhile, In Australia, a senate-inquiry submitted in November, 2018, calling for the regulation of these systems, has yet to been followed up by the relevant regulatory bodies. Ultimately, age restrictions, and appropriate classification is the recommendation most uniformly expressed by public agents.

Summation:

EA Sports have propagated an industry mechanic which has transformed the entire industry into a cash-mongering vacuum. you’d be far-stretched to find any triple-a title or developer, which doesn’t incorporate micro-transactions. After all they’re free for the developer to produce and monetise, and in many ways are even enjoyable to the consumer. However, the biggest threat to this transformative mechanic is the looming inevitability of regulation.

Regulation, which is justifiable considering the current freedoms developers relish in implementing a mechanic which is in many ways, gambling. As a gamer myself, it pains me to be so condemning of the industry I adore. Far too often is gaming unfairly scapegoated by narratives like associative violence and anti-sociability. Despite this, the pay-to-win systems brought about by loot-boxes have transformed the industry into a highly profitable, entertainment monolith. A prime example of how monetisation can be a transformative influence on open markets like online gaming.

 

References:

Crecente, B. (2018) The story behind Red Dead Redemption 2.

Variety – Available at: https://variety.com/2018/gaming/features/red-dead-redemption-2-narrative-interview-1202992401/

 

McAfee. Fenech, (2018). Parents unaware their children are at risk playing online games.

TechGuide – Available at: https://www.techguide.com.au/news/gaming-news/parents-unaware-children-risk-playing-online-games/

 

Freedman, A. (2019). What are Loot Boxes? Gaming’s Big Controversy Explained.

Tom’s Guide – Available at: https://www.tomsguide.com/us/what-are-loot-boxes-microtransactions,news-26161.html

 

IGEA. (2019). The Digital Australia Report 2020: The Power of Games.

Australian Interactive Games and Entertainment Association.

Available at: https://igea.net/2019/07/digital-australia-2020-da20/

 

Looi, C.K. (2001). Enhancing learning ecology on the Internet. Journal of Computer Assisted Learning.

 

Mikhalkina, T., Cabantous,L. (2015). Business Model Innovation: How Iconic Business Models Emerge. In Fuller, C.B. , Vincent Mangematin (Ed.), Business Models and Modelling : Advances in Strategic Management .(Volume 33).

 

Riendau, D. (2017). ‘Mario Kart 64’ is 20 Years Old, Weird, and Still a Series Highlight

Vice – Available at: https://variety.com/2018/gaming/features/red-dead-redemption-2-narrative-interview-1202992401/

 

Valentine, R. (2018). FIFA 18 sells over 24 million copies.

            Gamesindustry.biz

Avaliable at: https://www.gamesindustry.biz/articles/2018-09-05-fifa-18-sells-over-24-million-copies

 

Wijman, T. (2018). Mobile Revenues Account for More Than 50% of the Global Games Market as It Reaches $137.9 Billion in 2018. NEWZOO.

Available at: https://newzoo.com/insights/articles/global-games-market-reaches-137-9-billion-in-2018-mobile-games-take-half/

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