ESRB introducing ‘in-game purchases’ label in response to loot box controversy

The Entertainment Software Rating Board will begin labeling video games that contain in-game purchases, a response to lawmakers who have noticed the outcry over so-called loot crate systems and have signaled a willingness to legislate them.

The labeling will “be applied to games with in-game offers to purchase digital goods or premiums with real world currency,” the ESRB said in a news release this morning, “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 upgrades (e.g., to disable ads).”

The label will appear separate from the familiar ESRB rating label (T-for-Teen, M-for-Mature, etc.) and not inside it.

Additionally, the ESRB has begun an awareness campaign meant to highlight the controls available to parents whose households have a video game console.

The developments come three months after Electronic Arts’ Star Wars Battlefront 2 raised the furor over loot crates to a mainstream news concern. In loot crate systems, players purchase a virtual box, whose contents are unknown, with virtual currency typically earned in the game. Typically, these crates can be acquired with a secondary currency that is bought for real money. Battlefront 2 drew attention because of the way the crate items were tied to player advancement within the main game, as opposed to being an optional or cosmetic part of it. Electronic Arts suspended real-money transactions in Battlefront 2 the day before the game’s full launch back in November.

Since then, however, representatives from three governmental gambling commissions have weighed in on loot crates, discussing whether the activity falls under their nations’ gambling laws. Two weeks ago, lawmakers in Hawaii introduced four bills that would regulate the sale of games that feature loot boxes. A day later, Sen. Maggie Hassan (D-N.H.) wrote the ESRB to ask it to examine how video games are rated with respect to loot-box features.

“We feel this is an effective response,” Patricia Vance, the president of the ESRB, said to reporters in a call Tuesday morning. “If you care about parents, if you care about their concerns, this is an effective response.”

However, “this is just a first step,” Vance said. “We are going to continue to look at this issue and determine if there are additional measures or guidelines to put in place. This obviously an issue of concern to the gamer community.”

While the ESRB is directing attention to its awareness campaign, at the website parentaltools.org, to video game enthusiasts there would seem to be an issue of message dilution. Virtually every so-called AAA video game, particularly on consoles, contains some form of in-game purchase, available from a menu choice within that game. Typically this is in the form of post-release premium downloadable content, which has been a part of games for nearly a decade.

“If it’s offered from within the game, yes,” Vance said, when asked if the ESRB’s in-game purchasing label covered all in-game transactions, as opposed to just the category of microtransactions that are typically more open-ended, such as virtual currencies and loot crates.

Asked if the ESRB had received any opposition from publishers when developing plans, Vance said simply, “No.”

In-game transactions are nothing new, but as Hawaii state Rep. Chris Quinlan noted in a November news conference, they had typically been associated with mobile video games. This fall, three big games — Middle-earth: Shadow of War, Call of Duty: WWII and foremost among them, Battlefront 2 — made them a controversy. Quinlan, his colleague Rep. Chris Lee and others have equated them with gambling, a contention the Entertainment Software Association has strongly denied, and said they affect children in the same way that gambling at a slot machine would.

“We tried to find research on that,” Vance said, “but we were unable to find any evidence that children were specifically impacted by loot boxes, or that they were leading them toward some tendency to gambling. We truly don’t know of any evidence supporting those claims. We continue to believe loot boxes are a fun way to acquire virtual items; most of them are cosmetic.” Vance stressed that the items can be earned without a purchase but in either case “they’re always optional.”

Vance said the ESRB conducted surveys of parents prior to introducing the label and found that “a large majority of parents don’t know what a loot box is, and those who claim that they do don’t really understand what a loot box is.” This is why the ESRB did not introduce a specific content descriptor — the notes beside a game’s rating — for loot boxes, or make their presence in a game increase its age rating.

“It’s important for us not to harp on loot boxes, per se,” she said. “When we did describe what a loot box is to parents, we found their primary concern by fair is their child spending money. This initiative [parentaltools.org] we’re launching is focusing on that, which we also think is an effective approach to managing loot boxes specifically.”

Since 2004, the ESRB has included “gambling,” and “simulated gambling” as content descriptors listed alongside a game’s age rating. Vance said the ESRB considered whether these descriptors applied to loot boxes, but decided against it.

“We don’t believe it does [fit the definition of gambling],” Vance said. “We think it’s a fun way to acquire virtual items to enhance users’ experiences. There’s obviously an element of surprise, like with baseball cards. But you always get something, there’s no way to cash out, and you can complete a game without buying a loot box. So there are a lot of different factors where we just don’t think this qualifies for either of the gambling descriptors.”

Relatedly, the ESRB noted the proposed legislation in Hawaii that would require publishers to disclose the payout rates for loot crate systems, much like state gaming commissions require casinos to do so for their games. The ESRB will not require publishers to disclose odds of receiving certain items, Vance said.

“Some publishers have begun posting, voluntarily, their drop rates to provide transparency to players,” Vance said. “We’re going to continue to evaluate what additional measures we can take. but for those who want to voluntarily offer them, we support those efforts.”

Also on Tuesday, Vance and the ESRB replied to Hassan in a wide-ranging letter that noted the history of loot crates and current trends in how video games are monetized.

“I think it is important to clarify that these purchases are always optional, are often awarded at no cost to the player, can be acquired using virtual currency that can be earned through gameplay and/or purchased, and are never required to complete the game,” Vance said, plainly drawing the boundaries publishers see between loot boxes and gambling.

Vance’s letter to Hassan reinforced the priority the ESRB places on parental controls that consoles and other devices carry, and the ESRB’s recommendation that parents set up and manage sub-accounts on them as opposed to letting children using a console service’s main account. That will be a focus of the ParentalTools.org outreach campaign, Vance said.

“I think we can both agree that we need to do more to educate parents about the tools at their disposal to manage the time and money their children spend playing games,” she wrote.