[Newsmaker] Game firms under increasing scrutiny over loot box odds

Calls to regulate the gaming industry are growing in South Korea after local game companies have come under fire for what users call a “deceptive” system of randomized, for-purchase game items.

Yeo Myung-sook, the former head of the Game Rating and Administration Committee, threw her weight behind the pro-regulation argument, saying that games with a loot box feature, which offers randomized in-game items for sale, should be subject to the same tax imposed on casinos.

“Games that include random items (must be regarded as gambling) and should be managed by the National Gambling Control Commission. If game companies want to make money out of random items, they should pay 40 percent special consumption tax,” Yeo said in a YouTube post uploaded on Sunday.

The comment came amid a growing controversy here over the loot box systems and a user outcry over its “deceptive” nature. They claim game companies reap profits by hiding, or even deceiving, users about the real odds of them receiving different items available for in–game purchases.

A typical loot box drops a randomized, virtual item to users who purchase it with in-game currency, points or real money. At the point of purchase, users don’t know what they will be getting.

In the latest related development, Nexon said a slot machine-like loot box system inside its popular game MapleStory had systemically blocked users from hitting a jackpot, leaving users spending money to raise their chances that didn’t exist in the first place.

The country’s largest game publisher, having already received flak earlier over another randomized item system, has pledged a full disclosure of all probability-based items.

According to Nexon’s mea culpa, the “Cube,” which allows game characters to bag three abilities in each draw, was designed to prevent the most powerful ones from appearing simultaneously in one combination. The abilities users can collect range from getting additional attacks on boss monsters to disabling the monsters’ defense capabilities.

“The reason why Nexon prevented certain potential abilities to appear at the same time was to preserve the balance of the game. Some potential abilities were set to appear no more than twice in one combination,” the notice said.

Nexon offered a full refund -- in game items and points -- of the Cube items purchased in the last two years, because the company has only kept purchase logs up to that period. The Cube was introduced in 2011.

Amid the backlash and growing calls for regulation, however, some politicians say it’s inappropriate to consider buying probability-based items as gambling.

Democratic Party Rep. Lee Sang-hun, who proposed a bill that mandates a full disclosure of random game items last December, warned that the scandal should not lead to the demonization of game firms.

“We must not corner domestic game companies and their games with such negativity. If there is a wound to be treated, then we should treat it, simple,” Lee said.

Currently in Korea, game firms are “recommended” by the Korea Association of Game Industry to disclose probabilities of randomized “cash items” to prevent gambling elements inside games. Without any legally-binding force, however, the measure has failed to ensure transparency and protect users, critics say.

“The industry’s voluntary regulation has failed to provide a clear answer to consumers’ doubts over probability manipulation. The trust has been breached,” said DP Rep. Yoo Dong-soo. He recently proposed a bill that requires a disclosure of not only cash items but also free items for complete transparency.

“All the developers recognize that the purpose of random items has changed compared to when they were first introduced and now contains too much gambling elements. To stop games from being officially categorized as a disease, the game industry must address this whole gambling issue,” an industry source said.

By Kim Byung-wook (kbw@heraldcorp.com)