In-game monetization could tarnish Nintendo’s squeaky-clean image d fresh off the billion-dollar success of The Super Mario Bros. Movie. The company faces a potential class-action lawsuit alleging predatory and “immoral” in-game monetization for its mobile game Mario Kart Tour. A teenager and their disgruntled parent filed the suit, demanding refunds for all minors who purchased “Spotlight Pipe” loot boxes. The game featured these loot boxes, often likened to slot machines and gambling, until October 2022.
Courts in the U.S. have yet to determine whether loot boxes are gambling on a legal basis. However, a 2021 study showed a “clear correlation” between the monetization method and problem gambling. With that said, are video game companies trying to get your child addicted to gambling?
A 2021 study linked loot boxes to problem gambling habits.
The monetization method, popularized by Activision Blizzard’s 2016 first-person shooter Overwatch, features mechanics eerily similar to slot machines. Gamers spend real money for a chance to earn an in-game advantage or a rare cosmetic item. And just like slot machines, the better payouts have increasingly slimmer chances of appearing. According to The Guardian, about 5% of players who purchase loot boxes account for approximately half of the revenue generated.
Forbes reports the video game industry generated as much as $30 billion in revenue from loot box mechanics in 2018. Over 90% of the revenue generated came from “whales,” a small portion of the user base. These whales spent exponentially more than the average player to receive the best in-game items.
The class-action lawsuit alleges Nintendo violated Washington state’s Consumer Protection Act.
The law prevents companies from employing “unfair or deceptive acts or practices in the conduct of any trade or commerce.” And unfortunately, several video game companies have a clear track record of using suspicious methods to generate revenue. For example, the FTC fined Epic Games $520 million for using “dark patterns” to trick Fortnite players into spending money. Dark patterns are malicious interface designs that trick users into unwanted purchases.
The Nintendo lawsuit alleges Nintendo employed dark patterns to deceive unsuspecting minors into buying loot boxes. The “plaintiff almost never received any valuable reward from the Spotlight Pipres he had purchased.” And the plaintiff, identified as N.A., would not have spent so much had he known the odds of winning.
Additionally, Activision Blizzard removed loot boxes from Overwatch in August 2022 in favor of the “battle pass” monetization method. Unlike loot boxes, battle passes clearly show players what items they will receive for their money. Epic Games also releases seasonal battle passes in Fortnite.
A similar previous case cited the Washington State Consumer Protection Act.
In 2016, a mother filed a lawsuit against Valve for their game Counter Strike: Global Offensive. The video game, also known as CS:GO, is notorious for its exorbitantly priced resale market of in-game cosmetics. A player recently sold a single weapon skin for $400,000.
CS:GO, released in 2012, is perhaps the oldest example of video game loot boxes. Although, unlike other games, there is a third-party market that allows players to use their in-game skins as betting chips. The courts ultimately ruled in favor of Valve because the plaintiffs couldn’t show the company misled them. However, the plaintiffs appealed the decision, which the courts docketed in February 2022.
