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It’s possible for “Loot boxes can be bad in video games” and “Loot boxes are not actually a form of gambling” to both be true.

On Tuesday, Chris Lee, a member of Hawaii’s House of Representatives, posted a video on YouTube addressing “predatory practices at Electronic Arts and other companies.” His issue: loot boxes, and the effect their presence in games has on children.

“We are here today to ensure future protections for kids, youth, and everyone when it comes to the spread of predatory practices in online gaming, and the significant financial consequences that it can have on families, and has been having on families, around this nation,” he said at the start of the video.

He then goes on to describe Star Wars: Battlefront II — which has become a flashpoint in this growing controversy — as “a Star Wars-themed online casino designed to lure kids into spending money.” 

Later in the same video, Representative Sean Quinlan, another Hawaii state politician, compares the Battlefront situation to cigarette mascot Joe Camel. 

“We didn’t allow Joe Camel to encourage our kids to smoke cigarettes and we shouldn’t allow Star Wars to encourage our kids to gamble,” Quinlan said.

But is it really gambling?

On its face, these sound like sensible points. There are age limitations on gambling for a reason, and kid-friendly games shouldn’t create an environment that endorses underage gambling.

The Entertainment Software Ratings Board has already weighed in on the issue, in a statement given to Kotaku. The industry organization has no government affiliation, but it is charged with assigning age and content ratings to games.

ESRB does not consider loot boxes to be gambling. While there’s an element of chance in these mechanics, the player is always guaranteed to receive in-game content (even if the player unfortunately receives something they don’t want). We think of it as a similar principle to collectible card games: Sometimes you’ll open a pack and get a brand new holographic card you’ve had your eye on for a while. But other times you’ll end up with a pack of cards you already have.

Logically, it makes sense. There’s no bet being placed here — these are purchased — and nothing gained from a loot box has any tangible value outside the game. You can’t trade or re-sell Battlefront II‘s digital goods; they’re for your account, and your account alone.

Legally, however, this is a trickier question to answer because regulations vary so much from state to state.

“State laws vary wildly and many would definitely call loot boxes gambling. Even in the sense [of Battlefront II publisher Electronic Arts],” Odin Law and Media founder Brandon J. Huffman wrote in an email. (It should be noted: These comments come from Huffman’s personal perspective; they don’t necessarily represent the views of any of his clients.)

“There is cash, being paid by one person to another (EA), for a random chance at receiving a prize (whatever is in the box),” he wrote. “The counterargument that ‘everyone gets something’ doesn’t hold up if there are discernibly some things better than others.”

But even if EA is technically vulnerable in states where local regulations might take a dim view of loot boxes, it’s not that simple. In some places, gambling regulations are meant to protect the state lottery from competitors. In-game loot boxes exist in a completely different category, so the “likelihood of enforcement is very low.”

“We need to be careful before rushing into any new regulation or legislation.”

Ultimately, Huffman urged caution. “We need to be careful before rushing into any new regulation or legislation. Lawmakers typically don’t have the understanding of video games or the nuances of loot boxes that we would likely want them to have in order to take even a first look at this issue,” he wrote. 

Was publisher Electronic Arts’ implementation of loot boxes in Battlefront II poorly conceived and openly predatory? No question. That’s already been proven. But this video from Lee, along with context he added in a Reddit post, relies heavily on charged language. It’s trying to provoke a response, not engage with a complicated issue.

That’s dangerous.

Battlefront II‘s questionable implementation of loot boxes sparked an immediate angry reaction among consumers. Boycotts were threatened, launch sales fell, and EA responded with an apology and promised changes all before the game was released.

To be clear, everything described in the above paragraph is a positive example. The game employed a universally disagreeable approach to generating post-release income, consumers responded, and now EA is taking steps to fix things. That’s the system working as it should.

Only now we have lawmakers like Lee and Quinlan who want to use this situation as a springboard to pass legislation, seemingly quickly. Their view seems to be: Video game loot boxes are gambling and the government regulates gambling, therefore the government should regulate video games. 

It’s an overreaction that sidesteps the reality of what transpired with Battlefront II in the name of promoting a political agenda.

There’s history here

Other entertainment mediums have faced the specter of federal regulation before. It’s never actually gotten to that point in Hollywood, but a 1915 Supreme Court decision established a legal baseline for regulation: movies were commerce, not art. The latter is protected under the First Amendment; the former is not.

The legal decision, coupled with public concerns over a then-new form of entertainment, led movie studios to the creation of the Motion Picture Production Code. It’s commonly referred to as the “Hays Code,” named for Will H. Hays, a Republican lawyer who headed up the Motion Pictures Producers and Distributors Association.

Image: electronic arts / screenshot by mashable

The Hays Code amounted to a list of “moral” guidelines that placed limitations on everything from a film’s use of profanity to portrayals of drug trafficking, white slavery, and interracial relationships (among other things). The Hays Code wasn’t federal law, but it was established to keep the threat of federal regulation at bay.

A 1952 Supreme Court decision reversed the earlier 1915 judgment, reaffirming the legally protected artistic nature of film. But the long period of de facto censorship wasn’t without its after-effects. It spilled into other industries, and comic books came next.

Thinkpieces and hot takes might say otherwise, but legally, games are works of art.

Although there was never a court decision challenging the First Amendment rights of comic books, the Comics Code Authority formed in 1954 as a proactive measure. This industry-wide effort to avoid government regulation led to the adoption of The Comics Code, which drew directly from Hollywood’s Hays Code.

In both cases, the so-called moral guidelines were abandoned and later replaced with ratings systems. In Hollywood, the Motion Pictures Producers and Distributors Association was a precursor to the Motion Picture Association of America, which today decides the ratings for movies in theaters. 

Comics didn’t abandon the Code until much more recently — the last publishers bailed in early 2011 — but a similar arrangement has replaced it. Now, individual publishers provide their own parental guidance and ratings.

Video games are no different. The ESRB, established in 1994, governs game ratings in the U.S. and it, too, formed as a response to public concerns over violence and sexual content. Legal challenges followed, such as the years-long crusade against violent video games spearheaded by the now-disbarred lawyer Jack Thompson. But the courts have since spoken.

Small step, big implications

Thinkpieces and hot takes might say otherwise, but legally, games are works of art. They’re protected under the First Amendment, and the government isn’t going to step in to regulate blood, guts, drugs, or sex. That’s content, and a product of free expression. It’s off-limits.

That’s why Lee’s video is so dangerous. This isn’t a games-are-too-violent conversation anymore. It’s a games-are-operating-outside-an-established-legal-framework conversation. Lee is implicitly asking: If games are gambling, why aren’t they regulated?

As satisfying as the thought might be of Uncle Sam wading in and saying, “No, EA, you can’t rip off players using loot boxes,” there are broader implications. It’s difficult to predict what would happen, precisely. But it wouldn’t be good. 

Image: electronic arts / screenshot by mashable

Remember, loot boxes came out of an industry need to offset risk as game development costs have risen. The money they bring in not only helps to justify what was spent on making the one game, it also helps to support other development efforts. 

If that income source disappears or is heavily constrained by one-size-fits-all regulation, a number of things could happen. Up-front pricing could climb well beyond the current industry standard of $60. Indies could struggle as major publishers mitigate risk by ceasing their investments in smaller projects. 

Just look at recent games like the Microsoft-published Cuphead or EA’s own Unravel. Would they have been released at all without support from a major publisher? And even if they had, how much longer would development have taken? Would you even know they exist? Loot boxes and other post-release income strategies built on recurring micropurchases pay for more than just the release and continued development of a single game.

This is a legal Pandora’s box.

It might even get worse than that, too. Federal regulation could start with loot boxes and anything else perceived as gambling, but it could also eventually extend to the content in your games. This is a legal Pandora’s box.

By all means, continue to yell at EA, and any publisher that leans on openly predatory systems to generate income. It’s a shady practice, and — as Battlefront II demonstrated — it has the potential to blow up in the creator’s face, in a bad way.

Just make sure to keep the bigger picture in mind. Let companies know when they’re doing something you don’t like, but don’t let that anger push you to get behind a misguided call for government intervention. 

Loot boxes can be very bad for games, but they’re not gambling and it’s dangerous to think of them as such. Both of those statements really are true. 

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