ITU PhD fellow named Game Changer by gaming industry mainstay

PhD fellow at the Center for Computer Games Research at the IT University of Copenhagen, Leon Y. Xiao, is new to ITU, but his research into the legal and ethical aspects of the gaming industry has already made an impact. Gaming industry mainstay, GamesIndustry.biz, recently named him one of 2021’s Game Changers.

Digital Design DepartmentResearchcomputer gamesethicsLeon Xiao

Written 5 January, 2022 08:17 by Theis Duelund Jensen

Even though online gaming is a well-established industry, its constantly evolving nature means that the regulation of business platforms is a struggle for policymakers and industry authorities alike. This is especially true in areas where video games rely on game mechanics that straddle the border between entertainment and gambling.

PhD fellow at the Center for Computer Games Research at ITU, Leon Y. Xiao, conducts research into video game “loot boxes” – a type of video game mechanic that in a sense offers players the chance to optimise their experience by participating in a virtual lottery where the prize opens new possibilities in the game. For instance, purchasing a loot box may secure you a better weapon or piece of equipment to complete the game. It is, however, a game of chance and the loot box may just as well yield nothing valuable at all.

Leon’s research focuses on the ethical and legal aspects of loot boxes in video games. He was recently named by GamesIndustry.biz, a well-regarded gaming industry website, as one of 2021’s Game Changers for his work.

"My main motivation was, and remains, wanting to do my bit to better protect players from potential loot box harms," says Leon who holds a master’s degree in law from City, University of London, and has previously worked with law and game design at National University of Singapore. "I wanted to do this because I had seen friends spend what I had thought was a bit too much on physical trading card booster packs and in online games."

Gaming or gambling?
Loot boxes are becoming an area of concern in many countries due to the nature of the mechanic. To the majority of gamers, buying a ticket in the virtual lottery of a loot box is likely not problematic, but there are concerns that the mechanic in some cases may lead to problematic gambling behaviour. However, most countries have refrained from creating legislation as loot boxes do not constitute gambling in a legal sense – the reward has no monetary value outside of the game’s universe.

That said, some countries have acted on the problem already. In China, online video game companies are required by law to disclose the probability of players winning a coveted prize by purchase of a loot box, and in Belgium, authorities have gone as far as outright banning loot boxes from games.

“The problem is that in China some companies get around the legislation by, for example, burying the probability disclosure in a maze of links, and in Belgium it simply means that some games have been removed entirely and fewer games are available to be played for free. Neither is an ideal scenario,” says Leon.

Ethical game mechanics
In his research, Leon wants to examine ways in which video game companies can create more ethically sound loot boxes for players. He does not believe that bans or heavy-handed regulation will be the best solution.

One way of creating transparency would be for video game companies to simply allow players to also buy loot box content at a fixed price. Another would be to put a spending cap on loot boxes so that the player knows beforehand how much getting a particular prize at the most will cost. Finally, video game companies could simply increase the odds of securing the rarest prize in a given loot box and make it cheaper. In any case, Leon believes that these measures may actually encourage more players to buy into the games and thus increase revenue for the companies.

“Video game companies are actually different from gambling companies. If a player wins against a gambling company, the company loses money. If a player ‘wins’ against a video game company by obtaining the rare prize cheaply, the company still earns money. The video game companies do not lose money by making loot boxes more accessible. People have still invested money in the game and there is no money at stake for the company to lose beyond recouping its operational costs,” argues the researcher.

Leon has already contributed with knowledge from his research in policy consultations with the UK, Spanish, and Singaporean governments.

“At present, many countries are considering regulating video games, including loot boxes. Any regulation should be scientifically informed,” he says. “I want to fill the evidential gaps in the academic literature and to help with government consultations on potential video gaming regulation.”

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