Introduction

This research intends to address the behavior of consumers
towards loot boxes.

Loot boxes are a form of microtransaction found in many free
to play games where consumers pay money for a small chance to obtain the
virtual item they desire. Recently however, loot boxes have made their way into
AAA games, expensive titles (usually above $70 games) that are expected to be
of high quality and among the year’s bestsellers, in an obstructive manner that
has caused much public outcry and complaints.

With the recent Star Wars Battlefront 2 loot box
controversy, Belgium’s Gaming Commission and Netherlands have launched their
investigation into whether loot boxes are a form of gambling. Despite loot
boxes getting much media coverage, there hasn’t been significant research from
an academic perspective on this issue. This prompted the research question: Which quantifiable and qualitative elements
of a loot box transaction contributes to an adolescent Singaporean’s purchasing
decision?  

For this research to be concise, two limitations were made.
Firstly, gambling games were not considered as loot boxes despite fulfilling
the criteria. This is because the entire premises of such games are about
gambling whereas this study intends to consider the behavior of consumers
towards games where loot boxes either provide a cosmetic or actual advantage
alongside the core gameplay. Secondly, only senior high students in NUS High
and NUS are considered for the survey.

Literature Review

“Microtransactions: A study of Consumer Behavior and Virtual
Goods/Services Among Students at Linköping University in Sweden” is a report by 2 Linköping
University students which concluded that their subjects did not purchase
microtransactions to bypass repetitive tasks in video games nor were they
interested in utilizing microtransactions to gain an advantage over other
players in competitive games. It also partially supported the hypothesis that
the subjects were more likely to spend money on an in-game item if it had a
high perceived value to them.

This report shall define a loot box as a microtransaction
that can be redeemed to receive a randomized selection of virtual items,
ranging from cosmetic options for the player’s avatars to in game bonuses that
directly confer an advantage.

Next, the report builds upon the research question posed by
the earlier report but changes its focus to loot box. Even though a loot box is
indeed considered a microtransaction, the fact that the consumer does not know
what he is paying for should drastically change the results and hence is a
significant enough difference that warrants a completely new study on.

Additionally, video game revenue in Singapore is higher than
that for Sweden, US$256m vs US$211m in 2017 and US$226m vs US$191m in 2016.
This data, along with the fact that Sweden has a larger population that
Singapore, implies that Singaporeans are more exposed to gaming than Sweden
which might result in a larger proportion of the subjects surveyed who game
compared to the previous report. This might help to overcome the problem with
overall gamer representation that the Swedish students had with their report.

The research should shed new light on how consumers behave
rationally towards loot boxes and perhaps enforce the conclusions that the
Swedish report had made. This would give society a greater understanding of
loot boxes and hopefully make it easier for governments to recognize that loot
boxes are in fact gambling.

Methodology

This research intends to study the behavior consumers
display towards loot boxes based on certain independent variables. These
variables would be their exposure to video games; price of loot box; knowledge
of probabilities of getting item desired; personal allowance or income; type of
video game: competitive or casual; type of loot box: cosmetic or in-game bonus;
how long video game has been played. This will then be compared to the
dependent variable, how many subjects decided to purchase loot boxes.

These variables will be determined through a questionnaire survey
printed and handed out to all senior high NUS High students and NUS students.
This survey will be developed in line with Bryman & Bell’s (2011)
guidelines for self-completion surveys. This form of research is selected due
to ease of administration and convenience for respondents.

For NUS High students, the survey will be done by directly
going to mentor classes when students have a free period or during mentoring to
ensure that most or all the students are represented. For NUS students, the
survey will be done by approaching students working in common spaces then
asking if they would wish to participate in the survey for loot boxes.

The survey and dialogue with students would be conducted in
English. The survey contains multiple choice questions and a few short
responses as well as a few pre-qualification responses. These pre-qualification
responses would easily help to classify the participants into a non-gamer,
casual gamer, competitive gamer and a whale (a person who spends a lot of money
on microtransactions). Due to these pre-qualification questions, certain
sections of the survey would be skipped to ensure that the participants answer
the sections they possess pertinent knowledge of. These would also help to
reduce respondent fatigue.

The research hypotheses are:

H1: If an in-game
item has a high perceived value ( hedonic, functional, social) to students,
they are more willing to purchase the loot box.

H2: If the odds of
getting the desired item was known, students were more willing to purchase the
loot box.

H3: Students were
more likely to purchase loot boxes that gave actual advantages in game compared
to cosmetics.

H4: Students are more
likely to purchase loot boxes if their egos are depleted from repetitive
Microtransaction solicitation.

 

Conclusion

Upon completion, this report will extend on the findings of
the Sweden students’ report and should provide a greater understanding of
consumer rational decision making behind a loot box purchase which is currently
not a well-researched field of behavioral economics.