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From Loot Boxes to Loan Boxes: The Economics of Gaming and Bad Credit

Over the last decade a trend has emerged of loot and loan boxes appearing in video games. These boxes often operate on the fringes of the Gambling Act and are largely unregulated, despite growing scrutiny about how they work and the fairness on players.

For developers, loot and loan boxes offer new ways to monetise content, create additional revenue streams and fund development for in-game updates and future projects. It is safe to say, loot and loan boxes are murky territory, so let’s dive in and explore them further.

The Regulation of Loot Boxes in Games

Just last month (July 2023) the UK Department for Culture and Media issued further guidance on loot boxes in video games. The aim is to make the gaming marketplace a fairer place for consumers.

The trouble is, this is purely guidance and outside of any direct regulation the loot box landscape is unlikely to change. Surprisingly for gamers this is both good and bad news.

The bad news is that game developers still operate in the grey areas outside of legislation when providing loot boxes and gamers have very little protection from any authorised body.

The good news for gamers is that regulation often complicates matters further, does little to address the core issue and can create hurdles that prevent players experiencing their favourite games.

For example, a large portion of players on Fortnite are under the age of 18 – if the game was subject to regulation, it is likely that Know Your Customer (KYC) would be implemented, and those players would be excluded from the game simply because they wouldn’t have the ID required to pass the checks.

How Developers Monetise Products

Traditionally, video game developers would make a single profit on a game when it is sold to the customer. In more recent times, developers started to realise this one-off payment wasn’t enough to sustain their business.

To combat this, they started selling additional content by way of expansion packs or bolt-ons that players could purchase and extend the gameplay. Developers still use this system today and it allows them to further monetise games by building on existing base content.

Despite the base content being there, building on it still requires time and effort from developers and this reduces their profit margins on expansions.

In the last 10 years, especially with the rise of mobile gaming, developers realised they didn’t need to expend energy on expansions if they could sell loot boxes. These are already coded into the existing content, can be purchased multiple times, and give developers almost a pure profit margin outside of payment fees.

Borrowing for Loot Boxes

For gamers, the appeal of loot boxes is plentiful, especially if the content unlocked by buying the loot box is meaningful.

Using the earlier example of Fortnite and their V Bucks system, gamers can purchase skins for characters and unlock battle passes to unlock further rewards such as weapons. These rewards give players that pay an advantage over those who choose not to spend money.

Commonly, this is known as Pay to Play.

Because of the in-game advantages, there is unfortunately a growing trend of people borrowing money to buy loot boxes. It is very common for players to use a credit card to make loot box purchases and although rarer, some players have taken personal loans.

In a handful of cases, players have even remortgaged their houses to free up cash and buy loot boxes. Although an extreme example, it is plain there is something very dark in action when players buy loot boxes which is why most commentators liken it to gambling and gambling addiction.

Bad Credit and Loot Boxes

For the most part, if you manage your credit lines responsibly, buying loot boxes with a credit card is not a bad thing. Credit cards offer payment protection on purchases and give players a little extra peace of mind.

However, if you fail to keep up with payments or just make the minimum payment on a credit card, the debt you accrue can gradually spiral out of control. It is very common for credit card debt to become a problem debt, especially after introductory offers expire and large interest rates are applied to the borrowing.

There is almost no data available to ascertain how much debt is leveraged against loot boxes and how much of that debt is problem debt. As time goes on and the industry matures more, this is likely to change with developers coming under more scrutiny.

Help if You Have Damaged Your Credit Score

If you have bad credit, or you are struggling with problem debt, there are several ways you can improve your financial situation.

If you feel your debt is unmanageable it is worth contacting StepChange, a debt management charity who specialise in helping people with budgets and clearing bad debts.

How to Repair Your Bad Credit Score

Most debt is not problem debt, and you can act yourself to recover and improve your circumstances.

These simple tricks will help improve your credit score:

  • Keep up with monthly payments,
  • Registering to vote on the electoral register,
  • Refinancing existing debt onto lower interest rates,
  • Consolidate your debts onto one loan with a lower interest rate,
  • Use credit building finance facilities.


Bad Credit Comparison Site to Rebuild Credit

It is very important that if you have bad credit because of borrowing for loot boxes you do two things when rebuilding your credit.

The first is to refrain from borrowing more to buy loot boxes and the second is to address the underlying issue of wanting to borrow money to pay for loot boxes.

Borrowing should only be done when you need to borrow money and never when you simply want to borrow money.

There is now a bad credit comparison website, the first of its kind launched in the UK to assist bad credit borrowers get finance at the best rates available to them.

These include credit building loans and cards to help you rebuild your credit score.

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