Video Game Loot Boxes and Probability Disclosures

[Leon Xiao]: Probability disclosures. These are these little notices that you’ll find both inside a video game and sometimes on websites where the game would tell you about the probabilities of obtaining the randomized rewards from the video games that you play. For example, on the left screenshot, you can see that this game tells the player that they have a 51.69% chance of obtaining a common tier hero. So this measure is intended to enhance the transparency of the purchasing process and to provide information to consumers, such that a more informed decision could be made. And this has been required by law in China. We observed that among the games containing loot boxes in China, 95.6% of them disclosed probabilities. So that’s a very high compliance rate. However, the problem with Chinese law was that it allowed compliance in three different ways. So firstly, if the game makes a probability disclosure inside of a game, that’s compliant with the law. If, alternatively, the game makes a probability disclosure on the official website, that’s also compliant with the law. And finally, if the game makes a probability disclosure both in-game and on the official website, that’s also complying with the law. So, what we observed was that only about a third of video games actually disclose probabilities at both locations, even though doing so obviously would have made the probability disclosure more accessible and more visually prominent.