It might be a little hard to fathom that an imaginary character could result in a $50-billion a year industry, but that appears to be exactly what is happening. Research company Juniper Research has released its report showing that in-game gambling in video games is proving to be a real moneymaker, currently producing around $30 billion a year. Juniper anticipates that this amount could rise to as much as $50 billion by 2020.
The in-game revenue comes by way of loot boxes and “skin” gambling. Both offer the ability to enhance a video game character or to win game upgrades or prizes by purchasing options with real cash. Loot boxes have been deemed by many to be gambling since the reward for their purchase isn’t revealed until after the purchase. This has resulted in a great deal of negative publicity, with some legislation, including those in Australia, Belgium and the United States, to consider banning them completely. It has been such a controversial topic that EA Games went so far as to completely remove its Star Wars Battlefront 2 game from shelves. Despite the setback, loot boxes are still offered, and are, in fact, rising in popularity. Now, however, video game manufacturers are taking steps to ensure that the practice adheres to regulations.
Skins haven’t been as controversial, but it will probably only be a matter of time. A skin is a cosmetic upgrade to a character in a video game that is purchased with cash. As such, they are considered to have real-world value and are becoming popular as a way to place wagers or gamble in casino-style games. They are also traded, with highly sought-after skins being sold for cash. The PC gaming platform Steam provides a marketplace for its games where users can bid on skins. Steam keeps 5% of the transaction amount, making it a lucrative endeavor. Valve, a third-party site similar to Steam’s marketplace, runs the same type of operation, and earns a small transaction fee from each trade.
Despite the regulatory blowback, it would seem that the industry isn’t going away anytime soon. The Juniper report, “In-Game Gambling – The Next Cash Cow For Publishers,” noted that “loot boxes are becoming an increasingly popular means of monetizing consumers and creating longer term engagement with titles.”