Revenue generated from loot boxes used in video games will exceed $US20 billion by 2025, up from an estimated $US15 billion in 2020. The figures are contained in a new study from Juniper Research.

Like a lucky dip, a loot box is a consumable virtual item that players redeem to win a prize ranging from simple customisation options for a player’s avatar or character, to game-changing equipment such as weapons and armour, according to Wikipedia.

Loot boxes are just one more subcategory of the increasingly lucrative gaming and esports sector, which is forecast to grow from $US159.3 billion in 2020 to $US200 billion by 2023. For some perspective, the combined film and music industry is estimated to be worth approximately $US100 billion.

As an industry, loot boxes alone are already bigger than the digital signatures market dominated by companies like Adobe and Docusign. By 2025 the loot box market will be closing in on almost half the size of the global CRM market dominated by Salesforce.

Some items found in loot boxes are worth thousands of dollars when first revealed, but appreciate in value into the tens of thousands of dollars as gamers trade them.

In-game items can run to tens of thousands of dollars. Image source

However, regulators around the world are starting to scrutinise the practice, which pushes into the territory of online gambling. In the US, for instance, there is a move to ban them altogether and to inhibit microtransactions in games available to minors.

Loot boxes were made popular in games like Counter-Strike and Apex Legends. Players would buy in-game currency and then use this to open the loot boxes.

“Loot boxes in their traditional form are often considered exploitative; leading to increased legislative scrutiny,” writes research co-author Nick Hunt. “We expect to see game publishers react to this in future by changing loot box formats, in order to keep them compelling and outside the legal realms of gambling.”

Regulatory pressure has lead Juniper Research to predict slowing revenue growth, which it says will average just five per cent per year, slower than in previous years. It also says consumer fatigue with loot boxes is dampening growth.

According to a report called In-game Gambling & Loot Boxes: Legislation, Market Evolution & Forecasts 2021-2025, Juniper expects more than 230 million gamers will buy loot boxes in 2025.

Mobile gamers will make up the majority of these, as alternative forms of in-game monetisation, like battle passes and downloadable content packs, are less common in mobile gaming. Overall, Juniper expects approximately five per cent of gamers will buy loot boxes that year.

Juniper Research notes that legislation restricting loot boxes — by either classifying them as a form of gambling or banning them outright — will become more prevalent, particularly in Europe. This is leading several publishers to develop new ways of using loot boxes, ranging from ‘transparent’ loot boxes to changing how they are purchased, in order to bypass legislation.

Skins Gambling

The report also found that skins gambling, where in-game items are wagered on games of chance or the outcome of eSports matches, will have total wagers worth $US321 million in 2025 — $US100 million more than in 2020, but down from a market high in 2016, due largely to the majority of skins gambling sites being blocked in many countries. Juniper expects that gambling will continue until trading platforms prohibit these practices outright, rather than merely limiting them.

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