Four-sided bandit

A DECADE ago the idea of paying real money for virtual items was strange and exotic. These days many video-game publishers build their business models around it. Some of the world’s biggest games, such as “League of Legends”, cost nothing to buy. Instead they rely for their revenue on players buying things for use in the game, such as new characters to play with or costumes to put them in.

A new twist on that model has been attracting the attention of regulators in recent weeks. “Loot boxes” are yet another type of “in-game” item that gamers buy with currency. Unlike the usual sort of purchase, however, players do not know in advance what they are buying, for the contents of a loot box are generated randomly. Sometimes they might be desirable, and therefore valuable; prized items include new gestures or “emotes” for a character, or a pearl handle for an automatic weapon. If less alluring, well, players can pay a bit more money...Continue reading