South Korean Game Developers Fined Close to $1Million Over Predatory Loot Boxes

Loot boxes have become a major problem for the gaming industry now due to the Govt taking interest in regulation. Opportunities for self-regulation are passing by quickly but publishers refuse to learn.

Recently, three South Korean developers were fined close to $1 million for using chance-based predatory loot boxes. According to a report by the Korean Herald, three developers including Nexon are fined $945,200 or 939 million Won. Nexon, the creator of Sudden Attack, a Koren rip-off of Counter Strike took the brunt of it with a total fine of 939 million Won ($879,936).

Netmarble received a 45 million Won ($43,300) while NextFloor had to pay 15 million Won ($14,100). All of the companies were ordered to rethink their monetization systems, otherwise, further action will be taken against the three. This is the highest penalty ever imposed on local game companies in violation of Korea’s electronic commerce act.

The Korean FTC also hinted at future regulation of random loot boxes which is widely being considered a form gambling by South Korean officials.

Nexon Korea released the following statement in response to the accusations and penalty imposed.

In our puzzle event, we used the phrase ‘random provision’ to suggest the items would be provided at random, and that the odds of obtaining each puzzle piece were different. However, the FTC interpreted the phrase as suggesting equal odds. We plan to work on obtaining an additional review of this issue in the future.

Nexon’s approach to selling loot boxes with randomized items is under fire by the FTC. The loot boxes can be acquired with real life money but players have no idea what’s inside the box until they open it up. Lack of transparency is one of the issues for the FTC.

What got the attention of officials is a recent “Celebrity Count” event in Sudden Attack that offered special loot boxes that featured 16 pieces of a puzzle. Completing the puzzle would give players exclusive rewards and benefits in the game. Each box offered two pieces of the puzzle that were most of the time duplicates. Nexon announced that pieces of the puzzle are offered at random but drop rate for some of the pieces was as low as 0.5 percent or 1 in 200. With each box costing 900 Won ($0.85), that is a lot of money to be spent on completing the puzzle. One player went on to spend 460,000 Won ($433) on the loot boxes.

Nexon led players to believe that the odds of getting each puzzle piece are equal.

Meanwhile, Netmarble and NextFloor used similar tactics, lying to its user base about the drop rates of certain items during an in-game event.