Loot Box Design 2.0 – Complying with China's New Rules

Are you worried that China’s loot box raid will leave you empty-handed? If your game counts on loot box revenue, you should be. Fortunately, there is still a lot you can do to stay profitable.

In this article, I’ll work on answering the following questions:

For starters, here’s an easy way to tell how much of an impact China’s gacha law will have on you:

The more revenue you drive from selling loot boxes to your players, the more you will be affected by these regulations when you bring your game to China.

Before getting into the intricacies of how these regulations will impact games and giving you suggestions on how to comply while still holding onto your revenue, let’s shed some more light on how loot box monetization works.

How Does Loot Box Monetization or “Gacha” Work?

The term “gacha” comes from a Japanese toy machine of the same name. When a customer puts money inside a gacha, they get to twist the knob and receive a prize—usually an egg containing a collectible toy or some other surprise item.

In games, gachas work similarly: players can either spend money, wait time, or win “loot boxes” in-game. The loot inside, which aims to enhance gameplay in some way, might include weapons, playable characters, or skins. Items tend to vary in quality, rarity, and impact on the game experience.

Getting a loot box with highly desirable content is a bit like winning the lottery: the more desirable the loot is for the player, the lower their chance is of getting it.

Given that many top-performing games use gacha as a monetization model, we have to ask how this kind of monetization will be affected by the new China loot box regulation.

This is what a paid loot box looks like in the game "Marvel - Contest of Champions". 

Before and After the New Regulations

Before recent regulations, China’s gacha law was much less restrictive.

Before the new loot box regulation, games could have:

However, when the new restrictions are enforced, games will have to adapt to a whole new regulatory environment.

After the new loot box regulation, games must have:

Besides single opens, players can also buy “10x” loot boxes. This is a bundle of 10 loot boxes that open consecutively or all at once. With the daily cap of 50 box opens, a player that has opened three “10x” boxes will only be allowed an additional 20 single loot box opens. Free loot boxes, such as the ones you get for leveling up in a game, do not count toward this daily limit.

Drop chance has also been regulated, meaning the chance of obtaining a specific item can no longer remain static. Instead, a player’s chances of obtaining the desired item must increase with every loot box they open. 

In short, with the new regulations, a rare item must be guaranteed to drop within no more than “X” amount of loot box opens. Developers can determine this maximum number “X” at their discretion but are required to be clear about it in the game. In a moment, I'll elaborate on how to strategically set this number for your loot boxes.

Impact on Games

The impact these changes will have on games monetized heavily by loot boxes must not be understated. In fact, the change to drop-chance mechanics alone has the potential to cut total revenue in half for some games.

Add to that the daily limit on box opens—which will curb your players’ binge-box-opening habit—and loot box revenue is practically guaranteed to take a heavy hit.

It is also important to note that certain loot box designs will be more heavily impacted than others. Games with higher quality and pricier loot boxes will be better off, while those that rely on cheaper loot boxes with smaller drop chances are set to get the short end of the stick.

So what can you as a developer do?

How to Hold Onto Your Revenue Under China’s Gacha Law

As a developer, your priority should be diversifying revenue sources and looking into how you can start moving away from—or at least relying less—on loot box monetization. 

If China’s gaming regulations trends have taught us anything, it’s that we should keep expecting more. If you want your game to remain successful in China, the best thing you can do is preemptively move away from the practices current regulations are starting to condemn.

Instead of relying on loot boxes, you can set up or prioritize other avenues for monetization. For example, you could move toward time-based incentives and get players to pay to speed things up. Other monetization options to lean toward could be subscription models or direct purchases. 

That being said, another immediate step you should take to hold onto your “gacha” revenue is redesigning your loot boxes.

Suggestions on How to Redesign Loot Boxes

Here are three tips on redesigning loot boxes to comply with new regulations while maintaining revenue.

Reduce loot box open incidents

Your overall strategy should be to greatly reduce the number of loot box open incidents while going for the same results in terms of revenue.

To work through this strategy, let’s look at the example of fictive game Apple Bomber Crusade. 

In this game, let’s say the super rare and highly prized “Triple Apple Canon” has a 1% drop chance in loot boxes that are being sold at 50 cents. 

With new rules, this monetization strategy is pretty awful for two reasons. Firstly, the price is low and will cap revenue because of the daily open limit. Secondly, with the regulated drop mechanics, the item must be guaranteed after a certain number of opens—which must be displayed t