How Color-Coded Loot Conquered Gaming

Earlier this year, attorney Ryan Morrison was enjoying a few rounds of the ludicrously-popular battle royale game Fortnite with some friends when a minor crisis erupted. One of his buddies decided to plonk down 12 bucks on one of the game’s newest skins, “The Brat,” a slightly disturbing hot dog-man with a glob of mustard zig-zagged across his chest. Once Morrison’s friend had completed the transaction, however, he immediately regretted his decision.

“He was clearly upset, so I just asked him, you know, ‘what’s wrong?'” Morrison recalled. “And he said, ‘Man, I thought it was an Epic or Legendary skin, but it’s just blue [Rare]. I don’t want this shit.’ That just absolutely threw me for a loop … it wasn’t anything about the skin that had changed. It was his idea of its worth, that little color, that changed his mind. I just didn’t understand it at all.”

“The Brat” in Fortnite will run you 1,200 V-Bucks, or about $12–but you should know it’s not designated “Epic” or “Legendary,” just “Rare.”

While you could argue that this constitutes an extreme example, over the past few years, the idea of determining an in-game item’s worth or value by its color-coded “rarity” has quietly conquered much of the gaming world. Whether they’re sold on storefronts that offer wares for brutally-short intervals (such as in the above case), or doled out at random through lootboxes that have set odds for awarding rarer gear, it’s no exaggeration to say that these virtual goods have entirely reconfigured the economics of the games industry, especially at the very top. But this new model has a subtle side effect: it has transformed the meaning of color-coded loot entirely, from a measure of in-game value to real-world desirability. And no one quite knows what that means yet.

“To me, the fun part was going in the dungeon, killing stuff, and getting loot.”

It was Blizzard’s highly-influential action-RPG Diablo that first popularized the idea of defining rarity or value with distinct colors. David Brevik, a senior designer on that game, told GameSpot he first started developing the concept that would eventually become Diablo as a voracious fan of role-playing games in the early-to-mid-’80s, borrowing the name from a mountain in his hometown. “I didn’t know any Spanish then or anything. I just thought it was a cool name,” he said, laughing.

By the time Brevik and his colleagues started polishing the pitch for the game in the early 1990s, however, the tide had turned. Stakeholders in the industry no longer viewed the slow, narrative-heavy style of computer RPGs as commercially-viable compared to the kinetic thrills offered by action games like Doom, and several of the biggest publishers in gaming declined to take the game on. Stung by this rejection, Brevik and his fellow designers decided to go back to what they viewed as the roots of the genre by making a more modern, accessible version of the early randomly-generated Rogue-flavored games that Brevik had grown up playing. These included the Tolkien-flavored Moria and its spiritual successor Angband, and it was this latter title that first gave Brevik the idea for using specific colors to easily communicate an item’s value to the player.

“I grew up playing a lot of [the pen-and-paper RPG] Dungeons and Dragons,” Brevik said. “I never really got into the whole role-playing aspect, you know, pretending to be an elf or whatever. To me, the fun part was going in the dungeon, killing stuff, and getting loot. At the time, we thought that was the most marketable part of the whole RPG genre, so we decided to focus on that as the core of the game. I think the color-coding part of [Angband] was probably just to show off the VGA color graphics at the time, which were very impressive, but it was something that really stuck with me as a very good idea, and that’s why we included it.”

Diablo and Diablo II first popularized the idea of a color-coded, rarity-based loot system in games–something that has become ubiquitous in RPGs, MMOs, and even action games and first-person shooters.

From the very beginning of Diablo’s development, Brevik and his teammates at Blizzard North recognized that the game could easily captivate players with the lure of ever-more-powerful gear, and they endeavored to maximize that appeal. By replacing the unwieldy combat mechanics of its contemporaries with an endless buffet table of loot, they succeeded in making this new “action-RPG” genre far more accessible–and addicting–to a broad audience.

“At the time, we would make fun of the games that were more clunky in their combat,” Brevik said of RPGs whose combat was slower than Diablo. “Maybe in a way that was mean, like ‘Oh, I see a horrible monster, I press a certain key to draw my sword, then I move around to get a better hit, then I have to do a certain swing’ … we wanted to distill down to the essence and replace all that with, basically, a slot machine. We didn’t even realize it was one at first–it’s not like we had somebody from Vegas telling us how to make this thing work better to really hook [players]–but over time, we learned that adjusting the odds and balancing the game so that your character level and build mattered about the same as your loot made people really, really want to play the game. And that’s what we focused on.”

Though Diablo and its beloved 2000 sequel made a big impact on the PC gaming climate of their day, it took quite a few years for randomized loot to spread to other genres. (Brevik himself formed part of that vanguard with Hellgate: London, a prototype of the “looter shooter” formula that 2009’s Borderlands would later catapult into the mainstream.) In recent years, however, the idea of color-coded loot has become ubiquitous all across the world of gaming, from story-heavy single-player fare like God of War to the ongoing pop culture craze that is Fortnite. But as the concept has become firmly embedded in the vocabulary of games, some developers have attempted to refine it further, with mixed success.

Even the hues themselves can prove divisive. Grinding Gear Games’ highly-successful action-RPG Path of Exile began life as a free-to-play rival to Diablo 2, and still uses the colors of its highly-influential progenitor. (Most games tend to use the grading-scale made famous by World of Warcraft as a base, with some variation.) According to managing director Chris Wilson, each time a new designer joins the Path of Exile team, they pitch their own unique idea for a new loot tier, but he personally believes it’s more about how players view the colors rather than the grades themselves. For example, in their game, orange “unique” items might be tougher to find, but they’re never as powerful as yellow “rare” items; instead, they feature strange quirks that are very useful in certain situations, or for rounding out specific builds.

The Path of Exile games utilize the same color-coding system for loot as Diablo, furthering the spread of that game’s influence.

“I personally have very strong opinions about loot colors in games,” Wilson said. “Often, the developers basically train the player to think, ‘Oh, okay, if this piece of gear is a better color than another piece of gear, then it’s automatically better.’ I really dislike that. I think it’s much more interesting for the player to occasionally find a piece of blue [“Magic”] gear that’s actually better than the yellow [“Rare”]. That way, they’re actually incentivized to look at everything they pick up, which adds to the strategy of the game … That’s the way it was in Diablo 2, and we just thought it was basically the perfect implementation, where occasionally [blue] gear would end up being a lot more useful than [yellow]. Coming out of that ecosystem, we just felt that it was basically perfect, so we decided to use those colors to make Path of Exile accessible to ARPG fans. Now, when someone on the team says, ‘Why don’t we add a new color,’ we have to be very cautious that we have a good reason to put that in. So far, we’ve stuck with [the Diablo colors.]”

“There’s an inherent danger to a lot of these mechanics, because if you can pay money to get a random outcome, then sell it on Steam or whatever, that’s really close to a gambling system.”

While Wilson feels that the widespread adoption of color-coded loot helps players understand their cluttered inventories at a glance, he said that many of these games promote a sort of unconscious indolence that he personally dislikes. Since Path of Exile targets what Wilson deems a “more hardcore crowd” than other loot-driven games, the team takes great pains to vary the relative value of what the player picks up, so that it pays to examine the actual statistics of your haul, rather than just strapping on the rarest gear and calling it a day. “Magic and rare items are generally going to have the best stats, and uniques are designed to be weird, to fill in holes in a player’s build, or make them try something really exotic,” Wilson said.

Some developers have tried to utilize these loot-tiers as creative solutions to long-standing problems that have haunted their output for years. Fatshark, the developers behind Warhammer: Vermintide 2, a four-player co-op shooter that adds swords, sorcery, and copious hoards of loot to the formula first struck by Left 4 Dead, decided to try to leverage loot colors as an unconventional mechanism for tutorials. As game designer Kasper Holmberg explained, since rarer items have more traits than their more mundane cousins, it allowed the designers to ramp up gameplay complexity in a smooth, controlled way.

“In [Vermintide 1], the rarest weapon was the best,” he said. “Once you have that, there’s no real point in continuing to play the game, once you have the sliciest sword, the shootiest gun, etc. Our objective was to detach power from rarity. At first, the only weapons you get, the white ones, have no stats except ‘power.’ If you find a green sword, it has a property, which introduces that as a concept… Eventually, you scale up to ‘exotics,’ which have more advanced modifiers. Your early play experience should be focused on learning to swing the sword, rather than, ‘Is this sword better than this sword?’ I think it worked well for us.”

While Warhammer: Vermintide 2 utilizes lootboxes to help players get a variety of loot, it doesn’t charge for them.

As the proliferation of virtual goods has bridged the gap between in-game and real-world value, these developers have had to make tough decisions on how to use these loot tiers in a way that doesn’t confuse or mislead their players. Though the game primarily doles out drops through random lootboxes, according to Vermintide game producer Mårten Stormdal, Fatshark has never even considered including paid lootboxes in its game, referring to the practice as “the dark path of monetization.” At the time of the game’s release, some players interpreted Fatshark’s inclusion of lootboxes as cynical overtures in the direction of paid virtual goods, but Holmberg clarified the system it was intended to solve one of the first game’s most-pressing issues. “In the first game, when you played as the elf, you got something like 90% elf-loot,” he said. “That meant that a lot of people never played with another hero. So, we thought lootboxes were a good way of dealing with that problem, because you can open them with your preferred hero.”

“Our primary goal of making these games is to continue making these games, not to enrich ourselves and drive Ferraris,” Stormdal said. “People might say we’re leaving money on the table, but I’d rather do that than take too much.”

Although Path of Exile features blind-boxes that players pay real money to buy, Wilson noted that the cosmetic items housed within are not marked by any particular grade of rarity, which he describes as a deliberate decision to keep the game’s microtransactions siloed away from the core gameplay. “There’s an inherent danger to a lot of these mechanics, because if you can pay money to get a random outcome, then sell it on Steam or whatever, that’s really close to a gambling system,” Wilson said. “We see microtransactions as a way to support the studio, basically crowdfunding. We like to draw a very clear line: part of our company makes the microtransactions, part of our company makes the game, and they really need to talk to each other, we just want to make it look cool.”

For Ryan Morrison, founding partner at Morrison Rothman LLP, a firm that provides legal counsel to many notable video game publishers, the erosion of the bulwark between the compelling loops of top multiplayer games and the perhaps-predatory business practices that power them is a source of concern. Though he describes himself as neither for nor against the concept of lootboxes, he said that their current implementation borders on unethical in many cases. He especially decries the concept of “dynamic odds,” a practice where a game algorithmically lowers a player’s chance of getting a desirable item if the player has purchased high volumes of virtual goods in the past.

Blizzard’s Overwatch uses lootboxes to dish out cosmetic items, which are color-coded by their rarity. The cooler the character skin, the lower the odds of getting it from a lootbox.

“When I see that rare purple skin in a game like Overwatch, I’ll buy more lootboxes,” Morrison said. “When I see that purple or golden flash when I open the lootbox, that makes me feel good. I’m a 33-year-old man, I can’t imagine how that affects a 13-year-old’s brain. I think what people fail to realize–and I have no firsthand knowledge myself–but many game studios have a consumer profile on you, they know how many lootboxes you buy, they know how often you refill your account, how much you refill it by, how much you spend relative to the amount in your account… If you don’t buy lootboxes, they might even give you a high chance of getting that purple or gold-colored item, because you become a walking billboard for how cool that skin is. It’s a market, and like any other market, they know how to work you.”

“There are a million corrupt, evil ways to run the gaming industry right now, and we’re trying all of them.”

Morrison noted that some permutations of the lootbox formula might meet the legal standard for gambling in some jurisdictions, especially as lawmakers in the US and elsewhere consider cracking down on the current paradigm with targeted legislation. While he said that some games might be closer than others–for example, players can sell the randomly awarded skins and other in-game items for Counter-Strike: Global Offensive or Dota 2 on the Steam marketplace–previous efforts to regulate this sort of activity were stymied by the fact that it’s difficult to “cash out” of the store entirely, making the line between earning in-game items and converting them to cash less clear. (You can always sell your account on a third-party site like Ebay, but such activities would violate the Steam Terms of Service.) “Let’s not forget, legally-speaking, you don’t own any of these games, you own a license to play them,” Morrison said. “You can’t give your Steam library to your child, it’s not yours to give, it’s a non-transferable license… Until there’s a proven good-guy economic model, I don’t see any of these companies spending any of their time figuring that out, unless the government makes them. There are a million corrupt, evil ways to run the gaming industry right now, and we’re trying all of them.”

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Still, while developers and observers alike can wax philosophical about the ethical tangles that these so-called “surprise mechanics” create, others in the industry aren’t so concerned. According to Michael Pachter, managing director at Wedbush Securities and a long-time analyst of the gaming market, this color-grading of virtual goods is just another step in refining the concept of microtransactions down to a perfect money-making algorithm. “It’s all just slot machine mechanics, but slot machines make a lot of money,” he said. “Gambling works. If you buy baseball cards or Crackerjacks, that’s almost gambling, too. Color-coding is just a fancy way to say, ‘You have a 2.5% chance to get that jackpot.’ For some of us, that’s worth it.”

Pachter isn’t merely bullish on the concept of lootboxes or so-called “pay-to-win” mechanics in terms of their effect on the market; he personally enjoys them immensely. He’s particularly a fan of the mobile game Empires and Puzzles, a hybrid match-3 RPG. He estimates that he’s spent $2,000 to $3,000 in the past year in virtual goods, and he considers that money well-spent. At one point, he was briefly ranked No. 7 on the world leaderboard, before a series of quick losses shunted him down around the No. 5000 mark. Though he admits that the game is manipulating him to get him to spend money, he doesn’t mind; in his mind, it’s playing into his desire to “kick people’s asses.”

Whether you agree or disagree with Pachter’s preferences, one thing appears to be clear: like battle passes and blind-boxes alike, loot tiers are going to continue to colonize the world of gaming, and your favorite genre might be next. Still, though some designers and publishers will continue to use these familiar colors as a way to augment their existing revenue–as long as the laws continue to allow it, that is–regardless, the mechanic has become a vital part of the visual design of the RPG genre, and if consumers want change, they’ll have to vote with their dollars accordingly.Like a lot of mobile RPGs, Empires and Puzzles has its own grading system for its “heroes”–a one-to-five star scale. Back at E3, Pachter managed to convince a major executive in the industry to try the game. After playing for a few weeks, the executive complained to Pachter that he still hadn’t received an elusive five-star hero from the lootboxes he was buying. “He said, ‘I keep getting three-star heroes, and it’s pissing me off,'” Pachter recalled. “I said, ‘Dude, you’re opening them one at a time. You have to buy and open a hundred at a time to get two, like me.’ He’s trying to understand how these mechanics work so he can put them in [his game.]…They play to our egos by letting us pay to win, but paying to win doesn’t get you anything but the smile on your face. But is that worth $2,000 or $3,000? Absolutely.”

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