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As to the affect of legislation. It is way too early to tell what will happen. I plan on just keeping a loose eye on this. My guess is America will be well behind the curve. Since several European companies have already declared them as gambling we will be able to see what enfolds in Europe and how companies will adapt.

For the US I call your attention to this quote from The Verge article.

“Value doesn’t mean necessarily mean you like it and you want it. Value means it ‘has value.’” said Whipple. “If you can sell it to somebody, if you can transfer it to somebody...and exchange for some consideration, some payment, I would argue under that most gambling statutes that it is almost certainly something of value. If you can’t, that doesn’t mean it isn’t something of value, it just means it’d be harder to prove,”

A very key concept here is "has value" is determined by a things exchange consideration. This is a fundamental economics principle as all economics is barter and trade. We have just made it more efficient by using a scale of trade value called money so we don't have to transport objects around.

So any game that uses a loot box system and does not allow the player to exchange those items with anyone else makes it much harder to declare it as gambling. The value of what is won in a loot box could be very strongly argued as having no exchange value as it is not exchangeable with another player or buyer of any kind.

As opposed to say the Steam Market where kids today buy loot boxes for gun skins and knifes in games like Counter Strike and then sell the loot box winnings on the Steam Market for actual money. Yep there screwed.

Given all that I have read on this topic I am not worried for ATVI. If anything it will take time to develop in the US and ATVI will get a feel for it in Europe first. It may cause a flutter in the stock value do to the uncertainty of change but in the long run the industry will figure out new revenue models. Loot boxes are not a significant revenue driver nor are they a part of the investment thesis for ATVI. Investment thesis for ATVI still holds and this change just creates a new chance for ATVI to continue to lead the industry. This is a speed bump.

[New revenue models? Sure, before loot boxes the revenue model was selling CDs. Then it became selling CDs and Downloads. Then we saw DLCs etc.... They will think up something new if loot boxes get regulated out. Perhaps we will see online time packages similar to cellular. Get the game, play the campaign all you want for free. To play on line you have to buy a monthly access package for x dollars with y overage costs like a cell plan. Keep it really cheap and collect a guaranteed $1 to $3 from every online player each month and you could blow the 12% loot box revenue out of the water. I am actually kinda surprised they are not doing this already. ATVI will figure this out.]

Disclosure: Personally I hate loot boxes. I refuse to buy them.
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