TLDR: Points are boiled down here, but I encourage you to ready the body.
The Right to Make Money
No one is arguing against any individual or company’s right to make money. What is generally a point of contention is how that money is made. If oil was a clean, safe resource to produce, with absolutely no environmental impacts and operated in more of an open market than say, OPEC, there would be very few people who could complain about how they do business. If the market crash had not occurred due to irresponsible lending and selling of securities, no one would have an issue with how much money the banking industry makes.
What this piece attempts to do is describe how poorly these practices are for consumers (ie: you) not just in terms of yourself, but for the game as a whole, and your fellow players.
More Money than a Flat Rate?
The product could in theory be sold on the Cash Shop for a flat rate, especially if they are already being offered for a limited time. The question becomes, why not?
There are various reasons. The return on investment (ROI) of the lottery boxes is higher than that of a flat rate. The cost of a flat rate in order to equal the return that the lottery boxes provide, a flat rate would appear to be too expensive, with too large of a price tag to pay in one expense. This goes towards the wedge of individual experience, further below.
If it were a flat rate, you could determine whether you liked the product enough for it to be worth the flat rate quoted. Or you could consider the product to be worth no money at all, at which point the company has lost your sale and has to make up the difference from a user who wants the product.
The drop rates are unknown until someone bothers to invest and do the research, either by grinding a lot of boxes or buying them outright, the latter of which is a net-positive for the company. And by the time the results are recorded and posted, the company has already seen sales from consumers assuming that the drop rate cannot be that bad.
The Wedges of "Individual Experience" and "Personal Responsibility"
Divisiveness is the greatest weapon of any entity against a collective to shield from its greatest weakness. You want the populace to be split on issues because if a high percentage of the body every aligns itself against you, you will feel its effects.
The randomness of these boxes creates a variable experience. However unlikely it is, it is possible for a lucky person to get the products he needs by opening a mere ten boxes. Suddenly, his experience is “this is the best thing EVER.” For another individual, they could open box upon box upon box and spend a large amount of money without getting a single claim ticket.
Since experiences vary, its harder to reach a consensus on drop rates. There will be people satisfied with their experience and others who feel as if its unfair. Some will be accused of merely being “unlucky.” Some will engage ad hominem, attacking other consumers for buying so many boxes irresponsibly, despite that being the intent of the company. Strife ensues and its much harder to direct blame against one specific entity as the customers squabble amongst one another.
It is therefore much harder to get consensus on implementation than if the product had a flat rate.
They benefit from these wedges to keep their customer-base from coming to a consensus on anything, even as far as debate the value of the implementation instead of the value of the product being offered for the price.
Instilling Urgency Artificially: Limited-Time Offers
If you could just grind these out through normal activity (gameplay), there are always going to be those who stick with the grind over the shortcut of buying the product outright. So to convert even a tiny percentage of those people (a net positive for the company), the company has a limited time offer on the product. That is greed. The limited time offer on the product is nothing more than a trick, to artificially give a sense of urgency.
In games like Tribes: Ascend everyone can get access to everything. If just takes time. You can choose to grind it out or you can buy it outright. There is no limited time offer. There are sales to incentivize a period where you would like to see more income, but a gun in Tribes: Ascend is never going to disappear because you did not buy it this month. It is a psychological trick meant to make you spend more money, and is an anti-consumer practice.
This operates much like the Disney Vault, in which Disney only releases a movie for a limited time every seven years or so on home media. This increases the scarcity of the movie and instills urgency to purchase the movie when it eventually becomes available.
Worse than Gambling
Gambling can be viewed as an experience. You play the game and the money is the barrier for playing the game, with more money as a reward for winning. One usually goes in knowing that you will likely lose money, but there's also a chance you could come out of ahead. It can get impersonal, such as with video poker machines or slot machines, but generally, it's an experience at playing a game of chance.
Common wisdom is that the results are stacked in the house's favor, and there is generally a poor outlook on people who think they can regularly come out ahead by playing, or in other words, playing to win.
Or going to a Dave & Buster’s (or Chuck E. Cheese’s). Sure, you may be attempting to win tickets for a particular prize, but you are usually paying as much for the experience of playing the games themselves. You get the experience. It is a poor value and poor sense to play at these places just to win tickets and win prizes, especially without a particularly good run of luck, you would end up buying the prize outright than trying to win it with tickets.
But these lottery boxes are different. You are not paying to gamble for the experience, generally. There is actually no experience, or at least less of one. The similarity is very much like buying a box of cereal you hate because it has an item you really want. At that point, you are just ripping open the box, pouring out the cereal for the product and potentially getting nothing for your trouble. Rinse and repeat ad nauseum until the limited time offer (artificially created sense of urgency) expires or you get the prize you want.
The Company’s Gamble
The company has its own gamble going.
It is relying on the obfuscated nature of its game of chance, with its accompanying ability to change the odds at their leisure, to keep its customer base arguing and speculating over the factual details as much as the subjective details. If you knew all the details, it would be much easier to base an argument for (or against) purchasing the product outright and there would be less coloring and argument from individual experiences.
It is relying on the artificial sense of urgency to push people into buying the product without spending a lot of time thinking about it, as well as pushing those who attempted grind it out to ultimately buy into the lottery boxes from the Cash Shop at the eleventh hour.
It is relying on human nature. There are people out there who are gullible, naive, have little foresight and in some cases, an addiction to gambling. These people with a clinical lack of self-control who will hand over money to engage in this process in hopes of getting the rush of a win.
Defending the Indefensible
The fact of the matter is that there will always be people attempting to defend these practices. Usually, the sum of the arguments is that the company has a right to make money. But why? Why are these practices worthy of money? And why do these people, who can only benefit as a consumer if these practices were revised to be less abusive, defend them? Why implement these practices over a flat rate, offered through the Cash Shop, unless this lottery box implementation makes more money.
I tend to look towards a rather quotable piece of TotalBiscuit:
What the hell happened to gamers looking out for each other? When did that suddenly fall by the wayside in favor of being an unemployed PR representative for a company that has been milking you for money? When did this happen? Was this with the advent of the Internet? Is this a recent thing? I can’t exactly pinpoint when it happened, but fanboy culture has gotten to the point of being actively detrimental to video games. It benefits nobody whatsoever other than the companies in question.
It’s wonderful that they’ve got a small little army of people that are willing to actively suppress dissent. Actively lie about the game. Actively try to character assassinate people. Engage in ad hominems. Slam them over social networks. Downvote videos. Lie in the comments section. It’s wonderful if they’re willing to do that, if you happen to be [the company] or any other company that has people like that. It’s terrible for the rest of us. It’s really really bad.
Gamers don’t look out for each other anymore. And that’s really depressing. The last thing that should be happening is gamers actively trying to mislead other gamers because they want to feel better about their purchase. Or because they want more players in their game, even though the game is clearly not up to spec. Where do you get off doing that? That is morally bankrupt. That is ethically unsound in the worst possible way. It sucks, and you suck for doing it.
People who defend these practices want the games they play to succeed regardless of how the company in question behaves, because they have some investment. They either want the game to have more players, be more successful so it will stick around for a long time, get more development, release expansions, etc, etc.
TLDR: Ultimately, it boils down to the idea that the lottery boxes offer a better return on investment than just simply slapping a flat rate on the product. It adds nothing to the product itself and is just a method for increasing profits, without doing anything. It is a form of predation on consumers, it should not be tolerated, but there will always be people willing to defend a company’s decision either out of apathy, a belief it does not nor will ever affect them or some other selfish reason.
Edit: I lost a ton of formatting moving from Google Docs, and I'm adding it back in.