Not to encourage destruction of players. If players were loot piñatas then that would give encouragement to those who like PvP to destroy players - and players who don't like PvP would be collateral damage.
If Frontier would like to encourage everyone to play in Open then Frontier will need to look carefully at the reasons why players don't play in Open - and they have already let slip that they are well aware that the majority of players don't get involved in PvP. I don't expect that introducing loot drops when players destroy players achieve the desired effect.
They mostly don't get involved because there are ways to avoid it. PvP gankers is a bogeyman, rarely seen, but widely blamed and avoided. High waking is not hard. Building a ship that can get away is not hard. But people won't go that route because Solo/PG is there, and there they can eek out another 32/64/128t of cargo of profit again and again instead of adding defensive systems or coughing up some cargo now and then.
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No direct rewards though.
Sure there are. They just aren't tangible, much like the other player-created content. Races, events, etc.
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I've always found it asinine that they put in solo, pg and Open, and tell everyone they are perfectly valid ways to play and then we get talk about encouraging people to play in Open.
Open is actually bustling with players. The only people who claim otherwise, or have concerns for its population, clearly don't use it. Odd but true. So based upon that it makes zero sense not to have some cargo drop when a ship explodes, since removing such loot drops has had zero effect on how people play the game anyway whether it comes to which mode people use and what folks shoot at.
You appear to be hanging on to these points by the skin of your teeth.
More like has his teeth sunk into them up to the gums