Tobold's Blog
Wednesday, July 06, 2011
 
Löwocalypse

Looking at my title I have to admit that it's not even coming close to spinks' Monocalypse. Sigh! Anyway, Wargaming.net with World of Tanks yesterday bravely stepped forward into the minefield that CCP with EVE is just trying to extract themselves from. As I mentioned previously, players with high-level tanks in World of Tanks have a cash flow problem, and need a gold farm tank. The best gold farming tank available is the Löwe, a German tier VIII "gold tank", currently available for 7,500 gold. That is €25 on European servers or $31 on US servers, at the best exchange rate. They also offer the KV-5 for the same price, a Russian tier VIII tank, which is better armored, but dealing less damage.

Now gold farming depends a lot on dealing damage, so the Löwe is the better gold farming tank. Wargaming.net realized that, and instead of changing the stats of the tanks to make them more equal, they decided to raise the price for the Löwe. In future it will cost 67% more, 12,500 gold or €41/$52. There is a grace period where you can still buy one for the old price. And players who already bought one aren't affected. Nevertheless this is a hefty price increase for future players, and the forums understandably aren't happy.

Capitalism is a curious thing with virtual goods. The laws of supply and demand normally would suggest that an item for which there is huge demand will go up in price. But that is to balance supply and demand, while in the case of virtual goods the supply is unlimited. Wargaming.net isn't increasing the price for the Löwe because they have trouble producing them fast enough. They increase the price because they think they can get away with it. Only if over 40% of people who would have bought the Löwe for 7,500 gold in the future decide not to buy it for 12,500 does Wargaming.net lose money.

Furthermore Wargaming.net probably doesn't mind selling less Löwes. Over time since release more and more players reached the higher levels, needed a gold farming tank, and the Löwe was simply by so far the best option that these days you see quite a lot of them around.

It will be interesting to see how this plays out. World of Tanks doesn't have a Council of Stellar Management or a line as fuzzy separating devs from players as EVE has. Thus players have less of an expectation to be listened to. WoT does have bitter veterans (and that just 1 year after the start of the closed beta, which albeit tells you more about the players than about the game), but Free2Play games don't mind bitter veterans leaving all that much as subscription games do. The bitter veterans usually don't pay, or don't pay any more, so them leaving is pure win for the company.

What I would love to have is sales numbers before and after the price increase. How much does a 67% price increase of a virtual item decrease its sales? I will probably never know, but Wargaming.net certainly will. Then they can borrow a quote from CCP CEO Hilmar Veigar Petursson: "this is one of the moments where we look at what our players do and less of what they say". Ultimately economic theory tells us that what a virtual item is really worth is what people are willing to pay for it.
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