Tobold's Blog
Wednesday, August 03, 2011
Time versus money in Diablo III

So the announcement that in Diablo III players will be able to buy any item in the game from other players for either in-game currency or real money caused some heads to explode and people to discuss the evil of "pay to win". Apparently nobody noticed, or at least chose to keep mum about, the fact that this is exactly like EVE Online. And the EVE fans have claimed for years that this isn't evil RMT, because you buy the items from other players, not from the game company. As usual MMO commentary is highly tribal, thus if one person's favorite game company does something it is a force of good, while if another game company does exactly the same it is a force of evil.

Nevertheless I find the system in Diablo III interesting, because it is safe to assume that a lot more people will play Diablo III than EVE. The more people participate in a market, the closer the actual prices on the market reflect what could be called the "true value". And I think this true value will be an eye-opener. And that is a good thing.

One of the curses of current games is that players often have a very unrealistic idea of the "value" of their virtual achievements and items. You might think that it is okay if people value virtual stuff however they like, but ultimately it is leading to stories like this Chinese couple selling their children to finance their online games. How we spend our time and money in online games *does* have some effect on the real world. The more common story is a student failing his exam due having played instead of studying, but even there it is obvious that the player got his priorities wrong.

By putting a realistic price tag on virtual items, Diablo III will give you a clearer idea of what this virtual stuff really is worth. Failing your exam to get hold of the Sword of Uberness might feel totally worth it initially. But once you see that same Sword of Uberness on the auction house for $5, you might reconsider. Some commenter complained about this "cheapening" your virtual achievements, but in fact it only tells you their true value, which wasn't much to begin with and you just totally overestimated it.

Virtual items in MMORPGs can usually be acquired by spending time. The auction house will put an hourly dollar value on that time. And this hourly dollar value will be significantly lower than minimum wage. Not just because the famous "Chinese gold farmer" might want to earn US/European minimum wages which are a fortune for him. But also because many players don't consider playing a game to be work. They'd do it for free, or even pay for the privilege. So getting paid cents for the hour is a great deal for these people, as long as they just sell the stuff they found while having fun playing. Lucky random drops might distort the image, but in the long run your virtual "work" is only worth cents to the hour. Let us hope that the Diablo III auction house will make more people realize this.
I also thought about the seemingly low prices shown in the demonstration and i'm not completely sure it's anything close to the real ones we'd have.

My suspicion is that the prices of around $5 were just put there to lessen the impact or at least not draw attention to the price aspect of the announcement.

Just imagine being a Blizz executive and receiving the video/shots with prices of around $15+ - you might want them to be reworked just for the presentation, no?

But i agree with you - the real price will be an eye-opener :) There's so much we'd be able to learn about our market and demographics from this marketplace.
There's an aspect of the whole thing that I think needs more attention put on it: you can either withdraw your auction house earnings on a per-transaction basis or never. The auction house FAQ states that either you choose to withdraw the money through a third person processing company or you get it depostied into your balance. Funds in cannot be withdrawn. I think people are going to be in for a rude awakening when they find out that can't save up $50 or so to save on transaction fees with that third party processor. Most of the ones I'm aware of charge a flat fee per transaction, and that's going to suck when your rune sells for $1.50, but only a quarter lands in your account after everyone takes their cut.
On a different note, Blizzard really needs to beef up the auction house and add in either buy orders or a transaction history. Undercutters are going to have a field day as it is (and people thought the economic PvP was harsh in WoW...), but to ask us to pay a real cash transaction fee per listing when we have no way of knowing the market value of these things are?

More on topic, while most people won't be able to make anything worthwhile off this AH, those aren't the stories you'll hear about. Instead, it'll be about how someone found that ultra-rare unique weapon and sold it for $5000...which will encourage others to keep trying to make money. Kinda like the state lotteries, really.
This was you in the Getting Microtransactions Right post:

But even with all the tricks, I do believe that players aren't stupid. It is the basic economic theory of the homo economicus which predicts that somebody buys an item, even a virtual one, because that item gives him more utility than the money he spent on it. I most certainly had several cases where the microtransaction model or pricing of a game turned me off before I ever paid anything, while I'm not shy of paying in Free2Play games I have fun with.

Not to play Gotcha! games, but I fundamentally disagree with the concept of rational consumers, and it appears you do to insofar someone failing an exam for pixels is said to have made a bad decision regarding the utility of their choice. You might argue that the lack of a price tag obsfugates the actual value of the transaction, but the exam doesn't really have a direct price tag either.

What I predict you are going to find is that - provided Blizzard doesn't radically alter the drop-rate formula of D2 - many these items are going to be ridiculously priced. In Blizzard's own FAQ on the subject, they mention there will be PvP in the form of Arenas, etc, but also mention items won't be balanced around PvP encounters. I read that and immediately thought about Magic: the Gathering TCG. Wizards of the Coast doesn't set the secondary market price of their cards, but the tournament-worthy decks are almost always made up of Rare cards.

Hell, considering that Diablo 3 items are NOT BoP, the average player could almost consider RMT purchases as investments since they can re-sell them later when an upgrade comes along or they want to "cash-out" of the game. Obviously gear resets and the like could make it more difficult, but I don't expect there to be as many as we see in WoW games.
Hmm, the only slight wrench in your plan is that rather than value being established by the average person (which would probably keep everything reasonable), value would be established by the other gamers.

And gamers are slightly crazy.

Case in point: myself.

I have a job which, with bonuses included, makes me an obscene amount of money for someone just a year out of college.

And yet I devoted a hefty chunk of my time reaching the 1 million gold cap in WoW. We're talking at least an hour each before work and sleep, and for a couple months, I had a setup at work where I could observe trade constantly and scripted an addon which would shout in trade automatically. All for some imaginary status icon, worth diddly squat.

The point that I'm trying to make is that players already know that the real life value of the games they play is $0, and yet they play in spite of it, because they value it in a realm beyond money. And technically, now that their efforts could possibly actually be sold for real money as a bonus, their perceived value on gaming would actually go up rather than down.
Great post!! I think legal RMT is a good thing because players with "money but not as much time" can find more enjoyment in the game.
While "mostly cheap" is definitely reasonable expectation, what if opposite will prove true? People did earn semi-decent "wages" on earlier games with enough dedication, no reason to expect that noone will be able to do it on official platform.

Anything spent on buying Diablo items goes as "entertainment budget", so value per hour can be fairly high. And highest possible trading volume is in Blizzard's interest since they are getting percentage from each deal.

"Item farming" might be above minimum wage if you do it full-time with usual farm-optimization tricks (or botting, which, given monetary incentives, is highly likely).

Or you can play auction house like in any other game, buying low, selling high, watching future patch notes and dev entries - most people are unwilling to devote their time to this, so it might be quite profitable (and selling "make your money" guides for extra cash).

Plus "making thousands of dollars playing Diablo" ('for some definitions of playing') will make great headlines in news!
Well honestly it's not as if buying items (usually duped) hasn't been a mainstay of playing Diablo 1 and 2 for 15 years.

I don't see why people who are comfortable with using or letting other people use illicit sites where Russian mafia/corporate China hack your Bnet account and credit card number to be acceptable but are outraged when Blizzard want to take back control and profits.
This is a good post Tobold. Most things that I've experienced going wrong as regards addiction in video games relate to times when you feel like you *have* to play, even when you don't want to or it's not convenient.
Well, I often fell labeled as an EVE fanboy despite some harsh criticism for that game.
Diablo3 itemstore is far more direct then the PLEX in EVE - you actually put a price tag on each and every item. It is also the 'tax' that Blizzard collects that makes a lot of difference.
PLEX was one of those awesome and scary ideas, and what Blizzard wants to do is just another step in the same direction. People accusing both of these as 'evil' are exaggerating. On the other hand each change like that makes virtual items trade more and more legal. You provide the optimistic approach in which you bielieve Blizzard will put a realistic price on virtual property hence teaching the world if it's 'true value'. While i root for that, there's also a pesimistic vision of how the events unfold - virtual property simply does not exist, yet people will find more and more legal ways of creating and trading it. My friend alone said semi-jokingly, that once D3 launches he quits his job and forms a guild of item sellers. Now most probably a future in which gathering virtual property can be a full time job is still far ahead of us, it is surely a direction we are headin in and this can be a cause for a very real economical crysis.
you bielieve Blizzard will put a realistic price on virtual property

You misunderstood: Blizzard is not putting a price tag on anything. The price tag comes from the free market between players, following the laws of supply and demand.

Thus if prices got high enough that somebody theoretically could make thousands of dollars per month, there will be automatically an inflow of item farmers, which will lower prices towards their true market value.

It is true that some players might be crazy enough to want to pay hundreds of dollars for the Sword of Uberness. But it isn't that player who determines the market price. The market price is determined by the seller with the lowest price who hasn't be bought out yet. Given a sufficiently large number of buyers and sellers, that price will by definition always be "reasonable".
With the new shop gold farmers are legalized and Blizzard makes money of these sales. They are happy and Blizzard is happy.

I still dislike the idea of having to spend a lot of money in the game to be a competitive multiplayer combatant. Then again, I can just enjoy its singleplayer and play another, fairer game like Starcraft 2 online.
What people seem to forget is that Diablo 3 should NOT have been an MMO. Copying Diablo 2's formula would have been quite enough. But no, Blizzard had to make it into an MMO. Because, hey, that's where the money is.

As for the real money auction house, nobody asked for it. Why don't monsters drop real dollars while we're at it?
There are achievements that can only be earned, and then there are things that can be bought. Making in game items all for sale for real money will take all value out of them.

For example, its impressive when one of my friends does something that takes dedication like read war and peace. But if my friend could have a computer chip put in his brain that automatically imported the book, the achievement would no longer mean anything.
There is one downside to having a price on anything - especially for casual gamers - maybe I get 'lucky' with a green drop that normally would make me happy - then I check the AH and it turns out it is worth 5 cents.

Also it is not true that the value relates to time only - there are workarounds, shortcuts and occasional exploits or strategies that have nothing to do with playing the game that can net you very valuable items that may be unattainable if you played the game normally.

I would much rather purchase XP or fully leveled characters than have all items a cash value.
First, I'll have to agree with Pzychotix here.

On a side note:
I don't really care about someone possibly making pennies off the AH.

What is the deal breaker for me is that when you bring real currency into a game, it is a major immersion breaker.

Assuming you just got The Sword of Uberness, which is a 0.05% drop (and is class appropriate). In any other case, you'd equip the item and be happy you got lucky.

In D3, assuming that sword goes for 100$, would you use it and effectively short change yourself a whole Benjamin?

We'll be going from "woo, the sword droped, epic carnage inc" to "woo, the sword droped, fat ca$h inc".

True, you could actually do that in the past (D1, D2), but it was frowned upon by Blizzard and it wasn't "right there in your face" in the first place. Now, it is promoted as a "major game feature".

This just kills my desire to play such a game.
"this is exactly like EVE Online"

Not exactly. In D3 you will also be able to buy and sell characters. I don't think there's an equivalent in EVE for that.
Wrong, SolidState. The official EVE forums have a section for buying and selling characters.
Virtual goods have a real world monetary value. It is almost impossible to completely block real world monetary influence from a game. So it seems that it is a lesser of two evils to have the developer rather than the black market profit from it.

What is the alternative, remove trade from the game? You would still have "out-of-band" collusion from people paying high levels to help lowbies. You would also still have hackers going after high level accounts too.

You can't win this battle. If you can't stop crime, legalize it! At least then the developer still has control.
"your virtual 'work' is only worth cents to the hour."

Your work is only worth something if you sell the items you acquired. In a sense, earning an item and NOT selling it is making a payment. Nobody would accept a job to work for cents per hour, but everybody is comfortable with paying cents per hour to have fun (MMOs, Netflix, etc.). I like your hypothesis because I feel that if gamers were reminded how worthless their in-game achievements really are, they'd enjoy games as play, rather than as crude definitions of self-worth.
Additional thought: The D3 AH isn't much different from buying Magic: The Gathering cards at a card shop. Only with M:TG, your only shot at getting the expensive cards is to buy booster packs. In D3, you just play the game.
Silvanis: On a different note, Blizzard really needs to beef up the auction house and add in either buy orders or a transaction history. Undercutters are going to have a field day as it is (and people thought the economic PvP was harsh in WoW...), but to ask us to pay a real cash transaction fee per listing when we have no way of knowing the market value of these things are?

And then we have to realize that D3 won't be moddable. I shudder at the thought of doing economic PVP without the mighty extent of my AH mods and resources.
I believe that the auction house will be just as jaded as it is in wow with people pricing solely on what they see that day, not on the actual trends of the market.

What you're going to witness are the same trends you see in wow, such as weekly cycles and seasonal jumps in demand.

I posted about it here: Diablo III Auction House
When you stop and think what really games is all about, you realise this type of games take the fun out of the box and becomes just another extension of plastic dollar sign world. The notion of even wanting to place such system into the game, makes me cringe and realise how far down the drain games have become of late.
I like the fact that Blizzard has come out so early with how D3 will work, and I like the fact that they are attempting to cut out the 3rd party profiteers with how they are designing the game.

Tobold thinks that the game will follow the rules of the "supply and demand" curve, however, I think that everyone who believes this is in for a very RUDE awakening once the game actually goes live. Drop rates HAVE to be considered here, and if Blizzards past is to be taken into account, it is PLAINLY visible that they have never been a fan of leaving things well enough alone. With just a few keystrokes of the code, Blizzard could just as well choose to set this system up to where certain items fetch more money, thereby fetching them a larger cut from the sales of these items.

I wonder if there will be some kind of legalese in the TOS/EULA that will attempt to absolve Blizzard of any wrongdoing if some RNG or other code bugs net them a hefty profit before being fixed?
You can count me as an "EVE fan" (though I don't play EVE any more) that approves of this microtransaction model. (As an aside, I think it's a bit of a cheap shot to imply that there's hypocrisy in the commentariat when I'm pretty sure that EVE proponents in general are completely ambivalent about D3.)

Actually, Blizzard is doing it better than CCP here, because Blizzard will actually earn money from these player-to-player transactions. But in general, it's much less offensive when the "item shot" simply facilitates player-to-player interaction. Item shops that generate goodies ex nihilo seriously warp the gamespace.

Now, for D3 I actually think Blizzard could do a standard item shop and it wouldn't harm the game _that_ much, because the fun in Diablo-type games aren't very dependent on their item economies. EVE, though, simply isn't a very good or fun "game" in a conventional sense, as even most of its fiercest advocates will admit. ("Spreadsheets in space" is probably the most common moniker for EVE among long-time players). The only thing EVE is good at - the only reason people play EVE at all - is that it is committed to being a sandbox and a simulation, even when that means compromising convenient gameplay and conventional "fun". Realistic worlds shouldn't appear to be arranged for the players' convenience, and generally EVE chooses realism over convenience - a choice that creates the interesting emergent consequences that is EVE's differentiator in the MMO market.

Items that are generated ex nihilo by the developer and sold in an item shop, and replace items that are crafted in-game out of in-game goods, would completely undermine the only thing EVE has going for it. (The recent EVE fan protests were sparked by internal leaks of documents which suggested exactly this sort of model. Overpriced vanity items were a sideshow - but the most "media-friendly" and easy-to-grasp item of contention, so it got more play) CCP clearly wants to monetize EVE more, though, and for that I think they should take a page from Blizzard and skim off the top of player-to-player RMT.
This had better be the revelatory experience we're hoping for, and Act I had better be the most amazing, engrossing, engaging experience of all time, because we will be seeing it a LOT. This is what it has cost us for these guys to implement their new cash cow. (Oh, and fight pirates.)

Always-online, no mods, no cheats. Cheats and mods are the only reason I was still loading the D2 expansion as recently as LAST YEAR, because I knew that with prolific mods and trainers I wouldn't have to play through Act I again. And again. And again, every time I wanted to experience a new build or character.

Instead, Blizzard have arrogantly chosen to assume that their developers' vision of the intended play experience is the best we will ever know, as opposed to giving us a framework and tools and allowing us to decide for ourselves what our experience will be. It's as if they took one look at Darkspore and said, "Which features of this game are the greatest stain on the industry to date? Let's embrace them wholly!"

From what I've seen in video reveals so far, it looks like Torchlight does it better anyhow. Blizz won't be seeing my money, but I doubt they'll care. I'm not their target audience any more. Which is a little sad for me.
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