Lens on Real Money

Money, get away
Get a good job with more pay
And you're OK.
        -Pink Floyd

Money makes the world go around
The world go around
The world go around
        -Cabaret

I've got 90 thousand pounds in my pajamas
I've got 40 thousand French francs in my fridge
I've got lots of lovely lira
Now the Deutschmark's getting dearer
And my dollar bills could buy the Brooklyn Bridge.
There is nothing quite as wonderful as money
There is nothing quite as beautiful as cash.
        -Monty Python


I could go on, obviously.  Like it or not, money is a huge factor in our lives, both actual and virtual.  It's the place where those two things meet I'll be writing about today, where real money interacts with out unreal game lives.

Online gaming was born in an environment where most people were paying just to get online.  Back in the online paleolithic, before the Internet was known to any but a few people in academia and government, people generally paid by the hour just to connect.

Once online gaming truly came alive with the sudden ubiquity of the Internet, the "logical" way of paying for a gaming service was to simply continue with the same mechanism, going from "per hour" to "per month".  And that's how the major commercial MMOs were all structured.  Buy, then subscribe with a monthly fee.

While in Asia they started to play around with other revenue generation mechanisms (free-to-play, for instance), in America the reliable recurring revenue generation of subscription fees was standard operating procedure.  This became even more carved in stone when WoW started producing quarterly recurring revenues of a magnitude to make Scrooge McDuck weep from pure envy.

The industry-wide changes we've seen recently all started innocently enough, improbably enough, with "Dungeons and Dragons Online".  DDO had been, charitably, a disappointment for Turbine.  With one of the best known names in all of gaming at their disposal, they had produced a disappointing product that few people were interested in and fewer still were willing to pay a subscription for.  So somebody at Turbine had the bright idea, "Why not try a free-to-play model and see what happens?"

There are only a few ways a suggestion like that gets implemented.  First, the person making the suggestion is sleeping with the person making the decision.  Second, the person making the suggestion IS the person making the decision (unlikely).  Third, the suggestion also includes the words "and if it flops, it'll give us an excuse to just kill the game."  Fourth, pure desperation.  My money (so to speak) is on the fourth, although the third may have been included.

So Turbine implements free-to-play into DDO.  The announcement is met with much laughter, mockery, and almost universal proclamations of the certain death of the game.  And then it comes out and revenues go through the roof.

That sound you heard wasn't a bell going off.  It's not a gong.  It's the cha-CHING of a cash register, and every game company in America heard it loud and clear.  It was a new day for alternate methods of game revenue generation. 

(And nobody heard the cha-CHING more clearly than Turbine.  The change of LotRO to "free"-to-play was inevitable the moment the first batch of DDO revenue numbers came out of the bean counters' offices.)

I have already written about the failed elements of LotRO's F2P implementation (in my column on the Bad in MMOs), so I won't go into much more about that, other than to note that in an effort to keep revenues up (or perhaps grow them more) Turbine is ratcheting up the commerce-driven design elements and is, I think, squeezing more $$ from a smaller number of people.  And that is the Herald of Game Doom.

I'll talk a bit about Real Money and three other games...EVE Online, then Guild Wars 2, and finally how the Diablo III Real Money Auction House might change the game (so to speak) as much or more as the F2P option has.

EVE Online

EVE allows real money into the game in limited ways.  They added a store with cosmetic items at ludicrous prices and implied that game-imbalancing items were coming in time...and the player base went bugfuck crazy.  An absolute shitstorm erupted on the forums and players started to quit and move to other games in organized fashion.

To give the talented amateurs at CCP credit, they realized they'd screwed up big-time and backpedalled so fast that everything in front of them red-shifted.  They did a bunch of public mea culpas and completely overhauled everything they were planning for their store.  Let this be an object lesson in Real World Money and gaming...you can squeeze money out of your customers, but if you squeeze the wrong thing too hard, you're not going to like what you've got on your hands when it's done.

The second way EVE allows real money into the game is via PLEX (Pilot License EXtension).  A PLEX is an in-game item you buy for Real Money that can be converted into 30 days of playtime.  It can also be sold for in-game money via the "auction house".  This is a fairly elegant method for allowing Real Money into the game (but not back out) and legitimizes the process by giving CCP the profit and removing the "gold farmer" from the interaction.  It allows rich players (in-game) to buy 30 day time cards for in-game currency (called "ISK" in EVE) and it allows players with more Real Money disposable income (out of game) to buy currency from other players.

It's also in keeping with EVE Online's generally laissez faire way of looking at in-game interactions.

Note that because $ ---> ISK, there is a direct, if fluctuating, actual dollar value to the virtual in-game currency of ISK.

So when it comes out, as it did this last week, that a small group of players discovered a...flaw or exploit, call it what you will...in one of the game systems and use it to manipulate a game mechanic to acquire a number of valuable in-game items which they then sell on the open market to amass 5,000,000,000,000 ISK (theoretically worth about $175,000) it both opens eyes and brings up a number of questions.

Did the players involved break the TOS of the game?  Unclear, that's being investigated by CCP.  If so, what will be done with the players directly and indirectly involved, and their ill-gotten gains?  Is there any way for them to get the cash value OUT of the game?  Not within the TOS, certainly, but gold/ISK sellers do operate in-game and $175k is a lot of cheese.  Were the developers aware of this flaw?  Absolutely, there were a number of forum posts questioning if exactly the sort of system manipulation might not be possible and CCP went ahead with it.

Can the players trust CCP?  For me, this answer is a resounding "No", which is one of the reasons I stopped playing.  They have encouraged a player-base with a "if it's not explicitly against 'the rules' (presumably the TOS) then it's totally fair play" mindset that encourages a great deal of anti-social game play.  It's not much of a step from game-stretching to game-breaking.  And with at least one case of in-house cheating where the person involved wasn't fired, and countless anecdotal reports of other CCP employees "helping" friends, I personally find it difficult to invest my time and money into the game where a potentially game-breaking economic bug is pointed out by players in testing but still gets released and, inevitably, exploited.

Guild Wars 2

Guild Wars 2 is actually looking at a similar mechanic to EVE's PLEX for working Real Money into the game.

You will be able to buy "gems", the game store currency, for real money.  Those gems will be able to buy things like additional character slots (I'll take 3 please!), bank space (bank storage is account shared, so I'm OK with this one), additional bags (character-based, so unless these are dirt cheap I'm not nuts about this), cosmetic outfits, etc.  Mostly pretty standard stuff for a F2P (in this case, F2P after purchase of the game, so no sub fee).

What's a little unusual about the GW2 F2P model is that players will be able to sell gems (purchased with Real Money) on the in-game auction house for in-game currency.  Similarly to PLEX, this is a "Real Money In" system.  So those with an excess of time on their hands will be able to turn their extra gold into gems to buy stuff on the store, and those with less time to play will be able to turn a little extra cash into gold for in-game purchases.

While I inherently am not nuts about this particular method for in-game goods acquisition, the negatives are greatly outweighed by one, overriding positive:  it disincentivizes the "gold-farmer".  Far fewer players will choose to buy gold from some shadowy Internet company (how can you trust your credit card number to people who are cheating and perhaps stealing to get what you're buying in the first place?) when they can take an extra step and sell store-bought gems for gold totally legitimately.

There might be a few people who will opt to go with the "gold-farmers", but not many I expect.  And with less demand, we'll see a lot less gold-farming and a lot less spam from the gold-farmers trying to sell, over time.  And the fact that all of the Real Money goes to the guys making the game is good for them and, hopefully, us.

Diablo III and the Real Money Auction House

And lastly we get to the 800,000 Pound Gorilla...The Great And Terrible Experiment...the winner of this years award for "New Feature Most Likely To Become Ubiquitous And/Or Fuck Up Things For The Foreseeable Future", I give you...

The Real Money Auction House from "Diablo III".  This is the potential game-changer of a magnitude unimaginable.  And all it adds is one, small addition to the equations of $--->PLEX--->ISK of EVE and $--->gems--->gold of GW2.  D3 has gold--->$  It allows Real Money OUT of the game.

On the surface of it, it doesn't seem like THAT big of a deal...the only change is that you can get your money back out of the system.  But I can't imagine how many hours Blizzard/Activision's legal departments have spent hammering out every little detail.  They better have, or they will be spending the rest of the decade in court.

Because once you can cash out, every single thing in the game, every trash drop and every single shiny gold coin on the ground, has real world value.  Since one of the commodities supported on the RMAH (Real Money Auction House) is "Gold", you'll be able to buy/sell gold for Real Money (I believe commodities like gold and gems and crafting mats are not yet enabled on the RMAH, although they are in place and ready to go).  So that junk loot worth 4 gold to a vendor is, given the reported minimum price of gold of $.25/100,000g, worth about 1/1000th of a cent.

It doesn't sound like much, but if everything has Real World value, that changes everything.

Because now every mob you kill is a lottery ticket.  Most of the time it's worth a fraction of a penny...but you might get lucky and win $250 (the current max dollar value an RMAH transaction can have).  You might win more, once the gold commodity becomes available, if you could sell an item for enough gold.  This changes the dynamics, both individually and economically.

There's good reason that South Korea is banning the RMAH (and similar gaming mechanisms)...because it takes a lot of legal questions off the table.

Is playing the game gambling?

How are in-game profits going to be tracked and taxed?

What can be done about market manipulation?

What legal exposure is there if you nerf something somebody just paid Real Money for (as Blizzard did with the nerf to attack speed)?

What about any bugs/exploits that can be used to, in essence, steal from other players by item-duping, trade-spoofing, or worst of all, gold-duping?

Can the RMAH be used for money-laundering?

Are they doing enough to secure accounts (Blizzard's case-insensitive passwords, for example, qualifies as The Worst Idea Ever)?

How can players be sure that there is no insider hanky-panky going on regarding game mechanics or simple data-base hacking?

It's questions like these that have me hoping that the D3 RMAH is a one-off experiment that doesn't catch on.  But with D3 becoming the fastest-selling PC game of all time, and with Blizzard taking a cut of every single Real Money transaction...a lot of game companies are paying close attention and considering their options.  And none of those options are about improving games or making them more fun.

Real Money is a Real Problem facing gamers and game makers.  We are in an interesting and dangerous place right now.

And we can't buy our way out of this.

-Lens