Gaming Signal: Buy any in-game items lately?

Buy any in-game items lately?

Have you ever purchased items in a computer or console game using real dollars? I personally haven't, although I have looked into it a few times. So far, I've never felt it was worth my money - but that may change.

Eventually I see games embracing this concept in a big way. We've already seen Sony do it with their StationExchange program. Right now they just act as a tax on the secondary market, but how long before they get directly involved? Why shouldn't Sony or Blizzard sell in-game currency for dollars? Let me explore this and more.

When Ultima Online first came out in 1997 the response was surprising and turned the world of online gaming on its ear. Players and developers learned many things - from the concept of griefing, the complexity of player houses, and the dynamics of in-game economies. It wasn't too long after that rumors started circulating of players being able to sell their max-level characters to other players - I remember hearing talks of someone selling a character for $2000. The developers at Origin tried to prevent this, however it has never been something that can be completely controlled. When Everquest took off, this practice continued - I personally know of a couple of people who completely recouped the cost of playing the game by selling off characters and items on sites like eBay and its predecessors.

Note that this is different from playing the online game Magic: The Gathering Online from Wizards of the Coast. Here you're very definitely paying real dollars for online items. That's how this game is designed and there is a secondary market that is encouraged by Wizards.

In fact this has become so lucrative, that its moved beyond just players selling to others, but whole factories setup to do nothing but create in-game items or characters for sale. Because these players aren't playing the game for fun but rather to get items, they are referred to as 'gold farmers' in the game community. The most notable company making money at this is IGE which sells game items on nearly all online games. Because these players were initially focused on doing nothing but getting loot they were often abusive and selfish - often trying to monopolize a particular game area. This has resulted in bad feelings about these players and creating a very negative opinion of them. Coupled with the fact that many of these factories have been setup in China and you have some pretty bad bias out there against Asian players. Last year there were a couple of articles on the practice that lay out the money to be made an the method they use to make it.

In case you are curious, right now EQ2 gold is trading for about a nickel apiece (or $54 per 1000 gold) and for WoW, it's about a dime per gold (again, in lots of 1000.) Given the amount of time it takes to make a gold in those games, you can do the math to determine if it is worth it to you - I did, and it didn't work out for me. It did work out for GamingSteve - he bought thousands of WoW gold. He pointed to a recent survey showing 25% of respondents had purchased gold or items using real money outside of the game.

PC Gamer magazine recently entered the fray by announcing they would no longer take advertising revenue from companies like IGE. He claims they are turning down hundreds of thousands of dollars per year by doing this, but felt it was the right thing to do because of the ill they cause to online games. My local sports radio station did something similar when it decided to no longer take advertisements from online sports books. I applaud both for standing up for their convictions, but I have to agree they are likely fighting a losing battle. The fact is - people like these services and are willing to pay for them.

Given the popularity, I believe it is only a matter of time before this because standard practice with MMOs supported by design. You will be able to go to the developers web site and purchase in-game gold whenever you want. In fact, it might be that they give the games away (free download) and sell nothing but the gold. Who knows - that business model might work out better than the one in place today.

I know Tim and I have talked about this in the past - what do you think?

I thought I talked about this with y'all before; but maybe not. I believe that game companies

have not fully realized the profit potential they can reap from their subscribers.

When I first sat down to comment, I was going to argue that the game companies can easily capture an additional revenue stream by selling game currency themselves. As I proceeded down that path, I realized that it's the items that matter; not the currency because people spend real money to buy in-game currency so they can buy in-game items. Why not just cut out the middle step? In addition, the companies can also offer "starting character" packages which would replace the gray market account selling transactions that exist now. Of course, they can still offer in-game currency as well as an additional product.

As Scott had said, right now SOE, using their StationExchange program, amounts to nothing more than a tax. They're, in effect, leaving a lot money "on the table" by not offering items and platinums themselves. Instead, they seem to want to drive additional, yet meage, revenue by "nickel and dime"-ing their customers with features like online character and guild information which is simply silly.

Strictly from a business standpoint, you would think they would capitalize on the one area

that costs them absolutely nothing and thereby having infinite return -- the farms have to still "work" to create the gold and items; the game companies don't. They can automatically process a credit card order and instantly drop the items/gold into your account. This is better than proverbial "Midas' Touch." Of course, an influx of in-game currency will likely create inflation in the in-game economy thereby driving additional demand for more in-game currency -- not a bad thing if you're the game company. Yes, left unchecked, this might create something that's unsustainable (read: diminishes the fun). Well, instead of selling virtual cash; just sell the items. Items (esp. those that are soulbound or no-drop, in either EQ or WoW parlance) have the unique property of being self-depreciating especially in the face of delivery of new-content.

I would think that the game companies would try to squeeze what they can out of

one game and move on to something bigger and better. MMOs are different from

non-persistent (offline) games in that offline games, you have to make money just from the sale of the game (which can make or break you). With MMOs, you can capture revenue from the sale of the game itself (which typically pays for the development, marketing, etc.), the monthly online subscription fee (which pays for the hardware upkeep to sustain the persistent world and GM salares, etc) and the, yet untapped market, the accessories that you create out of the NOTHING to generate profit.

To put it simply, do what WotC did with M:TG (the offline version) -- they can print more money for themselves simply by printing more cards! Game companies already has that money-printing machine, it seems that they are bright enough to crank the handle labeled "Make more money here!"

Posted by Peter on Monday January 30, 2006 at 5:42 PM

I believe the real point here is that MMOs are destined to be free. Take a listen to GamingSteve and you will realize that while the US and European markets are large - they are small compared to the markets in the far east. And its there that speaks the future of MMO gaming - the market is already setup for free base game with micropayments for content. The correct answer is really to offer items via that route - not gold or currency. Its about the gear, and thats where you will see things change. Farming for loot - fine go ahead. We won't stop you but you will have to weigh your time versus that 2 dollars investment to get some sword of death dealing +2. The key will be balancing the percieved power of a given item/spell to the cost acquired from it.

I think we will see that over time games will be more like guild wars or some of the free games we are seeing come out of Korea. And we will be paying for access to a set of dungeons or paying to access specific classes, but the monthly subscription fee will go away...

Posted by Tim on Tuesday January 31, 2006 at 12:02 AM

I for one welcome our no monthly fee overlords. Let the cry of 'free to play! (mostly)', ring out across the land and let all the gamers rejoice!

So the next question. Will this make MMOGs more accessible to the 'casual' gamer, or do those type of players want something more like Second Life? I've tried SL, and it's not for me. I'm more into a structured environment with stuff to do, although I can see the appeal of an entirely user create world. There, you can buy user created stuff in game, and I believe you can buy the SL currency with real $$$ on their website. It's an interesting model.

I'd buy stuff to play with in game, but only if I thought it was worth it. Otherwise, I'd ninja loot!

JP (world's slowest ninja looter)

Posted by jp on Tuesday January 31, 2006 at 8:44 AM

Unfortunately I fear the US internet infrastructure is a little weak right now - our access to broadband is so poor that companies can't count on it. WoW fully supports dial-up, for example. This pretty much prevents on-demand content from flowing down (although SOE has pre-staged content for EQ2, I admit I'm not sure how well that works.)

But eventually it will get there - and that will definately make these games more available and open to players who today don't have access.

And I think that yes, this makes it more accessible to the casual gamer - if you can game for 10 hours to get the 'scorpion slayer +2' or pay $10 for it, more people will have it. Honestly, I'm OK with the 10-hour version being called 'Uber Slayer +2' and having a kick-butt graphic, whereas 'Scorpion Slayer +2' looks like an ordinary sword - as long as otherwise they are exactly the same.

Posted by Scott on Tuesday January 31, 2006 at 9:49 AM

This triggered an interesting thought - how much should items cost, and should the cost increase? I'd like to argue no, although I admit its a new idea.

If I can buy a gun at level 1 that's appropriate for my level and class and it costs $1, why should a gun that's appropriate for my level and class cost more at level 2, or 10, or 100?

Assuming the item is level limited in some way (which it is in all modern games) it seems to me it should be the same price.

It isn't today via eBay or online games - the rare the item the more it costs. This is fine for items with inherent rarity, but once they start being sold by the game developers, the limitation on quantity goes away.

Ooo - how about this - should they create unique items on a regular basis and sell them via auction? That might be interesting! Imagine this:

This week up on World of Warquest we have:

Scorpion Slayer of Stinging
Damage: 90-120
Speed: 4.1
Chance to do 50-75 poison damage over 5 seconds on a successful hit.

Bids start at: $10

Or maybe they could have lotteries - you pay $1 for a ticket and you're sure to get something, but 1 player will get a unqiue item, 5 will get a rare item, and the rest will get a level-appropriate class-appropriate item that they don't already own.

And since players seem to enjoy it - why not have 'grab bags' of items? For $5 you get 10 items, one of which is rare, but its randomly generated when you pay and you don't get to know in advance.

The more I think about this, the more it makes me want to implement it!

Posted by Scott on Tuesday January 31, 2006 at 3:22 PM

I didn't read all these comments through completely, so excuse me if these have been covered.

1) I think a majority of the audience that plays MMO's are kids (ages 14-18), and kids don't have access to funds to do something like this. Their parents will set them up with a $15/month subscription fee, but they won't give them carte blanche to buy stuff willy-nilly. There are ways around this, of course - charge a credit card on a regular basis like a subscription fee, but put the money in an in-game account that junior can use to buy stuff. Yeah, in this case there's still a subscription fee, but it's strictly volunary.

B) I think that lotteries are considered gambling and online gambling is illegal in the United States. That's a minor part of this whole idea, however. Auctions and straight-up sales would still work! I probably wouldn't spend much money, but I'm sure there are plenty of clowns out there that would spend hundreds of dollars to win an auction for unique in-game items. Heck, I'll bet the item wouldn't even need to function any different from regular in-game items, so long as it looked different.

Posted by Kevin on Wednesday February 01, 2006 at 2:04 PM

First, I don't think your statistics are correct Kevin. I think you will find that if we look globally - the majority of players are folks who can afford to buy game items and have paying jobs. I will point to our guild on Khaz Modan where I thought I was surrounded by kiddies - only to find out that most of the folks are 30+. I also believe that the "kids" that play today are playing on thier parents dimes and from what I have seen they have better real world gear than I do and I work for a living.

Second, I am suggesting doing away with the concept of Soulbound items. If we all harken back to the early days of EQ, nothing was soulbound and there was an incredible market for gear. Soulbound was added to prevent spawn camping and to stop farmers. If we do endorse the concept of buying gear from the MMO provider - why should we not be able to sell it off later? I point back to the mechanism in play for collectable card games. Think about it from that perspective - you can pay 10 bucks for the rare sword, or you can buy a bag of 5 items (of varying rarity) for 12 bucks and sell off those items you don't want. The concept of sale can be done either using in game currency or through a MMO provided clearing house similar to Ebay.

We are discussing potential ideas here and I for one think it would be a very unique change to the dynamic of MMOs if this were to occur. I still think you can appeal to the uber gamer by offering them the ability to sell off that weapon from the last boss and casual gamers by offering them the ability to buy that gear without having to expend far too much time in game to kill said last boss.

Finally, I agree there may be no need for items to flow out of the system but I was offering that as an option.

Posted by Tim on Wednesday February 01, 2006 at 3:29 PM

Here is a snipped from an article on Sony's efforts by John Smedley. It is an interesting read. You can find the complete article here.

--- (GS=Gamespot, JS=John Smedley)

GS: One thing you didn't change was the revenue model. Now, when I think of you, I think of you as a keen observer of what's happening in the Asia markets... Do you see anything happening in the future with products at SOE that might build off of the billing and pay-model trends building in Asia?

JS: What I'm seeing over there is a trend toward more the upsell model. You can play a game without subscription, but maybe you're buying cosmetic items, or maybe you're purchasing a cheap subscription with a kind of "behind the velvet rope" [gamespace]. We've been trying to adopt a variant [subscription] model for an upcoming game we have coming out next year--I can't really give you details about it.

But we're also considering adding other models for the current set of games. We think the best strategy is to get these games into the hands of more people. We believe that the social bonding that occurs really makes them like the experience and want to come back for more. Then getting gamers over that subscription hurdle is--gotta be job number one for us after making great games.

So we think that [free-to-play] model could easily apply to other games. Is that going to happen to Star Wars? We have no plans for that, but let's put it this way, if we're very successful with this [upcoming] model, we could see making radical changes across the board. But we'll just have to see.

GS: And you'd have to wait for that game to be released next year, right?

JS: Yes.

GS: Which is going to be a game that carries the more creative revenue model?

JS: It's going to be a major new release from us next year. We [haven't announced] time frame or anything like that, or what the game's about, but it's been in development for quite a while now and I can't wait to reveal it. I'm excited about it, and my colleague in PR here has given me the sign to shut up about it!

Posted by Scott on Tuesday February 07, 2006 at 1:17 AM

The future's kind of already now, guys. Everquest and World of Warcraft are not the only MMOs out there. They're just the most inoffensive ones.

I've played a few of the boutique MMOGs in addition to some of the big ones, so I can tell you how your speculations actually turned out:

In Puzzle Pirates, there are two types of servers: subscription and free. The free servers are supported by buying a currency called 'doubloons', which are required in varying amounts for most in-game goods and can be bought with real money and traded for the game's more universal currency.

Players on the subscription servers, it turns out, are universally more mature, because they've had to front up actual money to really get anywhere.

Of course, Puzzle Pirates is a bad example because the core gameplay is primarily skill-based: no matter how much money you spend, if you can't swordfight, you can't swordfight. Games like World of Warcraft where gold can directly translate into advancement are far more precarious - essentially, people are skipping the tedious gameplay to get to what they want faster, which is the buzz of a level 60 or some item or whatever.

Real-world/virtual economies are already taking place in Eve Online and Second Life. In Second Life, there's a whole bunch of real-world laws involved to stop people from ripping off others, and Eve Online is very PvP-focused, although apparantly excellent. (It's next on my list, although ATITD3 might pip it at the post.) For more traditional MMOGs, however, I greatly fear the incursion of real-world economics, mostly because these game designs are irrevocably broken and real-world economics would only make it more obvious.

Here's my reasoning. Advancement is basically a function of time - there is a maximum rate that you can progress per hour, and only a certain amount of gold that you can earn at one time, no matter how well you understand the game. The increasing push for ease of casual play is a wild goose chase - RPGs, by their very nature, are hardcore games, because they either require a huge investment of time or they're too trivial for the hardcore players. You can't make that more satisfying for casual players, unless you get rid of the standard RPG model, an intimidating prospect at best. And let's not even get into the fact that to make massively multiplayer games fun for everyone they had to make them not massively multiplayer any more (they call it 'instanced').

Posted by Merus on Tuesday March 07, 2006 at 12:54 PM

I don't necessarily agree that RPGs are "hardcore" games. Single player games of that nature can be played by folks who can allocate small blocks of time to play. The MMO hardcore on the other hand is a very small set of gamers overall. You can look at the numbers of who is playing what and get a pretty good idea what size of the market this is. Warcraft success has somewhat to do with the fact it is accessible to a large audience and has so many different ways to play the game. You want to raid - you can do it. You want to solo - you can do it. You want to gank your fellow humans - there is an option for you as well.

Ultimately, the idea that advancement being based on some time requirement is silly. I still think that games have to offer the player the ability to demonstrate skill and intelligence and not just click these buttons for the next 14 hours and you are more powerful.

Finally, I still think from a developer point of view - offering users the ability to buy items versus the other mechanims will be a positive financial model. It is a proven model in other areas of the world and its only a matter of time before the companies figure out that if they offer a much more robust mechanism to thier customers - the ebay route dissapears.

Posted by Tim on Wednesday March 08, 2006 at 9:20 AM