A history of World of Warcraft's gold economy
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MMO operators have long struggled with secondary markets for virtual currency. They often have trouble trying to sell virtual currency directly to players because then it has the feel of "pay-to-win." And so third parties have captured the lion's share of this market for years -- by some accounts capturing billions of dollars annually in revenues.
But with WoW tokens (and similar concepts in other MMOs), they can market virtual currency to players, and because other players can feel like they benefit, too by getting their subscription for free, they don't complain as much of it being a "pay-to-win" model.
In reality, though, remember that Blizzard controls the market for both buying and selling WoW tokens, and they can peg prices (in cash and in in-game currency) at whatever they feel is appropriate, by either providing or reducing supply artificially.
Yet it is the artifice of "exchanging WoW tokens with other players" that gives the whole practice an air of fairness. This brain-dead-simple scheme will make them tens or hundreds of millions of dollars per year in increased profits that for years has been instead going to IGE and a cadre of third-party gold sellers.
At the end of the day, each monthly player results in one monthly fee, whether they are paying for themselves, or buying a token which another player's paid for. Hundreds of millions in increased profits would require tens of millions of active accounts. I am I think at last count Wow had about 6 million active monthly accounts.
Just google "eve killmail plex" and you'll find quite a few examples of players getting blown up while carrying thousands of dollars worth of tokens.
To get caught you have to do something foolish like buy heaps of PLEX, then undock with the character that bought them in Jita, during a wardec, and not have an instant undock bookmark.
Blizzard could sell 20 million WoW tokens each month to players for cash even if only 2 million tokens are bought by players for virtual currency. Blizzard needs only buy the remaining 18 million tokens on their own auction house in exchange for virtual currency (which, conveniently, they can create out of thin air).
The question here, then, is not about the number of active accounts, but: how much extra cash are players willing to put into the game in order to get gear / avoid grinding / gain a competitive edge, etc. The size of this market could be very different; Wikipedia links to [0] (2008), which on page 10 examines some possible lower ($200m) and upper ($1.4bn) bounds for the annual size of the market. Of course, not all of that is WoW, and not all of it would necessarily be captured by Blizzard, but that's where I'm pulling the "tens to hundreds of millions in additional annual revenue" from.
[0]: http://www.sed.manchester.ac.uk/idpm/research/publications/w...
Hmm, you're right. I assumed it had to be a player to player transfer of the token.
I guess under said system they are walking the pay-to-win line, as you say. They've been slowly making the game more and more accessible to casual gamers. I'd bet these decisions are driven by the fact that the games user base is dwindling.
Interesting, so the final effect is as if players had just bought virtual currency with real world dollars but they 'launder the guilt' through this token scheme..?
But wouldn't players be able to see through only 1 degree of indirection and make the connection that they are buying virtual currency with real?
Note the convenient effect of inflation resulting in MORE token sales next month to buy the next widget.
But I think you're misjudging negative reaction people have to "pay to win." Maybe I'm not correctly reading the average player, but I don't think it's so much a matter of Blizzard having to keep up the appearance of fairness. The underground gold market has been around for so long and in so many games that people expect that money can buy in-game currency. There are other games which are designed to be fair like first-person shooters, but part of the draw of MMOs is that they are explicitly not fair. Coming in as a new player, you have to compete against people with significant gear advantages, and there's an aspect of this that's actually ego-boosting. If you can compete with people who have more resources, not necessarily win but at least operate close to their level, you can feel good about your skill, and when someone else has an advantage, you can excuse it because you know the system isn't fair. It's the same with games of chance, where you know that some of your failings are attributed to bad luck and not your own failings.
Where "pay to win" goes bad is when you feel like you need to fork over excessive amounts of money to compete at all and feel like the game is just trying to squeeze you for money. But the way WoW is designed, it's relatively easy to get to the gear level of other players, and what's really valuable is having people who you can work closely with. In the time it takes to develop those relationships, you will have more than enough put into the game to have the resources you need to compete. Although gold can be a nice boost and snag a few top-notch pieces of gear, it's mostly unnecessary, and the really expensive items are usually vanity items.
So the unfairness is actually only a small part of the game which serves to excuse personal failings, and the really valuable resources: friends, time, and skill, are things which can't be bought.
As an aside, I always dreamed of playing the game I read about. One of the cool things about the game was that your character continued in the game as an NPC when you were offline. I always thought this would be very interesting way to have player generated content, where they would have to build defences to protect their player/gold while offline. Other players could launch raids to try to steal it. No one has ever built a similar kind of PK system that doesn't piss everyone off, but for me it's a kind of holy grail of MMO functionality. I hope I see it before I die :-)
Reminds me of Stephenson's REAMDE.
I've never really played MMOs outside of a little bit of UO and EQ in the '90s, and everything I'm reading about WoW's gold economy is something that I thought Stephenson just came up with for REAMDE. I'm actually a little bit shocked that all this is real.
There was no such thing at the time. There were MU* games around but MMO as a genre was viewed as something greater than that. Games like M59 and UO were where that differentiation really started being made.
The fact that they didn't exist doesn't mean people couldn't write short stories (or other fiction) about them. Fictional accounts often precede reality.
The phrase "short story" that was used to describe it is a term for a particular form of fiction writing, so that was obvious from the outset.
http://henrysstories.blogspot.com/2011/03/catacomb-part-1-of...
This story made a big impression on me when I was a kid.
Not an MMO but the first-person survival/crafting game Rust features that concept, your character sleeps on the ground when you're offline and anybody is free to loot or kill you. It gives a whole other dimension to the game, with players being assigned to defend a clan's base at set hours and calling them in when the base needs defending, I've even seen people skip work early to defend against major raids.
Picture leaving the Amulet of Yendor somewhere hidden in a new WoW shard.
First player to pick it up wins $10,000.
$0.25 to play the contest - PER LIFE. PVP. MASS HYSTERIA.
So at one point I was in the top 5 players in the game and had a absolute ton of gear and actual liquidity and set up a trade hub. I never expected it but that thing took off, I was making a billion a day and you could sell a billion credits for about $10. Remember that this was a pretty obscure tiny game that was generating hundreds of dollars a month for a 16 year old, and that you could completely set up the trade hub on your base as you liked, and so I didn't actually have to put in any work. (setting up the initial shop was a pain). The beauty was that after a short time, 90% of my trade wasn't my own gear that I was finding and selling. Mostly I was providing instant, immediate liquidity to anyone. (the alternative was to spam in trade chat you wanted to sell something, then haggle, fly across the universe to meet the guy and then do a 'drop trade' based on trust without any form of escrow). My base offered a safe, secure, immediate price. And that value allowed me to discount prices and charge premiums. I was getting ridiculous 30% profit margins on other people's intermittent trading just by being a source of liquidity (in a game where there's no opportunity cost of money, there's no security to buy or interest rate to get. So there were no cons to locking up my money in trades) and gear.
[0]: https://en.wikipedia.org/wiki/Jeffrey_Kaplan_(game_designer)