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December 09, 2005

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Joshua Duplantier

There are several reasons why most developers of games do not tap into this market and work heavily to keep the market from becoming prevalent. They are selling a game to people that requires interaction and "time sinks" in order to make the game "better" for the player. With most of these MMOGs (massively multiplayer online games) the time you spend playing is directly correlated to how "good" your character is. Within the gamer community, there is a lot of "pride" about what you've accomplished, and there is a stigma associated with those that just "ebay" their items and gold. While it is rather prevalent, it isn't the norm.
Also, the basic principle to liken this to is that it is in fact a game. Being able to buy yourself boardwalk at the start of a game of Monopoly isn't "fun" and if i could jump in a game pump in 100$ and be the best of the best, what's the fun in that? It's a lot like cheating in some respects, and while this may seem personal, the community that plays these games is largely connected through message boards and websites, you'd be surprised how many people don't use the services and would rather them not be around.
Another way to look at the buisness model aspect also is that if you require the same time input from everyone, you're guaranteed that much buisness, and cutting down on monthly subscriptions for a burst of quick income doesn't seem as viable as hooking people for multiple years at 15$ a month, rather than 100 for a month, then the person having it all and getting bored.

Just some points from a law student that used to be way into these things.
Joshua Duplantier
1L Loyola Chicago and New Orleans

Joe Liu

My guess is that the software developers have decided that (or are trying to figure out whether) the financial benefits of acting as a middleman are outweighed by the lost revenues from people who are turned off by the practice. This is different from the Gauntlet example because there, the competition between players and the impact of money are more indirect. To take an extreme example, imagine if an online chess site allowed you to buy extra pieces.

Lior

I hear the norms point, but I'm not sure it's responsive. Even if the dominant norm views purchasing weapons as cheating, the existence of this large black market suggests that there are a lot of gamers who dissent from that norm, and the question is why doesn't a software developer try to niche market to them? (i.e., we're the MMOG game for people with more dough than free time.) Offline, there are lots of environments designed to allow people to show off how much money they have.

There are a lot of massively multiuser virtual worlds, and it can be hard for a newcomer to gain market share. So my question stands: Why hasn't a developer tried to fill this niche?

Bruce

I'm no economist, but I don't think a game developer could supplant the black marketers by entering the market, even though it could arbitrarily set its price lower, at least not without leading to inflation problems. But I suppose the question is why don't developers at least try to reap some of that revenue through direct sales.

I think answer relates to the practical and symbolic effect that would have. There's a difference between a black market existing that serves large numbers of players, but is nevertheless limited by its disreputableness and occasional enforcement efforts, and in-game advancement as an official feature of the game, both in terms of their ability to take pride in their skill and labor, and in terms of its effects on the number of people trading money for time. Many players may reject a game where those who level up through money rather than time cannot even properly be scorned as flouting the rules. With respect to the practical impact, I think there may be an analogy here to Section 1201's protection of content protection schemes, which even when it does not prevent exploits, at least forces those exploits onto a "Darknet" of dubious reputation for many people.

Greg Lastowka

Hey, thanks for the ping. Three answers.

The first answer, I think, is the one Joe and Josh suggested -- the game companies have internalized a set of game-meritocratic principles. The people who build and run these games come in large part from former players and they care about the games as more than attempts to meet market demands. Just as there is a Hollywood culture, there is a MMORPG culture. Many designers think that embracing direct sales to players would break the game they made.

A second answer is that there are smaller players with games built around the model you describe--while they are profitable reportedly, they aren't the most popular games at present. E.g. EA's Ultima Online (which was on the cutting edge in 1998) allows the purchase of "advanced character templates" for $30. But game communities aren't fungible, and many players want to be in the most popular games.

The third answer is that yes, many of the bigger companies are interested in that type of revenue, but they are being conservative about proceeding on this front. My sense is that they've got concerns about the PR such a move would generate and about what it might do to the loyalty of the community, but they are also being cautious because of perceived legal uncertainties, based in part upon developments in Asian courts and claims some companies have faced here in the US.

As you get away from meritocratic games into pure socialization worlds, the sale of virtual stuff becomes much more regular. On the Asian Yahoo! sites, for instance, they market fashionable clothes for personal avatars in much the same way ring tones are sold here at present.

Bruce

One additional post-post point that just occurred to me, I suppose the question arises: if non-money-purchasers would defect, why not design a MMOG expressly to try to capture the purchasing market? I don't know if it's been tried, but my intuition is that, while many non-purchasers don't want to play with purchasers, most purchasers want to play against at least some non-purchasers. I.e., the value of paying X dollars for a magic sword is that it puts you on a par with a player who's skilled enough to achieve the sword without any extra investment, not that it puts you on a par with other players who have also paid X dollars.

Joe Liu

Perhaps the very appeal of the black market is that it is a black market. In other words, if I buy a cool weapon on the black market, I obtain an advantage not widely available to others and also the perception that I may have obtained that weapon through merit. Once the purchase and sale of these weapons becomes regularized, then both advantages are reduced.

D Conrad

One point made by a lot of devs (who identify with most of players' values) is that, as said above, they don't like the idea of a rich person buying their way to the top.

I don't think that is more than a problem of perception, as there are plenty of ways to control advancement by money -- look at World of Warcraft's bound items, etc. gameplay can be altered so that money can improve your character, but retain the neccesity to grind away for experience or whatever.

The complaints about economic issue also ring false, because in a game economy, there are controls on supply and demand. Supply controls are absolute (the company can simply remove all instances of an item or make an infinite number available for free). On the demand side, things are controlled by making gameplay changes. Make an item worthless, and demand will drop almost instantly. In a virtual world, economics are easily adjustable (and hence can provide a very neat way to test economic theories).

The reasons put forth by a lot of executives, as opposed to developers, is the question of legal liability. If you sell someone an in-game object, and your servers crash and that object is lost, what liability do you have? Do the players own it, or does your company own it? There is quite a bit of unexplored territory that terrifies companies.

I think the best answer to why more mmorpgs haven't done this sort of thing is just that the number of popular mmorpgs is still low, and the big players are more risk-averse than the smaller ones (who have in many cases implemented a system for buying in game objects already).

Seth Ayarza

Bruce,
Thats because doing so is extremely difficult to do without preventing in game trades from occuring.

Any MMORPG is to a certain extent about trading... I think its interesting that free trade in any context is sort of viral as it situates itself or finds its way into some global marketplace.

Ilya Beylin

Game manufacturers’ revenue strategies are heterogeneous. There are toys out there that encourage continuous investment (e.g. legos). There are also games out there that require continuous investment (e.g. Magic the Gathering). Then there are toys/games that require one time investments (e.g. the Quakes, Starcrafts, and latest MUDs). Various people use various (combinations of) toys/games to satisfy their entertainment preferences.

The motives of online gamers are diverse as are their backgrounds. Despite that diversity, there is a common assumption about virtual role playing games both amongst lay commentators and those that market games. People escape online. They escape the bounds of their everyday repressed eking to someplace where they can be muscle bound heroes slaying various dragons. To the extent that games incentivize translation of a player’s characteristics into their avatar’s characteristics (e.g. allowing the rich to express their affluence through better equipment or extra magic points) the very purpose of the game is thwarted.

Those who play video games are often young and often receive them as gifts. This point interacts with the next, but for now it’s sufficient to consider that a parent may be more likely to spend sixty dollars on a cartridge in December than give their child five dollars every month for upgrades.

Companies have the option of offering their products on credit, or requiring users to pay for upgrades. Such strategies, however, aren’t always wise. There are business advantages to smooth revenue streams. There are also business advantages to getting money up front, especially if the customer’s commitment to a product is uncertain. Gamers are faddish. Software is hardware bound and hardware is swiftly evolving. Therefore games built for the latest platform often offer richer, more real time, virtual experiences than their predecessors (again this is a presumption and there are still diehards perfecting their pacman tactics). If a firm offered items for sale, it would effectively increase the costs of full participation. The NPV of the maintenance stream would translate into lower cartridge costs. Given the risk of fickle customers, it is not at all certain that firms are irrational when they choose to receive their money up front. Though I am not familiar w/the literature, I would hazard that industries that produce fad products frontload the revenue stream attached to each product.

Benjamin Cooper

Softnyx - http://www.softnyx.net/ - maker of the tank game Gunbound, did at least at one point in time allow users to trade real money in for game points without a middleman. I know of no other examples.

slevmore

The puzzle is a great one, but I think the facts to solve it are there for most games. So there is a thriving black market, especially in "equipment" and currency, but by and large what gamers reall hate is someone walking around in the game at a high level without the skill to be there. Somebody with extra currency is not as awful. Having said that, there remains the question of why the developer does not sell upgrades or currency, and one possible answer is that it is hard for it to make a credible commitment about the volume of this currency. At least the black market limits the amount of new currency or status because someone (even in China) has to spend the time to obtain it.

George

Apologies if this is old news, but there was a very good article in WIRED magazine about a year ago or so about Everquest and other similar games that provided some very good insights into this phenomena.

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