« Werewolves of London? | Main | Ted and Julian on NPR »

Apr 05, 2004

Comments

1.

I know this is probably way more interesting to me than to most, but despite attempts to maintain authority defining all game items as part of the service, virtual item trade already shows all of the characteristics of the commodities market.

I can't help but thinking that Our Political Heroes will take note in the coming years, and that virtual items and the market of buying and selling intangible items will soon be subjected to real world taxes and some form of regulation (not to mention stir up property and ownership rights).

2.

I hope not. But each quarter's growth seems to confirm that there's a process of powerful economic development at work.

The place where I live, Los">http://www.historycooperative.org/journals/ahr/106.1/br_58.html">Los Angeles, is a fine example of how economic development can ruin what was once a paradise. The emotional impact of the change, for people who live through it, seems to be pretty well captured in films like Mon Oncle.

In the case of virtual worlds, the question is, who's the zoning authority? What agent is in a position to structure development so that precious natural assets (in this case, the magic circle) get preserved?

3.

Edward,

How does this growth compare to the growth (or decline) in the sales (or subscriptions) of these games?

4.

Hard to say. The MMORPG market's down right now. But it's a case of supply growth exceeding demand growth. In other words, there's growing demand, but we just have had way too many games with massive intentions lately for all of them to survive.

The changes I'm concerned about are more long-run and structural. I think a big part of the growth in the eBay numbers is not growth in game participation, rather its a growing awareness/acceptance of eBaying as a method of participating in the existing blockbuster games. Its a trend toward redefining what those games are.

5.

Ted>"The changes I'm concerned about are more long-run and structural. I think a big part of the growth in the eBay numbers is not growth in game participation, rather its a growing awareness/acceptance of eBaying as a method of participating in the existing blockbuster games. Its a trend toward redefining what those games are."

I agree. It's like "ghost stories" or "Santa Claus." They may not be factually real, but are true in the cultural context.

eBay was at the fringe of economic activity. Now eBay may be at the center of eocnomic activity. So by extension, eBaying virtual ingame goods may become a culturally-accepted part of MMORPG experience.

Frank

6.

Hard to say indeed.
I tend to view the eBay trading as more gamers trying to gain an edge than a full mentality swing. If buying the things was the real path to the game, it would cease to be a shortcut and lose all the 'edge' appeal. Is there a breaking point here? At what point do you realize that you're buying half the game at the store but unless you buy the other half on eBay you aren't going anywhere? And what edge are you going to use to differentiate (or equalize depending on your situation) yourself when the shortcut isn't blocked, but actually someone turned it into a toll highway? You were paying 'extra' to play with an edge. Are you going to pay the extra toll just to play like everyone else? If so, whats the point of telling me I can play for $12 a month but then charge me out the wazooo on the back end? Will we do here what There does there? Free to chat, but hit your credit card instead of your hit-point bar when you go fight? Why does Project Entropia seem to suck? By any measurement there should be thousands of people beating down their door.

7.

I think rarely it's used to gain an edge. Usually its done gor convenience and to avoid the long, tedious and un-fun process of character development (aka "the level grind").

The majority of MMOs require lots of time and effort to build up your character so that you are able to participate in the "end game", or the main content of the product. For the casual gamer who has to work and has but a few hours a week to play, this can mean a couple of months.

Additionally, to date I have yet to meet someone who enjoys the arduous task of character development in games that feature an end game as main content.

For those that do not have the time, or do not want to feel like they have to go to work in order to make a character, eBay and other virtual property trading sites provide a solution.

8.

Edward,

You wrote, "Hard to say. The MMORPG market's down right now. But it's a case of supply growth exceeding demand growth. In other words, there's growing demand, but we just have had way too many games with massive intentions lately for all of them to survive."

80% of games fail to turn a profit. Why should it be any different with muds?
--matt

9.

Edward,

You wrote, "Hard to say. The MMORPG market's down right now. But it's a case of supply growth exceeding demand growth. In other words, there's growing demand, but we just have had way too many games with massive intentions lately for all of them to survive."

80% of games fail to turn a profit. Why should it be any different with muds?
--matt

10.

Oi. My apologies for the dual posts. Technology hates me.

11.

Anecdotal Evidence: SoE continue to release new "high end" expansions to Everquest at about the same rate as their most active and "uber" players consume them. The abilities and equipment of the "high end" players continue to increase, in line with their consumption of the latest high end content.

For a new player, starting now, from nothing, it is all but impossible to reach the top end of the game. The people already there, started several years ago, and are still getting better every night.

If you choose to define "winning" as getting to the top, then it appears that the only way to get there, if you started today, is to buy a high level character, which has already had several years of investment in it.

If you want to sell apples tomorrow, you dont plant some seeds, you buy an orchard. Alter example as appropriate...

12.

Partically off topic:

A very long design review of WoW with the following section about risk/reward design and eBaying:

"Risk/reward is an optimal mechanic applied in some situations, but mmorpg designers simply didn't get it right. Risk/reward is good when you die (you are defeated) because you did an error. So you can *learn* from your actions and improve. In a mmorpg, usually, you die just because you are forced to play on the borderline. When you have just a few styles to choose it's not that the game asks you some kind of ability. You sit there and hope it will go well. If it doesn't, you *cannot learn a damn*, because you cannot change what you do. This means that you can just lower your aim, till you finish to kill critters that give you an amount of stupid exp making you realize that if you keep killing those you'll need like two weeks of real gameplay to pass a level. And here some smart players just cancel their account and laugh at who thought a stupid system like that. Then tell me: How damn can you blame peoples selling and buying accounts on E-Bay when the game is that bad? "

So, will WoW and new generations of MMORPG that get this right reduce the need for eBaying virtual goods?

Long WoW design review

Frank

13.

Ok, now the next paragraph of the review:

"When you want to spend real money to jump a part of a game, it's *more than obvious* that the game is *broken*. This, fortunately, doesn't happen in WoW. You don't care about buying a character as you don't care about buying Final Fantasy for the PSX2 and buy also a memory card from your friend for the save state before the final boss. You *don't* want the game spoiled for you. You *don't* want to have the character of someone else. The game is fun, if you want to skip it, it means it's broken (or that you are stupid). For this reason I don't expect this to happen in WoW. "

14.

It seems to me that we're always catching up with the Koreans or Japanese since they've already culturally accepted the fact that eBay is a place to do business. Heck, even CHINA realizes that the movement of virtual goods couldn't be stopped.

Would I mind about a tax on virtual items? Maybe, depending on the cut that the greedy bastards that run the US government want.

15.

Last I checked I wasn't Chinese, nor shared their culture.

16.

I agree with Frank's argument (by quotation of a WoW review): the VW eBay economy primarily indicates that the leveling grind is a design flaw -- if the flaw persists, the general expansion should grow the trade, but if the games actually improve, it should (hopefully) reduce the trade, as people stop attempting to use shortcuts to get past what should be part of the enjoyment.

I'm not saying that VWs and games are not socially important. It's just saying that my view about that would not change if the eBay markets went away overnight. Nobody would deny that, e.g., parenting/religion/sleep are socially important, but we do not judge the social importance of those things by the size of the economies they create.

17.

Agreed.

18.

I wouldn't say that the level grind is a design "flaw" exactly. It has problems, but it's the best thing that designers have come up with so far to represent game experience. People don't buy ultra avatars because playing the game is more fun with one, they buy them to impress other players with how skilled (or fanatical) they appear to be.

Even people with a lot of experience with decievers in chat rooms can be lulled by an actual avatar standing in front of them in a MMOG. You tend to take that person at face value. If someone's bio says they are a 50th level ptavv master or whatever, you subconsciously assume that they actually went through the grind, and should be respected for that.

BTW, I miss the old LA, too. Now it's so dang full!

19.

CherryBomb> People don't buy ultra avatars because playing the game is more fun with one, they buy them to impress other players with how skilled (or fanatical) they appear to be.

I don't agree with this statement, but hopefully Nick will get on this :-)!

20.

CB>they buy them to impress other players with how skilled (or fanatical) they appear to be

There has to be some truth in it, though it doesn't capture the whole eBay market.

I think there are about four reasons for eBaying -- and I'd be interested in hearing more.

1) You want to skip the boring early game for the more exciting end game. This has got to be true and I think it has to be the primary reason eBaying happens, because if you buy instead of play, you miss a big portion of the game play. I'd analogize this to skipping the early chapters of a book because the end of the book is more interesting. So that's a design flaw, imho.

2) What CB said -- you're deceptively purchasing social status in order to make other players into think you have accomplished something that you have not accomplished. That is cheating in the classic manner, and I think that's the way many players understand eBaying. That's not a design flaw, but it also isn't socially beneficial behavior (though it seems inevitable as part of human nature).

3) You don't want to skip game play, you don't want to fool anyone, but you are willing to accept both as collateral consequences of your eBaying because you have some more important goal -- for instance, playing with the same small social group you've played with before. I'm not sure if this is a design flaw, or just a classic bind presented by all rule systems -- sometimes the rules don't work out perfectly in practice so some people bend them where there is flexibility and perceived ambiguity (e.g., speeding in your car on the way to the hospital.) I don't know what percentage of eBaying can be attributed to this kind of thing. This is where good survey data would help. (I would wager, actually, that this data has been gathered already by the big VWs.)

4) You're playing in a FunHi VW like Entropia or There where 1, 2, and 3 don't apply. I think the issues raised by those kinds of VWs are much different.

21.

Story in Wired today -- seems to follow #2 above.

"We have people who have been playing for a number of years in EverQuest," he continues. "They've invested a large number of hours into creating their character, (and) amassing a small fortune in platinum. To have a person who has spent that much time and effort turn around and see someone else who has a character with equal abilities who has done nothing more than buy it on eBay, it turns off a lot of our players."

22.

Actually my view on buying avatars is quite a bit different from the above mentioned views.

If I buy an avatar, it isn't to show off, or promote my social standing or anything at all like that. I have bought avatars in the past with the sole goal in mind that this type of avatar (whatever I bought) could earn me money if I used them correctly in the game world to gain items/money and sell them on eBay instead of me having to work up my character to that level myself.

23.

LD> with the sole goal in mind that this type of avatar (whatever I bought) could earn me money

Okay, so my third category was kind of a catch-all, but I guess I was limiting it to "equitable" ebaying. But this is a fifth reason for eBay purchasing -- financial speculation.

Julian does that too, I gather.

24.

LD> with the sole goal in mind that this type of avatar (whatever I bought) could earn me money

One obvious thing about this motive (that separates it from the other four listed above) is that it functions within (upon?) a market but it doesn't create the market. In other words, speculation won't create demand, though it will produce profits from market inefficiencies.

25.

greglas>I think there are about four reasons for eBaying -- and I'd be interested in hearing more

I usually combine the "inflate status" and "get access to higher-level content" reasons into one. I also extend the "catching up with old buddies after an absence" to include "changing the make-up of an existing party" (eg. swapping an excess mage for a much-needed healer), although your descrption kinda covers that too.

There is another reason that people buy stuff, which doesn't seem to be covered by any of your reasons: professional players have camped a spawn site permanently so the ONLY way you can get it is if you buy it off them. I'd call this "unwilling" buying and selling, because most players (even the ones generally in favour of commodification) abhor a monopoly.

Richard

26.

Edward Castronova>Total sales in eBay category 1654 ('Internet Games,' listing virtual item sales) last quarter were $5.85 million.
>The raw number of completed auctions was about 35,000 in a typical two-week period last summer. Now, it's about 65,000.

I'm not an economist, but to me that looks like the number of objects for sale has almost doubled but the net value of all those sales has gone up by only about a tenth.

Does that mean that prices have come down, or that people are buying more cheaper goods?

Richard

27.

Richard>I usually combine the "inflate status" and "get access to higher-level content" reasons into one... I also extend the "catching up with old buddies after an absence" to include "changing the make-up of an existing party"

I guess you're not as keen on scienter and rule-breaking issues as I am. I would break those down in terms of fairness/rights in different ways. If the early play is boring, that's bad design, but if the L50 is bought just to deceive others, that's a dishonest player. Similar for the "play with group" vs. "switch class to play with group" -- although that is a closer call in some ways...

Richard> the ONLY way you can get it is if you buy it off them

Okay, there is 6 -- basically game extortion from other players. Any random, non-binding guesses on what percentage of eBaying purchasing has that as the underlying motive?

28.

Edward Castronova>Total sales in eBay category 1654 ('Internet Games,' listing virtual item sales) last quarter were $5.85 million.
>The raw number of completed auctions was about 35,000 in a typical two-week period last summer. Now, it's about 65,000.

Richard> I'm not an economist, but to me that looks like the number of objects for sale has almost doubled but the net value of all those sales has gone up by only about a tenth.

Does that mean that prices have come down, or that people are buying more cheaper goods?

The 9% increase was from Q4 2003 to Q1 2004. The doubling of auction numbers was from Q3 2003 to Q1 2004. So, comparing quarters to quarters:

Q3 2004: auctions per 14 days = 35,000, total sales per 14 days = $550,000.

Q1 2004: auctions per 14 days = 65,000, total sales per 14 days = $1,000,000.

Average sale per auction has held steady at about $25 - $30. Bids per auction has risen from around 2.2 to around 2.6.

Overall, I'm reading this as more participation, rather than a change in the type of participation.

29.

These statistics would be more insightful if they were broken down in terms of individual games. Lineage 2 has arrived on eBay (curiously its open beta will not be wiped before release). I'm curious if and how markets suffer when new games roll out.

30.

Tangential to the eBay discussion, but this is the closest thread I could find after reading the article (dated April 7) "When play Money Becomes Real" from Wired at http://www.wired.com/news/games/0,2101,62929,00.html

The question that's been on the back of my mind for years now is... What is the difference between SOE selling the EQ items and IGE/others doing it?

31.

I think the difference between SOE selling and IGE is that Sony can claim all sorts of legal loopholes in the law making them not responsible for any bad transactions or hacking or refunded payments or any of that other stuff that generally goes on with the side stuff as well. IGE/others are built for it, they take it into account and consider it a part of their everyday business.

32.

Lee. Well... If we're talking about such seemingly huge numbers that supposedly dwarf subscriptions on an anual basis, you'd build fraud and complaints into it too in order to capture that. Actually, all game companies have to think about fraud and customer support already.


So what about the user-experience part?

Scenario 1) Going to a 3rd party site, winning an auction or selecting "buy" on a shopping cart, giving them your info, chatting up with some stranger, getting your item in game.

Scenario 2) While playing the game, you go through some menus, select your items. Confirm. And its done, you'll be billed at the end of the month.

Why would Scenario 1 be better than Scenario 2? Why do we have Scenario 1 and very rarely Scenario 2?

33.

Mithra> These statistics would be more insightful if they were broken down in terms of individual games. Lineage 2 has arrived on eBay (curiously its open beta will not be wiped before release). I'm curious if and how markets suffer when new games roll out.

Julian Dibbell's Play Money site has data just for UO. But getting my crawler to pay attention to differences between worlds is pretty hard.

DivineShadow> The question that's been on the back of my mind for years now is... What is the difference between SOE selling the EQ items and IGE/others doing it?

I keep asking myself this as well. To me, it's little things that count, such as: If Sony does it, then there's a chance that I could buy a high-level avatar but then also name it and customize it, in other words, put some role-playing into it. If Sony does the trade, then it seems potentially less immersion-shattering to me. Also, the moral ambiguity is taken care of (cheating or not cheating?). From Sony's perspective, this would capture a very nice revenue stream. And it also keeps control of these all-important balancing flows in the hands of the Devs, where it belongs.

And so, if P2P trading goes on at all, I think it's best if it happens under the aegis of the developer. Build it into the EULA and construct some lore-consistent housing for it.

How about this? "The Sony Cash-Back Program: Pay $17 per month. $15 supports ongoing operations. $2 goes to buy PlayPoints. PlayPoints can be used for all sorts of things: buying new expansions, enabling extra character slots, etc, but especially for trading among players for items, plat, and even accounts. Best of all, PlayPoints can be redeemed for real dollars at a certain rate, as Sony's 'Thank you' for playing!" Some system like this might be enough to allow in-lore P2P trade without inviting in the IRS.

Might. I'm sure similar ideas have been concocted in the past, and I have no idea whether something like this would work.


34.

Edward,

" How about this? "The Sony Cash-Back Program: Pay $17 per month. $15 supports ongoing operations. $2 goes to buy PlayPoints"

It does seem similar to the Project Entropia model, where you can get "PED" back into dollars and take 'em home. One has to assume that their system is tuned to sink-in and draw out from the player as much money as is needed to keep the game going and return the rest to the pool. After all you don't want to keep it circulating (without devaluing or anything) forever increasing your liabilities.

Do players in general think this way?
Given the option of playing for ItemX or paying for it, it seems clear a certain percentage of them are willing to pay for ItemX. Also seeing that the road to item sales from the game company is a technological no-brainer, and that these companies generally employ very sharp people, I have to conclude there is also a good percentage of players that are not willing to pay for ItemX as well as a good percentage who would take their money elsewhere. Is the fact that its a black market have something to do with creating compatibility between "pLaying" players and "paying" players? Perhaps its the 'umbra' the game provides by sitting between the rules and reality what creates compatibility between the two camps and all the shades between.

As offerings come out in the next months and years, will we see self-selection happening where players clearly in the "white" spectrum flock to "white" games and players in the "dark" spectrum flock to games such as Project Entropia?
How many players fall into each camp and how many are in between?

35.

http://blackjack.cnt-group.com > http://blackjack.cnt-group.com
http://blackjack.cnt-group.com > blackjack

The comments to this entry are closed.