To quote Julian Dibbell on his reaction to the May 14 LA Times article Game Makers to Try Pay-as-You-Go Model (registration required)...
Exhibit I:
Sony will start selling add-ons — such as weapons for an adventure character or a souped-up car for a racing game — next year, said Andrew House, executive vice president of Sony Computer Entertainment America...
The inspiration for the Sony initiative, said House, came from participants in online subscription games who sell virtual goodies they've earned in the game on EBay Inc.'s auction site...
Exhibit II:
In private meetings at the games expo, Electronic Arts Inc. hinted that it, too, would offer downloadable add-ons for some of its most popular games...
Analyst Michael Pachter of Wedbush Morgan Securities said the strategy was mentioned by EA's chief financial officer, Warren Jenson, when talking about the "NCAA Football" game. "He said that if you were playing as Notre Dame against USC, maybe for a buck you could wear the green jerseys."
Is the paradigm shift upon us? What are the ramifications once the Ebay Virtual World (magic-circle flouting) fringe has gone mainstream. Consider a few first-order possibilities:
- EULAs viz "Ebay" will become more nuanced?
- EULA enforcement will become more certain (explicit damages)?
- ?
I wouldn't expect a move like this to make much of a difference in how game providers treat ebaying of in-game items. If anything, it might make them more zealous in preventing resale, to help preserve their revenue stream.
I also would expect players of existing MMOGs to howl if this becomes standard in the next generation of games, for a few reasons. First, there is what I've mentioned before (let's call it "Ashton's Postulate" because I've always wanted a postulate named after me): MMORPG players complain about everything. This probably applies to MMOGs in general. Second, and less flippantly, they will feel cheated by a system where there are in-game items that are only available for real-world currency. As things stand, players feel they can succeed entirely on the terms of the game. To bring real-world wealth into the picture is harmful to the game as a game - it's no longer a self-contained system with its own rules, it is now dependent on external reality.
How could a developer create a game that allowed you to buy items, without alienating their player base? The best solution would be to offer the special items for sale in real-world currency, but also make the obtainable in-game (either through purchase or questing or whatever). Even simpler from the developer standpoint would be to allow players to buy in-game currency with real dollars. This allows those who wish (or have no choice) to succeed on the terms of the game, while adding the extra option to spend a little to save time and effort, which I imagine would be particularly attractive to the casual player.
Of course this is all moot in NCAA football, but I assume most people here are more interested in the MMORPG case.
Posted by: Mark Ashton | May 14, 2004 at 22:48
It was only a matter of time.
Basically, "We can't figure out a way to build a game that *doesn't* rely on capitalism to make it interesting, and so we're taking the next logical step." And so it goes.
Honestly, the first shared persistent virtual world whose underlying structure is based on socialism or honest-to-god anarchy will certainly turn heads.
Or is there one that I missed?
Posted by: Jamie Hale | May 14, 2004 at 23:00
If Sony and EA did indeed start doing this for items and especially currency it would legitimize that virtual items are of true real world value. If anything. them setting a price on items and currency would stablize the MMO markets.
It would also create a problem with all their ToS which currently state that the sell of in game items and currency is illegal.
Posted by: TEK | May 14, 2004 at 23:04
Mark, if you haven't already, have a look at Project Entropia (http://www.project-entropia.com). While not a stunning game, and certainly not EQ levels of player numbers, it seems to be a successful game that is hinged on players paying real-life currency to buy in-game supplies.
You pay your cash and get your PEDs to buy ammunition (which you are constantly running out of) and repair various things. It's basically a casino with virtual laser swords and automatic rifles. You pay for your PEDs and use them wisely, and once you've ridden the treadmill long enough, you have a chance to stumble on some good loot.
And despite that, they still seem to be going strong.
Posted by: Jamie Hale | May 14, 2004 at 23:08
Jamie, that's pretty interesting - it seems to serve as a pretty good proof-of-concept of the virtual world/real world currency exchange that I proposed as a way to keep players happy.
Posted by: Mark Ashton | May 14, 2004 at 23:22
"We can't figure out a way to build a game that -doesn't- rely on capitalism to make it interesting" -- actually, I think that allowing people to pump real dollars into their virtual assets (in the form of in-game currency or items or whatever) is a step away from "real", i.e. laissez-faire, capitalism.
If the real world and the virtual world are completely separated, then the virtual world is pretty close to an Ayn-Rand-style meritocracy.
But, if the game developers give in-game advantages to certain players based on out-of-game interactions, that's equivalent (to my mind) to a real-world government giving advantages to certain citizens based on "non-meritocratic" interactions.
i.e. Frank Realworld gives $20 to Gamecorp. Gamecorp gives 20 Gamebucks to Gamefrank, even though Gamefrank has done nothing to deserve it in Gameworld.
=
Frank Carnefeller is good friends with President Beorge Clish. President Clish [pulls strings and sees that the government] gives a prestigious contract to Carnefellercorp, even though Carnefellercorp has done nothing to deserve it in the business world.
------
Of course, the real and virtual worlds haven't had perfect separation for years, thanks to eBay and such, but this involves "non-meritocratic" interactions between individuals, not officially sanctioned (operated!) by the Authorities.
But I think that the previous commentors are probably right. As long as the items are obtainable in-game as well as with cold hard cash, people won't really care. (Would there even be a demand for stuff that couldn't be obtained in-game? Wouldn't people rocking this dollars-only merchandise be ridiculed? "Hey, nice Superlegendary SonyMail, loser. Way to be a rich little mommy's boy.")
Posted by: Mill | May 15, 2004 at 02:59
It is not a paradigm shift in general, but is a paradigm shift for video game industry.
CFOs at EA and Sony are starting to realize now what companies like Topps, Wizards of the Coast and Nike have realized: that you can mint money from personalization and control scarcity.
Check out www.etopps.com on trading of semi-virtual baseball cards. The cards are semi-virtual as they are backed back actual cards stored in a warehouse. They trade like stocks!
Check out www.nike.com for Dunk Low Pro SB, a re-realsed basketball shoe with LIMITED-EDITION color schemes that goes for 5-times the suggest retail price.
Action by EA and Sony indicates that they have gone through the due dilligence sufficiently to go through with it.
Frank
Posted by: magicback | May 15, 2004 at 03:41
One simpler solution without the need to introduce new to alter the current game models to introduce an external source of items, currency and related would be to adapt the ebay model for virtual transactions. The service provider (game company) would be in charge of providing the infrastructure for the virtual transactions and offering an escrow service. Like the ebay business model, the service provider would charge a fee for the successful transaction.
Benefits:
Vendor and seller are both independent entities
No direct external interference with the ingame economy and game model
Possibility to increase revenues with additional services
Posted by: Luca Girardo | May 15, 2004 at 06:44
SCEA doesn't make MMO's.
SOE has been selling add-ons online for quite a while already. We call 'em "expansions".
You're reading too much into this.
Posted by: Jeff Freeman | May 15, 2004 at 06:48
Jeff,
I think they are going one step further. They are beginning to adapt a type of computer barebone model, earning greater profit margins on the premium add-ons. The kicker is that they are making certain add-ons "limited" to achieve even greater margins.
This, alone, is not that special. But the problem is that they want to sell "the green jersey" feature for a buck. But shouldn't this feature be free?
Secondly, are they going to sell a special rare fabric dye to "drain" excess disposable income from RL like they did in VWs to drain excess currency from duping exploits?
Frank
Posted by: magicback | May 16, 2004 at 06:10
Let me inject a bit of wild-eyed heresy here - for discussion.
I'm not sure the online business world sees MMOs as all that distinct a pea in that big pod of Online Entertainment (from here, 8%). Put it another way, where the dog goes, so may the tail...
The question in my mind is where are the convergence points that will shape the evolutionary path through "market meme space", so to speak. So is it consoles + communities + umbrella subscriptions + microtransactions... or is it something the wireless guys are doing... etc.
Posted by: Nathan Combs | May 16, 2004 at 10:12
Nathan,
Wireless leads the way by a mile. By extension, Europe and Asia leads the US on business models and service offerings.
3G services, SMS, etc. Three NASDAQ-traded wireless/net portals for the China market have rose out of the dot-bust era with healthy profit margins on this.
On the gaming front, mobile gaming will free all the gamers from the confines of their desktops or laptops and penerate market segments of people who don't want computers, but are ok with cellphones or handheld consumer devices. Maybe the idea about a laser sending rich visuals into your retina will make someone billions.
The convergence point for US will probably be led by Sony's PS3 and PSP.
Frank
Posted by: magicback | May 16, 2004 at 12:59
MMO's already charge box price + a monthly fee (for more content and access to more content). There are lots of "green jerseys" in EQ that you can't get access to without buying an expansion, the last odd-number of which *were* sold online.
Additionally MMO's already charge additional fees for extras, like the Legends server (early access to more green jerseys, and in some cases exclusive access to it), name-changes, character transfers, account transfers, pre-built characters, and so on, just depending on the company.
The console industry should take advantage of their newfound connectivity to do what we are already doing. It's a good idea.
It's a bad idea to do it in harmful ways which damage the long-term profitability of your game.
But single-player games don't *have* long-term profitability.
Console titles have traditionally sold you a CD and never seen you again. So this is new to them.
But it's nothing new to us.
Posted by: Jeff Freeman | May 16, 2004 at 23:42
You can also look at console game titles as a franchise. Sports game regularly get regular overhauls. FPS like Doom, Half-life also are franchise with long game lives. They have long life via sequels, updates, and spin-offs.
The strategy in this competitive marketplace is to lock in your players like MMO does with player subscriptions. Look at the business models like XBox Live and Phantom and the new Rogue (I think that's the name). They want to suck you into a long-term commitment.
The more money you send on the franchise, the more entrenched you are. Ebaying hurts entrenchment as this is an exit strategy for people wanting to leave, but it also increases subscription numbers and entrenchment for existing players. UO is an example of deep entrenchment. The jury is out whether the net effect is positive or negative.
But the recent actions from Sony and EA on the standalone titles mean that they believe the net effect of premium add-ons are positive.
I agree with the positive assessment, but Jeff is right that it is a tough of a line to tread.
Frank
Posted by: magicback | May 17, 2004 at 00:28
You can also look at console game titles as a franchise. Sports game regularly gets overhauls. FPS like Doom, Half-life also are franchise with long game lives. They have long life via sequels, updates, and spin-offs.
The strategy in this competitive marketplace is to lock in your players like MMO does with player subscriptions. Look at the business models like XBox Live and Phantom and the new Rogue (I think that's the name). They want to suck you into a long-term commitment.
The more money you send on the franchise, the more entrenched you are. Ebaying hurts entrenchment as this is an exit strategy for people wanting to leave, but it also increases subscription numbers and entrenchment for existing players. UO is an example of deep entrenchment. The jury is out whether the net effect is positive or negative.
But the recent actions from Sony and EA on the standalone titles mean that they believe the net effect of premium add-ons are positive.
I agree with the positive assessment, but Jeff is right that it is a tough of a line to tread.
Frank
Posted by: magicback | May 17, 2004 at 00:31
To take a step back here, I think the economic implications might be far-reaching. Just to consider the fantasy MMORPG case: Let's say that a Sword of Smiting goes for $100 on eBay. The developer introduces a new sword, only obtainable for RL cash--the Sword of Whomping, for $10. Let's say that the swords are roughly comparable. Disgruntled players aside, isn't this single item likely to drop the eBay price of the Sword of Smiting (and many other items) considerably, even with no change otherwise in supply and demand? Might this be desired by the developer? Is there any reason why the developer would be opposed to greatly devaluing the free market for their items, so long as they controled a larger portion of the new market? Or just attempting to devalue the entire market to forestall government regulation?
Another possibility this model brings up is DRM for game items. If you can only buy items from the developer, then it is relatively easy to make sure that you don't sell/give that item to others (via internal or external means). Avatars and possessions could be checked against each other for "proper authorization". Seems likely to infuriate players, but is still a possibility.
The green jersey issue is another matter entirely. Players will be more willing to pay for true extras (special halftime shows?) than for items that they feel should be part of the basic product. Witholding basic goods and charging for them doesn't make it an "extra" just by naming it so. On the other hand, make it cheap enough (a quarter?) and it won't matter. Every man's indignation has its price.
Posted by: Euphrosyne | May 17, 2004 at 12:31
Well, here's my point: I think you've stepped too far back, tripped over something behind you, rolled down a hill and landed in a blackberry bush. This article had nothing to do with the sort of item sale you are describing.
Disgruntled players aside
And there's why. For MMO's, you cannot push the disgruntled players aside. MMO's survive off the monthly fees. You can offer various and sundry 'value-added' sorts of thing, but nothing that would impact the monthly fee income.
There is no indication that they're adding any sort of ability for players to trade items with each other.
Typically you can't get everything in the game that you want to be in the game before you ship it. So I doubt that anyone can manage to get everything in the game they want, PLUS some extras that they hold back. I mean it's possible, but unlikely. More likely that the new stuff you're downloading really is new stuff: Things made since the game was released.
I think Frank's got it right: Forget switching from one series of football games to the next, if you've invested in all sorts of bells and whistles for one series and those carry over from one sequel to the next, they've got you as a customer for life... plus some extra cash, too.
Posted by: Jeff Freeman | May 17, 2004 at 13:24
I don’t think this development is entirely novel or unforeseen in any respect. It’s a shifting of markets from the eBay world to the one that’s developer-endorsed, owned and operated. It’s been coming for a while. We’ve had some intermediary steps, the only real question was when, not if. A few games have been offering either in-game items or in-game currency for real-world money. However, I don’t know of any game that has mixed that model *with* a subscription-based one.
Personally, if pay-for-item is mixed with pay-for-subscription (not to mention pay-for-software/CD/manual/box), I think I may feel like they’re double-dipping. Here’s $50 for the software, $13 per month so I can use it and another $5 so my sword isn’t made of cardboard.
The real test, as with everything, will be the implementation. This could be good, it could be bad. Depends on what they do with it. Are the items underpowered or overpowered? Are they too cheap or too expensive? Is this going to mess up the in-game economy? Is it going to fubar the real-world economy for the game? Does it piss off hardcore power-gamers, consumers whose wallets or purses are running low, or both? It’s going to be a very fine balancing act to make it work properly, as with any aspect of a game’s economy.
Shifting to a slightly more familiar perspective for myself, I see tons of potential legal implications. One hacker could wreak havok in ways previously less important that now really affect other people (and their back accounts) in the real world. And what of a server crash? If I lose my $5 item, do I get it back? The funny thing here is that this is when and where their EULA/ToS may be tested. And if it is, it’s going to have a lot more trouble now that the company has direct control over the troubling operation. Maybe this means that the game company will endeavor to settle all complaining parties? I can’t believe that, not for a second, but if I were a company exec. I’d prefer that to litigation any day of the week. Kind of like the cigarette companies or the gun companies, all it takes is one adverse ruling against a EULA or ToS and the gig is up. Okay, maybe not just *one* adverse ruling but you catch my drift. IMO, the reward/profits aren’t worth the substantially increased risks. Frankly, I’m surprised the game companies are willing to stick their necks into the guillotine on this one. Then again, maybe they’ll need some more lawyers. Hmmm.. job prospects looking up...
All in all, I’m dubious but hopeful.
Posted by: Alan Stern | May 17, 2004 at 16:47
See my comment, right above yours. You're thinking of something this article just isn't about.
Posted by: Jeff Freeman | May 17, 2004 at 18:04
magicback wrote: "Ebaying hurts entrenchment as this is an exit strategy for people wanting to leave, but it also increases subscription numbers and entrenchment for existing players. "
Is Ebaying is an exit strategy for people waiting to leave? Depends. Depends from what the subscribers are selling. If they sell their own account, that is true. But:
the subscriber currently waiting to exit, is using Ebay. Meaning that in any case the subscriber will sell its own account and in any case as comany you do not get any revenue from the transaction. Supporting subscriber vs subscriber transactions, you get access to an unknown size market on one side and at the same time you can gain an inderct control.
Ebaying for virtual assets is for sure a model to test. And at the same time it is a fair system as the virtual assets were already part of the virtual world and no additional interference is needed. The fact that only the company providind the game service is able to offer a 100% secure escrow system (as it has the control of the ingame transactions) make it a unique business opportunity. And what do you lose in trying it?
It is the same innovative concept like providing additional services for a fee (see characters transfer, EQ legend Server and so on). At the beginning no game service provider wanted to test it. As soon SOE introduced it and was able to announce that few months after the introduction, they had already earned more then 1 million dollars, all other game service providers followed.
Posted by: Luca Girardo | May 18, 2004 at 09:49
And an interesting news coming from the AC universe:
"Turbine has notified eBay to remove auction listings for the sale of Asheron's Call accounts/characters and in-game housing. We're initially concentrating on these two because we see them as being the most egregious AC-related auctions. Many housing auctions are run by brokers who deprive players from being able to acquire housing through legitimate in-game means; many account sales end up being recalled by the original player, causing grief to the buyer and creating a difficult situation for customer service.
Please be reminded that your end user license agreement and/or code of conduct prohibits the commercial sale or transfer of the game. We reserve the right to pull any other types of Asheron's Call auctions at any time, but as written above we are concentrating on these two because they cause the most harm to the game and the community.
"
News can be located here:
http://forums.ac.turbinegames.com/showthread.php?s=&threadid=8566
Posted by: Luca Girardo | May 18, 2004 at 09:59
Sell the milk, not the cow...
Sell housing, sell extra characters slots, sell access to special servers, sell extra levels, sell expansions, sell storage space, sell guilds (the ability to form one), sell character transfers, sell server transfers, sell account transfers, sell t-shirts (real). Sell the milk, not the cow.
Posted by: DivineShadow | May 18, 2004 at 20:21
But to get premium profit margins, sell premium milk. Limited edition milk. Flavored milk. Milk of different colors and fragrance. Sell personalized milk. Magicback #9 milk.
Oversell and you lose the audience. Sell what them want. If they get sufficient petitions, you entertain the features they want. If they get sufficient pre-orders, you do it.
The dam breaks when devs provide excellent customer experience.
Frank
Magicback
Posted by: magicback | May 18, 2004 at 22:51
... sell private servers,
sell personalization services (how does "tunic of Johnny" sound?),
sell graphics packs,
sell sound packs,
sell GUI skins,
sell stories on the front page,
sell moderated events,
sell weddings,
sell parties,
sell web-based access to your character,
sell forum space,
sell guild website hosting,
sell graphic services,
sell guild management tools,
sell offline inventory management,
sell screensavers that show live game shots,
sell an ingame voice-chat function,
sell a text-to-speech add-on,
sell force-feedback support,
sell support service-levels,
sell video-chat-streaming inside your game,
sell in-game photo album storage space,
sell in-game music by cool artists for the game...
There is so much to be done with this milk, selling the cow is for the shortsighted.
Posted by: DivineShadow | May 19, 2004 at 02:46
More...
Sell PCs preloaded with your game/a 'game black box'
Sell lifetime subscriptions
Sell ringtones with your game sounds
Sell desktop themes
Sell SMS notification services of ingame events
Sell access to an IM gateway to the major providers (ICQ, AOL, MSN, etc).
Give away real-world e-mail access in your game, sell the spam filter.
Sell "emote expansion packs" that have extra emote animations
Sell limited-run collector editions of your game
Partner with a sword/toy producer and sell "game-branded" real life toy swords, pistols, bows, etc.
Talk to Hallmark about a line of greeting cards with game themes (think: "Level-up!" for birthdays, etc)
Give away branded/TM'ed designs to Tatoo Parlors.
Sell game company office tours
Extend the office tours into a Theme Park
...
Posted by: DivineShadow | May 20, 2004 at 13:24
Jamie Hale> "Honestly, the first shared persistent virtual world whose underlying structure is based on socialism or honest-to-god anarchy will certainly turn heads."
I think Ultima Online at release did a good approximation of honest-to-god anarchy.
Even the laws of physics were mutable - what more could an anarchist want?
- Brask Mumei
Posted by: Brask Mumei | May 21, 2004 at 10:07
I like to think of the over paid athlete. At some point I'm sure many of us have said "what about when you were a kid and winning meant everything, just playing the game was everything". In modern sports I would say most athletes prioritize money first and winning second.
This is the same problem i see with monetizing every aspect of game play, it loses its purity of game. To this day at age 32 I still unwrap a game before I drive it home from compusa and read the manual in the car, of course once i get home i throw the manual away but i need to temper my excitement with dangerous car driving reading. Designing a game around interacting with a consumer based real world economy is the reason that an American (perhaps any corp) based corporation will never make a significant gamers MMO again.
A public corporation has way too many blockades to pass through on the way to maximizing potential revenue.
The internal development question is not "how can we make a better game" rather "how can we make more money". When an opportunity exists to make money (ebay cottage industry) a corporation has an obligation to its share holders and insiders to crush it or acquire it.
No matter how many gamers are managers someone above them is going to say "how can we add this money maker into the game... do it or you are fired."
I think the great MMO is on the same kind of silly quest the great American novel was. In a spurt of Renaissance many generations tried to write what could not be written, as many developers are attempting to program what can not be programmed (play SWG). However there is room for a truly good MMO but its only going to come from a large corp with a kind of mystic holy Japanese style infrastructure or an independent team.
For now we are in the dumb down formula cycle of MMO development. We are going to churn 1st person diablos until someone usurps the giants with a home grown dash of brilliance. By now someone can probably draw a chart of MMO evolution and fairly predict the norm as far as development. Thats it, thats how you know the game is being deflated from an MMO when you can fairly create a futures market surrounding its development.
Posted by: Oulous | Oct 08, 2004 at 02:03
Some day I'll reminisce on how I used to play games and be able to unlock cool items and features in it because I played it so religiously as to make sure I conquered every last corner of the worlds it brought me into, and about the day that I had to start paying for every last !&#@#%$ feature, item, extra, or bonus in the game.
Brask got it right - once there is a way to think about how much money can be made above and beyond the cost of the game, the viewpoint changes dramatically. Not everybody out there (including myself) will purchase anything more than the cost of the game. And if the game requires a monthly subscription just to play the damn thing... sorry, but it ain't gonna happen. And yes, that means that I've never played EQ, or any of those other MMO's.
I like to play games to escape from my every-day reality. Once I have to start purchasing in-game items for real-world currency, the game is only reminding me of exactly what I was trying to escape to begin with.
Posted by: duerra | Mar 22, 2005 at 17:21