Saturday, April 23, 2005


The Competition Weighs In

Mark Jacobs of Dark Age of Camelot weighs in on the Exchange:

Cynics might dismiss this as just a potshot from a competitor whose subscription numbers are waning, but it is worth looking at.

Here is a quote that summarizes the article:

"One, it will lead to frustrated players if their items get deleted or SOE has to make server changes; and two, it will also encourage the secondary market, which is exactly the opposite of what SOE is trying to do. "

The first concern is true regardless, and the second concern and the accompanying assertion aren't necessarily true.

It will encourage for-cash trading on Exchange servers, no doubt. However, SOE has been surprisingly clever in its approach to this, setting it up with a pre-emptive maneuver. They banned a large number of accounts owned by companies that sell virtual items and money. This move gives these companies a huge incentive to conduct business primarily on the Exchange instead of on all servers.

Well, wouldn't it keep them off the normal servers without Exchange, anyway? No, they would not give up such a large source of income; they would simply charge higher prices as risk to their capital investment went up. They may still do that...but when prices go up, the equilibrium point intersects at a lower point on the demand curve. In other words, the higher the price of platinum, the less people will be willing to buy. On top of that, the ready availability and enticing legality of far cheaper items on Exchange servers will shift the huge majority of these sales to those servers.

The assertion that Sony wants to prevent the secondary market is probably false. My personal guess is that SOE doesn't care one way or the other about the secondary market except in terms of whether it is good or bad for their profits. At one point they did, because the opponents of it were so vocal, and SOE wanted to make their customers happy in order to maximize subscriptions. However, as with most sensible businesses, money speaks even louder than the most prolific forum ranter. If there were no acceptance and high demand for these types of transactions, companies that offer them would not be taking in millions of dollars in revenue. Clearly, many players support the idea, but because of the stigma and potential "blacklisting" in game (or 1-star posts on the EQ2 forums) by the self-proclaimed judges of MMO ethics, they keep quiet. And being a sensible business, SOE came up with a way to keep everybody happy, except for the people who are rarely happy anyway, and make money in the process.

For a company that is so unwilling to advance in terms of actual gameplay, SOE has come up with some great features outside the game itself.
- First MMO to release an expansion pack
- First MMO to offer a premium monthly service (EQ Legends)
- First MMO to offer extensive player stats and accomplishments on the web (beginning with EQ Legends, now a separate and larger system)
- First MMO to sanction the sale of virtual items/characters

Oh, hold on a second. I'm not so sure about that last one. No, that one is definitely wrong. Let's see...
- 10six (now Project Visitor) sold "jitter packs", which were basically booster packs of random items, for cash
- Ultima Online sells built-up characters through its "Advanced Character Program"
- Project Entropia exchanges real and virtual money for a fee
- Second Life and There both sell virtual currency directly, as well as participating in and allowing other types of real-money transactions

I'm not aware of how well-received these systems were when they were implemented, but the fact that they still exist must mean that the companies behind them are satisfied that the money made from them (and possibly customers attracted/maintained because of them) outweighs the dissatisfaction/attrition of customers against them.

Of course, if designers would make these games more about skill and less about stats, this issue would be far less important.

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