Tuesday, May 4, 2010

Should Item Store Purchases Be Tradeable?

The current episode of DDOCast discussed whether there could be ways for players to gift or trade Turbine Points in the future. Could such a system be implemented? Perhaps, but it’s not quite so simple in practice.

The role of free players in a game with item shop trading
There are games out there that allow players to gift or trade items that are obtained via real currency. For example, Eve Online allows players to purchase in-game time-cards that can be sold to other players for in-game currency, allowing them to finance their subscriptions with the proceeds of their gaming efforts. In another example, Kingdom of Loathing allows players to sell or trade anything out of the game’s item shop.

These approaches have a major advantage – they allow the developers to monetize players who can’t or won’t pay directly. Players who have money to spare pay the developers for items that they can then sell off, purchases that they would not have made if the items were not tradeable. These players can then get their hands on in-game resources that they would not have wanted to farm or grind for on their own. Finally, cash shop items make their way into the hands of non-payers, who in turn are valuable to the developers because their presence in the economy drives sales by creating a secondary market for cash shop items.

Undercutters, Farmers, Botters and Fraudsters
Unfortunately, this type of plan does not work very well with free samples and sales. If Turbine points were tradeable players could potentially stock up during a sale and undercut Turbine’s own prices when things return to their normal price. In that case, money that would have gone to Turbine from players who were willing to pay instead winds up in the hands of resellers (who might also turn out to be fraudsters who pocket players’ money, as we’ve seen in WoW).

Another issue is with free samples. Each new Turbine account can pretty easily obtain almost 1000 Turbine Points ($10 at the most favorable non-sale exchange rate) just by making new characters on each server and advancing to level 4 or so. I’ve been doing just that recently, because I would have tried out those alts anyway, but the cost benefit in my view drops off very quickly once you’ve obtained those low-hanging fruit.

Even so, there are guilds right now that speed level additional characters to 100 favor for the 25 Turbine points (which can be repeated indefinitely). You’re talking about maybe $0.50/hour under ideal conditions, which is less than I value my time at, but that apparently does not go for everyone. Those numbers would only increase if the points could be resold, and, given the history of MMORPG’s, a large number of those farmers would probably be botting.

Finally, there’s a major account security issue in allowing players to trade their Turbine points in a system where credit cards are associated with your store account. If Turbine opens the door to point transfers, there’s be a major incentive for hackers to target DDO accounts and run up a balance on the account’s credit card.

This type of fraud apparently ended Runes of Magic's currency sales, which had been permitted via the in-game auction house until people started buying gold with which to buy item shop currency.

The Value Of Trading Vs Samples
Ultimately, I’d argue that the operator of a free to play game has a choice. You can go with free samples and free points, to show potential customers what they’re missing, along with sales to encourage impulse purchases, which is how DDO runs their store. Alternately, you can open up the cash store items to trading, in the hopes that this will improve the value of the potentially large majority of players who opt not to pay.

Personally, I have a slight preference for the latter model, because it feels more democratic; the risk with an optional payment system is that the non-payers become a less valuable demographic, and that creates incentives for the developers not to care about a major segment of the playerbase. Either way you go, though, mixing the two seems like a difficult task indeed.

5 comments:

Carson 63000 said...

I've been playing a bunch of Atlantica Online lately, which allows most item store purchases to be traded in-game (although there is no way to directly trade the currency, "gcoins").

They take a slightly different approach to free samples: instead of giving out currency as a reward, like the Turbine Points in DDO, as you progress through the early quest chains, you get a bunch of quest rewards which are equivalent to the item store items, but often more limited, and more importantly, bound to your character and untradeable.

e.g. a Merc Room License which allows you an extra slot to store a spare mercenary costs $5 from the item store, and is permanent. And it can be traded in game. But early quest rewards will get you a handful of "one week" Merc Room Licenses, which are not tradeable. So you can experience the sort of thing the item store has to offer (and obviously they hope you will therefore be tempted to start spending), without having any of the negative effects of people farming these rewards.

I think RoM's problem was that the combination of direct item store currency trades in game + black market goldsellers = a clear, black market exchange rate, which favours the black market. e.g. item x costs $10 at the cash shop; the $10 worth of diamonds can be bought in game for y gold pieces; buying y gold pieces from a goldfarmer costs less than $10. Obviously Frogster still gets their $10 from the person who put the diamonds on the AH, but it's a horrible feedback loop which massively encourages farming and spamming.

Backthief said...

Bind of Equip/Pick up should only be tradable, even after using, if you could upgrade the item (its´ stats) indefinetly, therefore making the items REALLY unique. Or finding any other way to make them unique.

Tesh said...

The latter model works fine for Puzzle Pirates, but then, gold selling isn't rampant there because the game isn't huge, and it's not a DIKU grind that players want to pay to bypass. Their dual currency model with a blind currency exchange also tends to make turning cash into gold quick and relatively easy. Oh, and Three Rings is brutal on crackdowns, wielding the IP ban with deft force. It's not just account *deletion*, it's a hard lockout from trying to set up new accounts. (Or, harder than most in the pirating arms race.)

Dàchéng said...

From the article

If Turbine points were tradeable players could potentially stock up during a sale and undercut Turbine’s own prices when things return to their normal price. In that case, money that would have gone to Turbine from players who were willing to pay instead winds up in the hands of resellers.


You make it sound like that might be a bad thing! But in fact isn't that exactly how the free market works. Turbine sell their goods and benefit from resellers buying those goods, thus guaranteeing sales to turbine. The resellers in turn risk making no sales, but benefit from a profit if they do make a sale. Who's hurt? Turbine get a guaranteed sale without neccessarily having to supply the service they're being paid for (if the reseller can't shift the unit). Even if the reseller sells the unit on, there is no guarantee that the eventual buyer would ever have bought the item at the non-sale price that Turbo normally sell it at, so one can't claim that the reseller is costing Turbine sales. In fact he might be increasing Turbine's customer base. What's not to like?

You tacked on a rider:
"... resellers (who might also turn out to be fraudsters who pocket players’ money, as we’ve seen in WoW)."

Why do you think resellers in such a scenario are likely to be fraudsters, and is there any evidence that gold sellers in WoW are fraudsters? (genuine question, I don't know the answer!)

Green Armadillo said...

"there is no guarantee that the eventual buyer would ever have bought the item at the non-sale price that Turbo normally sell it at, so one can't claim that the reseller is costing Turbine sales"

The former is true, but the difference in the resale market is that people who WOULD have paid the full price now will not do so because they can instead get a better rate from a reseller who stocked up at the last sale. It's going to be very hard to predict whether that results in a net decrease or a net increase for Turbine.

As to the WoW goldsellers, it's moderately well documented that players whose accounts are compromised through phishing and keylogging return to find their characters stripped of all value, and sometimes transferred to a different server. (The transfer fee can be paid with a credit card entered by a previous unsuspecting customer.) There may still be someone out there selling gold that they paid sweatshop players to farm the old-fashioned way, but that method appears to be inefficient - you have to not be noticed and banned for long enough to move your product.