Thursday, August 19, 2010

Should Runes of Magic Sell Gold?

There are a number of big problems with developers entering the business of selling in-game currency for real money.  However, based on the specific history and current circumstances in Runes of Magic, I'm not convinced that this outcome would be worse than the status quo. 

Money Laundering and your Local Auction House
ROM was designed with the intent that players would be able to purchase the cash store Diamond currency using in-game gold.  The auction house still has a category for this currently unavailable functionality.

The theory is that this type of model allows the developers to monetize players who are not willing to spend any of their own real money on the game.  From the developers' perspective, it doesn't matter if I spend $10 on a horse or if someone else spends $10 on diamonds that I buy off them for gold and then use to buy the horse.  There are a variety of potential drawbacks to this design decision, but the real problem that seems to have killed this feature is outright fraud. 

For an illicit gold seller, this system offers a perfect opportunity.
  1. Use stolen credit card numbers (perhaps from former customers) to make an unauthorized diamond purchase from the game.
  2. Sell diamonds on the AH for gold.
  3. Offer to sell the gold for real money at rates that are significantly better than the diamond -> AH rate.
The gold seller does not care if/when the owner of the original stolen card contests the charges, because it's not their money.  Their cut comes from the customer in step 3, who has no reason to contest the charges because they actually received the gold they paid for.  Meanwhile, the "stolen" diamonds are in the hands of a player who had no way of knowing that they were stolen, as they were posted on the legitimate in-game auction house.  If the gold buyer has spent the gold already, there are even more innocent third parties in the loop.  In the end, the developers lose money from chargeback fees, support time, and whatever they ultimately decide to do about the illicit currency. 

Passing the buck
Under the circumstances, you might figure that the logical solution would be to cut off the diamond trade entirely.  Unfortunately, ROM's developers were apparently counting on this revenue stream, and are unwilling to consider this approach. 

As a result, newly purchased diamonds that were paid for using online payment methods cannot be traded to other players (or at least cannot be traded for some amount of time, to ensure that any protests are resolved).  Diamonds purchased through any sort of gift card program, where the retailer rather than the game's developers eats the losses if the charges prove to be fraudulent, can still be transferred to other players, but NOT via the in-game auction house.  

This means that players must engage in completely insecure trades with other players, with no way of verifying that the other player has what they're promising to pay.  It's not entirely clear from my vantage point as a player whether customer service will intervene when these types of deals go bad.  Either way, the developers can't plausibly feign ignorance, as people looking to buy or sell diamonds/gold are constantly posting this in the global chat.  More to the point, the devs don't WANT to lock down this trade, because they're counting on the revenue. 

Will official gold trading solve the problem?
There's a rumor on the US forums (the developers and their official forums are in Germany) that the long term solution to this problem may involve the introduction of an NPC who sells gold for diamonds at some fixed rate.  The developers have also already locked down the use of in-game mail to send gold to other players.  Given the history of these things, it's not entirely clear that these steps will actually manage to eradicate the gold trade, but let's assume for the sake of argument that they do succeed.  Will this be a good thing? 

The effects on the economy are going to be a bit hard to predict.  On the one hand, this move might cause inflation, as new gold would be introduced to the economy when players purchase it in this way.  However, the current system also drives inflation in some ways, if players are currently willing to farm monsters to get gold to trade to players for diamonds.  In any case, as nearly as I can tell, the developers' WANT inflation, as this would leave more players feeling that they need to purchase gold. 

There's also a potential market among spendthrifts like myself, who CAN afford to pay for diamonds but CHOOSE not to when offered the option of handing over virtual gold instead. Meanwhile, I would speculate that the developers get less of the revenue from gift card sales compared to straight up credit card purchases, as there are more third parties involved (the gift card issuer, and a cut for the retailer).  So, the effects on revenue are not clearcut. 

On the other hand, the effects on transaction security for legitimate players would be dramatic.  Players who want to obtain gold would not have to worry about finding a legitimate buyer for their diamonds.  This change would most likely remove the ability to "gift" diamonds (realistically, I doubt that very many of these transactions are genuinely altruistic gifts without any form of compensation or scam involved), but at least then it would be official that there is no safe way to obtain diamonds without paying real money. 

In the end, the developers have made a decision that they want to take money from players who are intending to convert diamonds into gold.  In my view, this creates a responsibility to safeguard those transactions that trumps any other ill effects that official gold selling would have on the game. 


Indy said...

I saw an interview with a RoM developer (they're based in Taiwan, I think) and what I recall is that the NPC for diamond trading is going to be more of a specific clearing house broker. So the trades will be with other players, possibly anonymously (be a good idea to combat the goldsellers) and that would let market forces set prices.

What I'd read on the forums was that diamond selling on the AH was being abused by goldsellers using the fact that it can only list 500 entries. So they'd spam it with massive amounts of entries, for both buying and selling... but they'd lowball their buying price and jack up their selling price. Players couldn't get their auctions even seen until they were close to expiring. Until I'd read that, I hadn't realized what the actual problem with diamond selling on the AH was.

Obviously, if (as I think) the NPC is a broker and not a buyer/seller (essentially, a diamond only AH), then the game isn't selling gold. Thus it won't be inflationary, and if there are listing/selling fees, will be somewhat deflationary (a gold sink). Possibly a NASDAQ-like market maker function would work well.

Note that RuneScape took a similar approach to their Grand Exchange when it was put in, as part of their anti-goldselling game changes. There, players enter buy and sell orders (within certain price limits), and the system matches them anonymously. They did, however, have to code in trading restrictions based on the calculated market value of items... and where they set the value incorrectly, fairly much ruined the marketplace for those items.

Brian 'Psychochild' Green said...

Puzzle Pirates has a great system for allowing players to exchange Pieces of Eight (the in-game currency) for Doubloons (the purchased currency). It works kind of like what Indy said: people put in buy and sell orders and the system matches them up. It's fairly anonymous, and players can see the five most favorable offers in each category (Po8 for Doubloons and vice versa). If you want an exchange right now you know what to bid, but if you want to take a longer term view, you can put in an order that you think is better deal.

Doesn't seem like it should be rocket science here....

Tesh said...

Brian beat me to it. Puzzle Pirates has done the "microtransaction currency to game currency exchange" for years now, and it works beautifully. The exchange rate can fluctuate painfully at times, but that's true of any market... and the source of opportunity for canny traders.

Yeebo said...

Puzzle Pirates does not get nearly the street cred it deserves. It's come up with innovative solutions to issues that many more mainstream MMOs struggle with.

More on topic, when I played ROM I saw little reason to even worry about gold. Just by selling ore on the AH I was able to get up enough funds to buy any equipment I could use from the AH. I'm sure that high level players are injecting a lot of money into the economy buying diamonds, but for starting player being able to sell ore (and not wood or herbs for some reason) for more money than they will ever need or want isn't such a bad thing.