Tuesday, August 2, 2011

ROM Gear Lessons For Diablo III's Auction House

Much of the discussion of Blizzard's controversial decision to allow player-to-player item sales for real money in Diablo III has focused on the tired "pay to win" argument.  Like Ferrel, Keen, Rohan, and others, I'm not so interested in this side of the equation because how other players obtain their gear does not affect me directly.  I'm more concerned about the indirect effects of putting the developer in the business of making money when players replace their gear. 

Runes of Magic Gear Upgrades
The best example from my current experience is Runes of Magic and its cash store gear upgrades.  While both models do allow players to get what they want in-game with some (possibly prohibitive) amount of time investment, I would argue that the presence of gear boosts in the cash shop means that Runewaker/Frogster see more revenue specifically when new gear is added to the game, much as DIII's auction fees will almost certainly provide more revenue for Blizzard when new gear is added to the game.  Any MMO expects to make money off of new content somehow (box sales, renewed subscriptions, item shops), but this approach biases the payment model towards additions that replace players' gear.

If you look at ROM's content history, you'd see what my model predicts - compared to traditional subscription games, the ROM level cap has increased far more frequently, but with fewer additional levels at each increase, allowing players to park and farm up new gear at each new level range before the cap rises again.  There are benefits to this model - players get content more frequently, and all of the new content gets used while it is the current level cap, where games that raise the cap by 10 levels at a time often end up with underutilized content in the middle of that level range.   However, you also see insane vertical progression, with all the problems that this entails - my level 53 Druid has fewer than 3,000 HP in solo gear, while the Druid Encyclopedia recommends 5K-15K for dungeons in my level range. 

Moreover, you will also see dramatic swings in relative class balance.  The recently concluded Chapter 3 era saw Scouts topping the DPS charts by as much as 3-fold, while the talk in Chapter 4 is that Rogues are the new scouts, just as the game added a third class slot to let those disgruntled Scouts take up Rogue-ing.  Every game has class balance issues and flavor of the month builds.  Not every game makes more money when players replace their gear, and nothing makes ROM players replace their gear faster than changing archetypes outright. 

The Post DIII Era
Bobby Kotick's comments about exploiting his franchises aside, I don't expect that Blizzard would take this in a direction that immediately ruins a flagship product.  You can't sell virtual goods to people who aren't playing your game, and a game that's balanced assuming that players are fully decked out in the rarest of the low drop rate gear from the cash auction house will drive players away.  We can probably expect extremely rare items powerful enough to affect game balance, especially on higher difficulty levels, but that was a feature of the original game anyway. 

If anything, I think a fair number of would-be-Gevlons will waste a lot of time and real world money on posting fees - and, gods help them, attempts to buy low and sell high - as demand to get real cash for DIII loot outstrips willingness to pay real cash for all but the rarest of DIII loot.  That said, I think the longterm effects of having publishers demand the revenue from this feature will only worsen the vertical progression issues that are already causing huge problems in MMO's. 

Also, as Stabs points out, the legal implications are potentially staggering.  Can you sue a ninja looter?  How long before someone decides to test the EULA in court by suing Blizzard for a nerf or server crash that cost them real money?  Can Blizzard flag accounts to ensure that the rare drops go to people with a proven history of selling them, rather than keeping the loot and depriving Blizzard of their auction fees on an item that might not drop again for weeks?  Would they have to disclose it if they do so?  Is this system effectively online poker with the killing of monsters substituted for the random drawing of cards?

Though I don't think that pay to win is the direct problem, I think Scott Jennings is right when he says that this will take games in a direction that is bad for players, but that we've already lost the battle against it because the market will tolerate the new model.  It's not the apocalypse, but it's also not a good day for online gaming. 


  1. Something people keep forgetting, probably because it was announced nearly 3 years ago (nice job Blizzard on keeping us on the hook for info THAT long) is that there can be no loot ninjaing. In multiplayer, each player sees their own loot.

    ie: Boss is killed, player A sees a hammer and two potions on the ground, player B sees some plate mail and two scrolls. Neither can see or pick up the other loot.

    http://diablo3blog.blogspot.com/2008/07/new-drop-system-in-diablo-3.html (Video of devs talking about the drop system)

  2. To put on my tin-foil hat and expand on some of your other issues about the "bad stuff" that this could cause:

    Will the IRS suddenly consider your rare drops taxable income? It's not a far cry from online gambling since loot dropping is effectively random and if this turns out to be lucrative for blizzard the IRS is gonna want its share of the pie.

    To all your raised legal issues; I am currently a law student and "digital" property is basically what got me into it...while I am still early in my education, I am very interested to see if some of these issues come up. Sadly thus far the civil court system has no real understanding of how the technology works so it will turn into a lot of cases of "dueling experts". Though when the Developer starts consenting to real money transactions that brings up some property and EULA issues.

    Sorry I rambled, interesting times ahead...but I agree, not a good sign for online gaming.

  3. i'm glad someone else sees the taxation implications. if in game assets have real world liqudity and are distributed via RNG its very close to gambling.

    the gaming industry has been relying on endorphin addiction just like gambling industry for years. the only difference up till now was the balance of fun vs money. seems Blactivision wants its peice of the pie.

  4. Is this system effectively online poker with the killing of monsters substituted for the random drawing of cards?

    Oh, my. No. No it isn't. You must not be a poker player.

  5. As a practicing lawyer, albeit in Canada, I think the whole taxation questions are interesting but ultimately non-issues.

    Currently, the Canadian Tax code has the ability to tax any person on "taxable benefits" which are most often non-cash benefits an employee receives (such as use of a company car, a paid vacation, price security on a home if relocating, etc.). A taxable value can be imputed to the employee. So, if the tax authority wished to be particularly aggressive I believe that online currencies that are purchasable with real currency could already be taxable.

    The reality is none of these Diablo 3 "benefits" will ever be reported except in the most unusally of circumstances. Few waiters report their tips honestly, which would most likely dwarf the amount of money from Diablo 3. So I don't expect a line on my tax return to be for any online currencies any time soon.

    Other fictional "currencies" are also addressed in other legal areas in Canada. Every negotiated divorce settlement in our office deals with airmiles, credit card points, Canadian Tire money and the like. Your Diablo 3 gold could easily be dealt with in the same manner.

  6. First Anon here!

    No I do not play poker and will not claim to know anything about it beyond that in its online format it is a game that has an RNG element to it...it also certainly has a skill element to it. Technically so would D3, more "skilled" players would kill more monsters per minute and thus have a higher chance of worthy drops. That said, I know that D3 and Poker are nothing alike.

    Canadian Lawyer Anon: From my understanding the situation is basically the same in the US; the IRS has the authority to tax game currencies and such but thus far it has flown under their radar. The only reason I think D3 might change that is how big of a player D3 will be. Blizzard games sell extremely well and depending on the cost to post items on the AH it could end up representing a large portion of D3's profit. I'll defer to your experience though and I think you are right that we won't be seeing an online currency section on the tax form any time soon.

    Another forum I read also brought up the issue of: What happens if your battle.net account gets banned with a large amount of cash on it? I don't know if I missed it in the FAQ but from what I understand Blizz might want to keep that money...perhaps they'll let you "cash out". I know it's a bit tin-foil-hat of me but that could end up being the sort of thing that gets EULA's challenged.


Comments on posts older than 14 days are moderated and will not appear until manually approved because the overwhelming majority of such comments are spam. Anonymous commenting has unfortunately been disabled due to the sheer volume of comments that are defeating Google's spam filter.