Wednesday, March 4, 2015

Warcraft Positions for the Future

The latest buzz that has animated the Blizz-O-sphere is the announcement about WoW Game Tokens and a new market set up to buy and sell them for in-game gold.  Of course there is a certain amount of justifiable concern about how this move will affect the economy and disrupt the social contract, but what's really at the heart of this is a fundamental change in how the game is monetized.

A basic model of all free-to-play games everywhere is that a smaller pool of wealthy players, the "Whales," subsidize a larger pool of "free-riders" through lavish cash purchases from the game store.  The Whales can purchase premium gear, cosmetics like mounts and pets, emotes and banners in the cash shop, everything from useful gear, to consumables that minimize the grind, to ostentatious displays of finery.  This is important because it allows the game company to extract extra cash from some players who are willing to pay more.

Up until recently, WoW had a very limited ability to tap into this source of income.  One of the great strengths of the subscription model is that you get $15 from every player, month after month.  As long as the players are entertained, that income just keeps rolling in.  On the flip side though, one of the weaknesses of the subscription model is that the company is limited to collecting fifteen bucks a month, even though there are players who might pay much more.   

Contact has been made

This is that social contract thing I referred to earlier.  For the price of entry, all players get access to the entire game and are limited only by their willingness to play.  Each player is on a equal footing within the game and your success is based on your level of commitment - the amount of time you have to play.  This is very attractive to a player base composed of high school and college students with more time than money.  Regardless of their personal life circumstances, they can be a success if they are willing to do the work.

You always knew Thorn didn't need the eyepatch.

It's not so great, though, when your maturing player base has good jobs but less time to spend in the evening when they come home from them.  They don't want to spend 3 months grinding Tillers reputation on 4 characters; better to give them a commendation that will cut that time in half.  Rather than working for weeks to gather materials and farm savage blood to craft a 680 helm, they'll let others do that and just buy it off the Auction House.

Until now, Blizzard didn't have a way to profit from this play style.  Yes, there was the occasional mount on the fledgling game store but this was a far cry from the huge inventories of other f2p games that often changed on a monthly cycle.  Now, through the sale of Game Tokens, Bliz can extract as much real cash as they like from the Whales while providing a method for poor-but-active free-riders to continue padding the sub numbers.  Do the whales want to buy that very expensive raid-drop from the auction house, or the premium tundra yak motorcycle mount?  Buy a couple of game tokens and feed them into the machine.

The Black Box

The claim is that because a player must pay gold for the token, that no new gold is being introduced into the game, and therefore inflation won't be a problem.  This would have been true if the tokens had been listed for sale on the open market auction house.  That is not the case, however.  Instead, both transactions will take place in a black box where only Blizzard knows what is happening inside.  You put in your token, and Bliz gives you whatever gold it feels is appropriate.  Bliz tells you how much gold to donate and then gives you game time.  There is absolutely no transparency in this transaction.

A view from within the black box.

And if more tokens are purchased for cash then there are players willing to buy them, is Blizzard going to stop selling them?  Probably not.  Are they going to let the gold price fall below some threshold and discourage whales from buying and exchanging tokens for gold?  Probably not.  I'm not looking for them to throttle the new revenue stream.

The devs say that the price will fluctuate with demand, but since it's all inside a black box it's pretty clear that price support will keep the gold reward fairly stable.  What won't be stable is the price for desirable items on the Auction House.  These are now going to be measured in terms of game tokens, maybe 20,000 or 30,000g apiece.  And that warforged armor piece that seems high at 35k gold will regularly be listed for multiples of that; items over 100,000g don't seem unreasonable or unlikely.

Tinfoil Hat

So let's take a wider look at the potential for this alternate revenue stream.  For example, one of the favorite methods of extracting cash from free players is the sale of gambling boxes: SWTOR's cartel packs, Black Lion chests, Neverwinter lockboxes - they all do the same thing, take your money and give you a small chance for a very nice reward.  And we've just introduced a prototype for that mechanic into the game for WoW as well; Blizzard calls it the salvage crate.  It could be a 665 armor piece or it could be a level 12 green, take it to the Salvage yard and find out. The message is pretty clear, however.  Good things come in random boxes.

Right now, that sounds like paranoid ravings. Let's not even consider lvl 25 battle pets and items for the Toy Box beginning to show up in the crates as well.  I'll start to be worried when I find "Iron-Bound Salvage Crates" for sale from a garrison vendor for 500g apiece.

Hobbit presents for everybody. First one's free, kid.