Friday, February 22, 2008

L00t Chase

Black market sales of virtual world items have been the bane of many MMORPGs, particularly World of Warcraft. A report on a session at the Game Developers Conference 2008 posted at MTV Multiplayer by Tracey John offers some fresh perspectives on the practice. The session, entitled “Learning to Love Virtual Item Sales,” featured Andy Schneider of Live Gamer and Steve Goldstein of Ping0. John reports the following from the session:
for games that don’t offer real-money transactions, like “World of Warcraft” for example, websites like IGE and ItemBay have transformed illicit virtual item sales into a billion-dollar business— over $1.8 billion according to analysts’ estimates given in the session— and game publishers aren’t getting a cent.
The key point here is that there exists a huge profit opportunity, one which is currently being exploited by the black market. And as much as game companies may be committed to staying true to their opposition to the commercialization of games (well, beyond the fact that they charge $15/mo to play), the fact remains that game companies want to maximize profit. Leaving money on the table for sites like IGE to take does not make economic sense.

In addition to hurting revenues, black market trading increases support costs. According to John’s post, Schneider noted that before Sony’s Station Exchange, 40% of customer service was due to “virtual item sales resolution.” Since Station Exchange went live, such costs have fallen 30%.

It is true that many gamers are vehemently opposed dollar-for-gold or similar exchanges. Yet some sound reasons in favor of such sales have been put forward, such as to help a newcomer catch up to his high-level friends or to aid a time-constrained player reach new content. One solution to this dilemma is for game operators to designate some worlds as open to real-world exchanges. Operators already do this for PvP and PvE already, so this would simply allow some players to opt to play in an environment where they could participate in a sanctioned auction site, such as Sony’s Station Exchange/Live Gamer operation.

I expect that economics will trump other considerations. Even the hardcore purists might come to embrace an arrangement like one described above – the players who currently (or want to) engage in black-market trading would tend to migrate to Station Exchange-type worlds, leaving the purists in a, well, more purist world.

(Note: Sony recently announced that Live Gamer would take over the role now played by Station Exchange.)

Update: For another account of this Worlds in Motion session, see this post on Virtual Worlds News.