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Could WoW Support Something Like PLEX? October 17, 2011

Posted by Wilhelm Arcturus in Blizzard, entertainment, EVE Online, World of Warcraft.
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And would they want to?

When Blizzard announce their Guardian Cub plans for the Blizzard store, the immediate comparison that came to mind was PLEX.

And while, as Massively notes, there are items in other games that have some of the qualities of PLEX, nothing quite matches it.  CCP has something quite interesting on their hands.

PLEX is an in-game item you can buy in EVE Online for cash from their web site.  PLEX stands for Pilot License EXtension, and it is essentially a consumable in-game item that extends your subscription by 30 days.  You buy it and collect pick it up with your character in game.

Your character can then either use it to extend their account (which would be silly, since at a cost of two PLEX for $35, it is more expensive than a month-to-month subscription in most cases) or they can put it up for sale in the in-game marketplace and sell it to other people for in-game currency.  The going rate currently is about 400 million ISK, the in-game currency.

This effectively gave players a legal way to “buy gold” as well as rewarding hard core players by allowing them to essentially play for free as long as they were able to part with 400 million ISK or so every month.

It didn’t seem to break the economy and has provided only a mild amount of spectator drama in the two years since it was introduced.  There is a lot of PLEX for sale on the market in EVE and price has slowly risen over time, proving there is demand for it.

So could Blizzard pull off something similar in World of Warcraft?

My gut response is “no.”

I wouldn’t say it was impossible, but I cannot come up with a good answer on how or why Blizzard would go for it.

The 20,000 foot view seems to reveal this as an opportunity for Blizzard.  WoW has something like ten times as many players outside of Asia as EVE Online.  And they have a problem with gold sellers.  A big market and a problem to solve!

But EVE is special.  EVE may only have a tenth of the subscribers, but they all play on the same server and use the same market and contract system.

WoW players, on the other hand, are scattered over more than 400 servers in the Europe and North America.  And there are two separate factions on each server, each with its own auction house.  So there are at least twice as many economies in action as there are servers. (There is also the neutral auction house, which is active on some servers, but really isn’t anything like a full economy.)

So while it has 10 times the players, WoW is divided up into economies that are, on average, about one tenth the number of potential users as the EVE Online economy.

And potential users is another key.  In EVE Online, the economy is the life blood of the game.  You pretty much HAVE to use the marketplace.  Everybody participates.  When the Goons start doing things to impact the economy, everybody feels the ripples.

In WoW though, the auction house is a bit of a sideline.  You do not have to participate.  You can gear yourself up with quest rewards and instance drops for the leveling game, and if you move on to raiding, you aren’t going to find any of the tier rated gear you want for sale there.  And while it is the place to go to make gold (Darraxus just finished a good series on the subject, though he needs to discover tags to I can link to the whole thing. The first post in the series is here.), I know people who hate the auction house and refuse to buy or sell on it.

And those people can not participate and get along just fine.

And so my first concern is if there is even enough economic activity on the dominant faction on a high population server that has a high percentage of auction house use to support something like PLEX being introduced into the economy.

Even in that optimum scenario, would there be enough players with enough gold to absorb all the… let’s call it WoWPLEX… that would enter the market so that it maintained a stable and viable price?

I cannot actually answer that question.

This is where my gut says “no,” but I cannot prove or disprove that feeling.

And “that” feeling is that the price of WoWPLEX would bottom out at a level too low to make it an attractive illicit gold sellers or that, at best,  the price would fluctuate wildly.

And that is on the optimum server environment.  The price would almost assuredly bottom out too low or be radically unstable on the short faction side of a low population server.

To which I can hear some of you replying, “So what?”  Low priced WoWPLEX might be good for you, if not the seller.

And this is the second part of the problem, which is creating a set of circumstances under which Blizzard would see it to their advantage to adopt such a scheme.

Given that customer service is likely one of their larger expenses when it comes to the operation of the game, adding in anything that will generate phone calls that they might have to actually address is not going to fly at Blizzard.  The thought of people upset about WoWPLEX, likely because the selling price on their server is too low for their tastes, flooding the forums or calling up customer service looking for a refund is probably enough for Blizzard to steer clear of the idea, all the more so when they start seeing what happens when the Guardian Cub market starts to fall flat.

I can think of a few things that Blizzard might do to mitigate the market problem.

  • They could break down the wall between horde and alliance and create a unified auction house per server
  • They could a special cross-server auction house for WoWPLEX alone
  • They could put a floor on the price of WoWPLEX
  • They could make the actual real world price attractive enough that people would not mind if they could not sell it immediately

But those all require some changes on the Blizzard end

What do you think?  Could Blizzard be successful with their own version of PLEX?  What changes to the game do you think they would have to make?

And, probably most important, do you think Blizzard should pursue this sort of idea for WoW?

Comments»

1. SynCaine - October 17, 2011

On the support side, how would WoWPlex be different than the pet? Won’t people call/email about that?

As for price/demand, it should balance itself out. If the price is ‘too low’ for sellers, many stop selling, and then supply drops. Assuming AH people realize WoWPlex is ‘free’ subs, they should keep demand at a certain level.

And it’s ‘free’ money for Blizzard, as you know some people would stock up on WoWPlex because they bought it at a good price, and then quit the game before using even a fraction of them. Happens now with 3-6 month subs, but this is just another way of getting that money.

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2. Tesh - October 17, 2011

I think it could have worked, but the time is past. Interest in Titan and market pressures has too many people talking about WoW going F2P already. Maybe the better question is “will Titan be using some sort of PLEX system?”

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3. Wilhelm Arcturus - October 17, 2011

@SynCaine – We will see. They probably will. $10 gets you, checking a couple of WoW gold selling sites, something like 5-7K gold. Do you think the Griffon Cub is going to go for that on day one? How about on day 25?

But the Griffon Cub we know has a limited life span. You can only have one per character.

Something like WoWPlex needs to be an ongoing operation. Part of what makes PLEX successful in EVE is that the price is very stable. You know what a PLEX is worth. In WoW, with its fragmented market place, that is unlikely to ever be the case.

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4. Quain - October 17, 2011

WoWPlex would definitely have a floor. Your point is well-made in terms of items that can’t really be consumed, but if I have excess WoWPlex there’s an easy way to put it to efficient use — credit it to my account and play for another month.

Also, consider the current gold seller rate — no idea what it is, but let’s say 10,000 gold = $1 (and let’s ignore the negative externalities with gold buying, e.g. fraud) — if WoWPlex is bought for $15 from Blizzard, it would essentially have to floor at 150,000 gold because if I’m buying WoWPlex as a source of gold I’m not going to price it less efficiently than the other source of gold.

If, on the other hand, I’m a seller that doesn’t have that information, a buyer with more information will happily eat up the arbitrage gains to be had when I price the item inefficiently, just like any other resource. For example:

Stu buys WoWPlex, plops it on the market for 100,000 gold thinking he’s smart. Annie buys it up and either replenishes her account for a month and spends the $15 on Chinese gold or just remarkets it at the 150,000 gold price that makes it equivalent to using a gold seller.

Further, to echo and expand Syncaine’s point, if Blizzard can put a dent in the demand for gold sellers it would be a net positive for their customer service as you’d likely see fewer account theft/strip jobs. If I’m Blizzard and can reduce those by 1%, I think I’d happily take an uptick in having to send form letters explaining that we don’t refund WoWPlex (or even just doing the refunds).

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5. Wilhelm Arcturus - October 17, 2011

@Quain – I don’t think the gold seller price will necessarily dictate a floor as you indicate. WoW can expect to charge a certain premium for security and legality.

But you make an unintended point. One of the things EVE lacks is the cap on total gold that WoW has. There is not as much loose currency running around on any given character as there is in EVE.

So the market could never support a price of 100,000 gold. There just are not enough people who can afford that price once, and nobody can afford in a few month running.

I would be surprised if the market on a lot of servers could sustain a price one tenth that high, and once it gets below 5,000 gold per WoWPLEX, it starts to become a dubious venture. Which is why I thought an artificial floor might be a Blizzard option.

As for the whole “free” money aspect, I am not on board with that idea. Working on one problem by potentially creating another doesn’t count as “free.” Even form letters cost money, and how often have form letters made anybody any happier?

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6. bhagpuss - October 17, 2011

I don’t play EVE and I don’t take much interest in it, but it’s impossible to read MMO blogs without picking up some of the basics on how it plays. I knew that PLEX was game-time. I knew it was used as a transferable currency, bought out of the game with dollars and sold in the game for whatever EVE’s game currency is called.

I assumed, though, that it was being bought to use AS game time. I thought that was what gave it it’s value. If it actually costs more to buy than a subscription of the same length, how did it derive any value in-game in the first place? Is it purely because it can be bought for real money and then traded in game? If so, how does that make it any different than any other item in any game that can be bought in a cash shop and then traded? Many games have tradeable cash shop items.

Moving on from that, if a game company starts from the intention of addressing the problem of illegal game currency trading (RMT Gold sales in short), why would they even bother with convoluted systems like PLEX or flying cubs? Why not just sell in-game currency through the item shop?

The price of in-game gold sold through the official cash shop would set a de facto floor for the currency. There has to be a price point below which it becomes unprofitable for illegal RMT companies to operate. Blizzard can produce infinite WoW gold and any money it takes for selling it is pure profit.

Of course, my personal preferred solution to all of this would be to do away with all player-to-player currency trades to begin with, but given that you are going to have a tradeable currency, why not just sell it directly to your players for cash?

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7. Wilhelm Arcturus - October 17, 2011

@Bhagpuss – Smarter people than I have discounted the direct sales of currency because that gives it real world value, thus raising the taxation problem. But then again, lots of free to play games do something like that, though usually with convoluted multi-currency schemes, so I am sure that means something.

Economically though, just selling currency adds to the amount of gold floating around in a game, which will likely cause more inflation. Selling game time gives players something of value… 30 days of play time has a real world cost, so it has inherent value… which allows the transfer of wealth in-game without pouring more cash into the economy.

Or so I’ve read. You’d probably have to ask Edward Castronova to get a “good” answer.

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8. Darraxus - October 17, 2011

Thanks for the link. Sorry about the lack of tags, but by the time I figured out what tags were, I was well into my blog and didn’t want to go back and tag them all. Maybe some day.

As far as WoWPlex goes, I think it is a great idea. I would not mind paying for a subscription in gold. A lot of people may not be able to afford it however.

Better than WoWPlex would be the ability to purchase a lifetime subscription.

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9. D506 - October 17, 2011

@Bhagpuss

From a game world perspective, buying ISK through the PLEX system is the equivalent of someone giving you their stuff for free. It has no effect on the economy. The RL transfer of cash that is the other half of that transaction is meaningless in game terms.*

Buying ISK (or items or ships or whatever) from CCP directly, however, creates new items into the world which have an effect on the economy. Selling isk decreases of value of isk, and thereby decreases the value of my time spent acquiring it in a legitimate way. Same applies to ships, minerals, weapons, etc.

The long and short of it is that competing economically with other players is fun. If I’m a miner, other miners lower my prices by increasing supply. But I have options: I can race against them, declare war on them myself, hire mercenaries to do it or ‘suicide gank’ them, move my products to a more viable market or take advantage of the lower prices by leaving mining to try production.

Competing economically with a database query, on the other hand, isn’t fun, or interesting – and the player is going to lose.

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10. Jason - October 18, 2011

@Bhagpuss: As others have mentioned, PLEX has no value aside from that derived from the ability to maintain your account using ingame currency. In EVE’s market, 400m ISK, while steep, isn’t impossible, and if you’ve a decent income, fairly easy to sustain monthly. As for selling currency directly, while it would curb 3rd party sales, it would also likely cause inflation to spiral out of control, since the ceiling for 1st part sales would have been set by the 3rd party sellers.

As for WoWPLEX, I too think it’s a fantastic idea, however, there are definitely some logistics issues involved.

1. The market issue: As Wilhelm points out, the per-server market is a bit small for something like this.
2. Exchange rate: This is probably a bigger issue, however a simple one to address IMO.

So, how to address the issues at hand? Easy issues first, the exchange rate. There definitely needs to be a floor, roughly equivalent to the current third part sales rates. which are significantly below $1/10k gold. It probably needs to be by battlegroup, taking a median of the g/$ ratio of all servers in the battlegroup, both horde and alliance side. This way, you’ll have a good starting base to work from. As for how much, I’d say between 5000g and 7500g per 30 days.

As for the market issue, I’d wager most of the code exists, albeit requiring some modification. In order to ensure a sizeable market, you would need sales to run across horde and alliance, and span battlegroups. This will give you quite a large amount of folks to run it by.

That said, I don’t know that I see Blizzard taking the steps to implement this, or something like this despite what I see as being a smallish amount of effort. Redeeming them is as easy as adding an NPC, or even adding an option to the TCG NPC in Booty Bay. It’s a logical place for the AH node as well, and could even be a replacement for an existing Auctioneer there. Cross-battlegroup code exists in teh form of LFD, and modifying that to be for both horde and alliance pre-exists for the neutral auction house. So, all told, it should be minimal effort, easy to test and as Suyncaine poitns out, provide Blizzard with quite a nice additional revenue stream.

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11. seanas - October 18, 2011

what motivation would Blizzard have to do something like WoWPlex? From what I’ve read, by far the biggest problem, from CCP’s perspective, is that PLEX brings in no *new* money; it only brings forward existing money – which is excellent for quarterly figures, when the mechanism is introduced, but ultimately is at best neutral, and at worst counter-productive: it allows the companies *best* customers to pay nothing for the game, at the expense of the less good customers.

From the perspective of your above-average-time-played player; sure, PLEX is great, cos you can play for free. Shite for CCP though, and whatever failings Blizzard may have, they’ve never failed the ‘make money hand over fist’ test.

In that respect, i think the kitten is much more interesting – provided there’s a market for it, then it brings *new* money into the company, whilst striking a blow against gold sellers and thus the costs of account fraud.

The question of course, is whether there’s an ongoing market for the kitten, a question more than a few blogges have answered strongly negative. And maybe they’re right, but I’m reminded of the infamous IBM prediction in 1980 that the global 10 year cumulative demand for personal computers would be only 250,000, thus it was cost effective to sell the rights to the pc operating system to 2 guys in a shed in Seattle going under the company name Microsoft. or the US mobile phone manufacturers who thought the development of digital mobile phones was bureaucratic insanity because there was no mass market for mobile phones…

Basically, predictions that ‘there is no market for x’, whilst common-sensical in theory, are always highly suspect in practice – and I for one are wondering not ‘are Blizzard doing it wrong’ but instead ‘why is it always Blizzard who seem to do it right?’

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12. Wilhelm Arcturus - October 18, 2011

@Seanas – I am not sure I follow your logic. In the end, the “good” subscribers pay just as much… actually more, since PLEX is $17.50 per 30 days… as regular or marginal subscribers. They just get somebody else to give CCP the actual cash. Logically, in the long term, it is a cash neutral operation that has one primary benefit; it gives a legal option for people who want to purchase in-game currency.

Yes, the company gets money up front, but the behavior of MMO companies is such that I believe they WANT and PREFER money up front. That is why they offer you a big discount if you pay for a year’s subscription in advance, rather than going month to month, something even CCP does. Who is really the worse customer then, the person who buys a year in advance at essentially $10 a month, or the person who consumes a $17.50 PLEX every 30 days causing other players to run out and buy more?

And that would be the only reason I could see that Blizzard would engage in such a plan, if they could hurt gold sellers. But only if what they did was deemed both effective (i.e. it actually acts as a reasonable alternative) and does not piss people off, leading to loss of customers or customer service complaints.

As for the market for kittens… I know your story about IBM, but it is a false analogy. IBM failed to take into account gains in productivity and the amount of IT and personal wealth that people would be willing to allocate to something that seemed like an expensive and fairly limited terminal to some analyst at IBM.

On the other hand, the market for kittens in WoW is pretty easy to draw a circle around. You can have one per character. So there is a max number, all characters in-game. Cut out bank alts, and other lesser used characters and people who don’t use the auction house and people who don’t really have much gold, and you cut down that number quite a bit. Yeah, sure, maybe those people would buy a kitten if they were 10 gold at the AH, but there is no incentive for a seller to go down to that price.

And then there is the utility of the kitten. It looks cute. That will get some sales. But it otherwise bestows no benefits. And if a person has a choice between gems for their new item of the kitten, gems win.

Plus companion pets don’t sell as much as we all think. The cute Pandaren monk only sold 220,000 across ~4 million players. So that is what, 0.5% of the population? And you got that pet across ALL of your characters. This is $10 for a single character, which has already annoyed the pet collectors and, well, illicit gold sales aren’t a big problem in WoW because the average player has excess gold and the kitten is a luxury item that bestows no benefits.

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