Wednesday, November 15, 2006

If Everyone Hates Gold Sellers, Who's Buying?

I remember a time when buying and selling MMORPG loot was anathema to most gamers. It was akin to treason against friends, against your community, and least importantly, usually against the End User License Agreement that you failed to read before clicking OK. People used to regard this practice as debilitating to the economies of the games that they played. If you bought, or if you sold, or if you bought and sold, it really didn’t matter - you were a bad, bad boy or girl.

Worse still, the marketplace spawned some serious David and Goliath action between small operators paying their rent, and big corporate hacks getting in on the action. In addition, most of these operators have not been content with simply owning the currency and account exchange – that would be all too simple. They expand their operations into website networks and gaming information exchanges – message boards and item databases for those laypersons out there. Why? Because even non-subscription sites can generate millions of dollars in advertising revenue from page views alone, and premium service sites can make much, much more. The ultimate question is this: is the invasion of these supposed “unwanted entities” into the fringes of the gaming business going to hurt the business, or the players… And do we even care anymore?

Times have changed. If there was not a market for currency or accounts, there wouldn’t be an economy to worry about. For every ten guys who swear they would never buy or sell gold, I’ll show you nine Paypal accounts that will tell you differently. Sure, there are tons of people out there who stand by their convictions and raise their fists in anger every time that IGE or some other gold seller buys another gaming site, but whom are they punishing? Are the masses speaking? I think that they are. They are speaking volumes. The loot sellers are reaping the benefits. Methinks that the community doth protest too much sometimes. I’m not calling every message board troll a liar. Let’s just call them impaired in the area of vocalizing reality through text. It looks really good on paper and saves a lot of pride. The fact is that a survey reports that around 22% of respondents had bought or sold virtual currency in the past. If the sample is representative, that’s over 1 million WOW subscribers for that one example.

Recently the uproar that has been caused by the acquisition of Allakhazam and Thottbot by a holding company that also owns IGE (who although no longer employing John Yantis most certainly back-ends’s gold supply) has been fairly flame oriented. Many long-term subscribers to Alla’s premium services have been canceling the auto renew on their accounts, flaming his decision to sell on his boards, their boards, and every other type of board possible, and in general being disagreeable to the process.

Allakhazam had previously gone on record with promises that he would never sell to the low down and dirty loot vendors, so we can assume that the deal was too good to pass up. Additionally, the approach that has been taken in this has been pretty hands off. The team at Allakhazam remains pretty much unchanged.

If the informational sites remain the same, or improve their product, do we really care who owns it at the end of the day? Well, maybe human rights advocates and people who are for reversing the trade deficit will care, but for the average gamer who only wants to find the loc for the hidden box of fairy dust in the deep dark cave – there’s really not an issue. (The loc is 254, 72. Remember to bring a flashlight and a 12 pack. It’s a long walk and you can’t use run-speed enchants inside the dungeon, as you might trip and spill your beer. Total party foul.)

From a business perspective, there is another animal to consider. Let’s pretend that I am Bob. I own Bob’s Site About Games™. IGE is the Juggernaut. Literally 800 pounds of red armor and muscle (money), ready to spend and flex and spend some more. When IGE enters into its negotiation phase with a company, they don’t really negotiate. They make an offer. They promise that the offer is final. Then they tell you that if you don’t sell now, they are going to find someone else to offer your product or service and spend a metric ton of cash to ensure that your business crumbles into nothing more than a faded memory of bits and bytes.

That’s not just conjecture, by the way. Towards the end of 2004, Brock and Yantis called GGO co-founders Jason Allen and Brian MacKay from Hong Kong, where IGE was staging their first buying spree. In a series of very expensive conference calls, they experienced IGE’s tactics first hand. Brian MacKay said, “Brock Pierce is excellent at this. He’s persuasive, he knows how to play the high-powered corporate executive angle, and he does a good job of intimidating you with his raw financial might while simultaneously luring you in with promises. I wouldn’t want to work for him – which is ultimately what I felt he was offering us - but it’s no wonder so many people make the unpopular decision and cave.”

So many do in fact sell, and many sell for much less than they should have sold for. Fear and strong-arm tactics can make for some strange bedfellows. Now we have seen what happens when the big guys muscle the little guys, take over and redefine the nature of the product. Yantis tried this a couple times with a few different popular EQ message boards and ended up with a couple of worthless domains. This new and untested “hands off” approach may in fact be working in their favor. How many people knew until recently that, one of the most popular databases for WOW on the net, was owned by the same holding company that owns IGE? How many care now? Time will really be the only telling factor here, but if the past is prologue, the ZAM network will be garbage.

I for one have some moral and ethical issues, mostly dealing with the way that the big gaming companies do business with regards to labor and farming. Exploits that saturate game economies with too much of a good thing can create a stagnant game economy, not even considering that so much US currency finding its way into foreign marketplaces is a pretty bad thing for the real life economy. If you don’t get this part, lern2globaleconomics101 n00b. Let’s just say, for the record, that it’s generally bad to flood a foreign economy with currency and allow them to use that currency to buy up your country’s debt while at the same time very little of their currency is being sent to your country. We call that a trade deficit.

If you had your finger on the pulse of the gamer community, you would realize that companies like IGE are doomed to fail miserably. So many of us united against a common enemy cannot be swept aside. Except – well I really do need my epic mount, and it isn’t like I do it all the time. It won’t hurt. Just this once, really. Then never again, I promise.

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