The Lawbringer: What World of Warcraft can learn from other microtransaction models, part 1

Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Mathew McCurley takes you through the world running parallel to the games we love and enjoy, full of rules, regulations, pitfalls and traps. How about you hang out with us as we discuss some of the more esoteric aspects of the games we love to play?

Microtransactions are here to stay. We were wary and scared in the beginning -- it was a brave new world, having the gall to ask consumers for a couple of bucks for horse armor. DLC (downloadable content) and microtransactions evolved over time to include better customization, new missions and levels, convenience purchases, and more. The industry began to shape itself around the growing need for better revenue models, as well as conforming to the needs and wants of players while remaining (hopefully) pure in motive.

With the huge success of the free-to-play model in the United States and Europe, a feat which many said was not going to go over too well outside of the Asian markets, paying for your game over time instead of up front has become a staple, an afterthought, to gamers.

World of Warcraft isn't going true free-to-play any time soon, of course. The subscription model works for WoW in a fairly unique way. The number of global subscriptions for WoW make up such a huge, defined income that removing that income from the table in favor of the "5-percenters," the people who presumably pay for items in-game, would be almost criminal in terms of corporate mismanagement -- unless, of course, you could make more money on those 5-percenters than you do on 11.4 million monthly subscriptions, which seems like a hefty move to make.

There is no denying that Blizzard is dipping its toes into the microtransaction waters with the Blizzard Pet Store, selling virtual goods to players, including companion pets and mounts. Blizzard has sort of bucked its own trend when selling these virtual goods, creating its own unique understanding of selling pets and mounts: When you purchase a pet or a mount on the pet store, it attaches to your account rather than your character. In the past, and still going forward, Blizzard's other quasi-microtransaction avenue for pets and mounts, the WoW TCG from Cryptozoic, attaches pets and mounts to the character and arguably end up being much more expensive on a free market than Blizzard's own pets and mounts.

Adding licenses to your account from the pet store creates a new incentive for your account to stay with you in perpetuity, since your account grows with each thing you add to it. Presumably, you are going to want to hang on to your account forever, adding game licenses like Diablo 3, as well as pet and mount licenses for all of your games included.

The account enhancement model is not exactly new, but it definitely works for Blizzard's setup and the type of microtransactions that it provides. The complaint that I hear all the time with regard to Blizzard's microtransaction model is that these virtual goods cost too much and create incentives (like the coolest-looking mounts) for players to fork over more cash than their monthly subscription.

My response usually goes one of two ways. The first is a solemn reminder that microtransactions are here to stay and that no one expects you to purchase what you don't want (since you don't have a gun to your head, so to speak, when you see someone riding around on a Winged Guardian mount in Orgrimmar). The second response usually goes a little like this: Have you seen the microtransaction market outside of World of Warcraft? Because let me tell you, friend, WoW is holding back on the model more than you could ever imagine.

The fight against nickel and diming

You really think WoW is bad? Blizzard is atop a bucking bronco of cash-ins that it's not going for. One mount a year for the last two years must be the hardest thing to explain to hungry investors looking for short-term profit and big, big numbers for their stock. Those earnings calls must be hell for Mike Morhaime, who completely understands that too much too fast would kill a good amount of brand loyalty, even if it doesn't really effect the game being played. It's all in the eyes of the player.

What follows in the next week or so are examples of games out right now that are doing well for themselves, making money, and working with currency and item selling that have turned these games into services. WoW could probably learn a lot from these games and heed their micro-transaction pitfalls. Nonetheless, after reading about these other games, maybe you will appreciate the potential gravity of the situation at Blizzard HQ and realize that the nickel-and-diming perception is in fact less than you think.

Of space monocles and currency

I was determined to write an entire Lawbringer about the EVE Online monocle fiasco but was having trouble tying the whole thing to WoW. This is a WoW column, after all, and I realized that Blizzard could actually learn a lot from the monocle controversy through learning the pitfalls of player-run economies. The monocle thing is too good to pass up, though.

If you are scratching your head wondering why there is a controversy over monocles in space, let me illuminate the scandal for you. EVE Online is a space simulator game from CCP. It boasts a huge universe to explore and massive space battles. I read the forums about these, because the game just isn't for me; EVE is the best game to read about.

In EVE, there are currently three types of currency that players can collect -- ISK (in-game currency), PLEX (30-day game time, purchased with real money), and Aurum (customization store currency). ISK is used and collected in-game to purchase items and upgrades to your ship, as well as to purchase PLEX on an open player market. PLEX is used to re-up your game time to EVE and can be purchased with real money. Here's the kicker: PLEX is also able to be traded in-game. Players can purchase PLEX with real money and sell that game time to players in game for ISK. That's how you can essentially "purchase" currency in EVE. Aurum is purchased with PLEX, which you can sink some real-life cash into or purchase on the open market for ISK, and then convert into Aurum. Are we on the same page still?

When CCP opened up the in-game character customization store, much like Valve opened up the TF2 Mann Co. store to sell hats and other virtual wares, the price of PLEX on EVE skyrocketed because of the new demand for it. Now, not only could you use PLEX for game time but also to trade in for this new currency, Aurum, to purchase shop items. The in-game market for PLEX is controlled by the players.

One particular item, a monocle for your character, cost more Aurum than most shirts, pants, and other items in the store. If you wanted to purchase enough PLEX to then trade in for the Aurum needed to purchase the monocle, it came out to around $70-80 in PLEX.

The immediate answer to this is that PLEX is available on the market for in-game currency. If you have enough ISK, you are able to find your way to the amount of store currency needed to purchase these expensive items. The cost of PLEX for ISK rose dramatically, and many players felt that they needed to purchase PLEX because the amount of in-game currency needed to buy the more expensive items in the store became too great. The only way to purchase Aurum with ISK is to purchase PLEX, which is sold by players on an open market. There is no standard for players who want to purchase goods with in-game currency.

When all of these factors drove the "cost" of Aurum items up, the players got mad, the internet took notice, and screams of $70 monocles echoed in our ears. It's one of the dangers of a player-driven economy, in that the economy does not work in a perfect world despite the developers' having enough control to make it a perfect world. It is an odd thing, really.

Learning from giving players a say

So what can Blizzard learn from something like this? What can Blizzard steer clear of when moving forward with micro-transaction models, without falling into the public relations nightmare of a $70 monocle (ignoring the already huge and old controversy of a $25 sparkle horse, of course)? The EVE problem was that there was an element of the playerbase that set some of the cost of in-game items. Blizzard would be wise to never let players play with the economy of virtual goods that can be purchased with real money. Players scream for these items to be available in game as well as in the store, so that everything is available to everyone, no matter how much money you have or time you have to commit. To this, I say that this does not have to be the case, at least not with cosmetic and customization items and goods. It would be nice, sure, but Blizzard already has to deal with the incredibly destructive nature of gray-market gold selling, and you aren't likely to purchase gold from Blizzard any time soon.

EVE's intentions were pure, but it seems that it would have done better with making cosmetic items purchasable with a new currency that players had to buy themselves, without a liquid component to it. If you're going to sell items on a store, make certain that you can set the price yourself and have no other market influences other than your own. Players are left with prices they can count on and no terrible PR about $70 monocles.

Next week on The Lawbringer, we will explore more micro-transaction models and see how Blizzard and other developers can learn from the successes and failures of others (specifically from Second Life, League of Legends, and more). Hopefully, we can live in a world where micro-transactions are fair and fun as opposed to being stigmatized based on the follies of the past.

This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.