Gold Capped: Warcraft needs a new gold sink, and it needs it yesterday

Every week, WoW Insider brings you Gold Capped, in which Fox Van Allen and Basil "Euripides" Berntsen aim to show you how to make money on the auction house. Feed Fox's ego by emailing him or tweeting him at @foxvanallen.

Last month in this column, we discussed in-game inflation. Inflation is an inevitability in any economy -- a natural (albeit controllable) erosion of the value of money.

Usually, Blizzard falls over itself to do everything it can to promote balance. Are too many people dying to a certain mechanic? Slash the damage that mechanic inflicts by 10%, or change the frequency at which it occurs. Is a certain class struggling in PVP? Boost one of the bursty attacks by 8%. It's a subtle back and forth that goes on all the time.

With all the emphasis on balance, you'd think that Blizzard would micromanage the in-game economy to the nth degree. This quote (or this paraphrasing) from Lead Designer Tom Chilton from Gamescom stuck out rather prominently in my mind when I read it:

What in the heck are they thinking?

Raising the white flag

Let's call this what it is: Blizzard is surrendering the war against inflation.

Like DPS numbers and raid mechanics in World of Warcraft, real-life financial markets and the economy are heavily watched and regulated. While I'm sure all you armchair libertarians might take issue with the extent at which a government should regulate the economy, there's little question that bad things happen when the ball gets dropped (or, in some cases, when the ball is never even picked up in the first place).

What's a gold sink?

For those new to the concept, a gold sink is simply some (usually) non-essential item or service that takes money out of the World of Warcraft economy. Vial of the Sands is perhaps the most aggressive example in Cataclysm thus far -- each one that's crafted sucks tens of thousands of gold out of circulation -- but it's far from the only one. The 10% off the top that the Auction House takes, reforging, repair bills, and soon transmogrification -- all of these are gold sinks.

Typically, as WoW ages, game designers put more large gold sinks into the game. At first, advanced riding skills were gold sinks (900g to get the ability to use a 100% speed ground mount -- a lot of money at the time). Now, gold sinks typically take the form of mounts and items. In Wrath, there was the 20,000g Reins of the Traveler's Tundra Mammoth. The materials to craft Vial of the Sands cost around 30,000g. Even in patch 4.2, we have a few smaller (but definite) gold sinks: the 1,300g+ Crimson Lasher pet, the 1,300g+ Hyjal Bear Cub pet, the 437g Mushroom Chair, and the 3,000g+ Mylune's Call.

Gold sinks are often seen as luxury items, a way to flaunt wealth. But that's not why they exist. They're small battles in the losing but necessary war against inflation in World of Warcraft.

Gold inequality is the problem

Blizzard cites the variance of size in WoW bank accounts as the reason for not instituting a gold sink. That's bizarre thinking -- the inequality is the problem. Big players in the Auction House game are racking up bankrolls in the millions and even tens of millions. Even for more casual gold cappers, five-digit account balances are the norm and having hundreds of thousands is far from rare.

Now consider the more casual player. While they arguably have more in-game money now than they've ever had, at the same time, the gap between the WoW casual class, the WoW middle class, and the WoW upper class has never been larger. It's okay if the upper class -- those who play WoW for the Auction House -- are way ahead of the rest of the players, since they'll always have more money than they'll ever need. The problem happens when the middle class -- those who simply play the Auction House -- start blowing the casual class out of the water financially.

Why? Because it's the middle class that helps set the prices on the Auction House. They're not the ones buying Spectral Tigers. They're the people in trade asking to buy a pair of Valor bracers. They're the ones who spent a huge percentage of their bank account to buy that one i378 BOE in the earlier days of patch 4.2. They play the Auction House for some of those smaller rewards you can get -- a small but measurable advantage in the PVE game.

But these middle-class buyers are also buying just about everything that those more casual players are buying. They're grabbing food off the Auction House. They're buying glyphs for themselves and for alts. They're buying materials to help level professions or to just make a few Mythical Mana Potions for that heroic they're running later.

Because the middle class has so much money, they're willing to pay more for the basics. If they need a Flask of a Draconic Mind for a raid, they'll buy it regardless of the price -- 100g is a drop in the bucket. "Glyph of Spirit Tap costs 150g? Man, that's a lot, but I need it for my alt."

For more casual players, these necessities make up a significant portion of their bankroll. And worse yet, for absolute beginners, some of the most important elements they need -- say, that glyph -- are absolutely out of reach without strong knowledge of how to play the Auction House. That's the problem; inequality leads to more inflation, and more inflation requires people to do more to keep up. Sure, you may have cleared 80g for finishing that heroic yesterday, but what about that level 25 player who just got access to a glyph slot? They get a few silver for doing what you get 80 gold for. And without a doubt, these players are the ones who need those meager funds the most.

Gold sinks generally draw interest from all players. Everyone wanted that Tundra Mammoth, since it offered the ability to repair on the fly. New mounts have a cool factor. None of this stuff is necessary for players to have. It's just a little something extra to keep the economy from falling apart.

The consequences

Surrendering the war on inflation will have terrible consequences, mostly for the most casual of players. Without a steady Auction House income, these players won't be able to afford much beyond simple repairs. The middle class of players are going to feel the pinch too -- a BOE piece of gear will probably cost 250,000 gold or more in the opening days of patch 5.0.1; basic flasks might run thousands of gold each. A single Pandaren herb might run 100g.

Obviously, inflation is going to happen no matter what Blizzard does. But by surrendering the war, inflation is going to get much worse that much sooner.

Are gold sinks the only solution?

If Blizzard doesn't want to put in a new gold sink, one would hope it's got a plan to deal with the consequences. Certainly, dealing with inflation doesn't require a gold sink, but it's the most elegant solution.

What are the other options? Well, if inflation is rampant and newer players need to buy the bare essentials, the game will have to pay out progressively higher rewards for simple quest completion and monster drops. (One wonders why these drops and rewards are so tiny as-is -- 10 silver doesn't buy anything.) Blizzard will need to give players the tools to deal with out-of-control prices.

But does that really solve anything? Pumping more gold into the World of Warcraft economy will only worsen the existing problem. And worse yet, it will rapidly erode any kind of savings that players have. Your local economy works because of the actions of 10 or so major (~1,000,000g) players, backed up by another hundred or so minor players (~100,000). With inflation making the act of working for more money than you immediately need futile, these players are less likely to keep the economic motor humming. The consequence of that: Not being able to find what you need on the Auction House when you need it. (If you've ever been on a low-population server or even the less-played faction of your own server, you know how frustrating it can be to see only 12 Wool Cloth listed at any given time.)

Certainly, Blizzard doesn't have to put a shiny new 50,000g mount in the game, or a bunch of 10,000g pets, or something even more expensive like player housing. But it's the most effective, elegant solution to a problem that will only get worse without attention.

Maximize your profits with more advice from Gold Capped. Do you have questions about selling, reselling, and building your financial empire on the auction house? Fox and Basil are taking your questions at fox@wowinsider.com and basil@wowinsider.com.