Monday, June 25, 2007

I admit it - I cheated!

...but I did it for purely economic reasons.

Pokemon Diamond and Pearl have become fabulous bets-selling games for the Nintendo DS. These latest titles in the Pokemon series that started with the GameBoy add more Pokemon to catch and use the WiFi capabilities of the DS for battling and trading. I have to say I have been underwhelmed with the trading possibilities, as anyone I've come across with something to trade wants something ridiculously more valuable in exchange for what they're offering. A parallel in football would be offering to trade your injured third-string quarterback for Reggie Bush. Another feature of the DS games which is designed to reward long-time devotees is the ability to transfer pokemon captured in GameBoy Advance cartridges to the DS game card.

By now you may be wondering Why am I writing about this on a game economics blog. Here's what I'm getting at. With the WiFi trading capability, people are now selling rare Pokemon that could only have been caught in the old GameBoy Advance (GBA)titles. They will send it to you via WiFi once they receive your payment and your friend code that identifies your particular Nintendo DS. I considered taking advantage of this to complete my own virtual Pokemon collection. I have logged over 900 hours of playing time over the course of four GBA cartridges, yet there ewre still some Pokemon unattainable to me because you need to get a special ticket which had to be scanned into your GBA at special Nintendo events. (The tickets have also bee for sale on the internet). So either I by the tickets or the Pokemon invidually and I spend $15 for the ones I need. Also, some Pokemon are only available if you have a GameCube and Pokemon Colliseum - that comes to about $90 if you buy both used.

SO, as an alternative to $100+ to get what I "need" to complete my Pokedex (the thing in the game that keeps track of your collection), I went and cheated by getting a $20 GameShark for my GBA. This miraculous device plugs into the GBA and your cartridge plugs into the GameShark. You select which Pokemon you want to catch from a menu, start the game and then go catch it. Unlike the tickets or the WiFi transfers, the GameShark is the gift that keeps on giving. You can capture the very Pokemon that are being sold for $5 a pop as many times as you want - so instead of being a consumer I can be the seller if want to - and that would more than pay for the GameShark.

Now that I've bored you with my own personal story, what I really wanted to get you to think about is whether there are unintended negative consequences of the WiFi transfer feature that Nintendo put into the game. Will the real-world sales of Pokemon drive more and more people to resort to the GameShark or it's cousin the Action Replay to get their rare pokemon. And then, the rare Pokemon will lose their prestige when everyone has one. Does this eventually cause a decline in interest for the series? Perhaps Nintendo can respond to this by devising methods to prevent this in future titles, but they would bear some cost of development and QA to make sure backwards compatibility is retained.

Using the Pokemon example as a template, are there similar situations that are prone to suffer the same shifts as those I have conceived above? That is, upon shifting to WiFi or other wireless forms of access, what new goods and services will be offered to the detriment of their overall value - by becoming accessible to more consumers, by driving consumers to create or employ less expensive means to obtain the good or service, or by driving consumers to a different good or service that fulfills the consumer's underlying need in a different way?

Wednesday, June 20, 2007

The Perfect Gift for Father's Day

How does spending a day with your son traveling to a new place sound? Or maybe hunting together? Or shopping? Well one of thr guys I work work with did all of that with his son. SO what's the big deal?... they did it all playing World of Warcraft! That's right, junior took dad hunting to get him a high-level vest for one of his alt characters. Right from the convenience of their home, father and son spent the day doing stuff together, learning a little about each other, and fereling appreciated. No "real" economy was affected, no "real" animals were harmed and no natural resources like gasoline were expended.
Sounds good for the family, but what about commerce in real life? I don't think you neighborhood mega-mall or gas station will measure any significant hit from stay-at-home WoW adventurers - but will this trend grow and eventually make a few points of difference in sales after all? If 400,000 WoW players (5%) spent the day at home online, someone might notice. A game like Second Life provides a space that's more suited for providing a branded experience in that world if people chose to spend their holiday weekends there, but how does Macy*s participate in a combat/fantasy MMOG economy and not be out of place in that environment? I may not seem urgent to figure this out now, but now might be a good time to speculate and trying some stuff out for when it really does matter.

Thursday, June 07, 2007

Two Fer

What better way to start June than for Forbes magazine to write about both Second Life and WoW in this online piece. Seems like both games are the target of significant lawsuits related to the rights of virtual property owners.
In the SL suit, a player who was kicked out of the game because he used an exploit to get land for cheap is trying to recover the value of the virtual property that he no longer has access to. The key comment from U.S. District Judge Eduardo Robreno: “While the property and the world where it is found are ‘virtual', the dispute is real.”
WoW's legal action came from the other side of a supposed injustice. It's class-action suit against IGE, claiming that their systematic online gold farming practice is devaluing the goods and currency of the other online players. The important thing I see coming from this is whether the ruling will uphold and legitimize the business of paying players to farm gold, or discourage it to the point where such businesses will be curtailed.
Both cases are being taken seriously by the U.S. legal system and are still pending. If I get a whiff of any progress I'll let you know here.

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Sunday, June 03, 2007

Fast Drivers

More and more attention is being paid to the role of virtual item sales. Previously left to the gamers themselves, slinking around in dark alleys of the internet and selling off gold, swords and accounts, the game developers and operators themselves are making virtual items part of their revenue plans for the future. According to this GameDaily piece, digital distribution and online item sales are the fastest growing revenue segment for online games.
On two ends of the spectrum, we have games that don't charge a subscription fee and rely entirely on item sales for operating revenue. Acclaim has been rolling out a series subscription-free games, selling Acclaim Coins for real dollars and then letting subscribers use the virtual coins to purchase items in *any* of their titles. Less "gamey" worlds like Second Life, and Project Entropia sell you the currency to upgrade your game experience, but also provide the opportunity for you to earn your own wealth within the game through goods and services you provide.
The games that rely on subscriptions tend to have all kinds of rules about selling game things in the real world. This has left all of the profit from such sales - which are taking place despite their rules and objections - go entirely to the seller. Aside from expansion pack sales, I'm expecting we're gonna see more "hybrid" approaches emerge with a way for subscription players to "legitimately" engage in commerce either within or outside their virtual world that kicks back some portion back to the game operator. Maybe renting merchant booths, or purchasing spots in a "mall" or perhaps even selling a license that has to be periodically renewed.