Ok, I have seen enough misinformation and lack of knowledge of Economics around, regarding the big elephant in the room called RMT, so finally I am taking the time to write a post which, hopefully, will shed some light on the matter for all of those people.
This will be a two-part post, the first consisting of some basic economics concepts, and the second one will be an overview of RMT using those concepts. These won’t be some complex economic concepts, but rather simple ones (hopefully) everyone will understand. If you are interested in the RMT issue and why it is so controversial, tag along for the ride!
(Apologies in advance for those who have this knowledge already, you can skip the entire first part of the post, and most of the second part too).
(Note: you can find all of these concepts online, but since I will be making the association between them and how they work in the game, maybe it will make more sense for those people and they’ll have an easier time with them and enjoy the process more)
Economic concepts
(Content in the following spoiler)
“Supply” refers to the amount of a certain product or service that “exists/is produced/offered(sold)” in a certain market. In this topic of RMT, the product we’re referring to is Gold (although, as is known, other products exist within the concept of RMT, Gold buying is the more prevalent one, and so we will focus on that one). There are several ways to “produce” Gold within the game, and I will not go through them, would be a waste of words saying stuff every WoW player knows.
“Demand” refers to the amount of that product or service that consumers (in this case, players) “wish to have”. Naturally, every player would like to have, ideally, infinite Gold, but in practical terms, the “real value” of demand has more things to be considered than simply how much of something someone wants to have. This is where we go a little deeper.
(This next spoiler is a bit of an extension of these two concepts, and relates to the impact of RMT in the game economy, something which won’t be entirely explored in this post, but I thought could be of interest to some people, so I decided to add it anyway)
[It is easy to understand if you look at it from the side of Demand. Imagine a scenario where 10 companies have 1 cellphone for sale each. If there is only 1 person willing to buy a cellphone (low demand), companies will have to compete to try and make the sale (and so they will lower their price). But if, instead, there are 1000 people who want to buy cellphones (high demand), and only 10 units in the market, the companies who are selling them will be looking for the “highest bidder”, which is the same as to say the prices will increase.]
In the case of Gold in WoW (and of every currency in the real world, for that matter), increasing the total available amount of it, which translates to an “increase in the supply (of Gold/currency)”, will lead to its devaluation. In other words, the “price of Gold/currency” will lower, which is the same as to say that you need less of whatever is needed to buy that Gold or currency, when compared to before this increase. If you think of a real world example, you can say that you can “buy” more Euros using the same Orange, if the amount of Euros available increases. When you look at this from the other perspective and consider the Orange to be the product, then you have the opposite effect, aka an increase in price, where you will need more Euros to buy the same Orange.
[What I just described here is what is commonly known as “Inflation”, a word that I have seen be used many times in these RMT discussions, but quite often in a wrong way, so I thought I would clear that out for those that may have doubts about its definition.
Again, apologies for all who already knew of this.]
In WoW, the “supply” of Gold, or the existing amount of Gold, is always increasing. Every time you kill a mob and loot 1 silver, that is 1 silver that is being added to the total amount of available Gold, that was not there before (mobs don’t participate in the Economy, and so that silver is not considered to be part of the whole amount). The reason why people say “bots cause Inflation” is because, in practical terms, bots are also not considered to be part of the Economy (since they are not using that Gold to buy stuff, but rather just holding it, as mobs do, to then “introduce that Gold in the economy” when they sell it to a player (who will spend it in game-related stuff).
This means that Inflation occurs naturally with or without bots. However, if you imagine a scenario where there are 1000 players and no bots, with players getting an average of X gold “created” per hour (silver looted from mobs, along with grey items that are then sold to a vendor, etc), then you will have an inflation rate of Y. If, however, you have those same 1000 players but add in 100 bots, and if you assume that the bots will also have the same average “X Gold per hour” creation, inflation will no longer be Y, but Y+10% (of Y) (since you have 10% more Gold being created per unit of time).
This is to clarify that bots DO increase the inflation values/create additional inflation.
In order to get Gold, in the eyes of a consumer (aka the player), there are a lot of alternatives within the game to do so, as we all know. The important thing to consider here is what is called the “opportunity cost” of getting that gold.
(NOTE: the opportunity cost is often the sum of a big number of variables, but since most will have a relatively/very small impact on most of the decision-making, I’ll be opting to just point out the major ones)
One simple example:
I, Junglebeard, want to get, say, 50g, to buy items for 3 Enchants, 10 Consumables, and 2 items for an alt (all together making those 50g). I have several options to do so, like Mining (and selling the materials on the AH, for example), killing mobs to vendor the grey items that drop (along with getting the extra dropped silver), etc. When evaluating those options, my choice will go towards the one with the “lowest opportunity cost”. This will be the option that, in my eyes, will be “the cheapest”. This “cheap” does not refer, naturally, to some Gold cost, but something else. You may straight away think: “well d’uh, the cost is time!”, and you would be… partially correct. Other factors are taken into consideration too. I may find Mining to be more boring than killing mobs, so even if Mining is a more effective way of getting Gold (as in, more Gold made per unit of time spent, or gold/hour, as is usually the reference used), I may find it more fun to kill mobs and end up choosing to kill mobs to get gold, rather than just go Mining. This means that, to me, killing mobs would have a “lower opportunity cost”, when compared to Mining, even if the effective gold/hour made through killing mobs ends up being lower. So, there is a certain “discount” in that opportunity cost, that “discount” being the fact that I’m having more fun (even if I end up spending more time to get those 50g).
And this is where we insert the concept of Real Money Transfers (RMT), which goes against the Terms of Service (ToS) and is, thus, a bannable offense.
Current State of RMT (and what causes it to happen)
(If you did not read the first part of the post and get confused by some of the concepts used here, I can advise reading the first part to seek clarification on those concepts)
To most players, breaking ToS in order to facilitate the accomplishment of something (in the example I made, using a third party to buy the gold) is not desirable. Here, what we can say is that buying Gold through a third party, carrying the risk of having your account banned, is too high of an “opportunity cost” for that option to be the one the player will choose, even if it can be done in minutes (and thus, the value of gold/hour would be much higher than the one obtained by killing mobs or Mining ores). There are both an explicit and an implicit cost associated to that, which is both the real money spent AND the risk of losing the account by getting banned. Let’s explore these two costs a little more.
Real money: the “perception” of “opportunity cost” related to the amount of real money spent by a player depends on each player. The same 10€ spent by two different players will often have different “perceived values”, even if it’s still the same 10€ in both cases. A “poor” player will have a perceived value of the 10€ that is much higher than the one a “rich” player will have (there may be exceptions to this, of course, but the vast majority of the times this will be the correlation).
“Risk of getting banned”: there are two concepts related to this. One is, again, how much “perceived value” a player has of their account. For many players, especially those who have been playing for a long time (as is my case), the perceived value that they have of their account is usually higher (even if, in many cases, the account itself does not have anything that may be considered “valuable”, such as a lot of achievements or rare mounts). The other concept, is one called “risk aversion”. This is not exactly related to a person’s account or WoW in general, but to the person themselves, and it’s easy to identify how averse or not a person is to risk by making a simple test. (I will include an example of a testing method in the spoiler below, if you’re interested) The entanglement of these two will determine how much more or less willing a person may be to breaking ToS.
Conclusion on current state of RMT
So, putting all of this together, we can take the conclusion that, for a certain player, they may see the opportunity cost of breaking ToS to optimize their available Gold amount as low, while others (the majority), will see it as (very) high. Between these two, there is a sort of “line”, where a player will decide in favor of one or the other. Where this “line” is, depends on the factors that i just explained, and changing one or more of those factors may make a person who would previously choose one option, now choose the other.
For example, let’s assume the anecdotical scenario where RMT’s stopped being banned, and Gold sellers started simply giving out their gold at no cost. It’s easy to assume everyone would try to get their hands on some of that gold, right? The risk of losing your account would not exist, you would not have to pay real money to get gold, and you would not have to go Mining or kill mobs to get it. (the impact that this would have on the economy of the game is irrelevant for the point I’m trying to make and we will not look into it, especially since this is a silly example).
(NOTE: if gold was being handed at no cost, technically it would not be an RMT, since you would not actually be paying any real money, but you can assume paying 1 cent to buy 1 million Gold to keep the example alive, I suppose)
On the other hand, if suddenly the ToS became super strict and enforced (let’s say that 99% of people who bought Gold ended up being caught and banned, with real, reliable statistics being known by the players), and Gold sellers made their Gold 1000x more expensive as well, then only people who would have almost no aversion to risk and a big amount of real money to spend would still buy Gold, which would be an absurdly tiny fraction of the playerbase.
Now obviously, neither the first example nor the second are the current case in WoW. In fact, where the game stands now is a very grey area, since there is no data to show real numbers on this (for multiple obvious reasons, such as people not knowing who the players that buy Gold and don’t get caught are, for example, since those usually don’t tell and there is no software to get those numbers [if there was, I risk saying they would have been caught by now?]). What we DO know, is that “reducing the incentive to buy Gold” will lead to a reduction in Gold buying. This is because this “reduction in incentive” is nothing more than an increase in the “opportunity cost” that each player has when considering the option of buying Gold. How that can be done, my friends, is the whole discussion that is happening now, and there is obviously no easy answer to that, otherwise this issue would have been solved a long time ago. We know the “theory” (increase price on Gold and increase the chance of catching Gold buyers and sellers), but the practical part is still somewhat distant.
For starters, people can’t control the prices that Gold sellers put on their Gold. This means that that part of the opportunity cost cannot be controlled, neither by Blizzard nor by the players, but only by Gold sellers, and it’s safe to assume they would not want to ruin their own business by driving customers out. Along with that, and according to Blizzard, catching Gold buyers and sellers within the game is also not an easy task. This means that the opportunity cost related to the risk of having your account banned is not high enough to prevent the large majority of Gold buyers from doing it, so even players who are somewhat averse to risk may end up buying Gold.
So, what we’re left with, is secondary measures.
About the ban on GDKP’s
One measure that has been taken recently, as I assume (almost) all of you know, is banning Gdkp’s (raids where participants bid Gold on the items that drop, with the highest bidder winning the item). This has divided the community, including streamers, and I think we should look at this measure through this same lens that this whole post is using. So let’s do that. Before we do, however, I just want to add a disclaimer and say that I see positives and negatives to Gdkp’s. I am neither a “lover” nor a “hater”, and instead try my best to use reason above all to find the best answers. (even if I am only human, of course, and thus a subjective being in essence). My ultimate goal is to see WoW be a great game, as it has been (for me, at least) for so long.
First of all, the concept of Gdkp’s is directly related to Gold, unlike the “average” raids (MS>OS and derivatives) where people just /roll for their gear. Since this is the case, denying that the existence of Gdkp’s incentivizes Gold buying is denying a fact, and I think it is safe to assume that both sides of the barricade should agree to this. Personal experiences may and will vary. Personally, for example, I have only participated in 3 or 4 Gdkp’s in this phase 1 of Season of Discovery, and the highest amount of Gold that I saw being bid on an item was 50g, by an actual irl friend of mine, on the epic crossbow, and I can safely say he never bought Gold. I can understand, however, that other people had very different experiences, and in fact I did see a screenshot of a raid chat where a bid of 1000g was made on the epic staff from Kelris, which is both 20x higher than the highest bid I’ve seen, and also much more prone to be RMT-related than a 50g bid.
However, as crazy as our personal experiences may have been, we should look at this question through the rational side and from an outside perspective. If we assume a large sample of players who participate in Gdkp’s, the statistical odds of some of those players having bought Gold is high, and thus, cases like the 1k gold for the staff may, and statistically will, end up happening.
I can agree that, in a World (of Warcraft) with no RMT, no sort of Gold transaction within the game would be detrimental to it. This implies that any raid made up of strictly “legit” players should have no issues (or be banned) for running a Gdkp. However, considering that there is no effective way of knowing if any player in a raid has bought Gold (theoretically, even that 1k gold staff buyer could have farmed the Gold, even though no one will actually believe it), and also the high odds that at least a number of Gdkp’s will involve Gold buyers, testing this measure out will be giving both the players and the Blizzard staff some data on how it will impact RMT. People may believe (as in, have an opinion or feeling) that it will be good or bad for the game itself and for RMT’s, but until it has been tested, there is really no way of knowing for sure (the best we can make are assumptions). I have watched streams and read forum posts where players point out positive and negative aspects of Gdkp’s, and I believe I agree with all of them (simply put: legit players who like Gdkp’s are going to be unjustly “punished”, but Gold buyers and sellers should suffer too). Whether this will have a big impact on RMT’s, as I said, is something I believe we will have to wait to see.
(NOTE: as you may have read, my personal experience with Gdkp’s, although small, saw no suspicious cases of RMT, so I should be inclined towards seeing Gdkp’s as a good thing. But again, I am trying to remain neutral and give this idea a chance, for the sake of the quality of the game).
More to reduce RMT
Alongside this idea of temporarily (at least for now) banning Gdkp’s to decrease the incentive to Gold buying/selling, I believe Blizzard should take a big look at the game as a whole as well since, in my opinion (please note this is AN OPINION), there are many more existing reasons to buy Gold. Although Gdkp’s seem to be where the biggest bulks of Gold change hands, other aspects of the game should also be analyzed, and ideas tested out as well, to not only further decrease this incentive, but also maybe make the player experience improve as a whole.
PS: We all want WoW to be better, and this Gdkp ban experiment may or may not end up being beneficial for the game. What I’m trying to do with this post is make people take a perspective from outside a particular detail of the game, and look at the whole picture, so that ideas that benefit players and the game as whole can emerge. Who knows, maybe some day in the near future we will have an idea come up that may make Gdkp’s a very legitimate way of running a raid, while also having the amount of RMT’s drastically decreased.
Thank you for coming to my Ted talk.
