Actually, I'll go out on a limb here and say that many of you are really pissed at Blizzard right now. But before you condemnd Blizzard of sacrilege, we should take a closer look at what this system will really mean for the players.
The Basics First
Buying
Selling
Example
You can use the cash AH without spending a dime
It doesn't matter which AH you end up using anyway
Added bonus: It eliminates third-party selling
I don't want this crap in Diablo
Potential Hazards
Farmers
Hacking
Conclusion
The Basics First
Blizzard has revealed that there will be two auction houses available to players through the Battle.net interface: one which uses in-game gold as a currency (just as the WoW auction house does) and one which uses real world money such as dollars, euros or similar depending on which region you play in.
Buying
In order to buy items, all you have to do is transfer over money to your B.net account from your credit card, which will convert it into e-balance. You can then go right ahead and bid on items with your e-balance. If you win the auction, your bid is automatically subtracted from your e-balance and you get the item. If you bid on an item but someone else outbids you, it will cost you nothing. This is true for both the gold and cash AH systems, the only difference between them is that in one you will use actual money.
Selling
In order to sell items, it's a little more tricky. If you want to put up an item for sale, you have to pay a fee. This fee will be subtracted from your money whether you succeed in selling it or not and given to Blizzard. In the gold AH, this fee is a gold sum (again exactly like WoW), and in the cash AH it's your e-balance. This fee is set at a fixed nominal value (the exact amount we do not know at this time). If you don't manage to sell the item, it will remain in your stash and you can try to sell it again, but the fee will already have been removed from your e-balance. If you do sell it however, an additional selling fee is also applied and given to Blizzard, and afterwards one of two things can happen.
By default, money that people buy items for will be added to the sellers e-balance (or gold total, if they sell in gold). However, it will also be possible to set up your account so that it will be added your credit card. This will require adding a third party payment service to the account to handle the actual transaction. Blizzard is currently negotiating with potential companies at this point in regards to who will handle this service, so at this point we don't know who it will be or in what regions they will operate. However, it will be possible to make money selling items in Diablo III. What will not be possible, however, is to convert your e-balance back into cash. So if you sell an item and haven't set up your account to give you cash, it will increase your e-balance instead. That e-balance cannot later be withdrawn as cash, but it can be used to buy other items and anything in the Blizzard store, including games and WoW subscription time.
Blizzard has also stated that every player gets a number of auctions which allows them to put up cash auctions without paying the nominal fee. It's unclear whether this is a fixed amount for each account (x free auctions in a lifetime), a fixed amount concurrently (x free auctions at any one time) or a recharging value (x free auctions every week), but Bashiok has hinted we might be talking about a set number each week. In any case, using such a free waiver will provide you with the possibility of making money without risking a single cent. We'll get back to that further down.
Example
(NOTE: CONTAINS ENTIRELY FICTIONAL NUMBERS I MADE UP FOR THIS EXAMPLE.)
Here we have three people: Sixen, Scyber and Nektu.
Sixen has put up a leather cap for auction for 10$. In order to do this, he had to pay a nominal listing fee of $1 to Blizzard. Scyber sees this leather cap and decides to bid $10 on it. A couple of minutes later, Nektu sees the same item. He thinks it's worth more than $10, and bids $12. Scyber thinks anything over $10 is too expensive, and does not bid any more. The auction runs out a few hours later with no bids more bids being placed, and Nektu wins the item.
At this point, $12 are subtracted from Nektu's e-balance while nothing happens to Scyber's e-balance. The selling fee, in this example also $1, is subtracted from Sixen's $12, which means he has made $10 total on his auction (-$1 listing fee, -$1 selling fee)
Under normal circumstances this would be added to his e-balance, but if Sixen has also set up his account to forward him cash, the third party payment service will at this point extract a fee from those $11, say $1, in order to administer the transaction and give Sixen the rest, in this case a total of $9.
So Nektu pays $12, Scyber pays nothing, Sixen gets $9, Blizzard gets $2 and the third party gets $1.
You can use the cash AH without spending a dime
Using the cash AH is entirely optional. Players aren't forced by Blizzard to use it to trade for items. However, many of you fear that having a cash AH will make it so all the best items only sell for real money, thus in reality forcing people to spend money in order to get the best stuff. And while that's appears to be true on the surface, it isn't really. Here's why:
If you sell an item using one of your free weekly waivers, you can put up an item in the cash AH, sell it, and generate a positive e-balance without spending a single $. With that e-balance, you can then continue to put up items for sale and, using your initial e-balance, pay for the listing fees. Once you accumulate enough e-balance, you can then buy items for real money without having put in a single cent yourself. So you sell that legendary axe and legendary armor you found and use the generated e-balance to buy an awesome staff instead. The system doesn't lock anyone outside of acquiring the best items, what it does is allow people to spend money to get items faster. But it's still perfectly possible for anyone to use the cash AH.
And you won't even have to exchange legendaries for legandaries. If Blizzard has done its job properly and accomplished what was intended, which is to make gold a valuable resource, then people will want huge amounts of gold for their crafting, repair and vendor needs even if they only use the cash AH. And since gold can be traded on the AH, anyone will be able to sell gold for cash. Of course, the exchange rate between gold and cash is impossible to predict as of now, but in theory anyone will be able to make e-balance without spending any money. Provided there are some individuals out there who actually do put money into the system, some original e-balance has to be generated with actual money. But they will not have to be a majority.
In fact, the cash system will establish an exchange rate between gold and real money. The exchange rate will be an approximation since there won't be any mods available to track all auctions, but the market will probably reach a rough value. At that point, every piece of gold you make in the game will be worth an amount of $ equal to the exchange rate. This money cannot be taken from your e-balance (can't make e-balance into cash) but it can be used to buy items and blizzard products.
It doesn't matter which AH you end up using anyway
What did you say? Each piece of gold dropped will be worth a certain amount of real money? Not only does this mean that you are tecnically making money as you play, it also means that whether you use the gold AH or the cash AH will be irrelevant. The concept is called Arbitrage, and for those of you not accustomed to economics I'll explain how it works.
Let's say that I find a legendary axe that I don't need and thus want to sell. I can either sell it for gold or e-balance. Looking in the AH, I see that there are incidentally ten axes, five in each AH, currently up for sale: five go for 2000g and the other five for $20. But I decide to see what gold sells for, and I quickly see that 200g costs $1 in the cash AH. Afterwards I proceed to sell my legendary axe for $19, which the sold for gold will be 19*200=3,800g
That's arbitrage, the possibility to profit due to price imbalances in different markets. Even if I didn't want cash, it's still a better option for me to use the cash AH under these circumstances, since it gives me more gold. The next thing I do is naturaly to buy the other five legendary axes for 2,000g each, sell them for $19 again, essentially giving me 5*(3,800-2,000)=9,000g profit without having killed a single monster.
This will of course not last, since eventually other people will figure out that the legendary axe is underpriced in the gold AH and correctly adjust their prices. I probably couldn't even have sold those five axes for $19 again, since I essentially bombed the market by doubling the supply of those axes. But that is exactly the point. This kind of equilization will happen continuously across all different items for sale in the two markets, and will work to create a stable exchange rate between gold and $. And when that has happened, it won't really matter which of them you decide to trade in. Even if you consider yourself a purist and never so much as look at the cash AH, the prices you see for items there should be same as those seen in the cash AH.
Perfect equilibrium is generally upset by various factors such as transportation costs, taxes, varying legislations between markets, expiration dates on products etc. In the future Diablo economy many of these are removed: the the flat fees applied to purchases are a transaction cost and will generate some imbalances between the markets, but that's about it. In the end, it will matter little which one you actually use.
Added bonus: It eliminates third-party selling
But that's not everything the AH will accomplish. The purpose of the AH is to eliminate third-party selling of items and the inherent uncertainty that follows from using such sites. I will quote Don here:
Most Diablo II veterans are familiar with D2JSP and the immense use it had in facilitating trade in Diablo II. It wasn't perfect, but it was much better than what Diablo II offered and allowed buyers and sellers to find and trade with each other using a (relatively) stable currency.Quote from
Well in D2 the market essentially worked just the way this real money AH will. Every serious player used D2JSP for trading because of the sheer effectiveness of it. And you could either buy forum gold for real money or sell items for forum gold. There was no way to convert forum gold back to real currency however.
D2JSP was really easy to scam in (since you had to do the trade in-game and giving the currency in the forums) if you weren't careful. The site was also corrupt (they gave gold to their friends who didn't pay for them) and so forth.
With Blizzard now running a cash AH, they've established a low-risk market. Blizzard will in this case act as the insurance of every transaction: if you sell an item and the buyer for some reason has no money, you will still get your money and Blizzard takes that financial hit. All transactions will be guaranteed by Blizzard, which will facilitate a safe and secure trading environment. In addition to that, since Blizzard will not be selling any items and since the exchange rate between gold and $ will be determined solely by the players in a region, Blizzard will have no way to influence it and purposefully generate a corrupt environment. In addition, the cash AH is a much more convenient method of trade, meaning any competing sites will have a hart time, well, competing.
I don't want this crap in Diablo
So far I've explained why you won't be left out of the system and why you won't have to spend real money. But these are all technical arguments. A fundamentally different argument people raise is that bigger wallet = better character. Most comments seem to counter this with "dis would happuned aniway, deal with eet" but that's not entirely true. Yes some people would have bought items for money, but you could at least feel that Blizzard did not support such actions and that an environment where no monetary benefits in RL would ever affect your own gaming experience existed. But "legalizing" it so to speak will with certainly cause a larger percentage of the total gaming population to at least consider engaging in these activities.
And to that, there's really nothing I can say. Because it is true that this will happen and that it will most likely affect how you view the game. Perhaps try to ignore other people's items? Kick their ass in PvP regardless? Secretly gloat that they're giving you money for your items? I don't know. Every change to a game is bound to be unappealing to some players unfortunately.
Potential Hazards
Finally we have the issue of the various kinds of potential risks this system faces: "chinese" farmers and hacks (particularly bots).
Farmers
The first fear is that loosing the restraints of the system will invite countless gold farmers in China and similar to pour into Diablo now that this is allowed. And at face value, we can say that there's no reason for such farmers to reduce in number because of this system, and there's also no reason Blizzard can ban them for. After all, all they've done is buy the game and play it according to the rules (working conditions and such aside, but there's no way for Blizzard to control that).
How will this affect Diablo III? Well, under normal circumstances such farmers operate in a black market outside of the general trade system. They are competing against each other in this environment, but still away from the main body of trade occuring in the general game.
Now however, every Diablo player will become a potential customer, and since the AH will be anonymous it will be impossible for you to tell whether you're buying items from a Chinese farmer or not. Of course, whatever items they generate will have to compete with the prices of every single item that every single player puts up, and the people who previously had to go to them for gold or items can now instead trade with the real players, thus hopefully pushing down prices and making it less profitable for them. Still, it will probably lead to a greater amount of items being generated, but so long as the problem of duping doesn't reappear, it shouldn't be a problem.
Bots
Botting is a second potential problem, one that doesn't really involve any running labor cost other than your electrical bill. Unlike farming however, this is actively prevented by Blizzard and we can only hope that their experience dealing with botting in WoW and SC2 has paid off and will allow them to contain this potential problem well enough. Has this cash AH given botters a bigger incentive? Undoubtedly. Do I think Blizzard can handle it? Yes, otherwise they've done some really terrible estimates prior to announcing this system.
Conclusion
Will this new cash AH force you to spend real money? No.
Is it certain to work/flop? No, neither is certain.
No one has done this before, and so it seems unlikely anyone can guarantee an outcome here. Individual future situations are not that easily prognosticated. But I don't think the outset is all that bad either. What it will do is to hopefully lead all trades to be handled through Battle.net, which will generate a more stable economy, a larger economy of more buyers and sellers, a more liquid market and an opportunity for people who want to spend money on items to do so freely while at the same time allowing people who do not want to spend money to still generate a net profit, and more importantly, still interact with the entire trading community regardless of financial situation. The problem will be accepting that people with more money can buy better gear, but if you can do that you should not be worried about what this system can bring.
Much like an earlier poster who talked about WoW's "auction-pvp", there are some of us who will use the AH in D3 for the fun of it. I will play the game to kill mobs, hell yeah! but I will also get a TON of mileage out of that evil "Market Manipulation".
I 'know a guy' who bought a truck and two jetskiis by selling WoW gold. There it was illicit and against the EULA but.... Here in D3 it will be sanctioned and will support Blizzard.
ETA: You just posted again so this is in reply to your page 5 post.
Completely agree.
There certainly would be for inelastic markets. It happened in WoW. You can even pull of more common high demand items. Like Copper Bars in WoW (or wtv they were called).
And in RW markets there are far more external factors that are impossible to take in to account. In a more perfect market in D3, manipulation is far easier, because the outcome is far more foreseeable.
Size does matter. And how large the market is will have an impact on how hard it will be to manipulate.
How can no one see the benefit the players get? Blizzard naturally gets money because they're offering the players a service. People seem to have this idea that just because we're talking about byte transactions here it will cost Blizzard nothing.
Wrong. The development cost of the AH infrastructure, the agreement with the eventual third-party transaction companies, possible legal issues, not to mention the customer support, PR problems and work that will have to be poured into protecting the Battle.net infrastructure from bots and malicious activities. The transaction itself will cost Blizzard nothing, but there are many other costs to cover with this system. Blizzard needs money for this, and the bot/hack work will benefit all. But they're only taking money from people who want to buy items. All of you who don't want to pay are getting a more stable economy, amore hack protection at no personal cost to you.
And no one seems to get the customer value this produces. If Blizzard has facilitates a trade with you for a small fee, then the value you got in the form of a new item and the value the seller got for an item sold are still there. Blizzard isn't slaving you to the work wheel and taking all the profit, they're providing their customers with an entirely new kind of service.
The fee will be minimal. A small fee is in Blizzard's best interest, since a large fee will discourage trade and once again provide an incentive for third-part sites to eke out an existence. A higher fee also disrupts the exchange rate between the gold AH and cash AH and will create a less fluid economy. And that could generate imbalances between the two AH's.
No they won't. If you can buy the same ice cream at the same price as in town but right next to your house rather than 10 miles away, you will always buy ice cream next door. There is no incentive to do otherwise.
That proce says nothing about trade in D3 at all. It is irrelevant, because that price is not set in relation to the aggregate total of all gold that is produced in WoW, which would include all the gold circulating on WoW server between normal players as well.
That's possibly true, but I think a fear was that such sites are already poised and ready for D3. Then again I think this move is also a way to continue to generate revenue for an online game that requires massive support without instituting a monthly fee. It's an experiment for sure.
Reread what I said, try to grasp the basic economic forces at work here, then come back.
You're right, and the same principles as for debt will dictate the amount of money in the system at any one time according to these three factors:
1. How large are Blizzard's fees?
2. What does the average item sell for in $?
3. How mauch of inserted e-balance is withdrawn as $/spent on Blizzard goods?
The lower the fees, higher the average prices and the less money withdrawn, the more people will be able to benefit from this system without putting in money themselves. So not only is it in Blizzard's interest to keep low fees to combat third-party selling, it's also in their interest because it will allow more people to participate in the cash auctioning and thus the system as a whole.
Are you kidding me? The reason you're against this is because you think it would cause the servers to overload and prevent you from playing online?
That was totally screwed before the cash AH was announced anyway, so it's not like the cash AH destroyed that for you.
No. Key difference: professional farmers will have to make money on this. Players have this as a hobby and do not need to generate a set amount of cash each hour. Farmers will have to compete with us.
That's why I'm hesitant against the whole "quit my job and do this"-idea. When I say make money, I do not mean it will cover the alternative cost of quitting your job, especially not in the US or EU. And if it does, then you're no longer playing a game you're just farming.
Hard to say. It will all depend on availability of items and what margins organized farmers have.
Yes it does. See ice cream above.
Yes it does. See original post about Blizzard insurance.
Depends on how you define gimmicky, but I'd still say no.
If someone does that without properly investigating whether it's possible, then you can either call them a visionary who failed or a dumbass who got what was coming. Either way, it's not Blizzard's responsibility to teach economic prudence to its customers. Somewhere you have to assume that your customers are informed individuals capable of making their own economic decisions. If not, then how dare BLizzard sell games to people with gaming problems?!
Incorrect. More powerful items are built into the game progression structure and do not depend on cookie-cutter builds existing. Each build will have a logical next gear step, and people will want to buy that.
There is, but it won't be that easy. First of all, undercutting is not bad, it's a consequence of an auction system. How an organization with running and labor costs are supposed to undercut billy who playes in his spare time and makes a profit so long as he sells above the fees is another matter entirely.
As for controlling the market, first of all they'd have to do it against hundreds of thousands of players in each region. Not easy, but I suppose not entirely impossible either. That could be interesting to watch unfold.
Incorrect, you can and it was clearly stated in the OP.
Name one reason.
It is inherently less trustworthy.
It is more of a hassle.
It is of roughly equal cost, because if they sell it for less then loss of customers in the AH will cause prices to drop down to similar levels. And they can't sell for more because then people wouldn't use them.
Very true, since all gold introduced to the economy goes through drops. Which is great, because then they can adjust unbalanced amounts of gold drops.
Of course that also has the potential to get screwed like any central bank not properly being able to predict economic outcomes, but this is no different than how things would have been without a cash AH.
Yeah, we will all have to wait and see what happens, although I am fairly confident that companies will try and use all sorts of maneuvers. And I do agree that in a PERFECT market it will counter balance, like you mentioned earlier with less people paying the higher price, but unfortunately the world has yet to see an invisible hand.
George Soros is a prime example of someone who uses large sums of money to apply market pressure. Black Wedneseday was sort of England's fault as they refused to change interest rates - regardless, I get what you are saying.
Nice job Scyber! Keep fighting the ignorant ragers...
EDIT: Also, Blizzard not providing an easy and efficient way to trade in D2 led to 3rd party sites. Therefore, eliminate botting and duping, and then them providing a way to trade in game = No logical reason to go/use 3rd party sites...
No it won't. You're assuming everyone behaves rationally, like counting machines. You're assuming everyone will exchange currencies immediately like some HFT software. Human beings are not pure theory executors, and the system in practice will be many orders of magnitude more complex than you and Phrozen are making it out to be.
Here's an important point: The models you're using are in reference to two real-world currencies. But that's not what we're discussing. We're talking about one fake currency and one actual currency. The models don't necessarily hold, and the emotion and moral dissonance that is obviously at work here destroys many of your notions.
While I honestly appreciate the exercise in econ 101, the world does not operate in a vacuum, nor does it adhere to steadfast rules like this, because there are no steadfast rules outside a vacuum. We can't say that a video game community is going to behave like wall street currency traders. The fact is we just don't know any of this for sure.
My bottom line is this. Why do I have to exchange between two currencies in the FIRST PLACE? It's an added layer of toil that keeps me from killing monsters and getting loot.
There are many answers to this, but I haven't heard any that are compelling.
Hopefully this isn't too much of a tangent. What if instead of two AH markets the exchange rate is "fixed"? What if the exchange rate is constantly up-to-date? I have no idea if it is practical but if the AH allows bids in gold and cash interchangeably, would that solve your frustration?
Obviously, that is a rather large hypothetical.
If people are not behaving rationally (working off the economy laws) they lose money. When they lose money, I get money. Yay for me.
Fake currency? Played WoW ever? Fake currency and yet the most robust, active and WORKING economy I've ever seen in gaming. Hell, some real-life economies are not as stable as WoW economy based on a FAKE currency.
PS. All currencies (yes, I am tlaking about dollars, euros and all those other pieces of paper) except for pure gold are fake, just saying...
If you buy a sword for 1000$ it is worth 1000$.
If you don't think a sword is worth 1000$ - DO NOT BUY IT.
I mean, it's simple, it's how marketplace operates and still people cannot understand even basics of it. How do you live your life without knowing basics of supply/demand and free market?
Actually there is only one answer to this. You don't. Who said you had to exchange in order to trade? Did Blizzard say that, if they did go find the quote and bring it here. Likewise for any MODS on Dfans.com, and the OP. They never stated you did have to eexchange.
They did say if you wanted to make a profit in a certain situation you COULD do it. COULD beign the KEY word, if you follow me.
So like i said, you DONT. You don't have to exchange to trade. And you especially DON'T have to even use the AH or RMAH to kill monsters or get your loot. Since Blizzard made sure that killing monsters and picking up loot is exactly what everyone will be doing for free after you purchased the game of course.
If your going to reply to this make sure you get an official quote stating clearly that you will either be forced to use the AH/RMAH or be FORCED to exchange in order to enjoy D3 then we can talk more.
PS: Dont come here with a vague statement and try to change it's meaning with your own representation of it. Get a clear black and white one that everyone can take it's exact meaning at face value.
Here is an example of a clear Blizzard quote taken from the AH FAQ for your viewing pleasure (since I'm sure you didnt bother reading it) :
I don't really get what your saying but if you mean the worth to the individual then yes, I think this is fairly obvious? But if you mean to say that if you pay a 1000 then its value is 1000 is incorrect. And in regards to my post, I don't know how this relates - care to elaborate?
edit - I read it again and I think you may not understand the concept of inelastic demand... so before you point fingers...
Oh WAKE UP buddy. All the best items are going to gravitate almost immediately to the RMAH, for reasons that have been stated ad nauseum. So if I want to be competitive in this game, and I do, I will be forced to use the RMAH if that's where all the highest quality gear resides.
Now, Phrozen and Don seem to think that's fine, because arbitrage will magically make everyone win, but their reasoning sits on some seriously shaky ground, and am not moved by their arguments because there are no working models that represent the economy we're talking about here. It's never been done.
I object to the RMAH on both personal and practical grounds. Personal because I hate the idea of playing a game, and whenever gear drops it will be impossible not to think about how many real U.S. dollars it's worth. Practical level because ALL I WANT IS A WORKING ECONOMY. You can do that strictly with good game design. I don't want multiple layers of fake economy abstraction and extra currency exchange hoops to jump through.
Heres another one for you.
.
No in all seriousness, I don't give a damn about some pre-canned HR Q/A quote. I don't need to quote anything in order to prove my point, I just need sound reasoning. We all know what's going to happen. I want to be competitive in this game, and in order to do so, it's extremely likely I will be forced to use the RMAH.
That quote you just gave me does nothing. I don't want to play the game that way, it will (most likely) not be viable for someone who wants to be competitive.
Completely agree with your point here, but I just have to point out that markets don't always act rationally (in the large scale). I think what they are trying to do is give Gold in D3 more intrinsic value by pairing it with USD/EURO. I wonder what the effect of a fixed rate would have. Like many currencies in developing nations do in order to create stability.
Goof Ball? Is that derogatory term or comical? Take this outside.....? What? Man I see why you can't understand
even a simple system as this. Not only you get so heated in a virtual debate, I bet you must rage at home if you
lose a PvP duel in this case. I'm starting to understand where your coming from, though no matter how I try to relate I can't seem too. heh
Sorry man, I'm just a casual player, never spent a dime on a game more than it's original value. And yes I used to be competitive in D2 in my young age, even when every other guy was buying hacked/legit items off various companies.
Nop, never cared about it, and I still don't care if people will be buying in D3. Cause I know I wont. In my opinion, if the normal AH works, good, if both work, even better. If not too bad, cause I'm going to be enjoying the game nonetheless and I can promise that it won't change nothing in my monster killing and loot reaping. Neither will it to yours unless you chose to let it to by crying for nothing as your doing.
And by the way, get through puberty and mature man, stop with the name calling and the virtual threats. lol It's good comical relief though. Then they wonder why it's hard for Blizzard to take these forums seriously... heh childish name calling in same posts containing economical assumptions.
PS: STOP REQUOTING THE WHOLE FREAKING OP, OR HUGE ASS QUOTES. waste of freaking space. lol