Ahead of my visit to Blizzard's Californian base for a preview of the Diablo III beta, I was told that there was going to be a major announcement. The developer's press office seemed unusually anxious about how it would be received.
Only one thing makes games companies this nervous about messaging: asking players for more money. But when Rob Pardo, Blizzard's vice president of game design, announced Diablo III's real money auction house, all I could do was laugh to myself at the sheer audacity of the move.
Although trading game items for real-world cash is almost as old as online gaming itself, the practice carries a stigma - of cheating, scamming, spam, and the dodgy ethics and inhumane working practices of black-market 'gold farmers'. Diablo III's auction house will be the first major authorised real money trading market in games. As such, it's both historic and controversial.
The reaction has been pretty negative. Gamers feel that Blizzard is squeezing them for extra cash, introducing a 'pay to win' culture to Diablo and legitimising the gold farmers. There's merit to all these arguments, and indeed, Blizzard doesn't really refute any of them. It simply argues that the auction house is consistent with Diablo's game design, and consistent with the way people already play the previous games.
How did this come about? How will it work? And can it - just maybe - be a good thing?
The Diablo role-playing game system has always focused heavily on loot. The items that drop from monsters are extremely plentiful, randomly generated, highly specialised, and rarely if ever awarded for specific quests or achievements. They also do not 'bind' to your character once picked up or equipped; unlike loot in World of Warcraft, say, almost all items in Diablo can be swapped between characters and players at will.
What this means is that, in the rarefied air of high-level Diablo play, advancement and customisation are almost limitless. The time you can pour into searching for the perfect equipment for your character is equally limitless - and there's no guarantee you'll ever get it. This naturally created a market for trading between players as they pooled resources to equip each other.
But there was no trading function to speak of - players actually had to meet up in-game and drop items on the ground, like backstreet dealers - and cheating, griefing, item duping and stealing were rife. What's more, the games' economies were unstable, and players eventually turned to exchanging items for cash, sometimes resorting to unsafe transactions through third-party websites. Scams, including account theft, preyed on the unwary. It wasn't fun for players and it created customer service headaches for the developer.
That, Pardo says, is how Blizzard came to decide that Diablo III needed an integrated item-trading system - and why it had to include the option to trade for real money. "Players really want it. This is something that we know players are going to do either way. We can either provide them a really safe, awesome, fun experience - or they'll find ways of doing it elsewhere."
Use of the Diablo III auction house is completely optional. There will be two separate versions, one for trading with real money, and one for trading in the in-game currency, gold. You can also trade directly with other players by meeting up and dumping items into a consensual trade window "exactly like World of Warcraft's", according to lead designer Jay Wilson.
Blizzard doesn't plan to divide the community between real money players and game gold traders. The one restriction is that there will be no real money auction house for players of the game's Hardcore mode, in which character death and equipment loss is permanent. ("We felt like, if someone sunk $100 into a bunch of items on their character and they lost them, that wouldn't be a very good experience," says Pardo with some understatement.)
Each time you select an item for sale, you'll choose which auction house you want to list it on. You can sell almost any item in the game: equipment, gold, crafting materials and customisation items such as gems. Blizzard is even considering allowing players to trade characters, but this won't be included at launch.
The auction houses will have all the features you might expect, including instant buyouts and auto-bidding. A 'smart search' function will find upgrades to your equipment for you, tailored to any of your characters and listed according to how beneficial it would be.
If you buy items on the real money auction house, you will pay using an "authorised payment method" - i.e. a credit card - attached to your Battle.net account. You can also choose to charge up your Battle.net account with an 'e-balance' of funds. Blizzard has no plans to sell 'prepaid' vouchers for players without credit cards, but Wilson doesn't rule it out. "It doesn't seem like a far stretch for something that we would do if there's a demand for it."
If you sell an item for cash, you're presented with a one-time option to either "cash out" or pay the funds into your Battle.net e-balance. If you choose the former - an option not available to all regions at launch - you'll receive the money via a third-party payment provider such as PayPal. (Blizzard is currently in negotiations to establish this partnership and can't announce it yet.) If you choose the latter, you can spend the money in the Diablo III auction house as well as on anything else that Blizzard sells: games, merchandise, World of Warcraft subscriptions and services. Choose carefully, as there's no way to extract cash from the Battle.net e-balance.
Blizzard will collect three separate fees: one for listing an item, one for selling it, and one for cashing out if you choose that option. Details on the latter are rather vague, but the listing and sale fees will be fixed and "nominal". Although the auction house is clearly designed to create additional revenue for Blizzard, the developer contends that there are gameplay reasons for charging players money - for listings, at least.
"We don't want every single item in the game to show up on the auction house," says Pardo. "We want people to be trading items of merit, items that really have meaningful, tangible value... A nominal listing fee helps make sure that players really want to list the item." That said, Blizzard will provide each player with a small number of free listings per week in order to stimulate trade and make it possible to begin trading without having to pay anything up front; list an item for free and sell it, and you've got a stake to play with without touching your credit card.
The rates are fixed, rather than a percentage, in order to ensure that Blizzard has no financial incentive to manipulate the game design, Wilson says. "It's our goal to make sure that the influence we have on the system is as minimal as possible," says Wilson. "We would not want to go in and create a bunch of super-rare items and profit off of that... So we as designers - or as people who want piles of money, because everybody wants piles of money, right? - we have no incentive to do that. We've designed the system specifically to not give us an incentive to do that." The developer's only commercial interest is in encouraging brisk trade.
Crucially, Blizzard will not sell items directly through the auction house, or any other in-game store. Everything available to buy will have to be found in the game by players. "We want it to be completely player-driven. This is all about facilitating player trading," states Pardo. "Which is very different to, let's say, a lot of the micro-transaction models in Asia where the company itself is selling you the items."
Transactions through the auction house will be completely anonymous in order to eliminate the unpleasant social dynamics associated with player trading, and because, as Wilson puts it, "every seller is equal" in a virtual auction house where every transaction is guaranteed to complete instantly, automatically and safely. "eBay's an honour system. There's no honour here. If you sell an item and someone buys it, they're going to get it... There's no such thing as a good seller and a bad seller."
Auction houses will be segregated by region and by currency. You'll be able to trade in other currencies within your region, but not outside your region; for example, British players can choose to buy items in euros rather than sterling, but can't buy them in US dollars from the North American auction house. Blizzard expects most players will stick to their own currency to avoid foreign transaction fees.
That's how the Diablo III auction house will work. But how does Blizzard defend the move to its critics? And is it really the beginning of the end?
Blizzard's basic rationale for allowing real money trading - which can be summarised as 'players will do it anyway, so we may as well provide a secure avenue for it (and get our cut)' - isn't quite the whole story. If it were, the company would be planning a similar service for World of Warcraft, which supports a massive black market in game gold. But we're explicitly told that this isn't on the cards.
"I don't think you would ever want to put this system in World of Warcraft [because WOW's item game is] not a trading system, it's a prestige system," says Wilson. He means that the very best items in WOW are obtained from, and emblems of, success in raiding or player-versus-player, and they can't be traded. "Doing something like a real money auction house in World of Warcraft would be highly damaging to the game design, so we would not do it there."
Pardo argues that player trading suits Diablo's randomised and unrestricted item game much better. More than suits it - is inherent to it. "I really do think a real money auction house like this is integrated into the game design of how the Diablo item system works," he says. "To really get the very best items, or the items that are most suited to you, oftentimes you'll have to trade around. And I think that adds a really interesting dynamic to the metagame."
Blizzard constantly reiterates the idea that Diablo is "a game about trading" (Wilson's words), that its design both encourages and benefits from players trading items with each other. Not all Diablo players would share this view - perhaps because the previous games segregated online and solo play, so a large proportion of players never encountered the trading culture.
That said, it's clearly true that the Diablo item game can support a player-driven "merchant economy", as Pardo puts it. Many players enjoy participating in trade in Diablo II, despite the risks and impracticalities. On that basis, an integrated in-game trading system for a modernised, online-focused Diablo game is a no-brainer.
But why does it have to have a real currency option? This is the question asked by gamers who feel that paying real money for a shortcut to quality items - items you'd otherwise have to grind to get (or grind to get gold to pay for) - cheapens both the game design and their own, hard-won achievements within it.
It's hardly an instant-win button - items are restricted by character level, so you'll still need to put the hours in to be able to wear the best bling. Nonetheless, Pardo readily admits that Blizzard is servicing the growing number of players who want to buy game advancement for cash.
He argues that the auction house model, as opposed to a "Freemium" item store, levels the playing field, because the players who don't believe in this style of play will literally profit from those that do. "Some players really do want to use real world money to get some amount of advancement within games. Some people really want the time investment... On the seller side, if I'm really elite within the game and I spend a lot of time in the game, then I can get benefits directly out of that."
That being the case, in a game squarely focused on co-operative play, where's the harm? It's a fair question, and most of the complaints are emotive or subjective ones with no particular bearing on the game balance. Of course, this isn't true of the game's team deathmatch Versus mode, where spending money on gear will clearly be the quickest route to success.
Blizzard's always maintained that Versus will be almost impossible to balance anyway, due to the open design of the character classes, and thus is presenting player-versus-player as a casual diversion that rewards participation rather than skill. Fair enough, but there's no question that the real money auction house will spoil the fun of this arena for many players. To put it another way, if Blizzard wants to ensure the irrelevance of Diablo III as a PVP game - and it often sounds like it does - allowing real money item trading is a good way of going about it.
You might almost consider the auction house as Diablo III's real PVP - an absorbing, high-stakes endgame which Pardo believes "will add a lot of depth". It certainly ought to make finding valuable items even more exciting - but it also risks making the game feel more like work, or at least like gambling. Doesn't introducing real money to the ecosystem fundamentally skew our relationship with Diablo?
"I actually don't think it's going to change players that much because it's already true," argues Wilson. "In Diablo II, items have a real monetary value... For the community that is hardcore enough to get those items, the value of them is very real. I think there's a perception issue here." It's a logical answer, but one that maybe underestimates the psychological impact of having the option to buy and sell for cash integrated in the game, one click away.
Blizzard's answer to the accusation that it's offering a platform for gold farmers is much more convincing. By taking the distribution channel out of the farmers' hands and forcing them to compete on a level playing field with the massed millions of players, it drastically weakens them. If you can't beat them, join them - and then beat them, by sheer force of numbers if nothing else.
"Really, the lack of a feature like this within the game is what's encouraged a lot of these markets," says Wilson. "There's a lot of third-party out there; there's a lot more players. There's a lot of players who play a lot." Pardo adds that, unlike in WOW's shared environments, farmers grinding out gold in their own Diablo game aren't harming anyone else's game experience.
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We're still left with that question: why do it? Because it will happen anyway - or because Blizzard can profit from it? It has to be both, of course.
Oddly, it's as a business model that the real money auction house is easiest to love. On the surface, it seems shocking and exploitative. But it might actually be the most elegant and unobtrusive way of generating an extra revenue stream for an online game we've ever seen.
It's genuinely optional. It will be entirely possible to enjoy Diablo III to the full without using it; even if you want to enjoy the trading game, a game gold alternative will be provided. Every transaction benefits a player as well as Blizzard, and participation in the auction house is driven entirely by player desire. Player trading is harmonious with the game design, but is in no sense required by it.
It's less tacky, less damaging to the game's fiction, than selling the kind of harmless cosmetic tat Blizzard itself does for World of Warcraft - pets, mounts and so on. It's less forced than selling chunks of downloadable content, such as multiplayer maps, that you can only leave on the shelf if you don't mind getting left out. For the players that want to use it, it will be a vast improvement on what's gone before. And yes, it's only right that Blizzard gets a share of the inevitable real money market around Diablo III.
Why should Blizzard get any extra revenue at all? It's simple economics: Diablo III has cost many years and countless millions to make, and it will be supported and updated online for free, for at least a decade. The new Battle.net service is infinitely better than the old - more than comparable to the Xbox Live Gold you pay for - and optional auction house fees are all that Blizzard is asking for Diablo III's upkeep ("until the expansion that you can't live without," jokes Pardo.)
Furthermore, Pardo is right that this had to happen. The black market in real money trading has been an ugly stain on online gaming since day one. It will never go away; the only way to fight it is to accept and rehabilitate it. This is a nettle that needed to be grasped, and we should be glad that a developer as scrupulous and profoundly experienced as Blizzard - above all, a developer that cares as much about its games as Blizzard - has had the guts to go first.
You don't have to like it. But Diablo is the right game to do this with - and Blizzard is the right developer to do it.