Economics 101 - WOW Tokens, Blizzard Profit, and such things

[unbound]

I'm casual player. Just quest, 5mans, low level mythics, LFR just to see content, and work AH

Because I enjoy playing with AH and the WOW economy I have more gold than I could ever spend and will never have to pay blizzard a penny again. lots of others have lots of gold and will get free subs for ever.

So, something I was just trying to wrap my head around and would appreciate the Econ 101 guru to chime in.

Put aside the fact that when I exchange gold for token, that means someone has paid blizz for token, so Blizz has gotten paid for THAT persons game time.

Blizz never gets a penny from ME for game time ( or with new store I think I can buy expansions with in game gold too). Gold is virtually a free commodity for me as I get it for doing what I like to do.

Wouldn't Blizz shareholders be better off if Blizz did not allow me get free game time and instead just created more in game gold to fullfill demand for tokens?

Skipped Econ class the day they taught Econ.

Please help.

Nope.

Here is what you are missing. It doesn't matter to Blizz where that money is coming from. Either you pay $15/mo via subscription or you give gold to someone who paid $20/mo on your behalf.

Blizz actually makes more money on the deal. The fact that someone paid $15 for his sub and another $20 for to get your gold while you paid $0 for the month is not relevant to Blizz...they walk away with $35 for $30 worth of goods.

So, quite the opposite of what you think. Blizz stockholders would rather the game get rid of paid subscriptions, and get their money entirely based on the $20 gold transactions, in which case every subscription would go from $15/mo (or less for those that pay multi-month) to $20/mo from the financial perspective.

However, the next step in economics is the system you see today. In reality, some people have more time than money, and others have more money than time. This current arrangement allows Blizz to maximize their profits by cashing in on both groups of people.

[delus]

They still get money from people buying token for €20, and you buying a €13 sub with gold, still means they made €7 more than they would if you had a regular subscription.

Same goes for Bnet balance, which only gives $15 / €13 out of a $€20 token.

As you said, no need to feel guilty, they make more this way.

[Felfaadaern Darkterror]

I'm casual player. Just quest, 5mans, low level mythics, LFR just to see content, and work AH

Because I enjoy playing with AH and the WOW economy I have more gold than I could ever spend and will never have to pay blizzard a penny again. lots of others have lots of gold and will get free subs for ever.

So, something I was just trying to wrap my head around and would appreciate the Econ 101 guru to chime in.

Put aside the fact that when I exchange gold for token, that means someone has paid blizz for token, so Blizz has gotten paid for THAT persons game time.

Blizz never gets a penny from ME for game time ( or with new store I think I can buy expansions with in game gold too). Gold is virtually a free commodity for me as I get it for doing what I like to do.

Wouldn't Blizz shareholders be better off if Blizz did not allow me get free game time and instead just created more in game gold to fullfill demand for tokens?

Skipped Econ class the day they taught Econ.

Please help.

Blizz does collect a $5 US surcharge when tokens are exchanged, as sort of a handlers fee.

Imho, it's a win-win-win. Players with more RL money than free time can subsidize the game time of those with more gold-farming time than RL money. Blizz gets more people actually able to maintain their subscriptions, and collects those surcharges.

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It also helps to marginalize the gold sellers, who got too much of their gold from account hacking.

[Alvito]

It makes me giggle and a bit sad when somebody think Blizzard cares much about gold. Even worse when somebody think Blizzard wants more of their in game currency from us. Like somehow the resource they create is needed by them to do anything. The new token system is pure brilliance by Blizzard. They found a way to get people to pay a 33% mark up and do it happily. They also made people spend time and money on WoW they might not have to get gold to buy tokens for other games.

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agree with all the above.

Totally agree it was genius move. but could have been more genius.

Think of it like this. IF you love to only run Mythic+, and because of doing that and nothing else you get more gold then you could ever spend thus you never have to pay blizzard a penny again for game time or expansions. blizz shareholders have lost the revenue they would have otherwise gotten from me, and yes get a little more from others, but not 1:1 .

To make the genius move even better why not plug the leak that allows you to play for free.

Why let me play for free just because I happen to love to manipulate the AH, they could easily plug that leak .

They don't care where the money comes from just that they get more. Instead of you paying 12 to 15 dollars a month for time they are getting 20 from somebody else. Share holders are laughing all the way to the bank on this.

[Dhrizzle]

Blizzard found a way to both make Profit and create a Pretty large Gold Sink within their game with 1 item.

Whatever Blizzard Staff member thought of the Token is a fucking genius. Literally printing Real Money with Fake Video Game currency demand.

It's not a gold sink as the gold isn't taken out of the economy as it is with an expensive vendor item. Also it doesn't seem fair for a Blizz employee to get the credit when it's basically the same system as PLEX in EVE.

[LanToaster]

They actually get more money from people buying the token for other people. So it's actually much better.

I feel like this is a win/win/win.

I have money but not time = I buy ~160k gold for $20.

Players who have time but not money = I get to give them $15 worth of game time for their virtual currency.

Blizzard makes an additional $5 off this transaction vs if people were buying their own subs, not to mention eliminating the 3rd party gold selling market in the first place. Super easy, sanctioned transaction.

This Exactly, in my Opinion the Token is a thing where everybody wins. (Except those who cant afford tokens either with gold or with Money )

[Super Kami Dende]

Actually it could end up adding gold to the market.

If someone buys a token when they're selling for 180k, and that token isn't bought until the price dropped to 150k, then that's now 30k added into the game that wasn't there before, since the token is guaranteed to give you the amount advertised when bought.

The point of it being though, it changes who handles the Wealth, which is healthier for the economy. instead of 1 guy having 1mil gold, him buying 5 tokens splits that gold between a bunch of people who will then spend it on things in game they want. Things like Mounts/consumables/Cosmetics etc.

Very few people buy the tokens just to sit on the Gold they sell them for. As opposed to people with the Wealth of Gold just sitting on the GOld because they had nothing else to buy.

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It's not a gold sink as the gold isn't taken out of the economy as it is with an expensive vendor item. Also it doesn't seem fair for a Blizz employee to get the credit when it's basically the same system as PLEX in EVE.

WoW Tokens work differently to PLEX. Same base Idea, different iteration.

[Alvito]

Actually it could end up adding gold to the market.

If someone buys a token when they're selling for 180k, and that token isn't bought until the price dropped to 150k, then that's now 30k added into the game that wasn't there before, since the token is guaranteed to give you the amount advertised when bought.

It does take a rather large amount of gold out of the game. This is only because people are buying tokens to purchase shop items or spending cash for gold to go and get things like the new yellow robot mount.

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oh damn, im glad i asked lol... - what about the opposite tho, if i purchase a token with RL$$ today, and sell later - its almost a sure thing to be worth more in game gold than it is today, am i rite?

The amount of gold you get is based on when you buy the token not when you sell it.

[chazus]

It does take a rather large amount of gold out of the game. This is only because people are buying tokens to purchase shop items or spending cash for gold to go and get things like the new yellow robot mount.

That... isn't really true.

people are buying tokens to purchase shop items

You buy a token with gold... That gold then goes to another player. It's still in the game.

spending cash for gold to go and get things like the new yellow robot mount.

I can't really justify "spending gold on an in game item" as 'removing it from the system'. That's like saying 'repair bills take gold out of the game'. I guess the definition is just called a gold sink, and is unrelated to the token system.. The token system just facilitates the gold sink where it wouldn't exist otherwise.. But itself doesn't remove the gold (this part is just semantics, I know)

[hulkgor]

Time goes by and people still don't realize Blizzard ALWAYS makes more money from wow tokens, regardless of who pays for it.

Money money money.

[Alvito]

That... isn't really true.


You buy a token with gold... That gold then goes to another player. It's still in the game.


I can't really justify "spending gold on an in game item" as 'removing it from the system'. That's like saying 'repair bills take gold out of the game'. I guess the definition is just called a gold sink, and is unrelated to the token system.. The token system just facilitates the gold sink where it wouldn't exist otherwise.. But itself doesn't remove the gold (this part is just semantics, I know)

When the amount of gold going to vendors are 400k mounts and things like that you can't ignore them. Yes the mount is why the gold is being spent/removed from the game, but without the tokens less and less people would be buying things like that.

[nekobaka]

It's not a gold sink as the gold isn't taken out of the economy as it is with an expensive vendor item. Also it doesn't seem fair for a Blizz employee to get the credit when it's basically the same system as PLEX in EVE.

It is a feature that has been asked since Classic along with other features like group finder and random queue. Though it is possible the higher up who gave the approval got some compensation. Not sure why some think it is some unique genius idea.

[TaliicElemental]

When you buy a token for 20 bucks rl cash the token goes into your backpack immediately and your only option is to put it in the auction house manually. This was to answer a previous question. It does not automatically go straight to the auction house for whatever the current rate is.

[Polarthief]

Wouldn't Blizz shareholders be better off if Blizz did not allow me get free game time and instead just created more in game gold to fullfill demand for tokens?

No because when you buy or sell a token, that's an extra 33% profit* (assuming you buy month to month and not 3/6 month recurring!) in Blizzard's pocket for that month.

I too never buy game time because the game isn't worth the money to me anymore and if I ran out of gold/blizzardbucks, I'd never play WoW again. But they're just getting an extra 33% profit that I WOULD have spent from someone else, on top of that someone else's normal money.

So if anything, they should encourage buying/selling tokens way more than they do.

* based on USD; idk about other currencies, but there's still SOME level of profit because a token is more expensive than the normal sub fee.

[TaliicElemental]

The amount of gold you get is based on when you buy the token not when you sell it.

Wrong dude, it's based on when you sell it.

[Banquetto]

They still get money from people buying token for €20, and you buying a €13 sub with gold, still means they made €7.

He understands that..

What he's saying is, Blizzard could make €20 profit by selling gold to player #1 for €20, but then not selling gametime / b.net balance to OP for xxx,xxx gold.

Which is arguably true, but would I think cause colossal bad will amongst the playerbase if Blizzard just straight up started selling people gold for cash.

[MoanaLisa]

You aren't getting free game time, someone simply bought it for you, at a higher price. In fact, it was a brilliant move on Blizzard's part, and the shareholders. There are people who are willing to pay more money into the game but had no outlet for that, now they do. Consequentially, there are people who are willing to pay less (or literally not play), and now they have options as well. It did two things.

1) Raised the price of a subscription
2) Added more players to subscriptions

It's also worth mentioning that in a general sense other games do this. And have for years. Blizzard was very late to this. There are some differences between tokens and PLEX but they are relatively minor and allow you to pay for your subscription indirectly with in-game currency.

It makes me giggle and a bit sad when somebody think Blizzard cares much about gold. Even worse when somebody think Blizzard wants more of their in game currency from us. Like somehow the resource they create is needed by them to do anything. The new token system is pure brilliance by Blizzard. They found a way to get people to pay a 33% mark up and do it happily. They also made people spend time and money on WoW they might not have to get gold to buy tokens for other games.

And this too. Blizzard's accounting department doesn't give two fucks about in-game gold. This idea always seems to pop up and it's ridiculous.

[Deleted]

THAT
ME

that u*



*implicit statement, cuz, ofc non-profit-organisations like buizzard provide their services for free

[Ielenia]

It's free though, in a sense.


If someone said you could have €20 to buy cake, but you would have to eat a cake to get the €20, wouldn't you consider it practically free?

He did state that he gets the gold just from playing the game how he likes.

It's not free. Also your example is completely backwards.

But still using your 'cake' example, the cake would be 'free' if I walked into the store and instead of paying for the cake, the attendant just handed me the cake, no questions asked. However, that's not what happens with the game tokens. Still in the same example, the attendant says I could have the cake without paying a single coin if, for example, I helped him by sweeping the store's floor. Or cleaned the windows. Or helped him sort the cakes in the displays.

You're always paying for your online time in WoW. Whether it's with your wallet or your time, you're always paying. Perhaps the time you used to gather the necessary gold for the token could be used to farm a toy or mount you want, or a world drop transmog item, or leveling an alt. Or hell, maybe even playing other games. Or... crazy idea, I know, but... perhaps spending time with your family or friends?

[SirCowdog]

You aren't getting free game time, someone simply bought it for you, at a higher price. In fact, it was a brilliant move on Blizzard's part, and the shareholders. There are people who are willing to pay more money into the game but had no outlet for that, now they do. Consequentially, there are people who are willing to pay less (or literally not play), and now they have options as well. It did two things.

1) Raised the price of a subscription
2) Added more players to subscriptions

I don't understand why people are having such a hard time with the token concept and how it makes Blizzard money. It's simple math. No complex economics formula required.

The person selling the token already has a WoW subscription: $15
The person has also paid Blizzard for the token: $20
The person buying the token for gold has paid Blizzard $0.

So instead of Blizzard making only $30 from two normal subscriptions, Blizzard has made $35 from a subscription plus a token sale. Blizzard isn't making any money when you buy the token for gold. They already made their money when the other guy shelled out $20 for it in the first place.

The only way this doesn't work is if Blizzard is selling more tokens for gold than people are actually buying with real money. And I don't think that's how it works. Or if it does, then Blizzard isn't releasing that info.

It's also worth mentioning that in a general sense other games do this. And have for years. Blizzard was very late to this. There are some differences between tokens and PLEX but they are relatively minor and allow you to pay for your subscription indirectly with in-game currency.

The mechanical difference between PLEX and the WoW token are virtually nonexistent. Where the real differences are is in the game economy. EVERYTHING in EVE-online costs in-game currency, and players are constantly getting, ammo, ships, and material destroyed or used up. There's a constant flow of in-game currency being generated into, and flowing out of the system. Whereas in WoW, there are relatively few ways for gold to come out of the system permanently.

How that effects the price of the token probably would take an actual economist, and isn't something I have the knowledge to speculate on, however. All I'll say is that EVE online has a VERY realistic economy, whereas WoW just doesn't.