Saturday, February 20, 2010

This is getting Allod more interesting

It looks like my confident prediction of a grovelling apology and price reduction from Gpotato were somewhat wide of the mark. Here is their first official response to Cash-shop-rip-offgate. Grovelling  apology it is not. Oh  they do apologise for not telling people that the item shop was going live. I haven't read a single complaint from anybody who was upset because "No one told me the cash shop was opening". All of the complaints were about the cash shop pricing and Gpotato's statement most pointedly does not apologise for that. They do acknowledge the concern and promise somewhat vaguely to "begin to evaluate the details of our item shop". That is not an apologyu or re-traction. If anything that is a confirmation of intent.

The apoplexy of the community begins to make more sense to me now. They must have seen this coming even if I didn't. Even the normally impeccably spoken Saylah of Mystic Worlds has taken to using anatomical references. Tempers are certainly hot over this. One puzzle still remains - a number of commenters have indicated that they pre-invested significant amounts ($50 or $100 in some cases) in shop currency EVEN BEFORE THE SHOP OPENED. Of course these folks feel rightly screwed because they are now trapped into spending that cash on ridiculously inflated items ... but why on earth did they do it? Why does anybody give money to a shop before it is even opened?

Anyway all this controversy has convinced me to hang around the game for a bit longer. I may not be interested in the gameplay on screen but the gameplay off screen is shaping up to be very juicy. My reading of the situation is this: Somewhere in the chain of this games management  there is person or persons who have studied Microeconomics 101 and know that there is an optimum price point for cash shop items which will maximise revenue. Other games try to guess this price but these managers (MBA graduates by any chance?) know better. They are going to take a scientific approach - setting an initial price and then varying it. After each variation they can determine whether revenue has gone up or gone down and by following the slope of the revenue versus price curve they will eventually home in on the optimum price which maximises revenue. Textbook stuff. Of course these guys are not stupid (MBA graduates - remember) so they realise that customers don't like prices going up. Therefore they decide to start with the highest prices possible and work down - no one complains about falling prices so that will keep people happy right? Oh and another master-stroke: better label the game "open beta" while we are conducting this experiment even though it really is a full release of everything else except for the cash shop. Using the word "Beta" is a get out of jail free card if anything goes wrong isn't it?

What could possibly go wrong? What has gone wrong is that in their ivory tower textbook vision of how pricing should be worked out they completely forgot that they are not operating in a vacuum. Customers already have an expectation of fair and reasonable pricing from other free to play games and even from Allods itself in other territories. They completely underestimated the scale of the customer backlash to perceived "rip off" pricing and my guess is they completely overestimated the degree of leeway the word "beta" in the title would give them. Allowing customers to pre-invest in shop cash before pricing was announced was also a grave error (eve if those customers were pretty silly to do so imho).

The official response is particularly interesting. Notice that no apology is made for the core complaint - the high prices. I think that this communication was written by some poor stuck in the middle customer rep. They probably knows full well the scale of the PR disaster but they are stuck with a recalcitrant management team who "know" they are doing a clever thing by playing with prices (after all it says so in their MBA  textbook) and who can't understand all the fuss. After all isn't the game still in Beta? It says so in the title!  Sadly the one chapter they apparently have not read in that MBA textbook is the one which says that finding the optimum price is not a lot of use to you if you scare away all your customers in the process.

This is shaping up to be interesting viewing.

2 comments:

Stabs said...

MBP, you're just guessing.

If 89% of their customers leave in disgust and the rest happily pay 10 times normal they're ahead of the game.

From my perspective I've always treated free to play games as games to be literally played for free. If I'm really enjoying myself I might spend some (I've spent $49.99 on DDO and got 6 months of good fun back).

From the perspective of cash shop v sub v sub + cash shop business models this is absolutely the best thing that could have happened to the genre.

If Allods burns in flames then it's the first victory against cash shops since Oblivion's horse barding. Edward Castronova wrote this week's about the lights going out in the anti-RMT bunker.
http://terranova.blogs.com/terra_nova/2010/02/lights-going-out-in-the-antirmt-bunker.html

If Allods makes more money than WoW in 2010 then we who won't pay over $15/month go back to being a niche which means we get more interesting experimental games to play.

It's not all bad unless you're a very invested Allods player. And even then I can see the appeal of optimising your free character to butcher as many rich bastards as possible. The ultimate pvp thrill in a way, ganking someone's $2000 Porsche with your rusty moped.

mbp said...

Of course I am just guessing and I am just as likely to be wrong as I was yesterday when I declared that it was surely a mistake.

I do agree this is a very interesting development. It is pushing the limits of the cash shop model and I am looking forward to see where it ends up.

My gut feeling though is that high prices will not make enough money for them in the long run. People have a kind of "impulse purchase threshold" below which they will spend money without thinking about it and above which they take the purchase decision more seriously. I have always assumed that they key to making money in a free to play is to offer a lot of items at or below this threshold so people will buy them without too much soul searching.

Valve have been exploring this with STEAM sales and from their pricing it seems likely that an impulse purchase threshold between $5 and $10 is pretty common. $20 misses the boat and €6000 is well, just silly.