Monday, March 16, 2009

My thoughts on RoM's business model

It was Saylah from Mystic World who put me on to Runes of Magic in the first place and in a recent blog post she has expressed concern that Frogster may be shooting themselves in the foot with a couple of changes to their micro transactions based business model.

The two things she queries are the fact that an increasing amount of rmt shop items are becoming available for purchase in game using in-game gold and also the proposed introduction of a currency exchange where players will be able to safely exchange in game gold for rmt shop currency (diamonds). Saylah is concerned that by allowing players get rmt shop items without paying real cash Frogster may throttle the very revenue stream the game needs to survive.

I am not so sure. I think Frogster are trying to be very clever with the RMT model and in particular I think they are looking at ways to adress one of the biggest dissadvantages of this type of game:

In a game where most of the pouplation play for free then the small number (the hard core) who do use rmt must pay a lot in order to support the horde of free-loaders. Anecdotally one hears tales of $500/month mmo habits. I don't know if this is an exageration but the principle of the few supporting the many does require the few to pay much more than the $15/month we have become used to for subscription games.

I think the currency exchange provides a mechanism for this small hardcore to offload the burden of paying for the whole game onto the much larger number of "middle core" players.

If I am right and this is what they are trying to do then Frogster will try and balance the game so that hardcore players are able to generate gold in excess of their requirements while the medium core will experience a deficit of gold. The hardcore can then buy the diamonds they need for rmt shop items from the "middle core" in exchange for surplus gold. This is exactly what legally sanctioned currency exchange has done for EVE - it allows the most dedicated players to offload the burden of paying for the game onto the middle classes. All in all it is a fairer solution because the larger number of middle of the road players avoids the need for a small number of players to pay excessive individual amounts.

Why also make rmt shop items available for in game gold? Perhaps it an economy balancing measure. It provides an alternative gold sink for high end players and it shoud serve to cap the currency exchange rate for diamonds (rmt shop currency). I would expect that once the market has settled it will generally be cheaper to buy diamonds from another player and then use these in the rmt shop than to buy shop items directly for in-game gold.

I have previously expressed my mistrust of microtransaction based mmos and the impact on game design but Frogster do seem to be taking a pretty innovative approach. All in all it is a delicate balancing act and I hope they pull it off.


Tesh said...

It's similar to the balance that Puzzle Pirates strikes; let people treat time and money as more or less interchangeable via a blind auction dual currency exchange, and you satisfy the time rich grinder with lots of gold and the money rich guy with more diamonds; each gets what they want to keep playing.

mbp said...

Hi Tesh, I don't play Puzzle Pirates but it does sound like a similar system. I do see such systems as benefiting gamers and allowing them to choose their own level of time and money expenditure.

It doesn't solve another difficulty with RMT games though - the economic imperative for developers to design their games in such a way as to encourage players to spend real money. This may lead to games that are total grind fests.