Diablo 3: RMAH. Are there Buyers?

Personal stuff

Diablo 3 RMAH fact and speculation after the jump!

Having passed series 6 and series 63 the Commonwealth of Massachusetts says that I can sell people investments in mutual funds.  However, over the past 6 months I’ve learned that working on comission is not for me.  So I’m looking to work for New York Life Investment Management in Customer Service.  Fortunately that job requires series 6 and series 63 licensing.  My future and the future of this blog is unknown.  At this point it’s a waiting game until NYLIM goes through the interview process.  Until then I have a few clients that need some financial goods and services to tide me over.

From a game design point of view, a small Ma game development company likes one of my game concepts, and wants to work on it.  This is a loose deal, but means actually making a real game prototype with someone who knows what they’re doing.  I expect no profit from this, but look forward to starting a real game and giving it a go.  (Well another go).

So in the past year I’ve started two businesses, and two businesses have failed.  This is encouraging.  At this rate I’ll be a successful entrepreneur in 2 years (or 4 more failed businesses, which ever one comes first)!  What better way to celebrate then with some speculating in Digital Goods!  Maybe D3 can be business #3.  That brings me to Diablo III!

Diablo 3

The real money auction house went live yesterday, and I jumped right in.  Having been fortunate enough to find a legendary item, Devil Tongue, there was something worthwhile to sell.

Here is my particular version of the Legendary.

Here is a shot of the auction house itself (click on the image to open a larger version if you cant read it):

Mine is the highest DPS Devil Tongue in the auction house (116.8 DPS $60 min $75 Buyout)!  Which is rather lucky.  You can see that others have lower DPS but have buyout prices as high as $200 (they were there first).  It was tempting to price it as such.  That would be a nice payout, but my pricing strategy was to severely undercut those prices, to make my auction more liquid than the others.  On the first day a lot of people are asking for a lot of money…  But it hasn’t sold yet.  So we have no confirmation that people are willing to pay that much money.  We don’t yet know what the market is willing to bear.
Secondly I paid $60 for the game.  My realistic goal is to pay for the purchase of the game.  So I am happy with anything over $60.  Besides I have a second legendary item ready if this one sells!  So no reason to be greedy.  I plan on putting every legendary found up on the RMAH, and everything else on the gold AH.  So far searching the Gold AH for more items to sell has not yielded any results, but at the end of Day 1, it’s too soon to really tell.
Speculation
/r/diablo has comments stating they are willing to pay real money now for good gear.  It would be great to see some proof of this.  However, that list hasn’t really moved much.  There has not been a lot of churn…  Which most likely means a flat market (few buyers).  If this is the case, items may need to be re-posted for a while until buyers get the cash together to step up.
The Diablo RMAH or Gold AH will in the end function like the WOW economy, while resources are scarce (before people play for 12 months) goods will fetch the highest prices.  Ultimately the value of digital goods is a function of the number of people mining and the number of people willing to buy.  Right now $200 bucks for a level 42 sword is most likely not in the realm of possibility for the average player.
It would be super hard for the Diablo 3 player base to increase over time.  It would be even harder to convince the player base to pay more for digital goods.  Therefore now is the best time to be asking high prices for things.  There will never be a better time then today (the day after it opens) on the D3 AH (of any kind).  The WOW AH taught us that digital goods always get cheaper over time, until there is a change in value based on game updates.  In this respect game updates are like earnings expectations in the real world.  You have to pay attention to them.  Even though they are dense, and technical and hard to figure out how they change things.
There may be other factors as well.  For example, people may not have saved enough money yet to want to buy stuff in game.  They may be trying to sell smaller items and save up to buy larger ones.  Maybe the market needs to grow a little before buyers step up?

Feedback

So what do you think of my strategy?  Was it foolish to ask for so little?  Was it foolish to ask for so much? (It was. Click the link for day 2 of my RMAH experiment)  Should I get my series 7 and then reevaluate these as speculative stocks?

3 Business Models for your mobile game.

The topic of business models happened to come up at the GAMBIT event at MIT titled “Indies will shoot you in the Kneecaps”.  Eitan of Firehose Games, Ichiro of Dejobaan Games, and Scott of MacGuffin Games and now of Viximo, talked about working for Indie Start ups in all stages of operation.  The moderator was Alex of Owlchemy Labs who stepped out from behind the lap top to answer a question himself.   For PC games check out a business plan for a computer game…  But let’s shift focus to mobile games for a moment and take a look.

Some of the MIT students had questions relating to the business model for releasing games as apps.  They were concerned about spreading the game while also recovering some money.  The price point of most games needs to be low in order to attract an audience.  Competition is fierce to drop the price and get more players.  But development costs need to be recouped.  How do you make sure to have some kind of return on investment while still attracting an audience?  From that discussion came these suggestions about business models for your apps.

The Long Game: Give away your app for free to build a fan base.  Worry about recouping development costs later.  This method works if you are in college and have the time to really focus on community development.  In college you have time and a roof over your head to make games which build a name.  This is not a great option for those who do not have resources to cover their expenses up front.

The Guilt Game: Give away low cost of free app, have in app purchases.  This requires using a system that allows for in app purchases.  Which apparently completely excludes Microsoft products.  Some players may have negative attitudes towards in-app or in-game purchases, and this may drive some audiences away.  Many times gamers feel that a free game should be completely free.  They erroneously believe that games appear as if by magic, and there is no cost associated with the production of said games.  Free to play games are slowly eroding that stance.

The Twin Game: Release a free version of an app that contains ads along side a paid version of that app which contains no ads.  This requires more work, and more development time.  Not only do you have to code a version of the game which contains some kind of ad support, but you also have to code one without.  While this may not exactly double the amount of work you have to do before launching a title, it will require more resources.  However, it will allow players to self select into the kind of game experience they prefer.

Have you launched any games under these models?  Mobile or otherwise?  Any horror stories about a method that you will never use again?  If you know someone that can use this information don’t forget to +1 the post!  Or share with them directly through twitter.

Know the playing field.

A good PVP player will tell you that success requires understanding the terrain.  Knowing what your goals are in Arathi Basin  and where to go to achieve those goals are key to getting your honor points at the end of the day.  (Am I dating my time in WoW by mentioning Honor Points?  Most likely).  Also understanding how other players react to the field is important as well.  Where are the hotspots?  Watching out for repetitive behavior is key to understanding a PVP match.  This concept is also key to doing better in the market.
There is another side to this coin.  If you don’t understand something, don’t expect to play it well.  As the example in the intro illustrates: I didn’t understand the market forces which lead to the collapse of the industry, and lost money.  The same will happen to you.  If you are a gamer looking to start investing the first advise is to learn as much as you can about what you are going to invest in.  It is actually far easier to stay on top of the market as a whole.
Advice #1: Play the market, not the stock.
Unless you really know a particular company very well (say Activision Blizzard for example) don’t try and play just one stock.  Instead look for things called Exchange Traded Funds (ETF).  This kind of fund should have very low costs, because a human doesn’t get paid to manage it.  If you find one with high costs, run away.  Find a different one.  An ETF just tracks the market.  That’s all.  Instead of paying attention to one particular stock now you just have to pay attention to what’s happening overall.
Advice #2: Collect Good Information.
For weeks NPR has been talking about troubles in the market because of the stagnation on the rise of the debt ceiling.  And the market slipped a little bit more each day.  Were you paying attention?  Were you taking action based on that information?  This is like a big red zone in the heat map.  The thing to pay attention to is ‘nervousness’ when investors are nervous the stock market drops.  In this post, lets avoid the issue of what to do when the market drops, we’ll talk about that in future posts…  But for now simply understand that although you cannot predict specific behavior in the market, at times you can really get a great idea of the increasing likely hood of a drop in the market.  Last weeks “Market Meltdown” is a great example.
I’m going to apply more gamer strategies to business over time, but for now, lets keep this post to that one tip.  So now that we know we need to pay attention to something, where can we find great places for that information?  Preferably places that don’t include a lot of craziness.  Some great suggestions come up next week!

A Gamer’s Advice for playing the Stock Market.

Could looking at the market from the point of view of a gamer shed some light on preventing terrible losses in the real stock market?  Does being a gamer provide helpful insight into ‘the market’?  Can we gamers prosper by looking at the elements of the stock market as we look at the elements of games?  Lets explore those questions with a new series of blog posts.  These posts will get released on Fridays.  If this kind of thing seems interesting, let me know in the comments below.

Economic downturn.  It scares everyone who is trying to ‘play the market’.  Scares them more then their first Creeper attack, because a downturn is long and drawn out, not sudden and explosive.  Watching your portfolio shrink is the creeping fear of disaster, not the sudden death of a gunshot.  In my time I’ve worked at a Mutual Fund Company and a Private Student Loan Company.  My investment education started at the height of the market in 2008.  An employee purchase program sounded like a great idea.  A few hundred dollars set aside from my paycheck went into a $45 dollar stock, which  promptly fell to around a $1.00 over the next couple months.  The official toll: 96.96%.  My advice comes from my experiences, my business education, and reading about investing.

If there are any topics that you would like to look at through the lens of gaming, leave a comment.  They’ll get written up in this series.  So post them now to get your burning questions in.  Oh, and I am not a professional so please consult with a trained financial professional before making any large stock purchases…  Or even small ones.  Next Friday we going to talk basics of investing for gamers.  First Strategy: Know the playing field.

One really exciting thing coming up is the release of Diablo III.  There have been a few ruffled feathers from
http://rcm.amazon.com/e/cm?t=widgetsamazon-20&o=1&p=8&l=bpl&asins=B00178630A&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr gamers of late about some of the protection surrounding the game.  I for one am going to be thinking more about the in game economy.  Diablo III will allow players to auction off goods in either gold, or real currency!  There is major opportunity for applying lessons learned on the real stock market to the virtual one, and vice versa.  One great resource is The Diablo 3 gold guide.  The guide is written by Markco Polo who wrote the amazing Just My Two Copper blog, and also The Traffic Blogger.  Markco does a ton of research and experiments into the best ways to make gold, and now real money in Blizzards Games.  Hopefully this series of posts will have good crossover and we’ll be able to highlight some real world economic effects using the games economy!