Anyone who says this is a Ponzi scheme obviously doesn't know how a Ponzi scheme works. This is INSURANCE. Nothing more, nothing less.

A Ponzi scheme pays out to the early investors with the investments of later investors. They then need to find more investors to pay out the secondary investors. Eventually, there are no more investors and the money is gone.

This plan is plain and simple insurance. They, like any other insurance company have a formula that will most likely make them money. You have to realize that. Insurance companies aren't in the business of losing money.

The problem inherent in this insurance is that there isn't much to be lost if the servers are down. If you can't play, qq more. Whereas with car or house insurance, there's a lot to be lost if something catastrophic happens. You pay your car insurance every month to insure that if you do get in a huge accident you don't have to have reserves to pay everyone involved. If Warcraft is down, what happens? You don't have to pay anyone off, you just lose play time. Would it be nice to be compensated for it? Maybe, but I just don't see this being a popular service with the limited amount it could pay out. If you pay $1000 for car insurance and you wreck your car and two others, the insurance company could pay out $100,000, a 100x multiple. If you lose some playtime in WoW, you get a 1.75 multiple, just not worth it. Even if you are the most cautious person in the world and very risk averse, I doubt this plan makes much sense.

However, just to clear it up, it's NOT a Ponzi scheme. Just because you heard about Madoff and his Ponzi scheme, don't think you're smart to throw that term around at any money-making operation.