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The Lawbringer: Q&A on Diablo's real-money auction house, page 2



Making a living off of playing Diablo?

Lobo wanted to know the feasibility of someone making a living off of a real-money auction house.

Hello Mat,

I was listening to the Podcast today and one question kept coming up in my mind about the side effects of having the two Auction Houses in Diablo 3. You were saying that the in game gold that would be sold still has to come from players putting in the work to get that gold. However, as you know, there is a growing group of people who are wildly successful at playing the WoW AH. (Basil, on your staff, included). These people can spend like 30 minutes a day making thousands of gold. Does this open up the opportunity for people to play the in game gold AH in Diablo 3 and make tons of gold and then sell that gold on the Cash AH? Does this new system open the door for a whole new type of online money making?

Keep up the great work!

Lobo - Worgen Druid Korgath


Many people make their living through online games, poker websites (less so in the United States after the great Poker Purge of the early century), and online entrepreneurial efforts. My prediction for Diablo 3's real-money auction house is that like most everything in society, there will be the outlying relatively few people who find a way to work the system for their own benefit and then everyone else who uses it sparingly.

See, the RMT auction house is going to cater to three distinct types of people: the average Diablo player looking for an awesome item sans the luck of the drop, the high-end AH maven who plays the market and finds a niche, and the organized gold seller who has a team of people who farm gold in-game, has a better luck spread to get better items, and so on.

There are three factors that make "becoming rich" off of the Diablo AH something of a rough sell. First, the auction houses are going to be regional, meaning everyone in the North American servers will be competing against each other, European servers will be competing against each other, and so on. The pool for competition is larger than the World of Warcraft local server economies, so supply will potentially be greater (or at least be closer to meeting) demand. Right now, you can oversupply or undersupply a WoW server based on general economic principles and warehousing certain goods. This will be a harder process in Diablo's region-wide auction houses.

Second, we do not yet know the frequency at which items become available. The only items on the Diablo 3 RMT auction house are from players and players alone. Blizzard has no intention of stepping in and putting up items, which means the supply of items on the auction house is completely dependent on the player. If the drop rate of the New Stone of Jordan is incredibly minuscule, there will not be many of them in the world on the auction house, and prices will reflect that. If the drop rate on great items is more lenient than in Diablo 1 or 2, we could see a more active economy with cheaper products. Market forces will adjust prices.

Third, gold sellers will be active on the Diablo auction house. It's a fact. At least now when you purchase gold, Blizzard gets a cut and seedy hackers won't steal your credit card. I count that as plus. The gold sellers who have made virtual currency a multibillion dollar business aren't going anywhere and are resilient to change. Players will be competing with them on the RMT auction houses, potentially bringing prices down further. You can only farm so much gold as one person. Hire a team of people, and your supply grows to a large degree. Prices for gold will reflect what these companies choose to do with their stockpiles.

So can you make a living off something like this? It's possible, but there are going to be many factors in the way, including the rate at which you get product that is good enough to sell. Will you become a millionaire off selling greens? Probably not. Can you try? Sure.

The tax man cometh

Hasteur asked about taxes.

Do profits made from the D3 RM-AH have to be declared on Income tax forms?

Most likely any money that comes to you via whatever third party Blizzard has set up will be classified as income since, well, that's what it is. You sold something and made a profit from it. It is up to person, not Blizzard, to report income for their annual income tax, as Blizzard is not an employer, just a facilitator of the auctions.

Money in the Battle.net wallet, however, might be a different story. You don't actually get that cash -- Blizzard stashes it away for you in the wallet-like store credit, for use on digital products at the Blizzard store or on more items in Diablo 3's auction house. While the money is still income realized, meaning it has manifested itself in some way, like purchasing a digital copy of StarCraft 2 or a companion pet in WoW. But then the argument can be made that there was no realization of income, since you just added virtual licenses to a virtual account. The case law in income tax realization line-drawing are vast. Really vast. It's a tough question.

Excitement

Jesse wanted to know why I get so excited about virtual currency.

Hey Mat,

You like to talk about the ways games make players purchase virtual currency and love talking about it. Where did the enthusiasm come from? It seems like a crappy topic for video gamers since, at the end of the day, it's costing us more money.

Jesse


I love virtual currency because I love seeing business models change and gameplay change as a result of it. Free-to-play models have become a staple in the industry when only years ago we would have lit these companies' buildings on fire if they even dared dream of charging us for certain content. Games as a service is a concept I like because there is player investment in their profile, account, and gameplay that is above and beyond what is usually in a boxed copy of a game that you play once and let sit.

Maybe it's just my personality, but I like evolution and growing and appreciate the innovations that have come from this style of game model. The free-to-play and virtual currency platforms are exciting to me because it's new, and I am of an age and generation that I've watched this thing happen and at the same time have the understanding of the thing. It's like watching the Berlin Wall fall when you were 8 years old versus watching it fall when you were 28 years old -- one doesn't understand the event but understands that it is important, and the other has the full scope of the event. Virtual currency, real-money transactions, and free-to-play model evolution are my moments that I "get" in video game history.

If you have any more questions about this sort of thing, send me an email to mat@wowinsider.com and I will try to answer the best that I can. Also, Twitter is a great way to ask me questions, since I am practically glued to it.

See you guys next week.


This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.

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