Greedy Goblin

Thursday, September 29, 2011

Will we be rich using the Diablo 3 AH?

In short: no. Longer: good and frugal players will be able to pay their Blizzard subscriptions and earn a handful more $.

We made millions of gold in WoW. In Diablo 3 you can change gold into $. So we'll soon be rich! Many WoW-goblins people made this assumption. I'm here to tell it's not going to happen, for four reasons.
  • Not all good players of WoW cared about gold. Actually most did not. Of course all good players care about having enough to repair, buy enchants, gems, consumables, maxed tradeskills. But after they got these, they stop making gold. When they go below their safety limit, they post some more auctions. So the dedicated AH goblins were facing mostly morons and slackers who were easy to separate from their gold. In Diablo 3 the gold is real money, so practically everyone will care to get more. Of course the M&S will still fail, but no good player will turn his back on a good opportunity.
  • WoW economy is much more complicated. There are 926 tradeskill items, Diablo 3 will have about 30 (stuff that the cube gives). Diablo 3 will have 7 armor slots, WoW has 14. Most items are not class-specific, and there are only 5 classes, while WoW has 4 armor types and within the types there separations like agi leather / int leather. It's much easier to find an item that is needed by someone and no one produces it.
  • Stats are good for all classes. Even if life leech/attack speed is superior for a barbarian than crit damage/attack power, no one would pay for an upgrade until the very top items of the top level (BiS hunting). Below top, the people will simply list for itemlevel and buy the cheapest.
  • WoW has as many AHs as servers *2 for each faction. About 1000 AHs in EU and US, for 5M players. So you are competing with 5K players. Diablo 3 will have 2 AHs (normal and hardcore). If we assume just 1M players for US playing Diablo 3 normal, you'll competing with that 1M players. Good luck finding a niche!
  • Legal goldselling. In WoW goldselling is illegal, so the professional farmers has to avoid the complicated tradeskill or investment related actions. No one levels up professions, buy 100K gold worth of stockpiles, or invest lot of human time just to be banned. Farmers are forced to short-term thinking as they can't be sure their char will be there tomorrow. So they rather stick to something that can be done by disposable/stolen accounts: bot farming. In Diablo2 they can do everything totally openly as long as they are using the marketplace of Blizzard. Of course most of them will be still be botter / sweatshop farmer, but the more intelligent ones will be allowed to level up professions to transmute the cheap raw materials into more expensive products. If it's profitable, they can also set up serious "daytrading" houses, where they scan the AH (for example via screenshot + character recognition software) and computers calculate which items worth buying and relisting for higher.
All these mean that the game economy will be near perfect and you'll be competing with professionals who has cheap labor and serious computational power. So in Diablo 3 you can't just buy item X, press a button and create item Y that costs 100G more. Or buy an underpriced item and list it higher (well, there will be morons listing low, but 100k others will jump on his auction). In a perfect market all actions will have the same G/work ratio. It doesn't mean equal G/hour as skill is still a limiting factor. Pressing a button doesn't have such, so it will be not profitable at all. The only production will come from direct farming. If you farm 2x more monsters, you get 2x more gold. However no one can beat bots in farming. Bots, even if much less effective than a player, can farm much more. Also, solo farming in Diablo 3 will be much less obvious than in WoW. If a WoW char does nothing but grind mobs, a filter will find it. In D3 practically everyone will do that, so a botter who is online 6 hours a day farming won't be any suspicious. This means that farmable items will have very little value.

To make  everything worse, Blizzard will take a nice AH cut. 5% AH cut isn't much when you have 40% profit. It is a disaster when you have 4% profit.

There is no money AH in hardcore mode, so no bot-free market for us.

PS: Don't miss tomorrow's post, without that, this post is misleading and incomplete.


Carson 63000 said...

The hardcore auction house won't have real-money auctions, only gold. That was stated in the original announcement (Blizzard don't want to have to deal with the rage of people who spend a fortune in real money on gear for their HC character, and then die to a lagspike next time they leave town).

Clockw0rk said...

In Diablo 2 I found the hardcore crowd to be a small minority, even amongst players that had reached max level on several characters though I suppose it is possible.

However I suspect that for the more "casual" players that one or two relatively early deaths and lost characters will turn them away from Hardcore mode.

Anonymous said...

Exactly what Carson said. The gold one can make more easily in Hardcore mode, can't be traded for real money. Only way to make some real money from Hardcore, is to do it illegally.

Gevlon said...

@Carson: Any official link for that?

Anonymous said...

Here's the snippet from the official FAQ about hardcore RMT.

Squishalot said...

@ Gevlon: That was my understanding too, that HC didn't have a real-money auction service.

That being said, even if it did have a real-money service, I would presume that you wouldn't make much from it either, due to competition. People would create hardcore characters for the purpose of AH-farming and day trading, and proceed to balance the economy in the same way as the normal servers.

There are also very easy ways to survive in HC modes in Diablo - simply grind endlessly against easy monsters. Again, sweatshops and gold farmers will still be present, even in the HC auction house, even if it were currency based.

I do believe that the D3 AH system is about as perfect an economy as you're going to get, if only because real money is involved. As with any other system, there will be profits obtainable, but only if there are serious market movements, or by taking risks (just like real world commodity / share markets).

Essentially, the price of a commodity in D3 is just as modellable as the price of a market-based commodity in the real world, and therefore, the same investment rules apply.

Shamaenei said...

The way i'm seeing this is that we will have the find out what percentage of the players is actually willing to spend real money on items and what the average amount is over a certain period of time. Until then we can't make any solid calculations and therefor not say what the diablo 3 AH will look like. We also have to take into account the inflational numbers. With so much loot dropping it will be hard to sell items on a regular basis unless you're on top of it 24/7.

Jana said...

I am fairly certain that the AH cut + the withdraw to Paypal your D3 item sale money cut will be high enough to completely eliminate any viable day trading.

Just like real world currency/bond/share day trading profitability could be eliminated if there would be something like 20% fee on every single transaction.

Also I think that the automatic AH scanning and grabbing underpriced stuff will be against ToS and will eventually lead to your ~60 Euro worth D3 account getting banned.

I would not really rise the hopes of any viable high money per hour earning from D3 unless you are a Prison Overlord in China.

Gesh said...

Im not Carson, but here is your link!
Now, give me an official link, that there will be a subscription fee for diablo3, please. Not the price for the game, but a subscription fee.

Gevlon said...

@Gesh: who said "Diablo III subscription"? The money you earn goes to your account. You can convert it to real money via PayPal, or spend it on Blizzard stuff, without the conversion cost.

Bobbins said...

Just who is saying the Diablo III ah is going to make them rich? To me the rmah should make the auction house sub-game more interesting. The quality of players engaging in the Wow ah is at a record low due to the neglible value of gold as an hard currency and the exodus of good players from the game.
You are also quite wrong about the complex economy of Wow. Once you strip out the worthless and outdated stuff from Wow there is very little left.

Anti said...

i only skimmed the d3 RMT info, but i thought you could trade in gold or dollars and fees were only charged on dollar transactions.

i assumed goblins would daytrade in gold then once in a while buy single valuable item to cash out in dollars.

Gesh said...

Gevlon - "In short: no. Longer: good and frugal players will be able to pay their subscription and earn a handful more $."

If I have misunderstood your words - appologies.

Bronte said...

Honest question: do you think it would make a difference if there were several servers with population caps with their own internal economies, instead of a universal AH?

Anonymous said...

The Real Money Auction House also transform Diablo3 in a online-gambling game. If you think at every aspect basically it is very similar with poker online . And we know that online gambling is banned in a lot of countries. Including USA or South Koreea. I predict a lot of legal problems for Blizzard in the future . I expect to see their game banned in a lot of countries.

More about how Diablo3 is online gambling is explained here :

Anonymous said...

Out of curiosity: your post gives the impression you are gonna play Diablo 3 ... may I ask why?

If D3 is even remotely like the previous Diablo games, then it will be a pure grind game with very little skill involved. It seems to be the complete opposite of what you are focusing on in WoW.

Anonymous said...

No Skill involved?
While in a grind game everyone can get to max level, a smart player can level much faster, even more in the beginning, when you have to adapt yourself to new difficult content.

And Diablo 2, wasnt easy, i died more on duriel normal with an untwinked char in a week than in total on shannox normal.

Eaten by a Grue said...

I have a question. What keeps players playing Diablo 2, and presumably will keep them playing Diablo 3, for so long? It seems there is no end game, really. Once you beat the game on the hard difficulty, that is all, right?

Obviously, replayability will affect demand for items.

Anonymous said...

Blizzard takes a % cut, plus a listing fee?

Christof said...

"what keeps players playing Diablo 2/3?"

Sometimes the answer is simple, Diablo 2 is a good game and is just fun to play.

You have played MMOs for a long time, havent you?

Squishalot said...

@ Eaten by a Grue - I can't speak for others, but I can safely say that I never finished Hell difficulty in D2. As a result, there was always something to keep working towards.

I did have several different characters that finished Nightmare difficulty and were each in a position to take a stab at finishing the game. I also took a character all the way into Hell difficulty in Hardcore mode.

There's plenty there for someone who enjoys the game for the game it is, similar to WoW. The difference is that it's primarily a solo / small party based game, and as a result, finishing the game has replayability, as killing the bosses as one class of character is vastly different to killing them as a different class.