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    Extra Credits is an animated gaming video blog — the usual episode is about 8 minutes of narration with lots of funny images and graphics for visuals — hosted by Penny Arcade. As several readers have mailed in to inform us, the most recent episode focused on the Diablo III Marketplace, specifically on the Real Money Auction House. And since we never *cough* get tired of talking about this issue, you might want to check it out. They don’t allow embedding, so here’s a link.

    It’s a lively presentation with some funny visuals and some good points, but I thought they missed a few points and misrepresented some others. For one thing, they didn’t even mention that trades in the Diablo III Auction House can be executed with in-game gold, as well as money. True, people like our D3 Markets guru Azzure have argued that there’s no real difference, since gold will sell for money, thus creating an exchange rate, but it’s a valid point. (Assuming the flat fee for a trade in gold will be far less than the equivalent cost to the player of the flat fee on a RM trade.) They also don’t mention that Blizzard only takes a small fee per sale, and that everyone gets some free trades per week, which makes Blizzard seem much more grasping in this presentation than in reality.

    I’d also disagree with their assertion that Blizzard’s *only* reason for making D3 online-only is to force everyone into a common economy. I’ve seen that asserted before, and while I’m sure that’s part of the reason, I think that simple piracy prevention is a much bigger factor. This Extra Credits goes into math on that point, estimating that the online-only requirement will cost D3 100-500k lost sales, since people with poor internet connections have no reason to buy the game. This is estimated to cost the company around $3m in lost revenue, but EC argues that they’ll easily make that back by taking their slices of the RMT pie. I’d say that’s pretty likely, but I think a bigger motivation, and a bigger short term profit for Activision/Blizzard, comes from all the extra $60 purchases they’ll get from people who would otherwise have downloaded a hacked copy of the game.

    On a related topic, the show makes an interesting prediction — that one day we’ll see AAA-quality titles given away for free, simply to get more people into the game economy. In that model, developers would make their profit not from box sales, or even from DLC sales or a cash shop, but from taking slices off of the RMT pie, the way Blizzard is with D3. If you apply that concept to D3, it would behoove Blizzard to steeply discount Diablo III (or give it away free with a WoW subscription?) after the initial rush of sales tapers off, since they’ll make more money long term based on having more people using the RMAH. Devious!

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