Virtual Value

The previous post talked about lockboxes and the challenge around calling it gambling.  I argue that the distinguishing difference is that gambling is a known loss, with a chance at winning, while lockboxes are a known win, with a chance of a bonus.

There’s a fundamental weakness to this argument though and that’s the concept of value of goods.

This is actually a relatively old argument, and one that eBay struggled with nearly 20 years ago.  If you read any of the EULAs for modern games, they are fairly clear that the actual ownership of these items never belongs to you, but is more or less “loaned” and can be reclaimed at any time.  Let’s walk through those impacts.

Real World

Let’s say I buy (not lease, rent, or take a loan) a car for $30,000.  It has an agreed to value, using globally negotiated currency.  I won’t go into what the level set it (gold to USD) but I know that there’s a specific value, and the courts will recognize that value.  The car company and the seller cannot take that car from me without compensation.  I own it.  If they do take it, I can go to court and get my money back.  Hundreds of years of property laws cover this.

Virtual World

I pay for services, not products, as per the agreement.  Let’s say I acquire the Sword of Death in the game.  This has a high virtual value due to it’s rarity.  I could try to exchange it, using in-game currency.  That’s akin to bartering.  Two people, using an un-managed currency, coming to terms on value.  There is no legal recourse to this exchange.  There are certain ethical issues, and this is why you sometimes see game companies do something when there’s internal fraud (I use that term loosely).  Heck, that’s discounting the ability to acquire something yourself simply by investing time (say a rare drop from a raid), that cannot be traded.  Enter the P2W conversation…

Inflation

This is the increase of value of an item, based on the increase of available currency.  In the real world, inflation is controlled to a degree by central banks/agencies through interest rates, currency issuance and other monetary methods.

Games have sinks and faucets, and often times much larger faucets.  WoW is a good example.  10 years ago, 1000 gold was considered rich.  Today, 1000 gold is an afterthought.

Devaluation

When you drive that car off the parking lot, it loses value.  Anything used loses value.  Very few items ever increase, in natural value – typically art/gems.  Virtual goods are similar.  That Sword of Death becomes obsolete after the next patch by the Twig of Destiny.   You may spend an entire fortune acquiring one item, and then a couple months later, that value is completely lost.

Currency Conversion

There are plenty of exchange options for real currency.  Large organizations collude (that is the correct word) to set the trading rate, but are overseen by laws.  (see: LIBOR scandal).  This has gradual changes over time, and is usually based on GDP and inflation, along with overall market value.

Virtual conversion is also usually straightforward, as it is brokered by the game company.  You are buying virtual assets, to use in a specific bartering session, for an item that is unique to that environment.  It is a fairly rare occurrence that you can then resell that currency.  And you cannot transfer that item to another environment.

A real-world analogy would be buying a car in Paris, France.  You would take your currency, trade it to local baguettes (that can’t be used anywhere else but that car dealer), then buy the car that you can’t use anywhere else but Paris.  To get your money back, you’d need to trade it back for baguettes, then find a currency trader that wants those baguettes and has the currency you’re looking for.

Direct Buying Power

This is the crux of the issue – the real-world value of a virtual good that cannot be used anywhere else.  The Sword of Death in one game would have zero value in another.  You would have to extract the normalized (real-world) currency value, based on the exchange rate for virtual currency (if any).   Ex:  $5 gets me 20 gold, which can buy a super sword in Game 1.  $5 gets me 1000 gold, which gets me a twig in Game 2.  Virtually, they have different values, in the context of those games.  In practice, they have the same value.

The Lockbox Connundrum

For lockboxes to be considered gambling, the real-world value of the items has to be zero in most cases, and rarely above.  That gets even murkier, since many of the items in the lockboxes cannot be acquired by other means.  That special skin is locked in a lockbox, you can’t get it any other way.  And maybe that’s a premium skin, vs a regular one.  There is no real-world gambling analogy to that model.  Well, not entirely true.  There are many lottery types that are legal within a country, but not within some of their states/provinces due to the nuance.

The fundamental problem then, is associating real-world value to virtual goods.  There’s no scale, no measure, no consistency across the medium.  We’re at that lovely cross road of law, and of ethics.  Territory that is so uncharted and vast that no one knows where to even start.  It’s a multi-trillion dollar industry, there’s going to be pushback.

Now, that doesn’t mean that it shouldn’t be treated like a controlled substance (a separate fun argument), or that it should be absolved of regulation.  Ethics + money = regulator’s dream job.  Now, if EA was smart and wanted to head this off at the pass, they would set up their own board (with other companies) to set some ground rules.  ESRB is such an example.  But dollars to donuts, the execs don’t see the issue yet.  BF2 was the tip of the iceberg.  They see lost dollars.. not the hammer coming in for a swing.

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