Blizzard to implement real money, player-driven online Auction House

http://pc.ign.com/articles/118/1185020p1.html

From the article:

As easy as it is to become obsessed with the World of Warcraft Auction House, waiting for item prices to drop and putting up rare treasures for bidding with the hopes of pulling in a nice virtual profit, that's child's play compared to what Blizzard's doing with Diablo III. The online Auction House to be implemented through Battle.net for Blizzard's upcoming action-role-playing game will allow you to put in-game items up for sale for real money. You set the price, other players bid or buy out, you make the profit.

That means when you're in a dungeon, slay a boss and get a super rare item, it's exciting not only because it'll help you kill stuff more effectively, but also because you could potentially profit from it in real life. The Battle.net Auction Houses will be separated based on region. While there won't be one single Auction House for the global player base, all players within a region will have access to the same one. Eventually Blizzard may allow players to check auction houses in other regions using different currencies, but at launch that won't be the case.

Diablo III Beta Video Preview

Auction Houses will be split into in-game currency versions and real money versions. If you don't want to deal with using real funds to buy items (or virtual), you don't have to. Most of everything you find in Diablo III, from skill-enhancing runestones to rare items to in-game gold can be put up for auction. The system is Blizzard's way of taking ownership over the black markets that tend to pop up around item-based games.

It's also Blizzard's way of making more money. There'll be a "nominal" flat fee charged by Blizzard for every item you post on the Auction House, as well as a transaction fee when the item is sold. It's important to note that this is a fixed fee, so it does not scale depending on the rarity of what you're selling or the associated price. For those who might cry foul at this, Diablo III executive producer Rob Pardo points out, "We could have chosen to do a model of 'we're just going to sell rare items on our website for X amount of money'. We just didn't feel like that was the right decision for us." The reason Blizzard says the listing fee exists is to guard against players spamming the Auction House with junk. It's likely at launch you will get a handful of free listings per week to try it out.

Demon hunter, day trader.

Is Blizzard expecting the Auction House to serve as the primary source of revenue for Diablo III? "We're still sticking to our box model for Diablo," says Pardo. "When you look at the Auction House, it's a really big unknown. I think it has potential. I think it's really conducive to the design of Diablo." In case you're not aware, enemies in Diablo III drop random items. Unlike something like World of Warcraft where loot tables for bosses are well known, nothing in the world of Diablo will spill out items with any sort of reliability, and very few items you acquire in Diablo will be soulbound (permanently tied to your in-game character).

"If you look in the Western world," said Pardo, "box sales work perfectly fine and make a lot of sense. If you look more at the Eastern side, especially mainland Asia, they already have a different business model. We can't really sell boxes there. We already feel awkward because we're trying to force something over there. [The Auction House] could be the primary way of generating the right revenue for the Diablo franchise. Maybe in the future we go full free-to-play like League of Legends. All that's really unknown. But it's all possible."

Adventuring for profits.

If you buy an item online, you're free to do whatever you want with it. You can use it, trade it to a friend in-game, or wait for a 24-hour cooldown and put it right back up for sale with the hope of selling it for more than the original purchase price. The money you make on the Diablo III auction house can be filtered to a Blizzard account, where it can be used to buy other Blizzard products, or filtered through a as of yet unnamed third-party service into an external account, in which case it's your money to use however you see fit. There will be a percentage fee for exporting the money beyond the bounds of Blizzard's system, though, so you'll take a hit on your total revenue.

If you do decide to keep the money in Blizzard's system, you can't export it afterwards. "If we have a balance that you can at any point turn into cash," said Pardo, "we get treated like a bank. That suddenly brings in a whole lot more regulations and things we do and oversight we have to have. It just made so much more sense for us to partner with someone that does all that." The decision about whether to filter profits to the third-party account or the Blizzard one therefore becomes all the more important.

Blizzard maintains it has no interest in posting items for sale within the Auction House. The idea is for the whole system to be player-run, with Blizzard's oversight meant to serve as a guarantee that you will receive the items that you buy and receive the money earned for a successful sale. As of now Blizzard has no plans to separate players online between those using the in-game currency Auction House and those actively utilizing real-money transactions.

I'm sure, especially when Diablo III initially launches, item prices are going to be all over the place. But Blizzard is confident the prices will eventually balance out given the large number of players that will have access to each Auction House. "People are going to experiment and they're going to try things out," said Pardo. "Very quickly, the market will correct. You look at something like the iPhone App Store. When it first came out, it didn't take too long before you really saw there being tiers of pricing. I think that's going to happen exponentially more rapidly in an auction house with thousands of players all putting stuff up every other second."

As part of Blizzard's plan to provide a secure trading environment, Diablo III will require a constant online connection whether you're playing alone, with friends or competing in player-versus-player matches. Your characters will all be stored on Blizzard's servers to ensure there isn't any hacking going on, ideally maintaining a safe, secure environment.

Quest for cool items, or just buy them.

In many loot games, ninja looting, or greedily snatching up powerful items so others can't collect them, is frequently an issue. Thankfully, the issue of ninja looting is bypassed entirely in Diablo III. When playing with another, the loot you see onscreen is unique to you. That includes money and gear. You still fight the same monsters, interact with the same NPCs and travel through the same spaces, but the drops are visible and accessible only to you. So even if someone really, really wanted to snatch up gear before you get a chance while playing co-op, they couldn't.

Sellers on the Auction House will be anonymous anyway, so even if you know a particular player is a jerk, you won't be able to identify what he or she is selling. You will see the name of the player with the highest bid, but that's it, along with the item and potential buyout price. You can then set your account to bid up to auto-bid up to a certain limit on an item, meaning you don't have to hang around for an auction's duration.

What you won't be able to do, at least at launch, is preview the item's look on your character model. You also won't initially be able to access the Auction House through external websites or mobile devices, though this could change as well. Characters from your account, which will be capped at 10 on Battle.net, could potentially be sold at a later date, but it won't be possible whenever Diablo III is first pushed live.

Blizzard first started working on a real money Auction House for Diablo III around 18 to 24 months ago. "Even before StarCraft II you saw the landscape changing, especially in Asia first," said Pardo. "There are so many innovative business models and ideas that have been coming over to the States. What we realized was, no one's actually done this before. There's examples sort of like it. But there wasn't anyone that's done exactly what we're trying to do."

Welcome to your new office?

So has the knowledge that players will be turning around and selling items online affected the game's design at all? "It's an emphatic no," said Pardo. "What we're incentivized to do is make lots of awesome random items. If we were making Diablo III without the auction house, that's exactly the same goal we would have."

For now, Blizzard wants to take a hands-off approach to the market. But might there be any scenario where Blizzard would step in? "It's hard to speculate on what that thing would be. I think we really want this to be a player-driven economy. I don't think we want to be acting like the Federal Reserve trying to balance it. Our number one thing is to protect the fun an integrity of the game. If something happened, that I can't predict, that caused the Auction House to go off the rails and make the game worse to play, then yeah, we're going to have to do something. What I don't want to do is try to artificially manipulate prices or transactions or anything like that. That I want to say away from. The player economy is the player economy."

There's still no specific release date for Diablo III or its beta testing period, but it's hard to imagine anyone being less excited about the game considering this news. What do you think of how Blizzard is redefining the loot drop?