Diablo 3 Economic Crumble? RMAH Thoughts. Sixen’s Interview with Marko. Creator of Gold Secrets.
A few days ago, Sixen had a live stream with Marko from Diablo 3 Gold Secrets discussing the current evolution of the Diablo III economy. There are plenty of things going on and a lot of concerns that need to be discussed.
The Real Money Auction House has been launched worldwide and Diablo 3 just stepped up the game. It seems now that there are two completely different sides of the game. It is evolving differently from the economy in WoW being much more difficult to control.
When looking at the mechanics of the game and how the monetary system is build, the Diablo 3 economy is on a continuous inflation. Blizzard has not implemented a solution to control the number of items and gold that gets thrown into the market. At this moment, players continue to gather gold and very little of it gets flushed out of the system. The total available gold keeps increasing, making the prices spike up slowly. However, the number of items also continues to increase. At some point, there will be a saturation of the demand when the available supply will reach unstable stocks. Items as well do not get flushed out. They keep on increasing and more of them are created each day. If a player finds an upgrade he will sell his current item. The item he sells will be sold over and over again multiple times. Unless it is salvaged, it will continue to exist and have a monetary value. On the other hand items are crafter all the time, supplementing the existing stock that changes hands frequently. The number of players does not increase fast enough to maintain a balance for the constant infusion of gold and items.
The infusion of items is mainly caused by the blacksmithing system. In Diablo 2, gambling was a great gold sink. Players were able to give back to the system significant amounts of Diablo 3 gold while with the Blacksmith, the ratio between the gold spend and the items obtained to be monetized is highly unbalanced. In fact, if every item was to be listed on the AH for its true value, there will not be enough gold for them. There is a gear discrepancy caused by the crafting system. At some point the market will collapse when the player base will reach saturation. More people will start crafting and less people will need to buy gear. Items will stop selling and prices will start to drop. However, this scenario is far away and it is unlikely to happen in the next few months since the player base is still increasing and there is still a demand for items.
The Diablo 3 economy will continue to be profitable as long as there are new players or characters that need gear. Truth be told, progression is conditioned by the Auction House. It is much more lucrative to buy something off the Auction House rather than waiting for it to drop. In fact, chances are that perfect item with decent stats for the player’s class will never drop by the time he levels up. The only way to maintain a proper scaling between level and gear is to buy items off the Auction House. This is still a niche that works investing into. As long as someone is leveling a new char or just started playing Diablo 3, he will need items and it is a matter of time until he discovers that the Auction House is the best way to get the proper gear. When stops needing that item he bought, he will throw it back into the system. At this moment such practices will just continue to fuel the continuous inflation.
Blizzard needs to come up with some ways to stop or slow down the inflation before the bubble bursts. Their move with the increased repair costs is the first step. In patch 1.0.3, repairs will cost 6 times more than what they were in the previous patch. But this method is not sufficient to control the quantity of gold available. Blizzard is clearly trying to control inflation. They will also nerf the drop of the treasure goblin as it has become a great source of items for all players, especially the level 60 ones whom can benefit from the Nephalem Valor buff. Even so, this small attempt to control the Diablo 3 economy needs more efforts from the developer’s side. Some speculators suggested the complete removal of the Gold Auction House and keeping only the Real Money Auction House. While this scenario eliminates completely the gold inflation, it does not eliminate the depreciation of items. Since the number of items increases constantly, so does the competition. In return, competition causes players to undercut each other in order to sell their items. The level 60 items niche seems lucrative on the RMAH but it seems to be less profitable than leveling gear. Let us not forget that less than 18% of the characters are level 60. That means the customer base for leveling gear is much higher. In return, leveling gear becomes more profitable as the inflation is slower for that segment. In fact, low level gear can earn two times more money than high end gear.
Assuming that Blizzard will come up with a way to control inflation, control over a market is impossible. We have seen how in World of Warcraft a player can monopolize an entire niche. For example, a WoW player buys all the flasks off the Auction House and relists them to a price of his liking, attempting to control the market for that niche. In D3 this is impossible. The Diablo 3 economy does not allow a player to monopolize the market due to the increasing competition and the number of players that sell items on a server. Unlike WoW, we are not talking about tens of thousands but millions. Each continent is playing on one server and there are millions of players using the Auction House. The second factor that makes the monopolization of a segment impossible is the inflation. Prices will increase and an item bought now for a certain sum of gold will cost more gold next week but so do all other items and the trader will end up running a zero sum game.
Looking at the economy from the other side of the wall, Blizzard is not completely aware of how things are evolving. They do implement changes to reduce inflation. It is not clear if this is done on purpose or it is just an accident that the gold market is affected by patch changes. Things can also backfire. Patch 1.0.3 reduces the costs of leveling the Blacksmith and Jeweler and it also decreases the gold and mats needed for crafting. This change can lead to an increase of crated items to more than 200%. If prices will drop to 50%, more people will start crafting and everyone will create 200% more items.
The Diablo 3 economy is a bubble that can burst at any time. It is up to Blizzard to find means to control the infusion of gold and items otherwise, everything will collapse.
Check out the stream here. Jump to 9:30
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