SOE Exchange: Are they Really On To Something?
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by: Tony "RadarX" Jones
In 2005, Sony Online Entertainment announced they were opening up special “Exchange” servers where players could sell and purchase things normally outside the guidelines of the End User License Agreement. The move was heavily criticized by many as sleeping with the enemy, or SOE trying to squeeze a few extra dollars out of it's players. As time went on, the anger died down, the rumors got quieter, and life went on, but a burning question remained for many. Was SOE on to something?
This week Gamasutra interviewed SOE President John Smedley regarding a recently released “white paper” on the Station Exchange. The interview itself was interesting, but nowhere near as baffling as what the report contained.
An Experiment in Economics
How did the Exchange servers work? Basically money, items, and characters could all be listed for sale. The seller was charged $1 for items and coin, and $10 for characters plus 10% of the sale price. Sounds like a pretty sweet deal for SOE if you ask me. Scoop up cash for what people were going to do already? Cha-Ching!
What benefits could they see from this? Well the income is obvious, but something else you might not have thought of, is the control of the secondary market. Of course they aren't going to affect a large percentage of it, but what if they could provide a secure environment for sales?
The Cash Rolls In
As much as I complain about the secondary market, and hate to admit it, the numbers support SOE. First, they report from 07/2005 – 07/2006 profit (they call "realized revenue") of $274, 083.00 which isn't a bankroll, but is far from insignificant.
While that number may not be daunting, they are also reporting that on the Station Exchange $1.8 million dollars changed hands last year or roughly $2,588 a day. Another interesting figure, was the top seller on servers had an unbelievable 351 auctions earning him roughly $37,435.47. I'm so not going to work tomorrow.
As to be expected, the sales seem to be mostly money and costs ballpark what you would pay on a live server for “illegal” cash. As you can see in those quote here:
“One piece of platinum on The Bazaar trades for $7.35 when averaged for the year ending June 2006. Average spending per customer on coin was $143.25.”
Who is buying all this stuff? Kids with nothing better to spend their lawn mowing money on? Try roughly 40% between the ages of 28 and 37. The largest margin of buyer and seller was in the state of California too. What this means, is the old misnomer about impatient children who are used to getting things now and don't remember the glory days of old MMO's is far from true.
The Silver Lining
As I mentioned earlier, what these servers provided was a method for SOE to control some of the secondary market. This directly affected customer service time spent on secondary market based concerns. To quote the paper directly:
“Prior to the introduction of Station Exchange, 40 percent of customer service time was spent on disputes over virtual item sales. Since the debut of the Exchange, the overall customer service time spent has dropped 30 percent.”
While I didn't read a direct correlation, I'm sure the Station Exchange servers did move some of the transactions off the normal servers. A 10% drop in customer service time on any one specific type of issue isn't anything to scoff at.
This paper is a fascinating look at what could become a very profitable game mechanic in future MMO's. I've skimmed over the high points, because honestly, unless you are a fan of numbers, this might be a lot more than you want to know. What you do need to know, is this is being taken seriously by SOE and I'm sure watched by other competing game companies. Will it make it to normal servers? Is this an indication of what future games might bring? Only time will tell, but one thing is for certain, you guys are buying a crapton of plat.
If you want to look at a few quotes from John Smedley and read the report in it's entirety head over to Gamasutra..
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