Tuesday, August 2, 2011

Diablo Cash Auction House

Recently, Blizzard announced that the Diablo 3 auction house would include two options:  buy things for in-game currency or buy things for real life money.  And as I do not play and have no plans to play Diabo at all, this isn't an issue with which I will have to deal anytime soon.

However, what would happen if Blizzard decided to expand this idea to World of Warcraft?  I see a few serious problems with this idea.  (My husband told me he could see "more than a few".)

One is the advantage it gives players who are willing to throw money at their problems, so to speak, making the opportunities in-game unequal to the subscribers who already pay a fee to play.  Up to now, opportunities were dictated pretty much by how much time and effort people were willing to spend in-game, which is, I believe, fair.  Up to now, extra real life money has bought World of Warcraft players vanity pets or mounts, things which are really do not affect game play.  I have no problem with the idea of Blizzard selling items with "smile value" or even convenience.  But when the line is crossed toward allowing those with the most real life money to have the most power in-game, it is wrong.

The value of gold may decrease to the point where it becomes worthless. It may come to pass that nobody will end up listing items on the in-game currency auction house at all, especially after the economy becomes mature to the point many players have more than enough gold for their needs.  After all, if they can get real life money for it, why mess with excess, useless gold?  (Unless, of course, they have decided gold will be their "cash crop", in which case, how does this make them any better than the gold farmers we have despised for so long?)  This would put newer players at an extreme disadvantage, forced to buy items with cash instead of gold.  It's not a good situation.

On a WoW forum discussion about this, I saw someone had responded something to this effect: "Who cares?  As long as I can get the same results from playing in game, I don't care if people are using money on the auction house."

But this may not be possible.  Remember how much of a pain it is to deal with gold farmers who make it difficult for the rest of us to farm our own mats, recipes, etc.? Well, under this sort of condition, it would be legal, so those who would never have dreamt of disobeying the Terms of Service might join the ranks of the gold farmers.  Real life money would be at stake, which is a much more powerful motivator than in-game gold.  (And no cap is ever reached.)  And this might mean that those players who choose not to purchase their materials with cash would find it nearly impossible to do any farming at all.

Another problem is taxes.  Yep, you heard me right.

Back in 2008, there were already studies going on about taxing virtual currency in games such as World of Warcraft or Second Life.  An article at Forbes.com, entitled Taxing Virtual Worlds, discussed this possibility, taking the opinions of different economists or professors who had considered the idea.

There is, after all, as the article points out, a precedent for taxing game "winnings".
If you go on a TV game show and win real dollars (or even stuff, like a car or TV), you've received taxable income. Richard Hatch, the first winner of Survivor, is doing time in prison for failing to report his $1 million prize as income.
Personally, I think the idea of taxing World of Warcraft gold is ridiculous. I cannot take that gold and use it to buy milk for my children, so how could that be considered part of my income?  However, what if that gold could be considered to have a real world dollar equivalent?  What if that gold could be cashed out at a standard rate?  The gold would then have a value which could justifiably be considered game winnings (or earnings) and be required for inclusion in taxable income calculations.

Right now, the US government seems to think it is more trouble than it is worth to try to pursue taxation on virtual gold, thankfully.  But if it got to the point where in-game activities could result in real life money, especially in substantial quantities, it might reawaken their interest in the economies of virtual worlds and how they could snatch some benefit for their use.

Now, would my taxes raise substantially?  Probably not.  But I do not like the idea of the government reaching its hands into my life any more than I absolutely have to have.  And, after all, even if I chose not to cash out my gold, it could still end up costing me real life money.

One way or another, I sincerely hope Blizzard is smart enough to realize that a cash auction house and WoW would be a bad fit.

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