Tuesday, July 28, 2015

A Discussion on Blizzard's Selling of In-Game Cosmetics

When the Celestial Steed was introduced and legions of them were ridden through the city of Dalaran, part of me was very concerned about how Blizzard was handling their budding model of microtransactions. While I understood and agreed with their desire to make a bit of money off of their playerbase with optional cosmetics, the price point for them seemed very steep. I touched on this point in my recent suggestion compilation for World of Warcraft as a way to indirectly improve the experience of World of Warcraft and other Blizzard games. I personally suggested a flat decrease in the price of cosmetic goods, among other things, which would be a consumer-friendly move that improves Blizzard's reputation, helping to secure their place in the gaming industry for the upcoming years.
Unfortunately, it seems the feedback that has been made over the years by myself and others has gone ignored, as recent events related to the practice have shown that it is more of a threat than ever to Blizzard's reputation. I touched on this in my last video when I discussed how Warlords of Draenor currently brings poor value in terms of money spent vs content compared to previous expansions. falling in line with Blizzard's desire for more frequent expansion releases, which doesn't necessarily address the issue of a need for more frequent content updates. By following this line of thinking regarding value, I will go over Blizzard's marketing of (in-game) cosmetics and why the price points implemented years ago, which are used to this day, lack said value and thus could damage their revenue through loss of reputation. I will also review some counterarguments made in defense of Blizzard's pricing of cosmetic goods, since they help to bring out additional arguments against the practice. Finally, I will offer some suggestions beyond just telling Blizzard to lower their prices as there's a good bit of untapped potential in the cosmetic market that could be used.

Part 1: Problematic Examples

As I've already mentioned, Blizzard's cosmetic goods are quite expensive. While the price points probably weren't the focal point of outrage, two of the more recent cosmetic additions were pretty much PR trainwrecks just waiting to happen. These additions were the alternate hero portraits in Hearthstone and the Mystic Runesaber in WoW.

The alternate hero portraits in Hearthstone are a cosmetic feature that was teased in a fan trailer quite a while ago and had good potential as an idea. After all, not everyone wants to play as the Hitler-esque Garrosh Hellscream or the like. Thus, when Magni Bronzebeard was announced as the alternate hero portrait, there was a good chance for flavorful potential. However, aside from the players who incorrectly associated the addition as (mandatory) content on par with having more deck slots which makes no sense from a game design standpoint, the $10 price tag is a pretty hard pill to swallow. That alone made players skeptical and spawned numerous posts, including a poll that showed that not a lot of players were interested in buying alternate hero portraits (on the subreddit anyways, though over 30,000 votes cast, with a majority of over 16000 overwhelmingly against is a pretty significant number regardless).

It's pretty easy to see why. At most, an alternate hero portrait consists of a picture of the hero (technically two), and about 30 lines of voice acting (29 according to the wiki), plus a unique animation for the hero ability and a card back. While it probably costs a bit to hire voice talent and a bit of work needs to be done for the art and animation, does it really justify the price tag? Considering the amount of work and cost is quite small, the answer is a definitive no.

Speaking of comparing work with price points, the Mystic Runesaber is an excellent example of a good that is overpriced based on how much work it took, especially when compared against cosmetics of a similar price point. Ignoring the fact that the trailer spawned a staggering amount of outrage due to gameplay-related reasons or lack thereof in the face of Blizzard effectively wanting players to spend their money on a new cosmetic, which in itself is a money matter that helps to support arguments that Blizzard is greedy and trying to cash grab, let's consider how much work went into the Mystic Runesaber compared to say... a League of Legends Ultimate Skin (this is roughly $25 in RP - if more RP is bought, such as by buying $20 of RP at once, the Ultimate Skin "costs less").

That comparison may seem weird since World of Warcraft mounts and League of Legends champion skins are quite different and involve different types of games, but remember, I am only comparing the raw amount of work that went into each cosmetic and not getting any more specific to the point of making the two concepts incomparable. Anyways, let's try to add up the amount of work each cosmetic took:

The Mystic Runesaber probably required the following to create and implement:
  • A moderate amount of graphical design and similar work to texture and model the mount, which probably at least iterated on an existing model.
  • A moderate amount of time to work on animations, such as wing movements, the mountspecial, etc. Some animations were probably reused in some way.
  • A small amount of time to work on sound assets. Many were probably reused.
  • A small to moderate amount of time to work on the trailer and generally prepare for featuring it to players. This kind of speaks for itself.
The most recent Ultimate Skin, D.J. Sona, required the following to create and implement:
  • A moderate to high amount of graphical design and similar work. While D.J. Sona looks similar to the base model, some major additions had to be made like the D.J. table/booth. In addition, each "form" of D.J. Sona required its own specific textures in addition to the base textures that needed to be made along with some recoloring (for example, the volume bar on the D.J. table/booth changes depending on the mode D.J. Sona is in).
  • A high amount of time to work on animations. D.J. Sona has three forms with different visual animations on her abilities and even basic actions (even when idling). While the amount of work isn't triple the amount it would be were D.J. Sona only to have one "form," the increased demand for original animation work is still significant.
  • A very high amount of time to work on sounds. Not only does D.J. Sona have a few hours of in-game sound, three soundtracks were made to accompany the login screen to depict the three "forms" of D.J. Sona. Riot Games collaborated with numerous artists to accomplish this.
  • A small to moderate amount of time (maybe more?) to work on the trailer and generally prepare for featuring it to players. It is worth mentioning Riot released many videos related to D.J. Sona, including one for each soundtrack.
By this point it's very clear the sheer amount of work that went into the latter cosmetic was far greater than the former. As to how much? I cannot say exactly, but let's consider the following factors:
  • Store mounts are released more frequently than Ultimate Skins. While I'd say this may be a matter of Riot still being a "growing company", D.J. Sona actually got delayed and was clearly a very ambitious piece of work. 
  • D.J. Sona got a release discount at 25% off. While this is smaller than the previous Ultimate Skin's release discount of 50% off and 40% off respectively (which in itself is probably due to D.J. Sona having great expenses in addition to time consumed when it came to creating it), it's still greater than the Mystic Runesaber's 0% off. I know the mount will probably go on sale at some point, but at the same time sales volume on release is probably pretty high if not at its highest, meaning Riot's willing to slash their prices to potentially sell more on release. This tactic is a strong indicator that at that lowered price point Riot anticipated a huge return (greater than if it was released at its base price). This point will come into play later when I discuss the benefits of lowering prices.
In short, the Mystic Runesaber (and the rest of the store mounts for that matter) really shouldn't be $25. Considering how Blizzard prices their other cosmetic goods (for World of Warcraft in particular), it's safe to say they probably follow similar price trends in terms of how overpriced they are versus how much work they took.

Part 2: The Counterpoints (and counter-counterpoints)

When I bring up these points or see them brought up, there's often some common counterarguments made in the defense of Blizzard's practices. While in some cases good points are made, I've found most arguments can be shifted aside and in the process of doing so, they help bring up additional points supporting the aforementioned argument:
"It's priced that way [by Blizzard] because people will buy it/It's priced that way because people are buying it for that much."
Blizzard as a company is indeed entitled to price goods however they wish. However, just because they can doesn't mean they should. I am certain Blizzard has data showing that their pricing model works to the point that sales numbers are high. Assuming the above point is correct and Blizzard's pricing of cosmetics is highly successful to the point it's not worth decreasing, it is worth considering why this is the case.

One point that comes to mind is that Blizzard has the advantage of having a large number of fans accrued over many years of successful games. Between the Starcraft, Diablo, and Warcraft franchises, there is no question that there are plenty of people willing to drop money on something Blizzard sells due to the name of the company. The result of this brand recognition is that Blizzard can enjoy the benefits of pricing at a premium, knowing they will get sales. However, what ends up getting created in the process is a minority of alienated customers that may grow, especially when players get loud about some wrong Blizzard has done, whether that wrong is a big deal or not. When such an outcry occurs, players are more likely to try to find more "flaws" such as the overpricing of cosmetics, magnifying the effect of unfavorable decisions and further fueling theories such as how Blizzard is "exploiting" their customers as opposed to conducting fair business. Considering that the announcement of Magni Bronzebeard resulted in a series of events similar to this, the aforementioned speculations have some merit.

On a somewhat related note I'm almost certain the nature of developing cosmetics for the in-game store involves a large upfront cost to develop that results in any subsequent sales after breaking even yielding a large profit. With the above points in mind, there's a couple inquiries to consider:
  • While the data shows decreasing the price may not be as profitable, is there a possible lower price point that still yields a decent amount of revenue due to the probable increase in sales volume that would result from a lowered price?
  • Is it worth making more profit to alienate customers, which could make mistakes more punishing, if not potentially fatal to the company, which could result in a financial loss?
Based on what I said above, the answers for me would be yes and no, respectively. The gamble, to me, just isn't worth it.
"You don't have to buy it."
I am aware that I don't have to buy it if I don't like the price. It is probably the best thing I can do from the consumer standpoint to help contribute to Blizzard's data of how successful they are with cosmetic sales at the current prices. This doesn't mean I can't criticize Blizzard's practice and, if anything, the criticism helps to justify exactly why I have no interest in buying something like a store mount for $25.
"It's a cosmetic item so it doesn't matter."
This argument just sounds terrible in general since it sounds so dismissive, but regardless, a cosmetic item (even a digital one) is a good that has a demand (maybe not so much of a supply as tangible goods, but still). Like other goods, it sells well based on the aforementioned demand and other factors such as price. If a good is too overpriced, not as many people will buy it, meaning the key is to price it just low enough that there's a lot of sales but not so low that goods are sold at minimal profit or even a loss, though both of these issues aren't quite as problematic with these kinds of digital sales since, as I mentioned previously, making such goods requires a large upfront cost and a very small upkeep compared to non-digital goods.
"I'm fine with the price."
While this argument can work, it's generally presented without any supporting evidence. In contrast with the points I made above to support my argument on why I think Blizzard's cosmetics are too expensive, the above argument looks very weak and effectively utilizes subjectivity and is effectively anecdotal. This does not refer to individuals who do support this argument with evidence, though I'd still likely be inclined to disagree (but at least the argument wouldn't be fallacious).
"It'll go on sale for the price you want anyways."
This isn't wrong, but also presents a problem with how sales are utilized sometimes. One can look no further than the last Steam Summer Sale to see a good example of using a sale in a misleading manner through price gouging, followed by a "discount" back to around the original price. While there were apparently numerous instances of this during the sale, the one that caused a huge amount of outrage was the GTA V "sale." This "sale" involved increasing the price of GTA V and also creating a bundle that contained GTA V and an online in-game cash card that increases the price, causing its discounted price to be the standard $60 price that a AAA game typically is. Despite this, GTA V was featured on the Steam frontpage (apparently I didn't have a screenshot so I got this from Rock, Paper, Shotgun) as an item that was on sale. This kind of practice is illegal and frankly, a scumbag move that's highly consumer-unfriendly due to how misleading it is.

In addition, I presented a possibility of Blizzard selling for a lower price that could be financially beneficial for them before accounting for sales. Due to the nature of a sale, it would almost certainly increase sales numbers even further and since I mentioned that revenue gained after a certain point is largely profit, the downside for doing a sale on an already discounted price would be a lot less. This makes the concept of pricing goods fairly and selling at a bargain (this part really depends on numerous factors) an even better idea that is highly consumer friendly and ethical instead of deceptive.

Part 3: Suggestions

Whew... That was a lot to go over. Now that I have sufficiently explained what's wrong with Blizzard's microtransactions involving cosmetics, it's a matter of appropriately adjusting the prices, right? Well, that would indeed be the quick solution and one I intend to go over, but there's also plenty of untapped potential in terms of marketable in-game cosmetics, which could help increase the size of the revenue stream through a larger variety of goods, negating the need to have higher prices that may not be that profitable to begin with.

In terms of suggesting lowered prices, the price of cosmetic goods could generally be cut in half across the board and that should suffice. There may need to be exceptions in some cases. For example, a Store Mount could cost anywhere between $10-15 due to rounding or cosmetic helmets may need to be reduced even further (seriously, $15 for a cosmetic helmet is pretty crazy and even half of that is asking a lot).

Cosmetic goods, particularly for World of Warcraft, are expanding slowly into new territory. For example, cosmetic equipment has been available for purchase for a while to complement the success of Transmogrification. Given another recent success with the Toy Box, Blizzard could also sell some (reasonably priced) toys. In fact, WoW TCG loot in general could help to serve as an inspiration for cosmetics Blizzard could sell, such as tabards and so on. As to whether TCG loot itself could be phased into a permanent spot in the cosmetic store is another, potentially controversial matter (one I recommend against, especially since the BMAH exists as a method for getting some of the items).

Conclusion

Sorry if this turned out to be a tad longer than it should've been, but I wanted to sufficiently provide detail since apparently my opinion is an outspoken one. I also know that there's a bigger issue at hand in the form of paid services, which I would've mentioned, but it's a lot easier to see why1 something like a $30 Faction Change, especially in the days where Alliance overwhelmingly dominates the ladder, could be exceedingly problematic and not just consumer-unfriendly, but damaging to the actual game in some major ways. 

Hopefully Blizzard really does do something in the way of reforming the way they sell cosmetics. While it won't be a total resolution of the company being perceived as consumer-unfriendly especially due to issues such as World of Warcraft-related news, it's a big step towards improving their image.

The next video involving me talking about stuff will probably be about my experiences with World of Warcraft.

1 Added on November 30th, 2015.

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