Welcome to Jester's Trek.
I'm your host, Jester. I've been an EVE Online player for about six years. One of my four mains is Ripard Teg, pictured at left. Sadly, I've succumbed to "bittervet" disease, but I'm wandering the New Eden landscape (and from time to time, the MMO landscape) in search of a cure.
You can follow along, if you want...

Wednesday, October 10, 2012

COTW: In case this isn't clear...

The two posts about PLEX prices are bringing a really incorrect belief out of the wood-work and I really need to smite it.  As one anonymous commenter puts it:
So, what do you think the chances are that it is CCP intentionally pushing things so that it is harder for freeloaders to absorb company resources playing month after month without paying a cent that can go to company payroll and server costs?
As another put it:
[High PLEX prices are] temporary and the poors should be able to afford PLEX again in a couple of months. Or they can resub their accounts with RL money. Increased monthly revenue is, in fact, CCP's ultimate goal.

OK.  I've said this in comments a few times, but it deserves its own post.  Let's start it with the most basic, fundamentally true fact there is:
CCP makes the most money from accounts subscribed with PLEXes.
Yes, they do.  Every single PLEX ultimately has to be purchased from CCP or from an authorized PLEX reseller.  CCP does not create PLEXes out of thin air.(1)  They're ultimately purchased by a player with real money.  PLEXes cost anywhere from $16 to $20 U.S. depending on how and when you buy them and are good for one month's play.  Meanwhile, an account subscribed with a credit card costs between $11 and $15 per month U.S.  If money were the main concern and CCP had their first choice, every single EVE player would pay for EVE with PLEXes.  It's just that simple.

High PLEX prices are therefore just as bad for CCP as they are for players.

Yes, they are.  If someone stops paying for an account with PLEXes and subscribes that account with a credit card instead, CCP loses money.  If someone stops paying for an account with PLEXes because they're too expensive and lets that account lapse, CCP loses even more money.  High PLEX prices help CCP in only two ways:
  • the fight against RMT, but that's quite temporary.  RMT sites will nearly always be able to beat CCP's dollars-per-ISK ratio; and,
  • when in-game PLEX prices are high, CCP can run specials on RL PLEX prices, hoping people will buy them, flood the market with them, and push the prices down again.(2)  But that is also temporary.
It is therefore virtually always in CCP's best interests for PLEX prices to be low, not high.  Yes, there are times when currency exchange rates and the like change the math, but I do not believe we are currently in one of those times.

Low PLEX prices encourage players toward the most profitable-for-CCP method of paying for EVE there is.  High PLEX prices encourage players away from that method.  Players that pay for the game with PLEXes aren't free-loaders.  Quite the opposite!  PLEXes are the most expensive way to pay for EVE Online, and CCP makes the most money from people that play this way.

Everyone clear?


(1) With very few exceptions, for things like prizes and the like.
(2) And expect to see this happen very soon.

33 comments:

  1. I disagree on this one a PLEX user leaving the game does not deprive CCP of a PLEX purchase.

    I don't know of anyone who buys the PLEX to use them as gametime for their own account. The PLEX that are purchased are meant to be sold on the market.

    The high price reflects two things, either the demand for plex is too high; in which case if one player stops using plex, he's replaced by another, or there's less plex's being purchased.

    If the volume of PLEX being sold is the same, CCP loses nothing.

    In another way, if PLEX were transfered directly into ISK and all the PLEX subscriber had to leave, CCP would still be making the same amount of money since the PLEX bought would not be affected.

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    Replies
    1. Amen.

      PLEX exist for the sellers, not the buyers. As much money as CCP makes from people extending game time consuming PLEX instead of paying a year up front, they would make even more if that PLEX was consumed for virtual items instead (or even better: destroyed along with 72 others in a kestrel in Jita).

      Delete
    2. I know tens if not near a hundred players that PLEX thier alts for gametime. Tahna we must live in oppositeends of the sandbox!!!
      ~DarthNefarius

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    3. It's true that PLEX exists for the seller, not the buyer, but you miss one point in your argument: CCP NEEDS the PLEX to be consumed for their RL accounting purposes.

      Now, I don't know what the Icelandic/EU equivalent of GAAP is (Generally Accepted Accounting Practices), but here in the US, every purchase of PLEX that is not consumed by either

      a) extending subscriptions
      b) resculpting characters
      c) paying for tournament fees
      d) being destroyed in-game by either being trashed or blown up
      e) turned into Aurum
      or
      f) some other service ONLY offered by CCP

      is considered unearned revenue. Even if the PLEX is turned into ISK by one player, it still exists in game and thus CCP is bound to provide a service in exchange for that PLEX. Until the service is rendered, CCP is on the hook for services unrendered. That's one reason why we got that Aurum for Incarna products instead of plain-'ol PLEX. Aurum IS the service rendered as it can not traded on the market.

      So I suspect that is why you see more services becoming available that you can use PLEX to pay for it. Not only do they make money, but they can also convert unearned revenue into earned revenue. And from that POV, it might make sense for PLEX to be worth a little less so that people *will* convert it into CCP provided services, and not for ISK.

      -Amari

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    4. Wrong. Addition of in-game item to player's inventory is a service already.

      -Zwo Zateki

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  2. If someone stops paying for an account with PLEXes and subscribes that account with a credit card instead, CCP don't lose money.
    They earn money from someone's credit card.

    Because in-game PLEX have been paid to CCP, even if none use PLEX, CCP still have earn money.

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    Replies
    1. CCP doesn't make *as much* money from a PLEX subscription turning into a CC subscription, but they lose anywhere from $1 to $5 per month.

      So they lose money.

      Delete
    2. I think the way you have to look at it is this; The number of PLEX subscribers stays the same and the number of Currency subscriber goes up.

      Whether someone says "I'm not resubscribing my account" or not, changes nothing. There's enough demand for PLEX that one people stopping using them is immediately replaced by someone else.

      With that in mind, how would CCP be losing money when the PLEX isk value goes up? More people will buy PLEX and more people will subscribe until the price goes down to normal.

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    3. you need to takea class in accounting... CCP has to expense these PLEX eventually! further down the line looks better in the short term but it still has to stay on the books.

      Delete
  3. Considering the amount of people saying they are turning in ISK to get a PLEX to continue to "play for free" versus the number of people that say they purchase PLEX to get ISK or pay for their subscription, I am unconvinced that CCP is not seeding extra PLEX into the economy in order to draw ISK out of the economy.

    I would like to see some hard figures on this, but I am also sure we will never see them.

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    Replies
    1. with CCP Diagoras out of a jobat CCP & Dr E's silence concerning the economy for over 6 months you aint going to get jack shit of stats out of CCP

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  4. This is so obvious I'm surprised anyone out there still doesn't understand. But thank you for clearing it up for them!

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  5. Well, one of those comments was mine. I disagree that CCP makes most of their money from accounts subbed with PLEX. They make nothing from those accounts at all. They make money from whoever bought the PLEX and paid RL money for it in the first place. The fact that said PLEX was subsequently sold for in-game isk and used to pay for someone else's monthly subscription is not important. What's important is that said PLEX bought and paid for with RL money has uses in-game, and 30-days' worth of gametime is only one of them (granted, it's the most obvious and popular use). As long as someone is shelling out RL money for PLEX, CCP makes money on them, and it's irrelevant how they're used after that.

    What if the playerbase consisted of 100,000 people each with 3 paid accounts and everyone paid for all their accounts in PLEX every month? Who, exactly, would be buying those PLEXes to sell to everyone else? An extreme case, perhaps, but the answer is people with extra cash in their gaming budget every month who don't feel like grinding isk to buy stuff. Everyone else (on a limited or no-cash gaming budget) is, by definition, a poor.

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    Replies
    1. I think it is very much relevant how they are used, cause if ppl can't sell them on market (cause they are too expensive and nobody buys them), they will stop buying them from CCP.

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    2. Exactly. It's really hard to be distinct how how the plex market really works without a lot of data. Do people who buy plex for isk tend to buy a set number a month, or just what they need to pay for their stuff? Etc.

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  6. CCP benefits the more PLEX are burned, regardless of any other part of the discussion in those threads. They've got a huge FW faucet and the proletariat is awash in cash (at long last the tyranny of null sec control over the bulk of the money supply is broken). More people with piles of ISK means more PLEX burned. The more valuable the PLEX becomes, the more tempting it is for people with RL cash to buy PLEX and sell them for ISK. I've been wondering when Dr. E will step in. He gave two specific examples of when he was tempted to step into the market. The price is way above where it was those two times. So why doesn't he act? They're burning the backlog before DUST.

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    1. FW isn't a faucet, you don't get ISK for taking part in FW.

      You get Loyalty Points for taking part in FW, which you then trade for items in the LP Store. You then sell those items on the market - so the ISK for the item comes from the buyer of the item.

      Unfortunately the problems are the faucets elsewhere in the game, that are allowing the FW players to sell large quantities of these items on the market so quickly. If there was no demand for the FW goods, the FW players would have to sell stuff much more cheaply, or sit there selling slowly in either case providing a much lower regular ISK income.

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    2. I've heard that the isk you get from FW will more or less pay for the LP Store payouts? Is this true? If so, CCP should really turn up the isk sink on the FW store so we can destroy more isk with the fast paced FW market.

      Delete
  7. Now Jester ... explain sinks and faucets for us so you can get really stupid comments...

    All told I think 5% of the population of the earth understands this stuff or is willing to learn.

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  8. Hmmmm. How do you know CCP never creates PLEX out of thin air? Conversely, how do you know CCP doesn't buy PLEX with ISK created out of thin air to remove excess PLEX from the game. Everyone seems to assume a closed loop where PLEX is concerned and I've seen nothing from CCP guaranteeing this will be the case.

    Mind, I don't keep up with every dev blog so you may have read something I haven't.

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    1. Every summit, the CSM has put this question to Dr EyjoG directly and every summit he's said that while CCP reserves the right to manipulate the PLEX market, in practice they never have.

      Most recently, it's in the Economy section of the May Summit minutes, page 161.

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    2. I thought he said somewhere that they had a stockpile of pre-purchased plex from perm-banned accounts that they've fed into the system occasionally at some point. I may be remembering that wrong.

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    3. CCP occasionally does make PLEX out o thin air: they did during last years XMAS caravans

      I do keep track of every DrE blog & they have been extremely sparse as of late :(

      The loss of CCP Diagoras's tweets was the second most blow to the death of the QEN for any true watcher of EVE's economy

      I was surprised that Dr E was able to say that confiscated PLEX can(will eventually? ) be used as away for CCP to regulate the PLEX market because in a real world sense it is a LOSS of real world money for them for an immediate ISK sink.

      With the Tourney auctions pushing PLEX prices up&up higher I suspect an out cry in the forums for PLEX relief will make the Greek EU auperity riots look like a tussle in a kindergarten sandbox. Be interesting to see if the CSM actually starts speaking up about the hi cost of PLEX or if they are sooooo space rich they don't care and stay silent about the hi PLEX costs

      -DarthNefarius

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  9. Stocking up for the PVP tourney admission fee and bidding might have hoovered up a few plex, but I have wondered if the recent FW cashouts have also reduced the number of people who buy plex for isk (Yes I know FW is actually an isk sink, I mean the redistributed isk the people selling the cashout items received ;))

    Looking at the volume of plex traded wouldn't show this because only CCP know how many Plex are being added and removed from the system, and I suspect many people are trying their luck re-listing at higher prices.

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  10. I have to disagree. Plexes might be the most expensive way to play Eve in the US. But certainly not in Europe.
    I cancelled my subscription and buy timecodes now. That is 30% cheaper for me.

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    Replies
    1. It depends how much gametime you buy at a time - if you pay for 3 months or more at a time, then a credit card is still cheaper even in europe.

      Delete
  11. "Low PLEX prices encourage players toward the most profitable-for-CCP method of paying for EVE there is. "

    Actually I disagree with this statement.

    CCP need PLEX to be more attractive to real-world buyers, and the more ISK you get when cashing in your PLEX the more attractive they are.

    To be honest though, PLEX is a free market, and the price should naturally move to a level where the "I want max ISK for my PLEX" and "I want to play for free" drivers on the market balance.

    But as I said on the previous post, it's perfectly possibly that PLEX are naturally increasing in price a little - but I think all the talk about PLEX prices rising out of control are actually driving a bubble which will burst soon.

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  12. A plex is an I.O.U. note from ccp for an exchange of a service. It is in their interest for players to use them else it increases ccp's financial liability. They want plex used up.

    In the csm minutes there was talk of ccp using plex seized from rmt accounts as a means of increasing supply if prices rise too high.

    There is a butter zone that ccp want to be in where players both buy and use plex. High prices are bad news for that.

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  13. Just a thought...the Goon FW exploit was exposed around the end of June. Assuming a whole bunch of people created Buddy Alts (51 days of game time) in the months that followed, when would they need to use isk to keep those accounts subbed? And how fast would all these alts deplete whatever existing stockpile of PLEX that existed?

    Looking at the price history, I see a small uptick on 8/17 (roughly 51 days after the Goon exploit is revealed) and large price hikes again on 9/12, 9/25 and 10/10.

    IK

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  14. Just a little thing:

    There is no such thing like a "authorized PLEX reseller".
    As PLEX are basically ingame-items, every purchase of one from somebody other than CCP is an EULA breach. There is however no problem with buying GTC (they are no ingame items, and there are plenty of authorized resellers) and turning them into PLEX.
    It seems unimprotant, but CCP could ban your account for a purchased PLEX (they probable wont, but still).

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  15. Fade ToBlack has the right of it: PLEX has to be worth enough to create, and affordable enough to sell. If the price is going up, that means that people creating PLEX with cash are getting more value, and there are enough people comfortable with buying PLEX at an increasingly high price. CCP makes money off the volume of PLEX created; after a point, lower prices indicated reduced demand for PLEX from people buying with ISK. Up to a point, higher prices indicate a larger potential market for created ISK, and there's no reason why CCP wouldn't like that.

    My post yesterday was concerned with what could be driving up the desirability of buying PLEX with ISK, and therefore the ISK price of PLEX. The tournament is one possible answer. If CCP is conservative about releasing PLEX in game--and they should be, because there are individuals in EVE who have enough stock of PLEX to manipulate the market as it is--then they may be pleased with the sustained rate of PLEX creation, irrespective of its in-game price.

    Besides, if the tournament is the cause, then the spike is purely local, and there's no point in taking measures that may devalue PLEX in the long term, thereby damping the desirability of created PLEX, in order to curb a local spike in price.

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  16. Paying with credit card resolves in 1-5 dollars less for CCP and just so we are clear that's called potential revenue. In no way does this reduce CCP s actual revenues less we know for sure that it costs more to create a plex than what they sell it for. So yeah the words lose money should not be applied in this situatuion unless you know something we don't . Reduced revenue is the correct term, losing money just confuses people.

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  17. From my point of view, if PLEX prices get any higher, I would be much more inclined to purchase GTCs for ISK rather than waste time with ratting or mining. I'm probably in the minority here, but there are two sides to the coin. Your point of view is only from the side of people who use PLEX (The Buy side), and not on the side of people who create them with real dollars (The sell side). The bubble will burst when more people reach this point.

    Also, the higher ISK price for PLEX necessarily indiciates a state where demand for PLEX is greater than supply. I don't think the problem is plex subscribers not buying PLEX, I think the problem is PLEX creaters are not selling them.

    ReplyDelete