Sponsored By

World of Warcraft’s Ingenious Way of Selling In-Game Currency

We take a look at what WoW can teach us about monetizing in-game currency in a premium game.

Austin Shamp, Blogger

April 19, 2017

6 Min Read
Game Developer logo in a gray background | Game Developer

It’s no secret that Blizzard Activision have been making a killing off of World of Warcraft (WoW). Subscription numbers and expansion sales, however, aren’t the only factors affecting their revenue. In fact, Blizzard no longer discloses subscription numbers to shareholders.  They defend this choice by claiming that subscription numbers are no longer the key metric for determining growth and financial success.  Instead, Blizzard values their alternate revenue streams within WoW.


Enter, the WoW Token

Of course, players can purchase unique mounts, appearance kits, pets, and the like for real-world cash.  However, the most interesting revenue stream in the game is the recent addition of the WoW Token.  This game token can be purchased in-game for real money, specifically, 20 USD.  The WoW Token provides the player with 30 days of game time if redeemed.  Alternatively, the player may sell the WoW Token on the in-game auction house for gold (the in-game currency).  In a sense, this is Blizzard’s way of allowing players to purchase gold without directly injecting gold into the economy.

 

 
Combating Inflation

WoW’s auction house economy is a complex and fragile thing.  If Blizzard allowed players to simply purchase gold, it would have to created specifically for that player.  Obviously, this injection of gold to the in-game economy would cause some instability, and potentially a huge inflation problem.  Gold could become devalued, wrecking the in-game economy and turning around to bite Blizzard back.  Players would assign less real-world value to the inflated in-game gold. Boom, Blizzard’s nifty revenue stream doesn’t work anymore.  In fact, it could have a domino effect of disrupting the game experience for the typical player, potentially resulting in those players dropping their subscription.


 At a price of 20 USD for the WoW Token, the player would be paying at least 5 USD above the most expensive rate for 30 days of game time.  So, it’s very unlikely that the player spending cash for the WoW Token is looking for game time – they’re looking for gold.  Therefore, it’s fair to say that the sole purpose of the WoW Token is for the purchasing player to turn real-world money into in-game currency.  Additionally, players with excess gold can exchange this gold to other players for some “free” game time.


Blizzard’s Valuation of In-Game Currency

This is where it gets interesting, as Blizzard has put a 5 USD value on the gold involved in a WoW Token transaction.  At the most expensive rate, 30 days of game time is valued at 15 USD. The player that purchases the WoW Token with gold is expected to redeem the token for 30 days of game time – there goes the 15 USD value.  So, 5 USD of value is left over, held by the player that has received the gold for the WoW Token.  Therefore, whatever the WoW Token sells for in-game has been valued at 5 USD by Blizzard.  To recap, the WoW Token seller values the gold at 20 USD, the buyer values the gold at 15 USD, and Blizzard values the gold at 5 USD.


Here’s the catch, while WoW Tokens have a set cash price, their gold value fluctuates based on supply and demand in each respective realm.  For example, North American servers currently have a gold value of about 62,000 for each WoW Token. When a player with a WoW Token wants to place it on the auction house selling block, they are presented with a sale price and an estimated time of sale.  The selling player is guaranteed this amount of gold, no matter what the gold value is when the sale is finally completed.  So, say the value of a WoW Token is 62,000 gold now but it dips to 50,000 gold before the sale.  The seller is still guaranteed the 62,000 gold that was quoted when the listing was created.


Exchange Rates and Third Party Interference

Players looking to get gold from their WoW Tokens are facing an exchange rate of roughly 3,000 gold per 1 USD (based on 60K gold valuation of a 20 USD WoW Token).  This exchange rate is absolutely obliterated by third-party sellers, though.  For example, sites like G2G allow players to trade gold for real-world money at any rate.  It’s a marketplace of varying prices, not a fixed rate. Currently, players can purchase 200K gold for an average of 30 USD.  That’s a killer exchange rate of more than 6500 Gold per 1 USD.  So, Blizzard is still getting destroyed by gold farmers.  That being said, there is an inherent risk when using services like G2G.  While player accounts are likely safe from being hacked, both involved parties may be flagged by Blizzard and banned.  This means that Blizzard is betting hard on their anti-cheat system, as well as players’ skepticism, to make WoW Tokens a viable way for players to purchase gold.  It’s admirable that Blizzard is standing their ground instead of just undercutting the gold farmers on sites like G2G.  Before the WoW Token, gold farmers were just disrupting the game experience for the average player slightly.  Now, gold farmers are directly cutting into Blizzard’s revenue.


Not Flawless, But Still Ingenious

While the WoW Token system may not be flawless, it is certainly an interesting (and seemingly successful) revenue stream.  Of course, subscriptions, expansion sales, and other in-game purchases are still the meat of WoW’s revenue.  That being said, Blizzard has executed an ingenious plan to allow players to purchase gold without inflating the economy, while providing a sense of goodwill by allowing players to trade gold for game time.  While players certainly still use third party services like G2G, Blizzard has offered players a secure and simple way of purchasing gold.  At the very least, Blizzard has monetized an area that was once monopolized by third party sites.

Thanks for reading!  We're always up for discussion, so feel free to drop a comment below.  New blogs are posted every Tuesday (well, most Tuesdays) so be sure to stop by again next week.  Until then, you can follow us on http://facebook.com/battleaxeinteractive" data-reactid=".0.$SITE_ROOT.$desktop_siteRoot.$PAGES_CONTAINER.1.1.$SITE_PAGES.$c193z.1.$ppPrt7-4aw.0.0.$child.$0.1.$1.$5.$0.0.d.1.0" data-type="external" href="http://facebook.com/battleaxeinteractive"; target="_blank">Facebook and http://twitter.com/battleaxeint" data-reactid=".0.$SITE_ROOT.$desktop_siteRoot.$PAGES_CONTAINER.1.1.$SITE_PAGES.$c193z.1.$ppPrt7-4aw.0.0.$child.$0.1.$1.$5.$0.0.d.3.0" data-type="external" href="http://twitter.com/battleaxeint"; target="_blank">Twitter for more marketing and monetization tid-bits. Also, you can follow our blog natively on BattleAxeInteractive.com/blog.

Read more about:

Blogs
Daily news, dev blogs, and stories from Game Developer straight to your inbox

You May Also Like