The Problem With RCE Business Model

Discussion in 'General Entropia Universe Discussion' started by aridash, Feb 1, 2011.

  1. aridash

    aridash large throbbing member

    or, Why RCE is a Fail.

    " soon as a competitor RCE comes along, MA will be finished."

    A popular claim, and not without foundation. However, why aren't there any competitors? Second Life isnt really the same, there's no game, its aims are about customisatising a virtual world (though it probably has a more real economy than EU). Blue Mars is 3D facebook. Afterworld, still born. what else?

    So where is the competition hiding? the MMO scene is awash with subscription games, clearly thats a strong business model. The scene really doesnt like the idea of buying game currency, they see it as cheating, the farmers a drain on resources. Though others are happy to buy the game gold, so its obviously not a universal objection.

    Ii've been toying with an idea and doing market research into browser based games, facebook games. These draw revenue from people paying for game gold (or items, XP, levels, whatever), and the companies that created them are worth hundreds of millions for small capital investment. Clearly people do accept the idea of paying for game gold.

    So why isn't there a RCE based browser game? is it because its simply a poor business model? Having to keep and return to customers their cash on demand is an unusual strategy. The ability to withdraw is really the only unique and defining feature of a RCE. MA takes millions of $, but has to payback millions of $. BrowserGame Co. takes millions of $... thats it, no pay back. Same with the tried and tested subscription model.

    I'm left with this conclusion: from a business perspective, any game concept will always be better if it is subscription or gold buying, then it would be if it is RCE.

    Your opinions and contradictions are welcome. :beerchug:
  2. TimUnleashed

    TimUnleashed Southern Fortress Engineering

    Hello aridash :)

    I'd like to mildly contradict the quote you gave: "" soon as a competitor RCE comes along, MA will be finished."

    I for one, upon being presented with another RCE game, would not simply up and leave Entropia. I am invested in it, and so the work needed to get me to invest myself into a separate place, would be quite great, not least because it would probably involve firstly DE-vesting myself from Entropia. Depending on how many players would fall into the same boat as me, MA would perhaps not be "finished".

    As for the conclusion you're left with: as a "game concept" you may well be right. I would contest, however, that as a business model, and therefore as a game that's going to be around for a long time, the RCE seems to be pretty hard to beat. Perhaps that's why there are no surviving competitors. Perhaps it's also what gives us comfort depositing.

    Just my thoughts. Love to see what others think here too.
  3. My guess is just about... the opposite. I think that we will see plenty of games with a real cash economy in the near future. However it will not be quite like Entropia... more like the Livegamer servers of EQ2 or Vanguard. So the developers can not be held responsible for paying anything (this is what will kill MA/EU some time in the future) but instead players trade stuff between themselves by spending and earning real money.
    Right now this is happening all the time in every MMO out there but it is ofc illegal and there is a risk involved of getting banned.
    I say that's what's going to change!
  4. aridash

    aridash large throbbing member

    im not really supporting or questioning the claim, i have no doubt many would stay and many would continue to join, its just a often read refrain.

    there are no competitors. the 3 projects mentioned are the nearest and none are really either RCE (can't withdraw) or games. im really not knocking MA or the game, its a niche and it seems relativly stable (despite many problems), im trying to explore why there havent been other similar games.

    i think i've seen this said for 5 years, still no competitors for RCE model. why?!? why havent sony, Ncsoft, blizzard, EA, etc implemented an RCE just as an experiment? what is about to change in the world of existing MMOs to make trading legal or indeed supported directly?

    I'm wanting to be shown otherwise, i want to proven wrong and have a good reason for RCE. if one has an idea for a game, is it worth the trouble of trying to balance the real cash element and back the commitment to make withdrawal, or is it simpler to just go down the pay for game gold route?
  5. AxeMurderer

    AxeMurderer Master Of Entropia

    Well we have to say that this is YOUR opinion.

    Is it realy a fail?!
    I believe MA are making prety good money from it.
    Where is the fail?! I don't see it.
    Was Facebook a fail few years ago? Was Google fail when it started? sure
    Just sit down for a minute ant think how complex this universe is and how hard it is to make it.
    Sure there are hundreds of bugs and missing features, but this is the first game of this type.
    I have to say they are doing prety well.
    And if you can imagine what the game will look with 10-100 times faster internet and 10-100 times faster PCs.
    Can you imagine it with kinetic sensors or 3D or CryEngine 10?!

  6. Thorn

    Thorn Proud CND Baby

    From my point of view EU is real cash but NOT a real economy. Therein lies the problem. And not to say the world economies are not manipulated as well but there are far more people participating in it that allows it to flourish. The economy in EU is manufactured and controlled. In order to have a more realistic functioning economy the game needs way more people than it has to create robust commerce between players.

    Face it for desirable items for instance there are only handfuls of players that can manufacture stuff at a reasonable cost let alone having the bp`s needed etc. So the markets are very limited. The competition is almost non existent and the value perceived for others to get into these markets is a huge barrier. Five years of playing and I still can`t position myself to craft anything that has value without risking losing everything in it`s pursuit. As such it keeps me playing the game part but not really getting involved in the economy and I`m sure it`s the same for many other players.

    When another company can create a game that has the fun factor of EU and a more realistic economy that allows participants to stand a better chance of carving out a niche then EU will see real competition. I think their focus is too much on taking in millions in revenue than it is engaging players enough to create real long term residents in it`s universe.
  7. Facebook and Google are examples of exactly what Ari is saying, I think.

    Both Google and Facebook have been imitated by numerous others (though in the case of Google it entered an existing market - they weren't totally innovative, they just did it better than everyone else).

    See how many websites you can find that use URLs like Fastest Growing Social Network Site (Powered by phpFoX),, bookarmy, created after the innovation of social networking sites. I haven't checked but I bet all of those URLs are real :)

    (EDIT: Given that the forum has converted my URLs, I guess they are)

    Now see if you can do that for EU (preferably without downloading a keylogger :D)

    Perhaps it's the level of complexity that is the key factor, which may be the strength of the planet partner model. Potential competitors may elect to launch an EU planet rather than a new platform.
  8. aridash

    aridash large throbbing member

    indeed, i've long held this view. except the controlled nature isnt necessarily the issue, but that there is no underlying economic activity, no "labour" upon which to build value and seed the mechanisms of an economy, no form of (widely accessible) interest bearing investment, no way of improving an investment. some of the ideas i have would go some way to addressing these points... but thats for another discussion :smile:

    exactly. in fact Google itself is an imitator and Facebook hardly original, re-treading and merging other sites into a seemless whole (Geocities and Yahoo groups, Classmates/Friends Reunited were around in the 90's). MA is not a new-born startup itself, its been around for 8+ odd years (pre-dating Facebook!), and while it has done very well financially upto recently, no one has seriously tried to emulate it.
  9. Thorn

    Thorn Proud CND Baby

    Very true`s the foundation of the economy that is key and allows wide scale participation. That also takes a lot of people to make it work from the base of the supply chains to end consumers. And it should be a recurring cycle. Say from hunter and miner to crafter back to hunter and miner and so on. But with lack of people and high costs it stunts growth. yes a whole other conversation! hehe
  10. this kind of system did not even exist 5 years ago. the developers do no balancing for this kind of real cash element. supply and demand do that. The MMOs which use this system and will be using the system still have the subscription based payment any other MMO has. They just have the additional option to lure players in by making them try to earn real money at whatever rate.
    did you even see those sites yet? or do you chose to ignore them? if so why?

    OH and also get your facts right... the vanguard marketplace was indeed run by SONY some time ago. However they didn't do well with the management so that was moved to livegamer aswell.
  11. aridash

    aridash large throbbing member

    im not sure what system you are refering to that didn't exist, certainly Project Entropia was around then and a good few years old. As were forums (EF and EP), where for as long i remember people have been saying that a competitor was on the horizon.

    thanks for drawing my attention to livegamer. i do vaguely recall Sony trying to make a change on this front (i wasnt much interested in MMOs before Entropia). but as far as i can see Livegamer is a simply a platform to permit semi-official trading of characters and gold. it is not creating revenue for the game developer, not part of their business model, which is what im exploring. it certainly doesnt make a game an RCE, all the client games i recognise or (breifly) checked are using either subscriptions or gold buying for revenue.

    it is however a clear recognition of the desire people have to trade gold and avatars, is there any further traction towards RCE though?
  12. The systems I meant was the livegamer and sony marketplace. They are as official as you can get. They are not more or less official than Entropia RCE.
    The developers get revenue from subscription... the more players paying that the better it is for them. I am certain many ppl got lured onto this servers by the RCE system.
    However from a future developers POV it makes sense to offer some servers which have the RCE element turned on and others which have it turned off since some players hate the idea of gold selling in general.
    That is kinda a system which beats the illegal gold sellers. As a dev you can reach a wider audience and make them happy that way since ofc it won't make much sense for illegal gold sellers to farm on your non RCE servers when noone there actualy wants that element.

    EDIT: real cash economy means to me that the ingame currency can be officialy paid out into real cash at a certain rate. I think the rates on those EQ2 servers never moved much in the last months... but it's not like I am following it closely... I never subscribed to that game since I hate that it has voiceover for the first few quests and then just stops with that. -.-
    Even though full voiceover was promised at the time and still is in wikipedia etc...
  13. aridash

    aridash large throbbing member

    well i would have to beg to differ. Livegamer is not "as official as you can get", that would be where the game company actually support it on their own systems. As MA do. Does a market place for trading gold/items/avatars drive subscriptions? i couldnt say for sure, though its a added feature rather than a core part of the business.

    I dont see that the rate itself is important (real currencies value floats) but the method of input and output to the system that defines RCE. MA formally controls both sides. a subscription game, even with legal market places only permit the selling, with no real value is ever put directly into the game as the subs are fixed.

    this raises an interesting point though... (bear with as i ramble on here) what does this mean for the nature of the internal game economy - would this be better? The RCE of MA is a very poor emulation of an economy, its a mere market imo (for reason highlighted above), and only the cash is real. would it make the the economy more "real" if we accept a model with no direct input but facilitating withdrawals? People would effectivly work in game to earn their gold and take it out? balancing might be a nightmare i fear, would need strict limits on what amounts loot to ensure never paying more than received in subs. i think i have a hybrid model in mind... but...

    but then, to what purpose? back to the original conclusion, why should i want a business model where i pay people back? if they want to trade on permitted market places outside the game, let them. thats very differnet to holding and returning my booked revenue, which i just cant find a strong commercial reason to do.

    to elaborate and clarify that last point, consider i have annual sales $10m, through subs or gold purchase (for this consider MA to do the latter). if there is another revenue stream i would be very interested to hear of it. I have costs of $5m, so $5m is left as operating profit (hey, i run a tight ship ;) ). but with an RCE where i facilitate withdrawls, i have to hold that profit as a liability, or worse actually pay it back, say $2.5m. so Subs/1-way-gold- purchase im $5m up at year end, with RCE im only $2.5m up and will find i have a $2.5 liability... no, i have upto $7.5m liability, reduced only by my carefull game design/balance. (which i want to stay away from here)
  14. I certainly agree with the first part of what you wrote and ofc I can't tell for sure if such a marketplace increases subscriptions... but I do believe it will if it is done properly and ofc we are just at a VERY early stage there.

    but about the second part I would say that this actualy seconds that those marketplaces not run by the game dev company are a good idea because it is better to transfer that part to ppl who know how to do this. I think the closing of sony shop and transfer over to livegamer shows that.
    Game Designers are not economists after all... which makes me very exited about the Arkadia development since their boss is one.

    Well at the end of the day there is still waaaay too little going on on the market with official real cash economies to make any conclusions.
  15. Hi,

    I guess this is the point. As long as it's possible to squeeze enough money from the game, why should a game company take this risk? A few grave mistakes in a row, a "withdrawal run" then, would MA survive such?

    As we all know MA has it's EULAs, ToUs, agreements and policies that effectively deny the RCE idea - the Real Cash we have in game is NOT safe at all, even if it's all as PED on our PED card. MA promises that we'd be able to withdraw, but we have no title at all. We cannot just get an executory title at the court that forces MA to pay back at least our TT value, MA has created a bazillion of holes to hide in the above mentioned walls of text. But this is off-topic.

    I think the reason that there's nothing comparable yet is just that nobody sees a reason to create such. It might be seen as an additional risk, that isn't justified by an improved prospect of profit.

    I'm playing another game that has nearly an RCE. It's a very small project, a few hundreds participants, with a mix of subscription (very cheap, 5 EUR/month) and buying of in game currency, even kind of an in game item-shop. Trading of virtual property & items/ accounts for real cash is explicitly allowed, just "on your own risk". Actually trades are done in the few 100 EUR region.
    Since anything in this game is player made (really, everything!) there's no "rare drops" nor any sort of "gambling". If you chop a tree, you know what you'll get. If you kill a critter, you know what you'll get. You'll get resources used to craft something other.
    Anything has a value resulting from demand and supply, and anything can be traded for in game currency, or real cash.

    Isn't this a by far smarter business model? Effectively this is very similar to EU - you can earn the money for your subscription with playing the game, you can even draw a small profit if you're smart enough. You can "invest" into this game, and as long as you manage to sell your stuff for real money, this is a "withdrawal" then. But you're not at the mercy of a game provider somewhere in the tundra, you get your cash directly from your co-players.

    And the game company has a steady, reliable income, and little risk. Wouldn't they be stupid to adapt MA's initial business model?

    So, why should Blizzard, EA, OneTooFree AB accept such a risk? Would they profit from it enough to justify it? Guess the non-existence of other games using this models is the answer.

    A few unsorted ideas about this topic:

    • Many people that I have shown PE (haven't propagated anymore since long) have expressed a major distaste of this scheme. They regarded it as a kind of scam after even a short introduction. The MA RCE model seems to repel ways more people than it attracts.
    • The basic idea behind the MA system is the gambling - killing a mob in the (maybe futile?) hope that this one will make you wealthy. You get showered with system messages telling who has won how much cash, over and over. (For sure this applies to mining & crafting, too)
      This heavy reliance of the gambling aspect has been tested by the Swedish authorities, but no sufficient answer was given - "we checked, found no hard prove, so 'innocent until proven guilty'.

      There's a pending danger that another authority comes to another conclusion. Sword of Damocles, anybody?
      Not exactly what big game publisher love, right?
    • Many game companies have a strong standing against the "gold trade", and fear them dreaded "Chinese gold farmers" more then anything else. Starting such themselves might be just culturally impossible for them?
      Or they'd make themselves incredible starting to do something very similar to what they fought for this long?
    I'm not sure how successful/ important all this RCE stuff really is. In didn't join, and stay in PE/ EU this long because I'd maybe might get some EUR anytime - I was in because it was a great game, and offered enough fun for the money I paid for. Once.

    I cannot help but to see this RCE thing as just a quite un-important feature of games, a feature that can be hurting more then being beneficial. The only way this feature really works is when the stakes are high enough to attract & exploit the gambling addicts. And doing so is a slippery slope, not every game company would be happy to act this way. IMHO.

    Isn't the success of a game, and the profit made with, by far more determined by the fun, challenge and entertainment the participants are getting for their money, in what a form whatever they are paying?

    Have fun!
  16. The business model in itself is not flawed. Who would want to allow its players to take some of the money they put in back? A casino... and I don't think anyone is questioning the profitability of the casino business model.

    So its not at all far fetched if they design a system that money taken out cannot be greater than money put in, not for one player but for the whole player-base. Of course, as stated by others before me in this thread for this model to succeed the number of players has to keep growing. Stagnation of the kind we seem to be having now does not allow the economy to really work properly. This a very different model from subscription games and aims at a different audience I believe, but it still has a market and EU is a proof of that.

    I think this model has vast potential, and even if MA fail to utilize it I am sure we will see more RCE games in the future.
  17. aridash

    aridash large throbbing member

    I've often wondered if the reason the authorities dont press the matter is because of MA is a small fringe game company. I behemoth like EA or Blizzard would be more closly scrutanised, and frnkly i dont think they'd get away with the gambling aspect. The deep resentment of "gold farming" makes the model completly alien to alot of the MMO market and the companies that operate those mainstream games.

    Though i have to say i dont think RCE is unimportant. its fundemental. the key draws of EU are:

    Futuristic setting with fricking lasers.
    Sandbox approach.

    Take away the RCE and you have something that any other game company could develop by simply re-skinning another game in their catalogue (Sandbox is just providing less content). another question i ask myself is why there aren't more Sci-fi based games, my primary initial draw to EU. alot of people are drawn to or retained by the RCE, i would say easily the majority. not necessarily the gamble, often just that money put in can be withdrawn.

    whats the other game? Afterworld? (you can name games here...) last i checked, you couldnt withdraw which for means it cannot be RCE. many games adopt a game currency and item shop model, that seems to work very well, so it'll probably work out for them especially if they have a low cost base.

    the act of staking money for each bet is not the same as depositing money. the exchange of money for chips is nothing to do with the business model of casinos, its a mechanism for convenience and control. the process of gambling could work perfectly well without them.
  18. Hi,

    Maybe because of this we don't see much advertisement for EU? To stay "below the radar"?
    Btw, when speaking of advertisement, you've seen that MA's partner for the in game ads, Massive Inc., has been closed?

    Well, depends on the view.

    For some people the possibility to get a huge HoF, and then to be able to withdraw a serious sum of money, will be a fundamental feature of EU. This is the gambling aspect.

    Other people might have realized that the chances to actually achieve this are so tiny, and might more enjoy the possibility to "buy as much game as suitable atm". One month money might be low, so you don't deposit, you live from the storage. Next month might be better (small deposit), and for XMas you might make yourself a "big deposit present"?
    On the other hand there's people that really hate this - they want to have a clear line of what they'd have to spent for their fun.

    But don't underestimate the number of people that, like me, just don't care about this RCE thingie. I'd bet that the overwhelming majority of EU participants never will actually withdraw anything - they are in EU to play the game, plain and simply. And when they are tired of this game, their virtual belongings are this small that it just wouldn't be worth the hassle to start the long winded procedure of withdrawing. Maybe we'd think of doing so, to justify the amounts of money we spent to ourselves, but how much will actually do it finally?

    "SciFi setting with friggin lasers", and "sandbox" are the keywords here, IMHO. Both are not this wide spread.

    SciFi just seems to draw less people but the common Tolkien copy. But such games exist, and I think we can name EVE as an example of a quite successful one. EU, these days, seems to row back from it's origins, with the current Barbie & Ken like avatar style, and with the implementation of quite "todays style" vehicles - Hummers, sure, and 80's style beach buggies, you bet. Some people, including me, don't really appreciate this, and quite some might regard it as a bad move.

    Sandbox, well - this seems to be something that many people are loving. While it has a certain charm to be led through the game with missions, quests, clear routes you just need to follow to improve, a sandbox has a ways better chance to bind a participant for a really long time.
    The common WoW maniac's fun in game comes in waves, to use this as an example. When another content update arrives, VU or expansion, the game is filled with people working hard to "beat it". As soon as they have "consumed" the new content, or "beaten it", their enthusiasm slowly goes to zero, the game goes in kind of "waiting state" - until the next content arrives.
    MA has introduced such functionality meanwhile. The "sandboxing" wasn't ever this prominent in EU, just due to the very limited possibilities of interacting with the game world. To be honest, I'd say that EU has abolished the sandbox approach meanwhile. Some people, including me, don't really appreciate this, and quite some might regard it as a bad move.

    Properly done sandboxing, IMHO, is to provide no content at all. It's providing a virtual world where the participants will, can, and will love to provide the content, and will do it happily, and in many cases ways better then any game provider could ever do. But such "sandboxing" needs certain requirements to work - no chance for success in a quite restricted environment like EU, where there's just a few different types of slot machines. EU these days has still some features of a sandbox game left, but it goes another way, for sure. Some people, including me, don't really appreciate this, and quite some might regard it as a bad move.

    My link didn't work? It's called Wurm. Find more about it here.

    Tried Afterworld some years ago, but it didn't catch me. Maybe I should give it another try now.

    Back to Wurm.

    This is a real sandbox. There's a quite poor gfx, but a most fine-tuned set of in game activities. There's no "special loot" as we know from EU, there's no "surprise drop of a limited BP", whatever you do has a foreseeable result, you just have a RNG to overcome.

    Anything, everything in this game is player made. There's a small set of "newbie tools" that you receive for completing the tutorial, anything else is crafted. You can venture out into a most hostile wilderness, you'll not want to fight anything in your first days because of your weakness, but you can terraform the area. You can make a nice, safe, place out of a most steep, hostile mountain side, you can tame tame wild animals to drag your carts, or to fight for you. You can even dig huge tunnels, connecting water areas, making it possible to travel with boats there.

    This game has the best game mechanics I ever found anywhere. Sure, it's a Java App, and the gfx are poor. On the other hand, no Giga-Byte download necessary. A new VU is usually done before you actually take notice.

    A real sandbox. You can create any tools you need (provided you have the skill), you can change the world at your desire, and you'd just have to to find a common sense with your neighbors doing so.

    No gambling, but kind of an RCE anyway - in game currency can be bought. Selling of in game property, even of accounts isn't prohibited. You just are remembered that it's on your own risk, and that the game company wouldn't come to help in case of a mistake.

    The in game currency is iron - copper - silver - gold coins, each one worth 100 of the previous. You can buy silver coin in the official shop, and you can sell it for real cash. The game company explicitly doesn't prohibit, they just say "at your own risk. Be careful!"

    I have to admit that such suits me well. I have to admit that I spent ways more money there, meanwhile, that I spent for the EU gambling.

    Wurm, meanwhile, gives me ways more fun, recreation and entertainment per EUR. And I vote with my purse.

    Have a good time!
  19. From the looks of it Wurm is a far cry from an RCE. Plus, it is subscription based, meaning that a lot of the money you put in goes NOWHERE. And yes, you might be able to sell things to other players for real money but there is no way to guarantee a transaction. Indeed, it is "at your own risk" - as far as that goes, you may as well be selling gold/accounts in WoW for real money as that is also "at your own risk", just a different risk.
  20. You can look at this in the same way. Its not the same model as subscription games, but that does not make it a bad model. EU really doesn't have any advantage in graphics, game-play, storyline, etc' over any of the popular subscription games. The RCE is what attracts the vast majority of active participants, so obviously there is a market for this kind of business model.

    You are basically saying that subscription games and games that you need to pay for in-game credits or advantages have a better business model. OK, that may be true but it does not mean that the RCE is a bad business model. If there is a market for it and it generates profit then it is a good business model. EU sells a different product, no point in comparing it to games who sell something totally different.
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