RE:krono inflation

Discussion in 'General Gameplay Discussion' started by steo, Sep 12, 2013.

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  1. Ahupu Well-Known Member

    His point is that as long as speculator's are willing to buy the Krono up by the truckload, the people who are willing to pay RL cash for them will continue to buy them. The end result will be people not buying kronos from the speculators if they think the price point is too high and perhaps fewer players (though as has been pointed out there is too much available in FTP that those saying they will quit if they cannot afford a krono for plat just sounds petulant and silly), but the profits for Sony will be the same or greater as long as the speculators' plat supply lasts. In other words it doesn't matter who buys the krono from the initial purchaser be it you or a Chinese gold farmer at least not to the people spending real money.

    And since anyone but Sony has a finite supply of plat in the game eventually the speculators will run out of money and those people who actually buy the krono may set theirs at the same price initially, see they aren't selling and set their prices at what others may consider a reasonable price the system IS autocorrecting, the only variable there is how many people will actually decide to quit or perhaps more properly take a hiatus until that occurs.

    Though as long as people are willing to buy krono Sony could task an employee with going in game and buying all the krono on the broker regardless of the cost (since their plat supply IS infinite) and the initial purchasers might then spend even more real money not less with no need for Sony to worry a bit about those pesky FTP players. Also a whole lot easier that recoding a krono
  2. Detor Active Member

    Actually, the HIGHER the price of Kronos the more Kronos people will buy to sell for pp. If you could pay $18 for 1 Krono and sell it for 500pp you might think 'Nah, not worth it.' Price of Kronos goes up to 1,000pp and you think 'Maybe.' Price goes to 2,000pp and you just might think 'I'm buying 5 to sell on the broker!' You're paying $18 no matter what (or a bit under that if you buy 5/10/etc at the same time), so the more pp you get the more likely you are to buy more Kronos from SOE.

    When a Krono sells on the broker SOE makes nothing. They only make money when somebody buys a Krono from them - for the sole purpose of selling to get pp. If SOE wanted to maximize the amount of Kronos sold they would want the price higher and higher because that's how you incentivize people to buy more of them from SOE. In fact do you remember when they were introduced and Smokejumper said something along the lines of 'We aren't going to tell players what to sell them at, but.....we suggest pricing them high!'

    If demand drops off because of a higher price guess what happens? The price drops. Even people buying to resell have to drop their price if they just aren't selling. That's not what's happened though is it? What did happen is: The price has gone up, SOE is probably selling more Kronos to people looking to sell them for pp than ever before because the extra incentive is there, and people are still buying them (or else they'd be piling up on the broker and causing the price to drop).
    Regolas likes this.
  3. Wingrider01 Well-Known Member

    Not everyone purchases Krono off the broker to pay for a subscription
  4. Shadrac Well-Known Member

    There is a certain level where you would think that the speculators would get saturated and have to lower prices. But I don't know how much plat those people have though. I did tradeskills in EQ1 and made hundreds of thousands before I quit. Several people with that kind of money could dominate and warp this market for a long time.

    That too would only last so long. I don't think they'd do that and risk pissing everyone off.
  5. Shadrac Well-Known Member

    That's true, but it's only half the story. The in game buyers have the opposite reaction to higher priced Kronos.

    There is the other half of the story!

    Well, as long as people aren't converting their gains thru gold selling website, it'll work itself out. I just don't think SOE can maximize profits in a market that's being manipulated this way. I was happy to sell my first Krono for 600p. And I know that demand would be higher at that price point than at the 1200p that I sold one for later. The question is, would sellers be happy getting 600p for an $18 investment like I was? If the answer is yes, then SOE would sell a lot more of them at that lower (un-speculative) price point.
  6. Nocturnus Member

    Because, again, it's not about them selling more Krono. People who are buying Krono from them are getting their platinum. It's selling. It's just going to someone who is then reselling it. So the people who sold it? Happy people. Platinum earned.

    So where's the continuing issue, and the continued source of the argument. You, being unable to buy Krono for the price you want.

    Tough for you. Can't afford it? There's something called a Subscription that you can buy.
  7. Nightshade New Member

    *hides her super secret Gnomish Krono counterfeiting machine*

    Nothing to see here...
    Griffon Lady and Shadrac like this.
  8. Shadrac Well-Known Member

    You have never addressed my argument about how SOE doesn't just want to sell some Krono, they want to maximize profits. If you don't care to address that argument, that's fine, but your tautology doesn't do it for me. You're basically arguing that the way it's currently setup is the way it should be because that's the way it is setup.

    I am a Krono seller and not a buyer.

    Anyway, thanks for playing. I hope you had a good time. Here are some lovely parting gifts.
  9. Shadrac Well-Known Member

  10. Ahupu Well-Known Member

    My point (though I do not think Sony actually would do as I suggested) was that Sony does not care how many people use Krono they care how many people buy them. And since platinum costs them nothing and they could have an intern log on and buy krono if the market goes too stupid. They could simply maximize their profits that way without having to code a single solitary thing and to heck with the FTP players who want to buy them on the cheap. No outrage would occur because those people who were selling them would have platinum and no one would know that they were the ones creating an artificial demand.
  11. Ynnek Well-Known Member

    Ah, it's a wacky theory, but at least you explained it well enough to be debated. Your conspiracy theory is that Sony could pop into the game, manufacture plat, buy the cheap krono, drive the market price up, and poof the krono, never to be seen again. Thus keeping in-game krono prices high, thus making them more valuable to people willing to pay real $$ for krono, thus driving up real $$ revenue for kronos. In doing so, they would also be introducing manufactured plat into the market, devaluing the plat, causing inflation, but keeping the value of Krono high.

    So as a real world parallel, printing money by the sheet to buy back variable rate government bonds, that people buy from the government, to keep their value high.

    (Now I have to go off and study the effect of such things in the real world)

    BUT, it's all moot, completely unnecessary. SoE doesn't have to do any of that. Players are doing an excellent job of doing it for them indirectly. (We don't manufacture plat, but we do collect large amounts of it in one place).

    Sometimes alone. Sometimes with friends. Sometimes with alts. Sometimes maliciously. Sometimes for profit. Sometimes just to have a stock of Krono on them just in case something happens, etc.... Someone's always going to be there to scoop up the undervalued Krono...

    (ie the reason there are no kronos on my server below 800p, isn't going to be because SoE is poofing them. It's because I'm pocketing them (they're not reentering the market)... And yes, others are inflating them...)

    Edit: Unless - the rate of entry dramatically increases, putting significant downward pressure on prices. Maybe when the expansion hits and there's an uptick in people playing? Maybe?
  12. Shadrac Well-Known Member

    When I'm talking about supply and demand and maximizing profits, I'm just stating facts about basic economic principles. Of course, this isn't a typical economy because the goods are virtual, there is no cost to produce more, the products are sold thru middlemen (who buy from SOE), and there are no substitutes or competition for the goods, but basic economic principles still unduly the market.

    Take a hypothetical scenario where there are only three possible prices for Krono.

    If the price of Krono was at 500p for a year, all other things being equal, SOE would sell a certain number of them based on the number of sellers willing to pay $18 for 500p and the number of buyers willing to pay 500p for a Krono.

    If the price of Krono was at 1000p for a year, all other things being equal, SOE would sell a certain number of them based on the number of sellers willing to pay $18 for 1000p and the number of buyers willing to pay 1000p for a Krono.

    If the price of Krono was at 1500p for a year, all other things being equal, SOE would sell a certain number of them based on the number of sellers willing to pay $18 for 1500p and the number of buyers willing to pay 1500p for a Krono.

    The number of Krono SOE would sell in each of these three scenarios would be different, and SOE would maximize profits in the scenario where the highest number of Krono is sold. Lets say that SOE sold 10,000 Krono when they were priced at 500p, 15,000 Krono when they were priced at 1,000p, and 9,000 Krono when they were priced at 1,500p. From this we conclude that profits were maximized when Krono sold for 1,000p.

    Did that make any sense?
  13. Airos Active Member

    That's not 100% true. A Station Cash card from Walmart can be activated for 2000 SC or 1 month of Gold membership and 500 SC, and I see offers to buy SC cards for coin in 1-9 chat all the on a fairly regular basis. The only difference is there's no speculator market for SC cards.

    That being said, there's always going to be a speculator market in online games. It just happens in this particular instance those speculators are making money for SOE instead of 3rd party sites and farmers.
  14. Airos Active Member

    I should correct myself here; there will always be a market in online games where there is trading, typically RPGs. Obviously there's not going to be a speculator market in Halo.
  15. Rotherian Well-Known Member

    But there (the underlined portion) is where your argument breaks down.

    Since listing things on the broker is essentially a race to the bottom, the only way that someone can keep a price inflated for a prolonged period of time is to regularly purchase any of them under the target price point (and you and I both know that there are going to be plenty of people ready and willing to undercut at the drop of a hat). This means that someone is buying them.

    A person selling a Krono doesn't generally care if the person controlling the character that purchased it is Peter the Plumber from Peoria or Chaoxiang the Plat Farmer from Beijing*. They just care that they received the asking price for their Krono. Since they received a sizable amount of platinum for it, there is a very good chance that they will purchase another Krono in the future. So if the in game price is 1K, 2K, 5K, or 10K, and staying reasonably close to that figure for long periods of time, then there is at least one buyer out there for anyone that lists their Krono for less than that amount.

    If we assume that it is just a regular player that is speculating, one of two things will occur: the speculator will continue to buy until they reach the realization that there are more people willing to supply the Krono than the speculator has funds or the speculator will run out of platinum. If the speculator reaches that realization before running out of platinum, he or she stops purchasing Krono and the prices begin to fall until they reach a point where other players are willing to purchase them from the broker again. If the speculator runs out of disposable platinum, then the prices will begin to fall until they reach a point where people are willing to purchase them from the broker again.

    However, if we assume,hypothetically, that it is the plat farmers that are buying them up and inflating the prices, they (the prices) are only going to rise to a certain point. That point will be where there are still players purchasing them - because the hypothetical plat farmers would need to recoup their expenditures as well as gain plat for their hypothetical non-condoned methods of plat selling.

    Note that in all three cases, the market corrects. It either causes the price to fall to a point** where people are buying them, or it limits the rise beyond a certain point**. Also in all three cases, intervention from an external source (SOE) is not necessary.

    It may be true that many people can't afford to use the Krono to pay for their subscription. While that kinda stinks for those people, the fewer people that actually redeem the purchased Krono, the better it is for SOE. The reason I state this is because the development costs have already been calculated (if not already paid), so it doesn't cost anything additional for them to "produce" one Krono or 200 Krono. The additional costs to SOE begin when the Krono is redeemed. As long as it remains un-redeemed, they don't have to exchange a month's worth of gold membership for it. So the best case scenario***, for SOE, is for large amounts of Krono to be purchased, but never redeemed.

    * Those names and occupations were fabricated. Although there is a non-zero probability that someone in Peoria is both a plumber and named Peter, as well as a non-zero probability that someone in the city of Beijing is a plat farmer and also happens to be named Chaoxiang, I have no idea if either of those descriptions fit any players of EQ2. If they do, it is purely coincidental.
    ** That point is known as the Equilibrium Point or Market Price.
    *** In the short-term. Of course, the shortness of that term partially depends upon the proportion of standard subscribers to Krono-subscribers. If the percentage of standard subscribers is greater, that term can be longer than if the percentage was less than that of Krono-subscribers.
  16. Tineren Active Member

    Where you are making your mistake is that there are two markets not one. The in-game market does not have a fixed price it has a variable price. That price is entirely based on what people are willing to pay (even if some of those people are speculators).
    The number of Krono Sony sells only depends on what that in-game price is. The higher the in-game price, the more Krono Sony will sell. What people are willing to pay was already taken into account to determine the broker prices.
    Earlier you said if the in game price was 100,000 platinum, no one would buy. But if no one was buying them then the price wouldn't be 100,000 platinum. The only way speculators can raise the price is by buying up the cheaper competitors. If they don't buy up people who undercut them, the price will fall.
  17. Ahupu Well-Known Member

    LOL Ynnek I am not a conspiracy theorist. My hypothetical was in response to the idea that krono speculators would impact Sony's bottom line and that it was necessary to recode the way kronos work to prevent that. Merely positing that it would be more cost effective to throw plat into the system and keep the people who actually buy the krono buying the krono than to divert dev time away from other things. I do not believe they would do this merely saying that they could. After all if the OP wants them to monkey with the economy in game why not go for the path of least resistance.
  18. Shadrac Well-Known Member

    In my hypothetical scenario it is 100% true.
  19. Airos Active Member

    SC cards don't exist in your hypothetical economy? No wonder SOE needs to fix the price of Krono which are being overpriced by a Chinese gold farming speculators market. :p

    On a more serious note, though, you really shouldn't be excluding real economic factors simply because they don't support your hypothesis. It kinda hurts your argument.

    My point, if it didn't come across, is that you, SOE or the President of the United States can not eliminate speculators in a trade market no matter how much price fixing is implimented. If SOE locked the price of Krono to 1000pp at all times, no matter what, then that sets the value of 1 month of Gold subscription at 1000pp. What, then, becomes the value of a Walmart SC card, which as I pointed out gives 1 month Gold Sub plus 500 SC? Obviously it's a greater value than 1000pp.

    So now, even though SOE has hypothetically fixed the price of trading coin for subscriptions, there's still a free market in which the price is set by supply and demand outside of their control. In this hypothetical situation, the only factors for determining price is how much plat someone feels 500 SC is worth on top of their 1000pp for a month of Gold subscription. If trading SC cards becomes a better deal than trading Krono it's going to result in less money for SOE overall, since there is greater than a $3 loss taking into account Walmart taking a cut, and the cost of printing and shipping the cards, which now means that price fixing has hurt their bottom line, not improved it.

    Even if that were somehow price fixed by SOE, then far more creative minds than mine would find something else to speculate on for trading, likely anything new in the upcoming Expansion. Collectibles, gear and crafting materials will all be highly sought after, hoarded, and in the end their prices will be determined by supply and demand, and the people without the time, resources or desire to grind for plat in-game will find something to sell for that plat, be it a Krono, an SC card, Powerleveling or Loot Rights.
  20. Shadrac Well-Known Member

    I said "Generally speaking, as the in game price falls, in game buyer interest (demand) is raised, but in game seller interest (supply) is depressed."

    I prefaced my post with "Generally speaking" so that we could depsense with all of the detailed vagaries of the market, and my example simply demonstrated the Law of Demand ( and the Law of Supply ( I am not debating basic economic principles. I am trying to lay the groundwork for the next idea.

    Then you went into detail about how the market would operate. I am not disputing that the distorted market would operate in some fashion, including that fashion, and SOE will make some profits. However, what leads you to believe that such a distorted market would lead to maximized profits for SOE? The laws of economics say that the market may reach equilibrium based on the actions of buyers and sellers. Speculators are parasites who distort their actions.

    In a market undistorted by speculators, there would be a positive pressure on buyers and a negative pressure on sellers. In a distorted market, the opposite is true. The answer to my question of which market would get closest to maximized profits for SOE depends on which group is the more elastic, buyer or sellers.
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