Kickstarter, Cash Shops, and Ultimate Capitalism

The perfect capitalist scenario is full price discrimination. That is to say, the ability to charge each individual customer the maximum amount they are willing to pay (consumer surplus = $0). Under normal situations, this is exceedingly difficult in non-monopolistic markets. If my maximum for a game is $85 and yours is $250, the monopolist would have to have some way of preventing me – or, say, Gamestop – from (re)selling the game to you at a discount.

Enter F2P and cash shops.

Every customer pays the same entrance fee (be it literal F2P or some cover charge or $X+ for the “collector’s edition”), but now you have the ability to engage in some voluntary price discrimination. Want some costumes? $10. How about a shiny mount or horse armor? $25. Server transfers? Hats? Keys to unlock chests? Speed the game up? Unlock a dungeon? Cha-ching!

When Guild Wars 2 comes out, there will be some people out there that bought it for $60. Others will have bought it for $80. Still others will spend $150. And many more will spend $5, $10, $100 more over time via the cash shop. Nearly perfect voluntary price discrimination. Same game, same amount of development (those developers would have been creating said content regardless), different prices for different customers.

Enter Kickstarter.

A lot of bloggers have been covering Kickstarter here lately. Two of the “previewed” games caught my eye: The Dead Linger, and Faster Than Light (FTL). The latter game is a roguelike space exploration game that has successfully received 2,005% of its funding goal. After watching the video and reading about it, I am somewhat sad I missed the chance to “buy-in” with $10.

The Dead Linger is an opportunity to buy-in at $25 for a game that sounds like a cross between Left 4 Dead and Minecraft (25,000 km procedurally generated worlds, 16-person multiplayer, PvP modes if you want, etc). Then I looked at the $100 option, which included the game and goodies, plus your name or handle as part of a street sign or graffiti. “How cool would it be to see people posting their screenshots and then seeing ‘Azuriel was here’ in the background?'” I thought.

That’s when I remembered how cool $100 is, especially when compared to a game not even in playable alpha yet.

The interesting thing to me about Kickstarter in a cash shop world are the implications. In effect, it proves that there are people out there just looking for the opportunity to give their money away. If I was fanatically in love with Bioware and Mass Effect 3, how could I show my appreciation for what they do? Buy the Collector’s Edition? Buy the novels? In each case, what is taking place is a sale, a transaction, a transfer of goods for compensation. My “contribution” is not distinguishable as an act of charity or praise; Bioware simply gets the feedback that I deemed the product a good value for the money.

Kickstarter is different. Sure, a lot of people treat it as a extra-early preorder. But you can also contribute anonymously. If I sent Bioware a check for $1000 in a the mail, would they cash it? I have no idea. What Kickstarter has done is package up charity and enthusiasm into a “product” that can be sold.

Rationally, it is no different than sending a check in the mail, but it feels different. There is a meter that fills up, there are (limited!) time-sensitive bonuses, there is the satisfaction of needs going on (the game wouldn’t exist without this funding), there is a sensation of fellowship with other Kickstarters. In short, it is brilliant marketing. Utterly and completely brilliant.

As a skeptical consumer, however, I worry. The gamification of charity aside, I am concerned about how the industry marketeers must already be foaming at the mouth. How long is it until it is not just Day 1 DLC we see, but “Pay $100 for your name in graffiti on Station Omega?” It already appears as though pre-order “bonuses” (if you pay for it, it is not a bonus) in the form of DLC is here to stay. When is Kickstarter’s methodology entirely co-opted, and eventually devalued?

Oh, wait. Resident Evil 6’s Premium Edition, which includes a real-life replica of Leon’s leather jacket, costs over $1,000. The future is now.

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Posted on April 12, 2012, in Philosophy and tagged , , , , . Bookmark the permalink. 3 Comments.

  1. Reading this left me slightly confused. In England, capitalism is a word usually used as an insult by people who don’t like the system. People who do like the system use the terms “economics” or “business” or “the market” to say the same thing.

    But let me see if I have got straight what you’re saying. Kickstarter IS capitalism and it’s good and exciting and something to like (because I think that is a position I’d agree with).

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    • Kickstarter is great.

      The method Kickstarter uses though, is objectively similar to the repugnant marketeering that drives exploitative cash shops and fills bags of potato chips with 70% air. It turns the process of purchasing games into quasi-charity, and thereby chews through a person’s consumer surplus in ways that people wouldn’t stand by traditional companies.

      Think about Monoclegate in EVE. Think about the cash shop flying mounts in WoW. Think about horse armor DLC. What is the difference between those and $100 graffiti in The Dead Linger? What’s the difference between a $1000 premium edition Resident Evil 6 (complete with leather jacket) and $1000 for any given Kickstarter game? The line is very, very thin.

      Kickstarter “works” because they have gamified the charity process (although obviously it’s not “charity” either). Kickstarter makes us feel good about “sending signals” to these developers to make the sort of games we want. Of course, buying normal games sends those same signals. Thus, I wonder how long will it take before the EA and Activision and Capcoms of the world co-op that same process, either overtly or covertly? If they thought they could get away with charging $80/$100/$150 for games, they would – and frequently do via “limited” (lol) digital editions.

      Why do we feel one is okay (objectively obscene “cash shop” purchases in Kickstarter) and the other (everyday cash shops) is not? That one is charity and the other exploitation? And the most important question in my mind: how long will there be a difference?

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  2. I think you are worrying needlessly: soon those signs will have names like Pepsi, Red Bull, BMW, Apple, on them. You simply won’t be able to compete.

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