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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.

Quote of the Decade

Today, Kotaku reposted an earlier article from Rock, Paper, Shotgun entitled “Do We Own Our Steam Games?” which was the inspiration for yesterday’s post. The example scenario that makes up half the article is not exactly the most flattering, as it involves a Russian gamer who, quote, “[…] openly admits that he’s gifted games to people in exchange for money, to help them get them cheaper.”

In other words, some Steam games are cheaper in Russia, so you could call this guy up, have him buy LIMBO for the equivalent of $0.50 instead of $9.99, have him gift the game to you, and then you give him $3 or buy him a beer or whatever in exchange. Of course, regional price differences sometimes work the other way too. For example, Deus Ex: Human Revolution costs $29.99 in the US, but €49.99 in Europe… the equivalent of $66.36, or an increase of 121.27%.

That sort of thing will get you banned, of course.

It was around this time in the comments that someone named “iteyoidar” dropped this gem:

Funny how when it comes to globalization, when it’s games devs and publishers dodging domestic laws and getting cheap shit in other countries, it’s just business, but when it’s the consumer using the same thing to their advantage to buy cheap media, it’s “fraud” and “cheating” and they’re all scum.

Yeah. Yeah. Is there a particularly good reason why we tolerate price discrimination on identical, digital goods? Other than, of course, that companies wouldn’t like it?

I get that standards of living are different, that you can’t ask for $15/month in China when the average person makes $20.27 a day, and so on. But as a consumer, why should I care? Spare me the “holistic” crap of feeding game devs and races to the bottom, because obviously that shit only works one-way when it comes to outsourcing jobs. Why is it okay to presume a business has a right to profit, but a consumer lacks the equivalent? Because that hurts businesses?

Oh. Oh, I see.

The people that can pay more should pay more, eh? Where have I heard that before?