Diablo III Auction Houses - A Race To The Bottom?

Now that Diablo III is out and we're actually able to play the game and get acquainted with the Auction House (gold for now, the Real Money AH has been delayed) we can finally start to get an idea what we might be able to expect from the Diablo III Auction Houses.

Whether these auction houses (Gold Auction House and Real Money Auction House) will be a success really depends a lot on what side of the auction you are standing on. While I won't go too far into my own theories on how this will pan out I wanted to take this chance to bring up a few things that are concerning me about the Auction Houses and their ability to provide players with real-money.

(It should be noted that this may likely be the last Diablo III-specific post on the main Power Word: Gold blog. About 6 months ago we set up Power Word: Gold Diablo which can always be found at diablo.powerwordgold.net to discuss making real-money in Diablo III. All future Diablo III-related posts will be presented there. If you want to be updated on new posts please follow our Diablo III-specific RSS feed.)

Read on past the jump for my thoughts on the Diablo III Auction Houses.

It's All Fun And Games...

...until the market is flooded due to items never leaving the game. Faid sent out this tweet in which she highlights this Diablo III forum post in which the poster Fulcrom goes over some of their concerns about the fact that since items are not "soul-bound" they will never leave the game. This continuous influx of items into the game and Auction Houses will eventually mean that the Auction Houses (both Gold and Real-Money) will ultimately end up flooded with all sorts of high-end gear.

"Given this understanding:1. Every item in the game is tradeable.2. All players are re-using loot to level up.3. The game generates loot constantly through drops and crafting.3. The best items will not be sold or salvaged, for obvious reasons.

The only possible result will be an AH flooded with legendaries (which it already is, less than a week past launch) with market prices dropping at an ever-increasing rate as more items are posted. Fast forward a few months and players who have maxed out (more or less) will be dumping gear that has no use anymore to any of their alts, flooding the market with even more gear and correspondingly low prices."

I think Fulcrom has a very good point and one that I had not even taken into consideration. With no reason for "good" items to ever leave the game it would seem that as the supply increases the prices for both the Gold and Real-Money Auction Houses will only drop.

I think that while this may be great for players looking to buy these items (from both Auction Houses) it isn't really looking good for anyone looking to sell items for real-world money.

I think this is one more indication that Blizzard has really set up the Auction Houses as a place that is great for buyers but not so much for sellers. Buyers benefit much more from the lower prices. While I might love this while leveling my alt I won't love it when trying to make real-money.

The Devil You Know

When I did a Warcraft Econ interview last month (See "Interview with Jim Younkin - Founder of Power Word Gold. On Gaming as a Profession, Gold Guides, and Diablo 3 RMAH") I was concerned that Real Money Trading (RMT) companies would flood into the economy and that the influx of items from those companies "going legit" would lower the prices for items.

While I still think the above will happen, I think that I may have over-estimated their influence on the Diablo III economy. I think ultimately it will be the over-supply of items coming into the Auction House by regular players that may ultimately create an environment where few (if any) items are able to be sold for high prices.

Seller Beware

The game is only 3 days old and it can be tough to get a real idea on what the Diablo III Auction Houses may end up looking like. What it might be like to play them. I'm being very cautious about any sort of enthusiasm for being able to make real-money selling items inside Diablo III.

Like I stated in the interview above, I'd love to be proven wrong. I'd love to see people being able to play a game they enjoy as well as make real-money doing it. It's sort-of a geek "American dream" to be able to get paid to play games.

That said, I'd urge all of my readers to be cautious in your expectations about making real-money in the game. I'd also ask that you be extra cautious when you hear anyone telling you you'll be able to "get rich" in real-life by playing Diablo III.

Conclusion

While the environment may, at some point, be created to allow gamers to make real-money from Diablo III, I am certain no one can say for sure when and if that will actually take place. The best we can all do is to continue to familiarize ourselves with the game and with the Auction Houses and continue to share information with one another while we all figure this new system out.

If you'd like to follow our thoughts, ideas and adventures in exploring the Diablo III Auction Houses be sure to visit Power Word: Gold Diablo as well as following out Diablo III-specific RSS feed.

Now go kill some monsters. It is very satisfying (and more fun than really should be legal).

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