Here's a video that more people need to watch, especially game publishers and developers.

It's a conversation with Jared Psigoda, a leader in the RMT industry. He's also the individual who informed Markeedragon about the new PayPal & Blizzard relationship that's still making the rounds on the net.



He says that Blizzard has certain trends in their ban-waves. Typically, they occur before an expansion pack launches (as a clean sweep) or when they experience poor quarterly financials. He confirms that Blizzard gets a "huge revenue influx" when a ban-wave occurs, due to the sheer number of accounts requiring reactivation (Note: Monthly fees also double-up meaning twice as many "Active Subscriptions"). These accounts make up a huge portion of revenue for Blizzard as there are hundreds of thousands working in the industry.

Does any of this sound familiar? =]

It's certainly nice to have this officially confirmed by another industry professional.

He also talks about a couple other interesting topics, like which games they avoid (since there's no profit to be made) and how most "hackers" gain access to your online gaming account.

Consider first, though, the amount of money developers spend on managing the aftermath of Gold Sellers and Hacked Accounts:

- Investigation teams need training, benefits, and salaries.
- The amount of time spent investigating accounts and confirming that they are gold buyers/sellers. Or confirming cheating, hacking, etc.
- Money spent on hiring and training large quantities of Customer Support personnel (high turn-over environment)
- More Customer Support staff needed for the amount of farming, cheating, hacking, recovery, etc.
- Blizzard even had to change their own Recovery Process, which goes to show how difficult and unmanageable the situation was becoming.
- The more staff you employ, the higher the risk and/or costs of mistakes (e.g. disgruntled employees, injury liability, employee theft.)
- Stolen and hacked accounts lead to massive customer service issues. Not only is it taxing on the customer service departments, but it is also taxing on their customer retention rates.
- You also have to pay the salaries of the managers who manage these teams, and financial services (HR, Facilities, IT, etc) who serve these managers and employees.

A massive money-eating monster has been created that just addresses "clean-up operations" or the chain-reaction and consequences of something that could have been prevented in the first place. There's a word for that: negligence.

All of those issues can be fixed with very simple solutions.

How To Stop Gold Farmers

- RMT (aka secondary sales) thrives on subscription based games, not games that are heavily micro-transaction based.
- RMT is almost exclusively World of Warcraft. Gold farmers and hacked accounts would suffer greatly if WoW were to change it's model.
- If the game is Free to Play or the developer sells items/gold themselves, RMT companies cannot compete with these developers who can print their own money.
- If people stop buying gold, there's nothing for farmers to sell. So, make gold worthless like how it was done in Diablo 2. (Or find a balance.)
- The more easily you can obtain gold in-game, the more it loses it's value and drives down the profit margin of gold farmers. Eventually there's a point where the value isn't "worth enough" to farm.
- Or leave gold very valuable in-game, but simply make it "soulbound". It can't be traded, but it can be used to purchase expensive services or crafts (that take a long time to develop and collect soulbound materials for) from other players. Prices for these services/goods would be fixed as well. Or the gold can be used to buy valuable items/gear, but from NPCs instead of real players.
- Make all items Bind On Pickup, so that epic items cannot be traded.

The best solution, however, is just for developers to sell the gold themselves. It's a quick way to shutdown the virtual trading industry.

This probably won't happen with World of Warcraft, considering the verbal commitments already made to their customers - but it's a viable solution for their next-generation MMO (considering the gameplay approach and plans on increasing "real world" interaction).

How To Stop Power-Leveling Services

One of the problems that RMT has been facing (for power-leveling services and hackers alike) is IP-based account locking. When an IP suddenly changes, the account is locked, and the owner of the account needs to call Blizzard to unlock it.

Unfortunately, Blizzard has also taken it upon themselves to take additional proactive (provocative?) measures, like cancelling credit cards of innocent players overseas and screwing them over.

Nevertheless, IP based account locking is a very effective process. It's geography based at the moment, but what if they made it for location specific? For example, limiting it to a specific ISP (in case the user has a dynamic IP address) but allowing them a maximum of 2-3 different IP address "registrations" in the same geography. The other option is MAC Address locking, but maybe allow a maximum or 2 PCs and additional ones require online approval and an "identity check".

It's one option that shouldn't be a nuisance for most players anyways. =]

How To Stop Gaming Account Hackers

This might surprise many of you. According to Jared, account hacking due to key-loggers isn't as significant as account hacking due to your gaming websites.

The problem is, most players use the same email address from World of Warcraft and they register it on other websites, forums, or gaming communities. They typically use the same password as well. That's how most WoW (and other) accounts are hacked.

Chinese hackers primarily target gaming websites and forums and steal user database information. Some of the gaming news sites (forums, communities, etc) are aware of the breach, however they don't tell their customers. Others might not be aware of the breach, and Chinese hackers may frequently revisit the database due to it's ease of access.

I don't own an Authenticator, but I have multiple WoW accounts. The reason I've never been hacked in 7 years is because I use a unique email address for each WoW account, and I have never re-used the same email account for anything else online. I have over a dozen different email addresses that I use for different purposes, and about 40 other "online identities" that have no interconnectivity. Passwords are never the same either.

If you want to substantially increase the protection of your WoW account right now, register a new GMAIL address right away, create a unique password, and change your WoW email address/login ID to the new GMAIL account. Your WoW account password should also be changed to something unique. And, of course, make sure to scan your PC for key-loggers before starting all of this. 20 minutes of work now will save you days of potential aggravation in the future.

Since most players don't know this, Blizzard needs to force a change in their customer behavior in order to reduce account hacking. After all, it will benefit their customers as well as themselves (in a huge way.)

Here is Jared's solution that can prevent 90% of hacked accounts (from a developer perspective): FORCE PLAYERS TO CHANGE THEIR PASSWORD EVERY MONTH.

Alternatively, Blizzard could "educate" players at the login screen to change their password. Or make it very easy at the login screen to change their password, but gently remind players to change it every 60 days for example. If they were to force players to change all of their passwords right now, they would see a HUGE and immediate impact to the number of hacked accounts.

More people need to get this knowledge across to Blizzard. If there are enough people demanding the change, the more positive impact it will have for at-risk players (and only serves to help Blizzard.) Unless, of course, there's more revenue to be made from simply selling authenticators.

A little bit of light humor here, triggered by the recent announcement of a new Zombie TV series. =]

If you recall, back in early November, I made a light-hearted blog entry post-dated to the future (March 26, 2011).

It turns out that a lot of what I wrote about is coming true. =]

- The cost of the game was going to be $59.99 (the main purpose of the post was because THQ's CEO complained that the standard price of $59.99 was too much for games, and that they were going to change.)
- Homefront was going to sell around 4 million copies.
- The PC version would get pushed back.
- There would (will) be a UK expansion pack.
- Cataclysm would sell about 3 million copies.
- A major WoW nerf following Christmas sales.
- Another new zombie-based TV series would be in the works due to the success of The Walking Dead (which first premiered the week earlier).
- And homefront DLC with zombies (ie, an announcement of the future release).

Not bad so far.

The CW is developing a zombie apocalypse series entitled "The Awakening" and NBC is developing "Zombies vs. Vampires".

The PC version hasn't been delayed _yet_, but as you recall they're having a lot of issues finishing off the game. Lots of overtime and stressed workers. It hasn't been pushed back yet.. they might still, or release it with bugs and patch later (to meet commitments). For now, March 8 is still the official release date for all 3 platforms (PC, PS3 & X360).

(UPDATE: IT GOT DELAYED!)

Now I'm just waiting for launch day to see their sales figures, expansion pack info, and maybe a mention of a Homefront DLC with zombies. =]

In other "spooky" news,

- I nailed that Active Subscription Count estimation using Blizzard's own geography based subscriber statistics. That was a nice vindication.

- I anticipated something really big happening within Take Two in November and just two days before they announced major "restructuring" and the TTWO CEO stepping down, etc. I also anticipated even more layoffs by TTWO, which has just happened (publicly) in the UK with more coming. There were even some silly stock trader enthusiasts from some Yahoo Finance forum that called b.s. on all of that.. I wonder how much money they lost by not watching the signs? =]

- And then there was a post where I talked about the "Insane in the Membrane" title and the return of the Zulian Tiger & Qiraji Battle Tank. I forgot all about that actually, until someone recently reminded me. Those were several months before the official announcements and before anyone else knew. Although.. those weren't really predictions.. I received more of a confirmation from a source. =] (The new Zulian Tiger isn't out yet - but there's still a plan for it by the way.)

I'm not sure if I missed anything else. I usually forget what I've written about and just move on to new posts. Often I need to go back over old posts to remember. =]

- Oh right! This isn't really a prediction, but if you had wisely followed my Gold Making Guides on collecting rare recipes from opposite factions, you would now be proud owners of the most expensive cooking recipes known to man. =] They're easily selling for 10-20k each now, and they'll be selling as high as Dirge's Epic Recipe eventually. I have about 100 recipes (that are impossible to get post-Cataclysm) that will easily sell for 100-250k gold in a year or so. =]

Sometimes I scare myself.

* UPDATE (03/16/2011):

LOL - They're dropping the price of Homefront from $60 to about $40 on the second day of release. They should have done this from the beginning, but many game studios use inflated prices to give the perception of quality.

Looks like they not going to even go over 1M sales on the first day, even after all of that hype. The game leak (almost 2 weeks early) and various information reveals (e.g. single player campaign length) certainly didn't help. Piracy can't be blamed here though, it was all about quality. During the first 24 hours, they sold 375,000 copies in North America alone.. normally the other countries would sell at least the same amount or more, but since it launched in NA first gamers are seeing all of the bad single-player reviews (which is why it's always a good idea to launch worldwide simultaneously). Multiplayer is looking pretty good though, and it should do well in the long run.

So, it was just "announced" that Blizzard and PayPal are now in bed together. (Technically, Markeedragon talked about it back on the 20th, but it's now making the rounds on other news sites.)

They will be walking together hand-in-hand fighting those dangerous virtual gold sellers. Take note, though, that they're targeting gold sellers & merchants, not gold buyers. They have no idea who buys gold except for those (who were caught) within the World of Warcraft.

But, there are two things very interesting with this whole situation:

1. Blizzard and PayPal are calling it an "intellectual properties violation" and that it "infringes upon the intellectual property rights" of Blizzard for the sale of virtual merchandise. We all know, of course, that it's not illegal (for the moment) to buy or sell virtual currency or commodities.

This is more about the wording, though. PayPal isn't saying it's illegal.. "violate" could just as easily have been swapped out with "annoys", "pisses off our partner", or "hurts Blizzard's feelings." But, those just don't sound as intimidating.

2. How did they find out and confirm the PayPal IDs of the gold sellers if they're not publicly advertised?

There was only one way they could do it: registered an account on various gold seller websites, and bought WoW gold from them. =]

So, Blizzard violated their own internal and external policies, the World of Warcraft Terms of Use, Gaming Policies, and even violated their own intellectual property (which is also now PayPal's policy).

A little hypocritical don't you think? Maybe I should change the headline to "Blizzard Buys WoW Gold!". I wonder if Blizzard's PayPal account is going to get banned now.. =]

In order to keep this up too, Blizzard will need to continue buying virtual gold from sellers as well (although right now, they just targeted the biggest suppliers). They can't just tell PayPal to ban certain PayPal IDs (email accounts) that are posted on webpages or forums for example. They'll need to confirm in-game that the person is indeed selling gold (ie, setup a sting operation.) Otherwise, social engineers and troublemakers could just create fake gold seller webpages, post PayPal email addresses, and get them banned.

Anyways.. this might not have as big of an impact that Blizzard is expecting. Gold Merchants have many payment alternatives at their disposal and this was just a bad business decision made on the part of PayPal. Unless, of course, there were other (more invisible) factors at work that "encouraged" PayPal to change their stance on the matter.

This is very good news for PayPal's competitors though. =]

After all, this new process will not impact the market demand for virtual currency.

So, if there are any smart online payment intermediaries out there that compete with PayPal, they should get into communication with these companies immediately. (If you work for a PayPal competitor, talk to management right away as these businesses will be looking for a new service provider and they transact tens-of-millions per year.) =]

This may also open up a new market for independents and smaller sellers. Since BlizzPal is targeting the larger gold sellers, we might see a shift in power or a distribution of power to many sellers.

I'm curious how this will effect gold prices. The big gold sellers might drop prices (a lot) so that they can offload their stocked gold as quickly as possible. Then once the dust settles, gold prices might end up being higher then they've ever been in years (same demand, but more difficult, more risk involved for the sellers, more independents, etc). Should be fun.

* UPDATE:

Apparently, the infringement notices are targeted at gold seller websites (that use PayPal) and not the individual PayPal accounts themselves. So, I guess Blizzard hasn't been confirming anything - but rather just telling PayPal to check their own accounts to see who owns the website and ban them? (Or maybe there's a combination of both.)

What I do know is that there have been multiple waves of these threats from PayPal over the past 2 months and they have mailed big and small sellers alike. Many PayPal accounts have already been banned, while the larger gold sellers are attempting to stall for as long as possible.

Since this has been going on since December, I wonder if it's one of the reasons why gold prices fell so dramatically after the Cataclysm expansion pack..