Destroying PLEX for $$$$

TAGN has an interesting discussion going on over in the comments of his blog about this article from Massively.

Quick Background:
CCP recently changed the rules regarding PLEX (a system for trading EVE game-time for game currency between players) so that it can be looted or even destroyed by EVE pirates. Previously, you could not move PLEX and it could only be traded safely in the hanger.  And now, according to Massively, some player lost 74 PLEX cards (1 PLEX = 1 month game time) worth around $1300 real-life dollars. Destroyed. Not looted.

The discussion over at TAGN site seems to be focused primarily on what action CCP will need to take to make things right with the player.

The part that is getting lost here is that with the old PLEX system, CCP had nothing to gain except future sales. For example, trading PLEX for ISK didn't add net new money into the pocket of CCP -- it simply allowed one person to effectively pay for someone else's game time.

But if PLEX can be DESTROYED...
It's a much different story.

From CCP's perspective, it's a paid subscription they no longer need to honor that has been destroyed. Unlike the virtual Ore that gets mined, someone paid real money for that PLEX card. A game card that will never be redeemed if it is destroyed.

And what happens to the real life dollars? Those aren't destroyed. They stay in CCP's bank account.

Is money the real Reason for the policy change on PLEX?
The major benefit to CCP of the old PLEX system is that it encouraged players to purchase game time they might not need in order to trade it for the in-game currency (ISK).

From a cash flow perspective, this is a great thing for CCP because they are are getting money upfront today for a future promise of service. They are still beholden to honoring that promise, but they get the money sooner rather than later.

But one thing always rubbed me wrong, what happens when there are more unused PLEX cards being openly traded than their are players who could reasonably use them?

In other words, if you have 1000 months of game cards and only 800 months needed by players, then a couple of horrible things happen from CCP's perspective:

• Cash Flow Stops or Slows - your players don't need to pay you because they have already paid.
• The in-game price of PLEX suffers dramatic deflation and your primary product (subscriptions) is de-valued.

Now I'm not suggesting that CCP reached the point where their are more PLEX game cards than players who need them. But what I am suggesting is that CCP, who does have an economist on staff, is well aware that such a system is an impending financial crisis and not sustainable for the long-term.

I would even hazard to guess that CCP started to see cash flows slow down as less and less players find themselves needing to purchase PLEX because it already exists in-game.

But, you ask, why is cash flow important? After all, doesn't CCP already have the money from the game cards they sold?

Well, the problem is that in all likelihood, CCP management didn't just set that money in the bank. It's going to be invested -- likely back into the company to pay for development costs on a future project for future returns.  If those returns aren't realized right away, they need continued cash flows to keep coming in order to keep the lights on.

Destroying PLEX for Profit
What's the best solution to having a surplus of something? Why blowing it up, of course!

The moment that PLEX is destroyed and rendered unusable as game-time, the promise of future services is gone and it becomes pure profit for CCP.

But more importantly, you no longer have as large a surplus of game time and it reverses the two trends I addressed earlier. Less PLEX means PLEX is more valuable. Less PLEX means more players will need to purchase additional game time.

It's for this very reason that I believe the change by CCP was deliberate, intentional and entirely motivated by self-interest.

The irony is that EVE has a player culture that revels in such losses. They don't want it to happen to them, but the fact it CAN happen is oddly appealing.

Contrast that change with Blizzard. Can you imagine the reaction from WoW players if you could get ganked and lose your game card in WoW?

Legal challenge?
From a legal standpoint, it's an intriguing situation. Does CCP have the right to void those promises of future services?

If I'm CCP, I would argue that what I am providing for the fee is not game time until it has been converted. Instead, I'm selling a virtual currency similar to ISK. What the player chooses to do with that virtual currency is up to them. Based on their actions, it can be traded, stolen or even destroyed.

Assuming the player losing the PLEX is not the same person who bought the PLEX, they have to agree with this interpretation. After all, if they don't agree that it's simply virtual currency, how did they trade for it?

It's a much murkier prospect if the person losing the PLEX is the same person who bought it. But even here, however, I think CCP is protected because there are other alternatives to adding game time. It could be argued that the only reason a player would buy PLEX over other methods is to at least have the option of trading it.

Edit:
On the legal issue, I particularly like Old Tom's comments at No Prisoners No Mercy:

Leaving out all extraneous analogies, the transaction between CCP and said customer is for a game-time code. That item has 2 possible functions – 1) Can be used to add game time to a particular account, or 2) can be transferred into an in-game item which then can be bought, sold, lost etc.

The transaction worked as promised. The issue is not the PLEX .. it is the game-time code. Seeing that the game time code was effectively transferred into PLEX, CCP’s implied warranty was fulfilled.

This is right in-line with my thinking that PLEX is first and foremost an in-game item subject to the rules for in-game items. That it can be redeemed for game time is secondary because the purchaser chose to turn the game time into an in-game item subject to those terms in the EULA.