Mounts at 2000 gems actually ARE ok and here's why (xpost from reddit)

[Ayrilana.1396]

@IndigoSundown.5419 said:

@Ayrilana.1396 said that @"Gaile Gray.6029" said:

I just want to be sure that I point out that gold does not necessarily indicate a purchase (for real money) of any kind, not by the player nor by anyone else."

OK, here's some analysis. For the sake of discussion, I'm going to assume that "...gold does not necessarily indicate a purchase (for real money)" really means "...exchanging gold for gems does not necessarily..."

Notice the "necessarily." This is equivocation, not in the sense of prevarication, but in the sense of refusing to commit. She could as easily have posted in a different context, "doesn't necessarily indicate there was no purchase." and it would amount to the same thing. You can interpret this to mean that ANet loses money on the gold-for-gems exchange if you like, but this is a failure of critical thinking. Had this post read, "ANet loses money due to the gold-for-gems exchange." you'd have a slam-dunk. It doesn't say that, though. All that statement does is cast doubt. This could just be ANet deciding that players don't need to know the ins and outs of exactly how the system works.

Prove that I’m wrong in this thread by all means. Prove that Anet makes money with people purchasing gems with gold and has been over the long run of the game.

[Lemondrop.5216]

@Oglaf.1074 said:"-$25 is the industry standard for MMO mounts."

Two wrongs don't make a right

Something is only worth what people are willing to pay for it. Yes they are beautiful, but $25-30 is a lot of money for a animated picture.

If the price was lower, i might buy two.

[IndigoSundown.5419]

@Ayrilana.1396 said:

@IndigoSundown.5419 said:

@Ayrilana.1396 said that @"Gaile Gray.6029" said:

I just want to be sure that I point out that gold does not necessarily indicate a purchase (for real money) of any kind, not by the player nor by anyone else."

OK, here's some analysis. For the sake of discussion, I'm going to assume that "...gold does not necessarily indicate a purchase (for real money)" really means "...exchanging gold for gems does not necessarily..."

Notice the "necessarily." This is equivocation, not in the sense of prevarication, but in the sense of refusing to commit. She could as easily have posted in a different context, "doesn't necessarily indicate there was no purchase." and it would amount to the same thing. You can interpret this to mean that ANet loses money on the gold-for-gems exchange if you like, but this is a failure of critical thinking. Had this post read, "ANet loses money due to the gold-for-gems exchange." you'd have a slam-dunk. It doesn't say that, though. All that statement does is cast doubt. This could just be ANet deciding that players don't need to know the ins and outs of exactly how the system works.

Prove that I’m wrong in this thread by all means. Prove that Anet makes money with people purchasing gems with gold and has been over the long run of the game.

You've misstated the issue in the above. ANet does not make money from people purchasing gems with gold, they make it from people purchasing gems to exchange for gold. Hopefully, you are not disputing that.

You made a statement that came across as, "ANet is losing more money than they are gaining due to the exchange." That's what I thought we were discussing. As far as that goes, I don't have to prove that you are wrong. I've stated my position as a belief. I have room in my opinion for you to be right, and me wrong, but I would want something more than you've offered to accept that. You, on the other hand, seem to be making a definitive statement. That means you would have to prove you're right. Now, if what you're stating is your belief, and just sounded more like a fact than you intended, then we might not have much more to discuss.

[Ayrilana.1396]

@IndigoSundown.5419 said:

@Ayrilana.1396 said:

@IndigoSundown.5419 said:

@Ayrilana.1396 said that @"Gaile Gray.6029" said:

I just want to be sure that I point out that gold does not necessarily indicate a purchase (for real money) of any kind, not by the player nor by anyone else."

OK, here's some analysis. For the sake of discussion, I'm going to assume that "...gold does not necessarily indicate a purchase (for real money)" really means "...exchanging gold for gems does not necessarily..."

Notice the "necessarily." This is equivocation, not in the sense of prevarication, but in the sense of refusing to commit. She could as easily have posted in a different context, "doesn't necessarily indicate there was no purchase." and it would amount to the same thing. You can interpret this to mean that ANet loses money on the gold-for-gems exchange if you like, but this is a failure of critical thinking. Had this post read, "ANet loses money due to the gold-for-gems exchange." you'd have a slam-dunk. It doesn't say that, though. All that statement does is cast doubt. This could just be ANet deciding that players don't need to know the ins and outs of exactly how the system works.

Prove that I’m wrong in this thread by all means. Prove that Anet makes money with people purchasing gems with gold and has been over the long run of the game.

You've misstated the issue in the above. ANet does not make money from people purchasing gems with gold, they make it from people purchasing gems to exchange for gold. Hopefully, you are not disputing that.

You made a statement that came across as, "ANet is losing more money than they are gaining due to the exchange." That's what I thought we were discussing. As far as that goes, I don't have to prove that you are wrong. I've stated my position as a belief. I have room in my opinion for you to be right, and me wrong, but I would want something more than you've offered to accept that. You, on the other hand, seem to be making a definitive statement. That means you would have to prove you're right. Now, if what you're stating is

your

belief, and just sounded more like a fact than you intended, then we might not have much more to discuss.

In previous posts I gave by reasonings for backing that statement. It’s based on how the system works and the data we have available.

[Ashen.2907]

Some people use real world money to buy gems specifically to trade for gold earned in game by other players. Those gem purchases made specifically and solely for the sake of exchanging for gold would not have been made if there was no option to exchange for gold so the ability to exchange gold for gems earns Anet some (we do not know how much) money.

This is not opinion, it is a fact.

[ReaverKane.7598]

@Ayrilana.1396 said:

@Belorn.2659 said:

@Ayrilana.1396 said:The gem exchange works with there being a finite number of gems within it. Gems leave it when players buy them with gold and gems enter it when players purchase gold with them. Gems purchased with money are newly created. Gems spent on gem store items are removed.

That part is correct. Gems on the trading post arrive there when a player buys them and then trade them in for gold, with a 15% tax cut.

When more gems are being bought with gold, the exchange rate increases. It costs more gold to purchase gems as well as more gold being received by exchanging gems. That’s a given since there’s usually a ~15% difference between them.

Since the game launched, the exchange rates have been steadily increasing. This can only happen if more gems are being bought with gold than exchanged for gold.

And that part is false. Anet has several times stated that there is a finite number of gems and all gems are first bought by other players. Every gem being sold on the TP has first been bought by a player. The exchange rate reflect a algorithm, where in theory the price would be infinitively large if the store had only a single gem left.

In practice, the algorithm seems more complex. Remember that anet takes ~15% tax cut on both when a person sell gems to the store, and when a player buy gems for gold from the store. Those 15% tax on both side generates a lot of missing gems and gold that anet could use as they wish to establish a fair price, while at the same time maintain a maximum 1:1 ratio between bought gems and sold gems on the TP.

So Anet is experiencing a loss in potential gem sales if players were to farm for gold and exchange it for gold rather than purchase with money. If items in the gem store, such as mount skins, were made to be cheaper, farming for gold would be more appealing. So the OP was correct in their statement. The only unknown is how much of a loss it would be and that’s something we don’t have the data to determine.

So no, a there is no loss in gem sales from a player buying gems for gold. In contrast, gold->gems is anets take on gold sellers, beating them in their own game. The 250g griffon showed everyone how a strong desire for gold will have a very strong impact on the gem<->gold price, cutting it down to almost 66% of the price before the expansion. Because of the 15% tax, this event generated anet a lot of gem sales that translate to quite a bit of revenue.

Lets run the numbers: 250g is 1400 gems right now. Let say a player buys those with money to get the gold. Anet take as their cut of 210 gems by acting as a middle man and holding those gems until a buyer wants them, giving the seller his 250g instantly from a gold reserve. When a buyer want to buy those remaining 1190 gems, they have to pay 310G, where 250g goes to back to the bank reserve and 60g goes to anet as tax. In total player A got 250g and paid 1400 gems. Player B paid 310G and got 1190 gems. Anet got for free in this transaction 210 gems and 60 gold.

Or to put it in other numbers. Every time a player buy gems to buy a griffon, Anet gets $2.5 and remove 60 gold from the economy. For free. I can easily make the bet that this part of micro-transaction is the single highest revenue source in the store. All Anet need to do is to encourage this trade by having items in the store that people want to buy and items in the game that people need gold to buy (such as legendaries/precursors on the TP). The economy will do the rest, and all Anet need to do is to act middle man and provide the market place. Just like the real world, this is where "the real money" is.

How is what I said false? I never said that the supply of gems was infinite. Anet seeded the gem supply at launch and since then all new gems that enter it was due to players converting gems to gold. I stated this several times in the thread so I do not understand why you’re claiming I did not know this. The exchange rate changes when there is an imbalance in one side. Looking at the trends, it due to more players exchanging gold for gems.

There’s only one 15% tax which is the difference between the exchange rates. That is all. Like the TP, this ensures currencies leave the system.

There is a loss if players buy gems with gold. I stated this several times as well in this thread and in the very post you quoted. If Anet released a mount skin for a price that was low enough that I considered to farm the gold for instead of buying with money, they lost out on that sale. All gems have a real world value associated with them. If more players are buying gems with gold than exchanging them for gold, that difference is how much they’re losing.

Your math ignore the exchange rate increasing since launch. You’d only be correct if the rate remained flat.

A loss where?The exchange rate MEANS NOTHING, it's just padding for Arena Net.There's no cost to gold for Arena Net, nor any earnign, the only loss that exists is for the person SELLING the gems or the guy BUYING the gems.For Arena net, 800 gems is 10€ whether the other person sells them for 100 gold or 10. Nothing changes!

[SkyFallsInThunder.8257]

-ANet could charge money for every patch.

I am okay with paying appropriately for new content releases. Not patches that fix stuff or add piecemeal stuff to the game, but stuff like LW episodes. 5 euro seems a decent price for a LW episode to me, considering how comparatively small they are to the game/xpacs.

Paying for content is not a problem.

But then ANet cannot scream far and wide that OMG WE DONT CHARGE FOR UPDATES WE ARE SO AWESOME COME PLAY OUR GAME. And what gains them more in the broad view, I wonder?

So it's a give/take for both sides. I am okay with that. Are you, ANet?

[Healix.5819]

@Ayrilana.1396 said:Rather than cause a another bump to the thread, here's a post backing up that Anet does not make money through gold->gem exchanges.

Gibson.4036: "Of course they make money off of it. If you buy gems with cash, they’ve made money. If you buy the gems with gold so you can upgrade, then someone else paid for those gems with cash, so ANet made money there, too."

Gaile: "Gibson — please keep in mind that players earn gold in the game. We do not make money from gold acquired in that manner, it’s coming to them through normal gameplay solely with the purchase of the original game. I just want to be sure that I point out that gold does not necessarily indicate a purchase (for real money) of any kind, not by the player nor by anyone else."

You can find a cache of the old forums, that topic specifically, here.

In short, Gaile wasn't considering the big picture, that someone first has to buy gems and sell them for gold in order for others to buy them for gold. John Smith came in and clarified that.

[Belorn.2659]

@ReaverKane.7598 said:

@Ayrilana.1396 said:

@Belorn.2659 said:

@Ayrilana.1396 said:The gem exchange works with there being a finite number of gems within it. Gems leave it when players buy them with gold and gems enter it when players purchase gold with them. Gems purchased with money are newly created. Gems spent on gem store items are removed.

That part is correct. Gems on the trading post arrive there when a player buys them and then trade them in for gold, with a 15% tax cut.

When more gems are being bought with gold, the exchange rate increases. It costs more gold to purchase gems as well as more gold being received by exchanging gems. That’s a given since there’s usually a ~15% difference between them.

Since the game launched, the exchange rates have been steadily increasing. This can only happen if more gems are being bought with gold than exchanged for gold.

And that part is false. Anet has several times stated that there is a finite number of gems and all gems are first bought by other players. Every gem being sold on the TP has first been bought by a player. The exchange rate reflect a algorithm, where in theory the price would be infinitively large if the store had only a single gem left.

In practice, the algorithm seems more complex. Remember that anet takes ~15% tax cut on both when a person sell gems to the store, and when a player buy gems for gold from the store. Those 15% tax on both side generates a lot of missing gems and gold that anet could use as they wish to establish a fair price, while at the same time maintain a maximum 1:1 ratio between bought gems and sold gems on the TP.

So Anet is experiencing a loss in potential gem sales if players were to farm for gold and exchange it for gold rather than purchase with money. If items in the gem store, such as mount skins, were made to be cheaper, farming for gold would be more appealing. So the OP was correct in their statement. The only unknown is how much of a loss it would be and that’s something we don’t have the data to determine.

So no, a there is no loss in gem sales from a player buying gems for gold. In contrast, gold->gems is anets take on gold sellers, beating them in their own game. The 250g griffon showed everyone how a strong desire for gold will have a very strong impact on the gem<->gold price, cutting it down to almost 66% of the price before the expansion. Because of the 15% tax, this event generated anet a lot of gem sales that translate to quite a bit of revenue.

Lets run the numbers: 250g is 1400 gems right now. Let say a player buys those with money to get the gold. Anet take as their cut of 210 gems by acting as a middle man and holding those gems until a buyer wants them, giving the seller his 250g instantly from a gold reserve. When a buyer want to buy those remaining 1190 gems, they have to pay 310G, where 250g goes to back to the bank reserve and 60g goes to anet as tax. In total player A got 250g and paid 1400 gems. Player B paid 310G and got 1190 gems. Anet got for free in this transaction 210 gems and 60 gold.

Or to put it in other numbers. Every time a player buy gems to buy a griffon, Anet gets $2.5 and remove 60 gold from the economy. For free. I can easily make the bet that this part of micro-transaction is the single highest revenue source in the store. All Anet need to do is to encourage this trade by having items in the store that people want to buy and items in the game that people need gold to buy (such as legendaries/precursors on the TP). The economy will do the rest, and all Anet need to do is to act middle man and provide the market place. Just like the real world, this is where "the real money" is.

How is what I said false? I never said that the supply of gems was infinite. Anet seeded the gem supply at launch and since then all new gems that enter it was due to players converting gems to gold. I stated this several times in the thread so I do not understand why you’re claiming I did not know this. The exchange rate changes when there is an imbalance in one side. Looking at the trends, it due to more players exchanging gold for gems.

There’s only one 15% tax which is the difference between the exchange rates. That is all. Like the TP, this ensures currencies leave the system.

There is a loss if players buy gems with gold. I stated this several times as well in this thread and in the very post you quoted. If Anet released a mount skin for a price that was low enough that I considered to farm the gold for instead of buying with money, they lost out on that sale. All gems have a real world value associated with them. If more players are buying gems with gold than exchanging them for gold, that difference is how much they’re losing.

Your math ignore the exchange rate increasing since launch. You’d only be correct if the rate remained flat.

A loss where?The exchange rate MEANS NOTHING, it's just padding for Arena Net.There's no cost to gold for Arena Net, nor any earnign, the only loss that exists is for the person SELLING the gems or the guy BUYING the gems.For Arena net, 800 gems is 10€ whether the other person sells them for 100 gold or 10. Nothing changes!

Technically, the tax that anet takes could either be on the gems or the gold, depending on how internal details of the exchange.

Assume someone buy 800 gems and sells them on the exchange. Anet takes around 15% tax (estimated for the price point between sell and buy), which either mean they destroy 15% of the gold output which the seller would get, or 15% of the 800 gems. Similarly the buyer of gems get equal 15% tax, where Anet either destroy 15% of the gold input or 15% of the gem output.

The statements of John Smith don't actually specify what the case is. it could be that any gems added to the store can also be bought, while its gold that get destroyed in every transaction. This would make gems a 1:1 from buyer to seller, while gold would loose about 30% of the value going from one players hand to an other. It could also be the opposite, where gold is 1:1 when entering and leaving the exchange, but 30% of the gems are lost between seller and buyer. Or it could be any mix between.

Personally I suspect that the tax do destroy some of the gems. Let assume player A want to $10 worth of gems, and player B want 150 gold. In old times this would mean that player A would be a illegal gold seller and there was no transaction fees involved. If both players tried today to insert the same numbers to the exchange at the same time, both player would end up short with about 15% of the intended goal. Player A would end up with $8.5 , and player B with 127 gold. In order for player A to end with $10, player B need to actually buy $12 worth of gems, and similarly player B need to raise around 180 gold. Anet, for holding the exchange and banning any other method gains $2 in the gold seller scenario. In additional, player B has caused $10 in revenue which player A might not have bought themselves, creating a win-win-win-win scenario. Anet get $2 dollar and a sale of $10, the gold seller can do their trade legit, and the gold buyer have a trusted market to buy gold for money.

John Smith is an economist, and the gold seller market in gw1 was untapped. It would make sense that such a person would integrate this in gw2 to be a profit center for the company.