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Aamrr
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Posted - 2011.01.04 06:25:00 -
[1]
Edited by: Aamrr on 04/01/2011 06:25:47
Interesting, but true. At first glance, it would seem that such donation schemes are profit-neutral: CCP donates no money to the fund, as ultimately all proceeds given out by CCP have been paid for by the PLEX purchased by the players. By initial analysis, campaigns like PLEX for Haiti would appear to be fiscally neutral, with all funds ultimately coming from players to those in need and CCP's contribution ultimately amounting to the work necessary to handle bureaucratic affairs of the program, which can be written off as advertising expense.
However, on further analysis, we see that these programs actually create an artificial demand on PLEX, increasing their price. People buy PLEX because they see it as a good time->isk exchange (and it is). When the price of PLEX rises, more people buy PLEX and CCP gets more money. Furthermore, as fewer people can afford the isk expense to pay for PLEXes, they revert to paying by real currency -- another source of income.
While this doesn't discount the contribution CCP makes on running these programs, it's interesting to note that they are not uncompensated by the time they invest in setting them up. Like any business, CCP exists to make money, and a fiscally healthy CCP means a healthy EVE.
Still, I'm not convinced that PLEX for Haiti was charitably motivated. Do any other players have feelings on this?
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Tres Farmer
Gallente Federation Intelligence Service
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Posted - 2011.01.04 06:30:00 -
[2]
0/10
1) this has been chewed through countless times already
2) your name sucks
3) plex whines are on the schedule for next month, you're too early
support
Public Idea Tracker | 24hr PLEX |
Pohbis
Neo T.E.C.H.
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Posted - 2011.01.04 08:29:00 -
[3]
 Originally by: Aamrr
When the price of PLEX rises, more people buy PLEX
Originally by: Aamrr
Furthermore, as fewer people can afford the isk expense to pay for PLEXes, they revert to paying by real currency
Yes, I agree with your clever analysis.
Oh wai...
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Niccolado Starwalker
Gallente
Shadow Templars
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Posted - 2011.01.04 08:47:00 -
[4]
Originally by: Aamrr
Still, I'm not convinced that PLEX for Haiti was charitably motivated. Do any other players have feelings on this?
Nope.
Originally by: Dianabolic
Your tears are absolutely divine, like a fine fine wine, rolling down your cheeks until they flow down the river of LOL. |
Cyaxares II
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Posted - 2011.01.04 08:56:00 -
[5]
Originally by: Pohbis
Originally by: Aamrr
When the price of PLEX rises, more people buy PLEX for RL money
Originally by: Aamrr
Furthermore, as fewer people can afford the isk expense to pay for PLEXes, they revert to paying by real currency
Yes, I agree with your clever analysis.
Oh wai...
so what?
(also: free tax credits for CCP)
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Pohbis
Neo T.E.C.H.
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Posted - 2011.01.04 09:30:00 -
[6]
Originally by: Cyaxares II
so what?
If the claim that "prices will rise", in the same sentence as "fewer people will buy" doesn't make your Supply & Demand 101 bells go off, then so be it. Nothing I can do to help you 
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Cyaxares II
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Posted - 2011.01.04 10:01:00 -
[7]
Edited by: Cyaxares II on 04/01/2011 10:01:56
Originally by: Pohbis
Originally by: Cyaxares II
so what?
If the claim that "prices will rise", in the same sentence as "fewer people will buy" doesn't make your Supply & Demand 101 bells go off, then so be it. Nothing I can do to help you
thanks for your concerns; luckily my professors tend to disagree with you.
The claim was:
(a) demand goes up -> prices rise -> supply increases -> new equilibrium prices still higher than the old equilibrium
(b) PLEX demand for donations is pretty large & far less price-elastic than PLEX demand for consumption, allowing for the high new equilbrium price despite less people buying PLEX for consumption (as prices rise, PLEX demand for donation basically crowds out PLEX demand for consumption).
CCP makes money by getting free tax credits and by profiting from the crowding out effect on the demand side (people who do not want to buy PLEX for ISK anymore will pay with RL money until the donation drive is over and the market has settled near the old equilbrium).
That effect is rather ingenious and while I wouldn't expect it to be practically relevant (i.e. I would expect it to be rather small but that does ultimately depend on the answer to "why do people pay for EVE with ISK?") the mechanism behind it seems plausible to me.
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Pohbis
Neo T.E.C.H.
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Posted - 2011.01.04 10:17:00 -
[8]
How exactly does it make any difference in terms of CCP income, if player A buys a PLEX, or pays CCP directly? In the end, it's a zero sum game. Unless CCP shuts down the servers while x amount of PLEX have not been redeemed, or they get blown up.
Players decide on supply and demend but whatever in-game price we attach to it, or when and how CCP will give 15USD worth of playtime, for an item that someone payed 15USD for, is irrelevant.
Best case scenario for CCP is that they get more income from PLEX one month. They'll have to honor those by giving they guy who redeems them 30 days worth of gametime, for free, at a later date.
And tax credit? Everyone who donates gets that. If that is your argument, yes, CCP are in charity for the moneyz. Just like every other individual or corporation that makes a donation.
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Kara Sharalien
Gallente
Federal Navy Academy
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Posted - 2011.01.04 11:02:00 -
[9]
http://en.wikipedia.org/wiki/Wikipedia:No_one_really_cares
The Adelaide meet, be there! |
HeIIfire11
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Posted - 2011.01.04 11:54:00 -
[10]
Originally by: Aamrr
Still, I'm not convinced that PLEX for Haiti was charitably motivated. Do any other players have feelings on this?
I agree.
Not going to get into why though,no point. |
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Musashi IV
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Posted - 2011.01.04 12:35:00 -
[11]
You are whipping a dead horse. A few months ago I wrote a thread about how PLEX donations are artificially inflating the price of PLEX. CCP only cares about its bottom line.
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