Golf Ball 2

Today I d like to take another look at the report released by Sony detailing the performance of their Station Exchange in 2006.

Instead of examining how the report can help Unreal Estate Agents refine their businesses, I d like instead to ponder how this report is likely to influence the other side of the tracks. What changes, if any are we likely to see in the gaming industry as a result of Sony s experiment with legitimate exchange of Unreal Estate for Real Money?

First thing we know is that Sony made a relatively small amount of money from running the Station Exchange for a year ($274,083). That probably doesn t even cover the salary of more than one board member.

So at first glance this doesn t look like something many other companies are likely to emulate. There isn t a lot of money in it for them.

However, Sony did report that prior to the Station Exchange 40% of the total time their customer service representatives spent on the phone involved virtual-goods transaction disputes and fraud. Station Exchange radically reduced this to a reported 10% of the total time customer service representatives spent on the phone.

Let s do some quick math. Suppose the average customer service representative (CSR) works a 40 hour week 50 weeks a year and is paid $7 an hour. (Just ball-parking here, I m not getting these numbers from anywhere.) That means that at the 40%

rate they d be spending 800 hours a year resolving virtual-goods transaction disputes a year, to the tune of $5,600. At 10% this becomes only 200 hours a year and $1,400 - a savings of $4,200.

So where am I going with this? Well look at the first number we considered; the $274,083 Sony made from the exchange. It cost them almost nothing in comparison to run the Exchange, but let s say it was only about $200k of profit. Add to this the $4,200 per CSR that they effectively earn by having those employees performing more productive tasks. Suppose their CSR staff is relatively small - perhaps only 75 total employees. That alone would represent 315,000 dollars being put to

better use.

We also need to consider one point against: opening the Station Exchange had no discernible effect on illicit Unreal Estate commerce on non-Exchange servers. Sony had hoped that opening a legitimate avenue would reduce the amount of unwanted virtual sales on other servers.

So if we assume that Sony s primary goal with opening the Exchange was to curtail the so-called illegal sale of virtual goods on non-Exchange servers we would have to also assume that Sony considers the Station Exchange a failure in this regard as no such reduction was noticed. However, it may not be entirely safe to make this assumption. After all it should be painfully obvious to anyone with a business degree that as

long as a product or service remains illegal somewhere there will be those who choose to supply it there. Sure, a seller could move to an Exchange server and go legit but those servers also have a larger potential base for competition - after all, even the most unwary seller can function there with ease. On a non-Exchange server a seller has to be careful or they ll wind up the proud owner of a banned account (or accounts). With this increased risk comes (presumably) an increased potential for reward. And even if the rewards aren t better that doesn t mean every business owner is going to make the move to an Exchange server - after all the unknown is a strongly negative motivator.

So while Sony undoubtedly hoped to curb the shadow exchange with the Station Exchange, it s not likely they honestly believed that it would work as well as they hoped it would. It was an easy thing to experiment with, so there was little risk in trying.

My diagnosis? Station Exchange failed to hurt illegal Unreal Estate agents, but didn t shock Sony by doing so. It doesn t make them a lot of money, but it more than pays it s rent and it makes their CSR department run more efficiently. Therefore Sony is better with Station Exchange than without it and Station Exchange is here to stay. Furthermore, I m betting that other

gaming companies are going to come to the same conclusion and strongly consider adding their own versions of this service. Whether or not they do so is impossible to say for sure, but I d lay odds we ll see this system emulated elsewhere, and soon.

This article is used with permission from http://www.gamingpays.com/blog and/or http://www.looterslounge.com

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This entry was posted on Wednesday, October 31st, 2007 at 8:00 am and is filed under Illegal Golf Balls. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.