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It was with mixed feelings that I heard Diablo 3 was shutting down their auction house. As an avid participant in the Diablo series I saw this as a confusing development move.

I’ll start from a “User Experience” perspective. An RPG designed around item acquisition and dungeon grinding is based around feeling rewarded in receiving an item of great value for completing a mission or quest. It’s here the value proposition is found – gaining distinct item combinations which are perceived as valuable to your character. I bold this because when you are able to go online and see how terrible your loot is compared to the really rare stuff for sale online it dilutes and devalues your hard earned loot. “Why not just ignore the Auction House?” one might ask. With the game designed around the trading mechanic it creates two arguments to this question.


Firstly, the game is specifically designed for players to be able to trade out their equipment to get better performing items. Therefore the difficulty curve needs to take this into account when developers are creating content. In fact, to ignore this very important concept would be a major shortcoming of the developers. The causal effect of developers creating this difficulty curve is that it forces users into the auction house upon meeting an enemy they can’t seem to beat. With the majority of users now using the auction house the curve must be higher to facilitate proper content exploration speeds.


Secondly, the game had the intention of entering into the PVP arena of gaming. Choosing not to use the auction house would leave any player at a significant advantage and would be forced to rely on the luck of receiving loot that was actually specific for your character.


As you can see there are obvious reasons why you can’t remain a puritan. Though the concept is controversial enough consider this from Blizzard’s perspective.


The auction house contributed to a massive portion of the revenue model. By ending its functionality you essentially had to rebalanced the game systems in order to have users cope with the lack of trading capacity. Re-balancing all of a game’s systems would take a few hundred man hours as is, but this isn’t even considering the loss in revenue (I calculate what I imagine the auction house was generating). The desire to give the users a game experience worthy of this title was so large that the developers closed an entire significant revenue stream. This is a ridiculously interesting decision because it shows how badly the monetization strategy and game design were conflicting.


There is an very important conclusion and lesson everyone can learn from this however…


Game design and monetization strategy should always be acting in a heavily integrated relationship. In learning Blizzard’s reason for shutting down the auction house, I was impressed that a triple A developer would not compromise the user’s experience by trying to make extra revenue (my estimates were close to a quarter million dollars per month in revenue -see table for assumptions)


Units Sold (According to BZD)    12,000,000.00
Monthly Active Users (40%)      4,800,000.00
% of Users MTX’ing (3%)          144,000.00
Monthly ARPU ($1.5)  $      216,000.00


Monetization is a very tricky strategy to manage in such a way that it compliments a game. Anytime a user notices the way in which they play a game is compromised by the method of monetization, you have a problem.

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