For players or profit? Activision-Blizzard at odds over Diablo 3's cash auction house

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Diablo 3's auction house is a contentious subject. It'll let players trade in-game loot for real-life cash. Blizzard will take a set fee for each transaction. It's being described in very different ways to players and to investors. To players and the specialist press, Blizzard have repeatedly emphasised that the real-money auction house is meant to protect gamers from shady gold sellers. To investors, Activision-Blizzard are talking up the profit potential.

We spoke to Diablo 3's Jay Wilson about Blizzard's motivation for the feature in August. At the time, it seemed that making a profit from the auction house wasn't high on the game designer's priority list: “We expect it'll break even. We talked about this as a service we wanted to provide players and not primarily as a financial model. We don't know if it will make us money," he said.

"It would be nice if it did, but as long as we don't lose money; that's really what we care about: that we provide the players with a great experience that doesn't put us out of business," he continued.

That was three months ago. The auction house came up at Activision Blizzard's recent Q3 2011 Earnings Call multiple times, mostly when people were talking about profit margins and business models. It seems that the auction house could end up turning a profit, accidentally or not. And in corporate land, Activision Blizzard's CFO Thomas Tippl, is enthusiastic about the item-trading system's potential for generating cash.

Speaking about the World of Warcraft annual pass (which comes with a free copy of Diablo 3), CFO of Activision Blizzard, Thomas Tippl said: "The larger the Diablo community is, and the larger the marketplace around Diablo's real money auction house is, the greater the opportunity to also generate income and have a long tail behind Diablo."

"The general acceptance of gamers for a different type of business model has increased substantially over time. We're really looking for upper benchmarks outside of currently relevant microtransaction-based games so those trends have been very encouraging," continued Tippl. But for us, we'll have to see what happens when we get into the marketplace. If we didn't think there was a significant opportunity, we wouldn't be doing it."

That directly contradicts what Blizzard have been telling us. Back in April, we asked the Blizzard designer whether he would still launch a real-money auction house if Blizzard couldn't earn cash from each sale. "Absolutely," he responded. Thomas' emphasis on the Auction House's margins seems contradictory to Jay's take.

At least Blizzard co-founder, Mike Morhaime, got the final word at the Investor's Call. And reassuring words they were, placing the emphasis back on the game experience instead of cold, hard cash.

"Let me add to that. If you look at Diablo 2, and even Diablo 1 player bahaviors, there was a need to trade items between players. We found that a lot of our players were trading items on third party sites. The main reason we're doing [the auction house] is to provide them with a safe and secure environment which we think it going to make for a better game."