Not separate features

Apparently everybody loves bullet points. Over the last week I've seen tons of posts on various blogs and websites reporting on Diablo 3, and they all have some variation of the following bullet point list:

• Diablo 3 will feature a real-money auction house.
• Diablo 3 will require always on internet connection.
• Diablo 3 will not allow any mods.

So what is wrong with that list? It suggests that we are talking about 3 separate features or news items here. But actually there is only one feature (real-money AH) and the fact that Blizzard isn't completely crazy.

Raph Koster once coined one of the laws of online games when he said that "The client is in the hands of the enemy.". The internet is full of cheats for games which involve players changing the data on their computer to give them an advantage in a game. Even mods are a form of changing the data to make a game easier, even if there is a valid point to be made that "it isn't cheating as long as it isn't explicitly forbidden". But just imagine for a second the difference in epic-collection speed of one guild using addons in WoW compared with another guild of equal skill not using any addons, and you will understand that mods do have a significant effect on a game economy too.

Earlier versions of Diablo were full of possibilities for cheating, with Diablo 1 having a serious bug enabling duping items right in the game, without even having to modify the data with an external tool. That didn't matter all that much as long as people were playing solo, but cheating is a huge annoyance in multiplayer online games. Adding the real-money auction house adds another level to this: By putting the Sword of Uberness on the AH you not only affect yourself or people in the same game as you, but everybody. Putting 1,000 duped Swords of Uberness on the AH would obviously pretty much kill the player economy.

Virtual items by definition have a marginal cost (the cost to produce one more of them) of very close to zero. In the real economy the price of any item for which there is plenty of supply drifts towards the marginal cost. For a virtual economy to function, the game company needs to artificially increase the marginal cost for the *players* to create an item. For the player the value of an item is roughly equivalent to what time it would take to farm another one. Thus an item with a low drop-rate at the end of a raid dungeon you need hours to get through is valuable, while an item you can farm dozens of in an hour is not. Duping or other forms of data manipulation, even mods, lowers the marginal cost of an item for the player. That first leads to imbalances (the cheating player gets an item for a low cost in time and sells it expensively to a non-cheating player for whom it would take a long time to farm that item), and then to market collapse as the cheat method spreads.

So when Blizzard says that: "Internally I don’t think [always-on DRM] ever actually came up when we talked about how we want connections to operate. Things that came up were always around the feature-set, the sanctity of the actual game systems like your characters. You’re guaranteeing that there are no hacks, no dupes.", I believe them. The real-money auction house *necessitates* all character and item data to be server-side, which can only be done with always-on internet connection. The connection requirement and the no-mods policy aren't separate features, but a logical consequence of the decision to enable real-money trade of virtual items.