Trading on Valve Value

I should have known the first time I realized there was a levelling system involved in Steam’s new Trading Cards system that eventually it would get its insidious hooks into me. But I wasn’t truly lost until it chanced upon my brain that the cards and boosters themselves were dropping like loot when I played games.

Last year Valve got some press for hiring a respected economist to come work for them on virtual economies, and I have to imagine that what we’re seeing is a direct result of his devious work. The method to the madness — the pure, manipulative gaming of this rigged system that makes me want to beat it all the more — is clearly the handiwork of several evil geniuses working in an unholy alliance.

Even as I collect cards and trade them around like childish stocks on a virtual exchange, I know that the best possible solution is to stop and back away slowly. But that’s just the thing: The card game isn’t one you can just walk away from. The drug pusher isn’t out on some corner waiting for you to walk by scratching your arms, shivering and with a dead look in your eye. No, he’s in the room with you. You just play your games like normal, and you turn around to realize you have cocaine in your pocket.

“Don’t worry, dog. I’ll just put this Chell trading card right here in your Steam Inventory all for free and everything. You deserve it just for playing Portal 2. G’on, treat yourself.” And there, almost against your will, you have this … thing. And, what’re you going to do, just let it sit there? No. No, that won’t stand at all.

Here’s how it works. The trading cards themselves are pieces of digital artwork for a given game, and usually there are seven to twelve of them that can be collected. Once you have the full catalog of cards for a game, you transmogrify them like a Harry Potter spell into this other virtual tchotchke called a badge. Along with the badge itself, which you can highlight on your profile to show just how “baller” you are, you get themed bonuses like emoticons or profile backgrounds. Also, you get delicious experience points which are applied to and ultimately raise your Steam Level. All of this, it’s important to note, is absolutely free for Valve to provide. It costs them nothing to put these things into the system.

Ah, but here’s the rub for you as a collector. You can only get about half the cards you need to create a badge for a given game by actually playing the game. Once you get the cards that drop from playing the game, the only way to get the rest of the cards is to have a booster for the game show up in your inventory — which occurs more often the higher Steam Level you are — or trade another user for the card you want, or to flat out buy it off the Community Marketplace.

Back to the free thing for a second, because it turns out that ostensibly the accumulation and collection of cards is also entirely free for the player. Even using the marketplace, someone could simply sell off any valuable cards they’ve collected by playing a game, and use those proceeds to buy the card they want. So not only is it free for Valve to release this stuff into the wild, it’s actually free for me to participate. Sort of. For a while.

These two ideas, however, make it interesting that the cards are perceived to have any value at all. There is in fact no way to complete a direct transaction between a player and Valve that directly infuses any card with some sort of monetary cost. Every instance of Valve introducing cards into the wild happens entirely for free (except, of course, that it doesn’t, but we’ll get to that in a minute).

So that value that is attached to cards by the community marketplace is entirely an illusion. It’s as though someone were to walk into a room full of people, hand half the people a piece of colored paper, and exclaim on the way out, “Whoever is holding a piece of paper is special.” Even though it’s an entirely illusory, arbitrary creation, the likelihood is that if there are enough people in the mix, some of those holding a piece of paper will immediately ascribe value to their paper, which inevitably means that someone not holding a piece of paper will ascribe more value and transactions will begin. Eventually, of course, the room will reach equilibrium, and those placing the highest value on paper will probably have one, and everyone else will have either chosen not to play or walked away, perhaps with some money from the paper lovers.

But unlike with Valve, in that simple scenario the guy who handed out the pieces of paper to begin with gets nothing from the deal.

Which is why, to tell the story more accurately, the paper distributor needs to add a couple of rules that change the dynamic. First, there needs to be a way to put new paper into the system and take paper that’s reached its maximized value out. Second — and this is the important one — every time someone transacts business to sell paper, the paper distributor needs to get a cut.

This is exactly what happens. Sell a trading card on the marketplace, and a flat 15% fee is added to the transaction when it goes up. So if you sell a card for a dollar, the cost to the buyer is actually $1.15, you get your dollar and Valve gets $0.15. Once the buyer has created their badge, that card forever leaves the system, leaving room for more cards to enter the system through people playing their games.

Of course, none of these cards ever hold any real-world value unless someone is also plugging actual money into the system. It’s interesting to think that every cent, every dollar floating around in the Trading Card game is money somewhere introduced into the system by someone who just took the shortcut of actually spending dollars and cents on these artificially valuable pieces of code. And then, of course, once that money is in the system, it’s trapped until its eventually given to Valve itself. It may move around for a while through trades. It will get segmented, separated, handed around. It will sit in a dozen Steam Wallets until finally someone spends that money on an actual game. The more times that money is part of a trade, the more Valve collects directly off the transaction fees until they finally are able to claim the whole bundle.

And you know what? Good on them for it. I don’t begrudge them the slightest, because they’ve found a way to do what businesses do (that is, make money) while providing value and entertainment for the user. In fact, I think this particular scheme is absolutely brilliant, adding a new answer to a longstanding and complicated problem for the games industry that’s generally only been answered with DLC and subscription fees.

Don’t be surprised when other companies begin implementing their own plans that look suspiciously like this trading card system in places like Origin or Battle.net. After all, what Valve has essentially figured out is a way to convince people to give them money for a commodity with essentially zero cost to the company, and then a way to have that money compound itself through fees over time.

Yet I have to admit I’m having a certain kind of fun gathering cards, trading them in the system and building my tiny collections for my favorite games. So far, I’ve spent absolutely none of my actual money on the transactions. Essentially I’m simply moving around money someone else put in at an earlier place, and whether someone buys the cards I put on the market with their Steam wallet or their leather one is invisible and irrelevant to me. All that’s happening on my end is that I get these cards to play with and then occasionally I find myself having a couple of extra bucks off on the next game I buy.

It’s ingenious in that it is a way for Valve to generate additional revenue in a way that, perplexingly, makes it far more likely that I will remain their customer in the future. After all, there’s some chance that the next time I buy a game, particularly one that is cross-platform, I will include in the math of that decision whether playing it on Steam will also gain me new cards.

For game publishers and retailers, that’s the holy grail.

Comments

Elysium wrote:

Sell a trading card on the marketplace, and a flat 15% fee is added to the transaction when it goes up. So if you sell a card for a dollar, the cost to the buyer is actually $1.15, you get your dollar and Valve gets $0.15. Once the buyer has created their badge, that card forever leaves the system, leaving room for more cards to enter the system through people playing their games.

It's worth pointing out that of that 15%, one third (5%) goes to Valve and two thirds (10%) go to the developer of the game the item is associated with. So the card system is also benefiting any developers who go to the trouble of adding cards to their games.

Hi, I'm McIrishJihad, and I have paid real-world money on fake cards for the Summer badge and other game badges.

It's worth pointing out that of that 15%, one third (5%) goes to Valve and two thirds (10%) go to the developer of the game the item is associated with. So the card system is also benefiting any developers who go to the trouble of adding cards to their games.

I didn't realize that. That's kind of awesome.

Elysium wrote:
It's worth pointing out that of that 15%, one third (5%) goes to Valve and two thirds (10%) go to the developer of the game the item is associated with. So the card system is also benefiting any developers who go to the trouble of adding cards to their games.

I didn't realize that. That's kind of awesome.

Valve's devious. I think you are right that they are going to be followed by the other digital distributors in the future. I'm totally on board with the cards and the monetization thereof, my one worry is that this is basically gambling, and last time I checked it is really easy for a kid to make a Steam account.

Elysium wrote:
It's worth pointing out that of that 15%, one third (5%) goes to Valve and two thirds (10%) go to the developer of the game the item is associated with. So the card system is also benefiting any developers who go to the trouble of adding cards to their games.

I didn't realize that. That's kind of awesome.

Yes, I really like that part, especially since at least some of the cards I have seen come from smaller devs like Squad (KSP).

I've collected a handful of cards from the Summer Sale, but have not yet done anything with them. Maybe I will gift them to my son, since he's actually been doing some trading and created a badge or two.

I am .67 cents away from transferring $5 (the minimum) to my steam wallet. I like the cards, because I am soon to buy DLC using the cards. All I have to do is play more games... hmmm seems like this free money will not be cheap in the long run.

Don’t be surprised when other companies begin implementing their own plans that look suspiciously like this trading card system in places like Origin or Batlle.net.

Why the heck would I start collecting stuff elsewhere when I already have so many cards on Steam? Valve beat them to the punch again. Beyond the money they make off of the virtual transactions, that's the other genius of this plan. It really increases customer loyalty to their particular brand.

Even if I never get into collecting, never buy a single card, and just sell them for a couple of bucks here and there, I've now got some money in my Steam wallet. It's essentially like a coupon for $2 off and further increases the likelihood of impulse purchases while decreasing my odds of shopping elsewhere.

Bonnonon wrote:

I am .67 cents away from transferring $5 (the minimum) to my steam wallet. I like the cards, because I am soon to buy DLC using the cards. All I have to do is play more games... hmmm seems like this free money will not be cheap in the long run.

What minimum is that? Doesn't the money from selling stuff on the market go automatically to your Steam Wallet?

soonerjudd wrote:
Bonnonon wrote:

I am .67 cents away from transferring $5 (the minimum) to my steam wallet. I like the cards, because I am soon to buy DLC using the cards. All I have to do is play more games... hmmm seems like this free money will not be cheap in the long run.

What minimum is that? Doesn't the money from selling stuff on the market go automatically to your Steam Wallet?

Click on the money you have at the top right of steam, then look below your balance where it says "+add funds to your steam wallet" and click the hyper linked text. It states that you have to have a $5 minimum to transfer money to your "steam wallet" to buy games. I guess I can have 4.33 to buy other cards, but I have to save until $5 to transfer the funds and purchase a game or dlc.

No, no, If you look, you should already have a Wallet balance of $4.33. This is an actual balance that you can spend on anything through Steam, games included. Adding funds to your wallet is paying with a credit card/bank account/etc.

soonerjudd wrote:

No, no, If you look, you should already have a Wallet balance of $4.33. This is an actual balance that you can spend on anything through Steam, games included. Adding funds to your wallet is paying with a credit card/bank account/etc.

Thanks for the clarification.

gewy wrote:
Don’t be surprised when other companies begin implementing their own plans that look suspiciously like this trading card system in places like Origin or Batlle.net.

Why the heck would I start collecting stuff elsewhere when I already have so many cards on Steam? Valve beat them to the punch again. Beyond the money they make off of the virtual transactions, that's the other genius of this plan. It really increases customer loyalty to their particular brand.

Also beating Sony and Microsoft to the punch with their networks. I'm sure someone will say it's different because they're consoles, but really it's not, it's another system competing for market, and it wasn't too long ago that there were rumours flying around that Valve/EA(Origin) were pitching Nintendo to handle the network on the WiiU. They all want a piece of the pie on whatever platform.

In a way Valve is a johnny-come-lately by adding backgrounds and various profile customisation, MS have been selling those for ages, but Valve's solution is more similar to a (done well) F2P game in that it gives people options for how to get on board and is more flexible (I sell my cards and buy games), and of course money only flows into the system.

Stylez wrote:

I'm totally on board with the cards and the monetization thereof, my one worry is that this is basically gambling, and last time I checked it is really easy for a kid to make a Steam account.

As far as I can tell this is very similar to the odds of getting a Magic: The Gathering booster pack with randomized cards in it, only this time you get cards as soon as you walk in the store.

Or perhaps it's more accurate to say you bought a D&D rulebook, and they're throwing in Magic cards for free.

...oh God, the non-digital implications of such a system...

ccesarano wrote:
Stylez wrote:

I'm totally on board with the cards and the monetization thereof, my one worry is that this is basically gambling, and last time I checked it is really easy for a kid to make a Steam account.

As far as I can tell this is very similar to the odds of getting a Magic: The Gathering booster pack with randomized cards in it, only this time you get cards as soon as you walk in the store.

Or perhaps it's more accurate to say you bought a D&D rulebook, and they're throwing in Magic cards for free.

...oh God, the non-digital implications of such a system...

I'd say its more like you walk into PAX, and there's a 30-card deck in your swag bag. Enough to play quick games while killing time in lines, and learn the system, but not enough to really do anything. But hey, you've already got some cards, what's the harm in buying boosters?

McIrishJihad wrote:

I'd say its more like you walk into PAX, and there's a 30-card deck in your swag bag. Enough to play quick games while killing time in lines, and learn the system, but not enough to really do anything. But hey, you've already got some cards, what's the harm in buying boosters?

I think you hit that particular nail on the head.

So far I've not outright spent money on cards, but I might have snagged a couple cheap indie games that MIGHT have had cards

Hey, now. We already have a Mannconomics writer. We don't need any competition. I mean, it's an awfully nice front page ya got here. It'd be a shame if something...happened to it.

Now I'm imagining a bunch of tough guys (but dapper) taking baseball bats walking canes to a computer server in some guy's house.

Minarchist wrote:

Hey, now. We already have a Mannconomics writer. We don't need any competition. I mean, it's an awfully nice front page ya got here. It'd be a shame if something...happened to it.

Tips jar of pencils off the edge of the desk

Ooops.

Hey, now. We already have a Mannconomics writer. We don't need any competition. I mean, it's an awfully nice front page ya got here. It'd be a shame if something...happened to it.

I was just trying to set you up for the article "Here's Why Sean Is Wrong About Things And You Shouldn't Listen To Him"

Elysium wrote:
Hey, now. We already have a Mannconomics writer. We don't need any competition. I mean, it's an awfully nice front page ya got here. It'd be a shame if something...happened to it.

I was just trying to set you up for the article "Here's Why Sean Is Wrong About Things And You Shouldn't Listen To Him"

Because we all know that Sean is ultimately just a Skinner-box sucker.

I have to dissent here: Steam trading cards feel slimy to me. I've thought as much since they launched. I play games to play games, not to collect points/cards/whatever. Steam has basically created a system where they print money: for a small piece of artwork and some low-value investment in skins, they can take a chunk of money from everyone who trades them.

I really don't like seeing this trend towards monetization in games and their accouterments expand; it feels cynical at best, and preying upon gamer's psyches at worst. I realize that people are free to spend their money as they see fit. However, watching a hobby that I can remember being essentially independent (early-to-mid 80s computer gaming) become an Industry is uncomfortable.

TheHipGamer wrote:

However, watching a hobby that I can remember being essentially independent (early-to-mid 80s computer gaming) become an Industry is uncomfortable.

It was always about the money.

That said, once the notification has gone away, you can ignore the whole market thing, and it will be just about the games.

Thanks Sean for writing out an appropriately meaty outline of how all this trading card stuff works. I earned some in the sale and occassianally get some cards from playing but for the most part I'm with HipGamer and think they're mostly just an annoyance--stop clogging my inventory! But it's nice to have the whole system summarized here since trying to get straight answers out of Valve's store and forums is quite a pain.

Btw:

Batlle.net
McIrishJihad wrote:

Hi, I'm McIrishJihad, and I have paid real-world money on fake cards for the Summer badge and other game badges.

This reads less like an initial alcoholics anonymous confession and more like the opening speech at your first cult meeting.

Strangeblades wrote:
McIrishJihad wrote:

Hi, I'm McIrishJihad, and I have paid real-world money on fake cards for the Summer badge and other game badges.

This reads less like an initial alcoholics anonymous confession and more like the opening speech at your first cult meeting.

Well, that's like, your opinion, man.

McIrishJihad wrote:

Hi, I'm McIrishJihad, and I have paid real-world money on fake cards for the Summer badge and other game badges.

Hi, McIrishJihad. The coffee is over there, behind the jittery smokers. (I too paid money money to finish out a badge.)

McIrishJihad wrote:
Strangeblades wrote:
McIrishJihad wrote:

Hi, I'm McIrishJihad, and I have paid real-world money on fake cards for the Summer badge and other game badges.

This reads less like an initial alcoholics anonymous confession and more like the opening speech at your first cult meeting.

Well, that's like, your opinion, man.

Woops. I forgot to add this.

Keithustus wrote:

I'm with HipGamer and think they're mostly just an annoyance--stop clogging my inventory!

Feel free to send those slimy, inventory-clogging annoyances my way any time they bother you. No thanks necessary; I'm happy to help.

I generally turn around and sell my cards the moment I earn them. They've saved me a few dollars on game purchases.

I just sell mine. I think I've gotten almost $3 so far. And then I turn around and put that money directly into Marvel Heroes or some other online addiction.