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

Scratched wrote:
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.

There was almost no money in it when I was first interested in playing, at least for me: I was a kid, I was buying games once every 6-12 months, and it was fundamentally a social experience with friends. Most games were rented for $1-3 from the local video store, and we would spend the majority of our time sharing out the few games we had, discussing how to beat them, and so on.

Shareware dominated much of the early 90s in terms of PC games, and while that may have been about trying to make sales, I spent my time playing those same few levels over and over, and/or playing friends' copies of games.

Note two major differences here: there were no "in-game purchases"/DLC/whatever that were designed to up-sell you after the fact, and there was no metagame economy. Nobody had trading cards, there were few strategy guides or press releases or major conventions (E3 only starting in what, 1995?), and only a handful of magazines covering the space. I'm not overtly complaining that gaming has gotten larger, but the further from "I am playing a game I enjoy" things get, the less interested I am.

Gaming was never an identity for me as a kid, and I don't want it to be a lifestyle choice as an adult.

Nevin73 wrote:

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.

I've been pretty deligent about getting the cards, I am up to about $45 gained both from cards and the odd TF2 item here and there that I have gotten from pre-ordering stuff.

It was much more lucrative before the summer sale, often getting $.30-$.35 per card, now it is rare that you get above $.10

TheHipGamer wrote:

There was almost no money in it when I was first interested in playing, at least for me: I was a kid, I was buying games once every 6-12 months, and it was fundamentally a social experience with friends. Most games were rented for $1-3 from the local video store, and we would spend the majority of our time sharing out the few games we had, discussing how to beat them, and so on.

It's getting off topic, but until games are free to make, and the developer's time is free (somehow.... socialist utopia?), there will be money involved. There's always going to be some games that are passion projects, or free mods (well, it's against the license to charge for them) created off the back of a paid game, but personal experience aside, games like most other entertainment will always and usually be in exchange for currency. If anything the trading card aspect is another tip-jar option that's available.

Scratched wrote:
TheHipGamer wrote:

There was almost no money in it when I was first interested in playing, at least for me: I was a kid, I was buying games once every 6-12 months, and it was fundamentally a social experience with friends. Most games were rented for $1-3 from the local video store, and we would spend the majority of our time sharing out the few games we had, discussing how to beat them, and so on.

It's getting off topic, but until games are free to make, and the developer's time is free (somehow.... socialist utopia?), there will be money involved. There's always going to be some games that are passion projects, or free mods (well, it's against the license to charge for them) created off the back of a paid game, but personal experience aside, games like most other entertainment will always and usually be in exchange for currency. If anything the trading card aspect is another tip-jar option that's available.

Out of curiosity, Scratched, when did you start gaming? The "scene" was very different in the mid-80s through mid-90s, and saying it was "always about the money" is not quite there. Saying money was involved, not so much of an argument.

However, my nit to pick is the focus. Anyways, yeah, this is becoming a bit of a circle, so perhaps we just agree to disagree on that point.

80s/90s. AtariST and then PC, with a sideline in my friends' consoles. I would have started earlier but I wasn't born in the 70s.

Scratched wrote:

80s/90s. AtariST and then PC, with a sideline in my friends' consoles. I would have started earlier but I wasn't born in the 70s.

Huh - that's interesting, as we're of the same age. Maybe a US/UK cultural thing? Anyways.

I'd say it more depends on the games played. While there were a lot of games that got their foot in the door as shareware, well, I was playing on the NES and Super Nintendo, and my friend had a Genesis that I got to play on.

While there were a lot of passion projects, it's also where games were very much a business. Of course, in order to put a game on a cartridge, you kind of had to be. A handful of guys programming games and then using a very primitive Internet and ads in papers/magazines to try and share and sell floppies was basically "the indie" thing to do.

And even then, I'm pretty sure my brother paid cash for quite a few of his Interplay games in the early to mid 90's, as well as the various strategy games he was addicted to.

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.

That's not just awesome, that's downright brilliant. It gives incentive to developers to "play the game" and add cards to their games, which is essential for the whole system to work. Valve is literally full of mad geniuses that devise ways for people to give them money and love them for it.

I just wish Valve went back to devising games that made people want to give them money and love them for it.

Nevin73 wrote:

I just wish Valve went back to devising games that made people want to give them money and love them for it.

I was about to argue some counter points, but Valve and games is one of those things you can argue any way you want. The case can be made that "Valve" haven't made any new/original games since the first half-life, or you can say that they hare a really high output if you look at their catalogue another way.

TheHipGamer wrote:

I play games to play games, not to collect points/cards/whatever.

You know this of course, but to a lot of people collecting "points/cards/whatever" is not only a big part not only of playing games, but the part that makes the playing fun.

Note two major differences here: there were no "in-game purchases"/DLC/whatever that were designed to up-sell you after the fact, and there was no metagame economy.

There was certainly a tack-on economy of cheat books and strategy guides, however. And if sharing were so totally OK with devs, I bet they wouldn't have gone to such weird lengths to plug "you better not lose the manual" copy-protections into their games.

wordsmythe wrote:
TheHipGamer wrote:

I play games to play games, not to collect points/cards/whatever.

You know this of course, but to a lot of people collecting "points/cards/whatever" is not only a big part not only of playing games, but the part that makes the playing fun.

Yes, definitely. It's not my thing, though; I don't like DLC (full expansions excepted), I don't like in-app purchases, and I don't like metagame features like this. I do like immersive stories, technological innovation in game engines, and interesting mechanics; I'd rather dev teams be spending time and money on those things, rather than the Skinner-esque functionality that I see much of the industry moving towards.

wordsmythe wrote:
TheHipGamer wrote:

Note two major differences here: there were no "in-game purchases"/DLC/whatever that were designed to up-sell you after the fact, and there was no metagame economy.

There was certainly a tack-on economy of cheat books and strategy guides, however. And if sharing were so totally OK with devs, I bet they wouldn't have gone to such weird lengths to plug "you better not lose the manual" copy-protections into their games.

I just wasn't exposed to that stuff, as it was not as prominent a part of the experience. I think I owned the "cheat guide" to Wolfenstein, but that was a gift from a parent or relative, and I wasn't subject to advertisements for it, or really any kind of game marketing aside from what was at PC conventions and in the stores.

The anti-piracy stuff was there, but it was trivial, and often diegetic. Often, when I "borrowed" a game, it was with the manual, so it wasn't like I was trying to pirate something in the modern sense. We just wanted to exchange cool games, and at that point, it was easy to do.

I realize I sound like an insufferable old man. Things change. I get that. I can still enjoy gaming, and do. But, stuff like "cards" that amount to pretty much nothing? I guess that's for someone else.

wordsmythe wrote:

There was certainly a tack-on economy of cheat books and strategy guides, however.

Aye. My nostalgic favorite read:

IMAGE(http://ecx.images-amazon.com/images/I/51mFUZ0mWEL._SY300_.jpg)

480 pages, a lot of them charts, but I must have read them all.

I remember when I first met my dad's "friend at work who's already beaten it."

Yep, they are all just sitting there. Right next to my giftable copies of Portal and Civ 5.