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.