Monetization Director“, someone to run the monetization strategy for the company. Now, I’ve never worked in the games industry and I’m likely never going to work in the games industry. I don’t know anything about it. But I do know how to sell junk that my family members don’t want and I know how to make a ton of money doing it. So let’s apply the Zen yard sale to EVE monetization.

" /> Monetization Director“, someone to run the monetization strategy for the company. Now, I’ve never worked in the games industry and I’m likely never going to work in the games industry. I don’t know anything about it. But I do know how to sell junk that my family members don’t want and I know how to make a ton of money doing it. So let’s apply the Zen yard sale to EVE monetization.

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Jester’s Trek: Zen and the art of monetization

May 12, 2014

If you’ve read my blog for a while, you’ve probably inferred — correctly — that I move a lot. In the process of doing so, I’ve become sort of a family legend at making money at yard sales. This bears on EVE Online very closely but to explain why, I’ll have to set this up a little. Bear with me.

Yard sales (variously called that, garage sales, or tag sales in various parts of the U.S.) involve getting together a large pile of the stuff that Americans accumulate after a while. Then you sell that part of it you can live without to other Americans who are also busy accumulating stuff. You put an ad in the local newspaper or whatever, people come to your house, you put the stuff on your driveway or your lawn, and the negotiations for what the stuff is worth begin. The stuff is usually media, tools, unused clothing, bedding, small appliances, small furniture, toys, et cetera. These sales are usually associated with the family moving in or out of the neighborhood.

The problem with most yard sales — and the reason most yard sales fail — is that the people running them try to make money.

Now making money would seem to be the obvious goal of the exercise (with a secondary goal of getting rid of unwanted stuff). That’s why it’s funny that most Americans are so bad at it. The reason they don’t make any money is that they try to make money on each individual item. If they bought that toaster for $35, then it would seem reasonable to sell the toaster for $15. That’s less than half price, right? Meanwhile, the buyers aren’t interested in a used toaster for only $20 less than what they can get a brand new toaster for. Negotiations go back and forth, but both parties are usually wed to their positions and at the end of the day, the guy selling the toaster more often than not has to bring the unsold toaster back into the house. Later, the toaster gets donated to a charitable institution and he makes no money at all. The net result for the rest of the yard sale items is more or less the same, and the yard sale as a whole is regarded as a failure because “we didn’t make any money.”

Give me the very same toaster and I’ll tag it $5. Or $4. And it will sell instantly. I mark all the other stuff with similar prices. And the bulk of the other stuff also sells. And because I do this, the money pours in and I usually have very little or no stuff left at the end of a yard sale. I’ve never once run a yard sale where I didn’t make $750 or more. It hardly seems to matter what I have to sell.

I call this a “Zen yard sale”. I don’t try to make any money. And because I’m not trying to make money, the universe misunderstands my motivations and I make a ton of money. 😉

As I said, I’m sort of a family legend at this. Family members make me run their yard sales.

What does all this have to do with EVE Online? Glad you asked.

For the last few months now, CCP has been looking for a “Monetization Director“, someone to run the monetization strategy for the company. Now, I’ve never worked in the games industry and I’m likely never going to work in the games industry. I don’t know anything about it. But I do know how to sell junk that my family members don’t want and I know how to make a ton of money doing it. So let’s apply the Zen yard sale to EVE monetization.

We’re now 60 days into the ship skin pilot program. For our test cases, we’re going to look at seven ships: four Gallente ships with Aliastra skins, and three Minmatar ships with Krusual skins. By default, this is going to be tricky. CCP has not released any public data about how many of these seven ships have been built or used. But we can look at the market data for Jita and that at least gives us a place to start:

Ship Uplift     Days     Unskinned     Skinned     Penetration
Incursus 5M 60 39409 2312 5.5%
Thorax 14M 12 3689 209 5.4%
Hyperion 40M 60 1905 687 26.5%
Rifter 4M 60 39309 2022 4.9%
Stabber 10M 30 7249 240 3.2%
Maelstrom     24M 60 2479 264 9.6%
Catalyst 14M 60 68040 290 0.4%

“Uplift” represents the increased cost of a skinned ship over an unskinned ship. “Days” represents the number of days of market data we’re looking at. For all ships except the two recently-available skinned cruisers, that’s 60 days. “Penetration” indicates the percentage of ships of that type sold that were skinned.

What we see looking at the data is that for the very popular Aliastra line, a bit over 5% of frigates and cruisers sold are being skinned. The Hyperion is doing better, likely due to its use as a solo low-sec boat and its come-and-go popularity with PvP streamers. For the Krusual line, penetration is lower at 3-5% and only about 10% of battleships are being skinned. The Aliastra Catalyst has been available for months but despite having a comparable uplift to the cruisers, only 0.4% of Catalysts sold in Jita are skinned.

Now, I’ve made no secret of the fact that I’d like to see ship skins — ship painting, really — to become as ubiquitous as rigging ships. We have no data on this either, but I’d estimate that rigging penetration is around 95%: the vast majority of ships are almost certainly rigged, and there are even some ships that are rigged multiple times as they’re repackaged and moved around, or as rigs are destroyed to make way for different fits. There’s no reason why ship paint can’t eventually work the same way.

But of course penetration of ship skins is nowhere near 95% and I know for a fact that that’s all about cost. The cost for the ship skins is too damn high. And it’s too damn high because CCP is — unconsciously or consciously — trying to make money at their yard sale. And because they’re trying to make money, they’re not making any money! Players refuse to pay their prices.

For a moment, let’s ignore the “free” Aurum that CCP has distributed to all players since 2011. Just for a moment, we’ll pretend that the uplift represents actual potential monetization income for CCP. By this metric, the most successful ship at making money for CCP is the Hyperion. In 60 days, 687 Hyps have been skinned at an uplift of 40 million ISK each. Extended to a year, that’s 165 billion ISK, or converted to PLEXes, a shade over $4100. The average for the other six ships on our list is $1200 per year.

There’s a word for these numbers: “paltry”. Hell, maybe “pathetic”.

What will players pay to skin a ship? What would it take to reach rig-style penetration? Put that way, the answer is pretty easy: rig-style prices. Maybe even a little less than rig-style prices. Rigging a cruiser costs about five million ISK. Rigging a battleship costs 25 or so. We could get the skins to those prices by cutting the cost of skins in half. But let’s be silly. Let’s apply the art of the Zen yard sale to skin prices and cut them by 80%. Skinning a frigate would cost a million ISK or less. Skinning a cruiser would cost two or three. And let’s further stack the deck against us: we’ll assume penetration for frigates at 75%, cruisers at 85%, and since Catalysts mostly get used for ganks, we’ll assume only 25% penetration there.

By not trying to make any money, do we make any money? Have a look.

Ship Uplift Current Pen     Current Inc/Yr     Projected Pen     Projected Inc/Yr
Incursus 5M -> 1M 5.5% $1758 75% $4759
Thorax 14M -> 2.8M 5.4% $2225 85% $7054
Hyperion 40M -> 8M 26.5% $4179 95% $2996
Rifter 4M -> 0.8M 4.9% $1230 75% $3771
Stabber 10M -> 2M 3.2% $730 85% $3872
Maelstrom     24M -> 4.8M 9.6% $964 95% $1902
Catalyst 14M -> 2.8M     0.4% $617 25% $7274

Turns out if CCP didn’t try to make any money at this, they’d make triple the money they’re making now. And that’s just the ships on the Jita market. Doesn’t even count the ships players are building and skinning for their own use.

The only change they have to make to put this into operation — today! — is to make the current BPCs 5-run instead of 1-run. And with basic skins set at 20% of their current prices, that would give CCP lots of room to grow the market later with more expensive skins costing more. As it is now, they’ve got nowhere to go. If 95% of players won’t buy skins at these prices, they certainly won’t buy more expensive ones. As a bonus, cutting the prices of the current skins 80% would make players wild with joy. If there’s a downside here, I’m missing it.

Anyway, I am not CCP’s Monetization Director. But if I were, I’d have myself a little Zen yard sale.