MA does NOT make money from decay

[aridash]

I know you said you're not comparing MA to a bank, but let's take a look at a bank's balance sheet

... we can see that they list the Unconsumed User Holdings at the bottom of the sheet. We know how much is in the game from this. But this is a CONTINGENT liability. It's something that could become a liability, if requested, but in it's current form, is not a real liability. You also notice that it is not included in the liability section, and is not covered by the amount in assets.

i dont see why you then compare to a bank but it makes little odds. the fact the liability isn't covered is what makes it a contingent liability... i fail to see your point. its like you are trying to tell us something is going on, that we know anyway, while not accepting the machinery inside the accounts (they are "consolidated for a reason" hides alot of techanicalities.

incidently, i scanned through a comple of bookies accounts (ladbrokes, Williamhill) and couldnt see anyhting in them to show money that hold on deposit either.

 

[DoubleWolf]

i fail to see your point.

My point is that they can't make money from decay because peds are like lemonade. The person that sells the lemonade does not collect revenue as the person drinks it. So each amount of lemonade that disappears does not equate to revenue to the lemonade dealer.

Now if the lemonade dealer PROMISED the value of the lemonade to the kids buying it, even if the kid shut down his lemonade stand, then yes, each bit of lemonade that was consumed would reduce the difference between what was purchased and what remains, resulting in profit. But since the dealer does not owe that value to the other kids, consumed lemonade means nothing.

If you think it's more complicated than the lemonade stand example in it's simplest form, then I don't know what to tell you. Perhaps MA's incorrect use of terms like "Real Cash Economy", "deposit" and "withdrawal" has got your mind doing some mental back flips to come up with how the system works, because you assume that the peds on your account is your money? I don't know. I simply can't make your explanation work given the information that MA has provided in their financials.

 

[aridash]

...Perhaps MA's incorrect use of terms like "Real Cash Economy", "deposit" and "withdrawal" has got your mind doing some mental back flips to come up with how the system works,

mental back flips? your the one going on about peds being lemonade

i dont assume the ped on my card are "mine", just that they are available for me to withdraw. i've given a working analogy (though i'm not sure how accurate it is) that shows how the two conflicting ideas, decay as revenue vs sales as revenue, can work alongside each other.

 

[DoubleWolf]

i've given a working analogy (though i'm not sure how accurate it is) that shows how the two conflicting ideas, decay as revenue vs sales as revenue, can work alongside each other.

If I go back the example you last provided, you said that the deposits could be counted as revenue, but then they keep some money on hand in a separate account to anticipate any draws on their contingent liability. As decay happens, they move the equivalent amount of money from this account to their revenue account. Correct me if I'm wrong here.

 

[Mr Trayles]

My point is that they can't make money from decay because peds are like lemonade.

Say what? I think you mean "Life is like lemonade". But whatever.

The person that sells the lemonade does not collect revenue as the person drinks it. So each amount of lemonade that disappears does not equate to revenue to the lemonade dealer.

Actually, if we must use this lemonade metaphore, yes, they do collect revenue as the person drinks. Yes, it does equate to revenue to the dealer.

The money that the lemonade represents is held by the dealer. As it is being drunk, the dealer sets aside some of it to use as he wishes while the rest is to be put back into the jug. (*Yecch!*)

Any left over lemonade not drunken, belongs to the lemonade drinker.

The confusion all stems from the fact that MA holds all the lemonade all the time. Does it or does it not actually belong to us, yada, yada, yada.

 

[DoubleWolf]

The money that the lemonade represents is held by the dealer. As it is being drunk, the dealer sets aside some of it to use as he wishes while the rest is to be put back into the jug. (*Yecch!*)

Any left over lemonade not drunken, belongs to the lemonade drinker.

Then the money he is holding on to is a liability that is owed to the lemonade drinkers. That's how a bank works, but that's not how it works here...

 

[dogofwar]

Nice post DoubleWolf. I've been away from Entropia but came here to checkout the forums.

How MMOs function has changed over the years and it has increasingly made me nervous. When micro-transactions entered into MMOs i had an uneasy feeling. Subscriptions, I trusted those because it was capped and flat. Everyone payed $10 or $20, not more. Micro-transactions aren't capped and it's not flat. If a player was rich enough they could fund the entire MMO and the rest of the players could play for free. If the company could tap into the richest players and learn how to fleece them then who would be there to stop them? They could also tap the most addicted players and who would would be there to stop them. All business exists to exploit, but who is there to regulate. And RCE made me feel even more uncomfortable. Now we can take money out. People can make profit now. It's a cesspool more and more like the real world now. We're entering a dangerous domain. Furthermore, with a finite pool of currency, there will always be losers so if you think this is just a game where you can come and be treated fairly and make your honest income then you're going to be butthurt. This is a #%! battlefield with money on the ground and we're doing whatever we can to get at the money on the ground. No mercy. I think all of this is just being expressed here and elsewhere.

Bottom line, my assessment is that if Entropia isn't a fun game without RCE then it's not a fun game with RCE. They have to add things to this game that're fun. I gave some examples. For example, I would like there to be raceways where I can be automatically timed and put in a top 1000 list. I'd pay maybe 1 ped for a chance to race on it. So I could go to the different speedways on a planet and get on the top 1000 list for each one. I think that would be fun. Sure, I wouldn't be making a profit, but it would be hella fun and to me that's making a profit. This game needs more diversity. Sometimes I get the feeling that the RCE is limiting this game. Somehow the fact that real money is involved here makes everything too restricted. It's like the gravity here is 10x higher than it should be. Too much tension. It's hard to be at ease when you can lose where it hurts.

My opinion is SL is a superior RCE because real skills are involved and players can create everything. Entropia has a chance to be a better game by far when compared to the best SL games, but I don't know what the prospects are for this RCE and whether a hybrid version can even work. I just know that when I compare SL to Entropia my trust and real money is in SL but the potential entertainment value of SL is poor by comparison. This is because SL is made for creating things more than it's made for playing things.

I still think the best way to approach EU is to play it like a game while at the same time playing within your means. Try to make a profit, but if you're not enjoying it first and foremost then you're losing. If you want to make money, do it in RL or SL. Not to say you can't do it in Entropia, you can and people have proven it. But I think EU is best played as a game. If you're responsible about it and you enjoy it, then you're a winner.

 

[Mad Dog]

Can someone deposit then please

I have been waiting for a withdrawal for over the 30 business days. Please someone deposit so they have money to pay me! hahaha

Seriously, over 30 bus. days to get money out is wrong on so many levels. They want people to feel confident in their system? I sure don't.

Still waiting.. ( and yes, 30 business days not including weekends, holidays )

 

[Shew]

I have been waiting for a withdrawal for over the 30 business days. Please someone deposit so they have money to pay me! hahaha

Seriously, over 30 bus. days to get money out is wrong on so many levels. They want people to feel confident in their system? I sure don't.

Still waiting.. ( and yes, 30 business days not including weekends, holidays )

I just got mine, it was "submitted" on 7 Feb, and finally "committed" on the 30th business day (Monday) and in my bank account today. I agree they need to improve handling and COMMUNICATION in the process.

 

[Nicole]

How did you work that out?... I have never heard of a company refunding your money for worth more than what you paid lol ...

BTW, say if you are right.... maybe MA shouldn't promote it as an RCE (Real Currency Economy), which all their ads did...saying you can draw real money and so forth ... they should just say whatever you pay is a payment for the game and if you dont get it back stiff shit lol

I am going to get a refund of 10k on my 5k TV next time lol

I took out a lot more then I ever put in the game, over 1 million peds!

I bought uber gear in 2004 and sold out before the big crash about 2 or 3 years ago on example would be buying my
MM ( modified ep 40 laser pistol for 20,000 peds and selling it latter for 250,000 peds) Mod fap for 400,000 peds .

I don't think this can be done again, but I was lucky to be in a position to take out 10 times more then I ever put in game I guess the buyers of my items took the big lose though which does make me sad to see others lose money.

 

[Zavy]

It makes sense that on the bottom line (Income = Deposit - Withdraw - Expenses)

But it doesn't make sense to me to just take what ever you get spend it then say "oh I don't have your money right now, please wait"

MA makes money from decay and fees, Does make sense to me.

How else would you manage your money?

If 10 people deposit $10, MA now has $100. From decay it will determine how much of that money is theirs(MA) to spend on expenses. If each person decays $5 (50 peds) then MA has $50 that is theirs and $50 that is available in case those people withdrawl it.

From what you are saying, 10 people all deposit $10. MA now has $100. So they (MA) spend it. Then those 10 people ask for their money back and MA says "ok, wait 30 days" then they(MA) pray someone else deposits $100 so they can pay those people. That's just ludacris.

But you might be right, but that is how you get into the 'red' = debt.

I don't know how they do things and I could care less, but very interesting thread. You make sense, but the idea to run a company like that doesn't. Unless you are hoping that things will be better later.

So there is no spoon (peds). They just stand by their promise to payout, but there isn't any money there. Ahh the stockmarket crash.

Lesson of the day:
Credit is tool of the devil! Buy what you can afford or just do with out and wait till you can!
Ask yourself: Do you OWN everything you have? If no, that is why others have to do with out.

excuse the ramble.

Just my .00002 pecs

 

[Chopper]

I just got mine, it was "submitted" on 7 Feb, and finally "committed" on the 30th business day (Monday) and in my bank account today.

Very pleased to hear that, Shew...

Quicker would be better, obviously. But at least you got yours withing the promised 30 business days.

Mine was submitted on Feb 15th, so I guess I have another week to wait before I see it Committed...

 

[Xavier Target]

It makes sense that on the bottom line (Income = Deposit - Withdraw - Expenses)

From what you are saying, 10 people all deposit $10. MA now has $100. So they (MA) spend it. Then those 10 people ask for their money back and MA says "ok, wait 30 days" then they(MA) pray someone else deposits $100 so they can pay those people. That's just ludacris.

Its not quite that bad, since not all those $10 depositers can withdrawal their funds. Only those that have accumulated more than 1k Ped can withdrawal, so some portion of total PEDs in game can not be withdrawn unless they are willing to deposit more to reach the minimum withdrawal amount. The withdrawal wait period probably discourages some people from making the decision to deposit a little more, so they can withdrawal their account balance.

I wonder how much PED of the total stated in-game PED is in accts less than minimum withdrawal amount or in inactive accounts. If it is a high percentage, then MA may be much better off than we might assume by looking at their financial report.

My account is far below the minimum and probably always will be...

 

[Shew]

Very pleased to hear that, Shew...

Quicker would be better, obviously. But at least you got yours withing the promised 30 business days.

Mine was submitted on Feb 15th, so I guess I have another week to wait before I see it Committed...

Yours should show committed on the 28th. Nothing like waiting until the 30th day. Need to get as much interest on it as possible I suppose.

 

[R4tt3xx]

Good question. How long would it take us to run through 98.2 million ped?

Or better yet, how many months could MA survive without receiving any deposits? How long would it take them to just shut it down completely?

+-380 transactions at 5% decay per transaction, all gone. PEDs would be sitting in the hands of the platform provider.

You should watch this then.

 

[Magyar_Republic]

Thanks. I used the first post of this, as well as other pertinent information on my own site, to inform my society a bit.

I couldn't have said it better, so I didn't reinvent the wheel.

The original post has been linked at the bottom of the page.

http://www.laudanumonline.com/drupal/content/money-entropia-why-your-money-really-not-yours

 

[DoubleWolf]

Thanks. I used the first post of this, as well as other pertinent information on my own site, to inform my society a bit.

I couldn't have said it better, so I didn't reinvent the wheel.

The original post has been linked at the bottom of the page.

http://www.laudanumonline.com/drupal/content/money-entropia-why-your-money-really-not-yours

That's a nice collection of information. I hope my part helps out!

 

[Mega]

Yes they do.

 

[sky west]

I'll move the discussion to this thread, so we won't take the other thread off-topic.

Don't let the terms "deposit" and "withdrawal" confuse you. What is really happening is that you are PURCHASING a virtual currency that has no real value. You're buying Monopoly, play money. However, Mindark gives you the opportunity to REDEEM your virtual currency for real money. They aren't holding all the value of ped in the game on their books like a bank would.

They are essentially betting that they will receive more money each month than they will have requested from players to be refunded. If in any month more money is being requested to be refunded than what they receive, they will simply delay the withdraw requests until more money comes in. Hence the reason there have been some long delays recently for withdraws. Too many people withdrawing, not enough depositing...

So while we can calculate what the value of our accounts are worth to us, because we know that 10 PED exchanges for $1, that money does not actually belong to us, and we are not entitled to it. But since there is a PERCEPTION that we are, Mindark has put in place certain security features akin to a bank so as to improve customer confidence in the system. But that doesn't mean they work like a bank, which is a very common misconception among the community.

What they need to be betting on is keeping the running cost and profit margin within the decay revenue. If they have to resort to paying out customers with money they just recieved, they've already lost.

Despite what everyone may say and think, the only way for MA(or PP for that matter) to earn money is to take peds out of the game. Be it decay or selling.

MA's revenue does not come from decay...

This might be a helpful read for you:

https://www.planetcalypsoforum.com/forums/showthread.php?206946-MA-does-NOT-make-money-from-decay

Nice thread but it only focuses on one aspect of the business, namely the flow of funds and MA book keeping. The way you explain it it can never be a solid business plan that's sustainable, let alone profitable on the long term.

Imagine the begining of entropia from your point of view:
- So we are going to make this game where ppl can play with real money. Ppl can deposit real money for play money, and later (if there's any left ) they can change that play money into real money again.
* And how are we going to make money?
- Well, we're just going to use their deposits to fund the operation and take a nice cut. Hope they never withdraw, and when they do we're just going to wait until we get enough deposits to pay for the withdrawls. Should take around 30 days.
* And how are we supposed to survive in those 30 days? We've got expenses too, we can't put those on hold for 30 days while we collect to pay out. We need something better...


So what I'm trying to say here is, there's a difference between how the money is earned by means of a niftey construction called decay (which just boils down to taking peds out that can no longer be withdrawn), and the funds that flow to and from MA.

Sure, they don't have all the funds of EU sitting on an account looking pretty waiting to be paid out, but that's pretty standard in business. The funds are tied up in god knows what, german castles? But that's also true for any bank. None of them have enough to pay out all account holders, and they don't have to. So unless something nasty happens those funds can be used for 'other profitable activities' whatever that may lead to.

MA's revenue comes from the difference between deposits and withdrawals. So:

Net Deposits - Net Withdrawals = Net Revenue

That fact is CLEARLY stated by MA in nearly every financial report they have released. In addition, we are not a liability on their balance sheet, which means that our peds that we hold in game do not belong to us and have no real value. You can't argue that. It's presented as fact through their financials.

So once we deposit, that money is no longer ours. This means when they take decay away from us in the form of peds, MA does NOT receive revenue from us. They can't take revenue in the form of a deposit and then ALSO take revenue in the form of decay.

Go back to the lemonade example I provided in that thread. If I give you $5 for a glass of lemonade, and drink half of it, you didn't just make another $2.50. You still only have the $5 that I gave you. This is basic business. In addition, nearly every business has some form of refund policy. The money that they use to pay out refunds comes from the revenue that they received in that period. This business just happens to have a rather active refunding policy...

Listen, I don't want you to see things my way. I only want to stress that there's a different angle to look at this. I dont disagree that for a certain period(=financial statements), the difference between deposits and withdrawals can be seen as income for MA. But this is not the system how they make their money in EU!

This is about the difference between getting the money and earning the money. You are discribing the first, I'm focusing on the second. But we are both right.

Here's another example of different viewpoints:
You say that our peds ingame are worthless and you are right in that, but only from a legal point of view. Our peds are worthless ingame, yes, but when we withdraw these peds and everything goes as it should, those peds become real money again. Sure this happens at the sole courtesy of MA, but it does happen. It's only when bad things happen that we have risk of loosing our peds, and that's not something MA (actively) wants to see happen.

 

[Kerham]

Ye skywest, but you're one of the few people, and rest asured, doublewolf is in same position, who can conceptualize and talk on an abstract level. This thread wasn't intended for you, but for the ultimate clarification of all truckdrivers who are convinced that their weapon/armour/whateva' decay is paying MindArk's bills.

Decay is an engine for fixing a part of the deposited money into MA's pockets. Sweating is another one, even the very aspect that EU is f2p is such engine. Markup balancing is another. And so on.

The roots of this argument were, to clear things a bit:

- the market price evolution of low-decay guns in 2005-2007
- the everlasting consideration that nondepositors are freeloaders

So it ain't an academic dispute about the economic engine of EU, or at least I never felt this on the forums.

 

[mastermesh]

Its not quite that bad, since not all those $10 depositers can withdrawal their funds. Only those that have accumulated more than 1k Ped can withdrawal, so some portion of total PEDs in game can not be withdrawn unless they are willing to deposit more to reach the minimum withdrawal amount. The withdrawal wait period probably discourages some people from making the decision to deposit a little more, so they can withdrawal their account balance.

too true. #1 reason I think UL sib stuff will always be a bit rare! That 50% condition limit is a big deal in adding towards the 1k minimum, especially for melee folks.

 

[DoubleWolf]

This is about the difference between getting the money and earning the money. You are discribing the first, I'm focusing on the second. But we are both right.

Sorry, but I have to disagree with you here. I understand your line of thinking. It's how I initially believed the game worked. That once the decay occurs, it gives Mindark the permission to remove that amount from what they received as deposits. What you're failing to realize, however, is that the only way for this to be possible is if we are listed as a liability on their balance sheet. Like a bank would.

If you deposit into a bank, they don't count that as revenue. It goes on their books as an asset, and they are then free to use that money for lending and investment purposes to try to generate revenue. You become a liability to those assets. Any fees that occur on your account can then be counted as additional revenue as they are able to keep the asset, but reduce your liability. This is how many people around believe Mindark works, and who could blame them? The way they've touted the terms "deposit" and "withdrawal" could easily confuse someone not willing to dive into the financial statements and really see how it works.

Fact is though, I have yet to see someone be able to fully explain how they can actually take decay as revenue and use something found in their financial statements as supporting evidence. It simply isn't possible. Facts are facts, and you can't argue that.

 

[sky west]

Well, there's no need for MA to count deposits as a liablility because they are not a bank. Same goes for the system of revenue, they don't need to show it on their financial statements, so they don't. Revenue through decay happens on a ped level, which has nothing to do with RL financials. Deposits and withdrawls do, so they do show up on financial statements.

 

[DoubleWolf]

Well, there's no need for MA to count deposits as a liablility because they are not a bank. Same goes for the system of revenue, they don't need to show it on their financial statements, so they don't. Revenue through decay happens on a ped level, which has nothing to do with RL financials. Deposits and withdrawls do, so they do show up on financial statements.

I think you're just making assumptions about how it works. It's never been said anywhere that it works as you suggest, other than some things Marco has mentioned in the past, which are rather up for interpretation. However, what I'm suggesting is clearly supported through every piece of data in their financials, in addition to every word in the reports.

I've done my part to prove how it works. If you feel it works differently, find some supporting evidence for your claim.

 

[aridash]

Fact is though, I have yet to see someone be able to fully explain how they can actually take decay as revenue and use something found in their financial statements as supporting evidence. It simply isn't possible. Facts are facts, and you can't argue that.

you cant see a companies internal cross charging in their financial statements, it doesnt mean its not possible. MA isn't a bank, thats the fact missing here. Sky West's summary shows the situation perfectly. we know there is nothing in the financial report to use as evidence. however, there is, in the very presence of decay - it dosent serve any purpose unless it is for the stated function of creating revenue for MA. as a game device its unnecessary and overly complicated for no benefit to gameplay.

 

[DoubleWolf]

you cant see a companies internal cross charging in their financial statements, it doesnt mean its not possible. MA isn't a bank, thats the fact missing here. Sky West's summary shows the situation perfectly. we know there is nothing in the financial report to use as evidence. however, there is, in the very presence of decay - it dosent serve any purpose unless it is for the stated function of creating revenue for MA. as a game device its unnecessary and overly complicated for no benefit to gameplay.

I've already said, the purpose of decay is to stimulate depositing. The reduction of peds in the game creates a reason to continually deposit. Otherwise, at some point, there would be no money left to play with.

But if you think that 50 ped worth of decay (that doesn't get cycled back into the loot pool) is equal to $5 worth of revenue to Mindark, you are mistaken.

If you think it works differently, don't just tell me so, but SHOW me how you came to that conclusion.

 

[sky west]

I think you're just making assumptions about how it works. It's never been said anywhere that it works as you suggest, other than some things Marco has mentioned in the past, which are rather up for interpretation. However, what I'm suggesting is clearly supported through every piece of data in their financials, in addition to every word in the reports.

I've done my part to prove how it works. If you feel it works differently, find some supporting evidence for your claim.

Sure I'm making assumptions, I'm just telling how I think it works based on common sense and logic. I'm not looking for evidence nor do I need it. And if I knew how it worked I wouldn't be posting on it.

I also think you haven't proven anything. The lack of relevant information in your evidence does not make a solid case for it not being there at all. Not finding gold in your house in no argument for it not being anywhere else.

 

[aridash]

I've already said, the purpose of decay is to stimulate depositing.

because the losses excluding decay are not sufficient to need depositing? like i say, unnecessary.

But if you think that 50 ped worth of decay (that doesn't get cycled back into the loot pool) is equal to $5 worth of revenue to Mindark, you are mistaken.

i dont think its a direct relationship in this way. but where can you prove this idea is mistaken? we are all staring at a black box.

 

[DoubleWolf]

I also think you haven't proven anything. The lack of relevant information in your evidence does not make a solid case for it not being there at all. Not finding gold in your house in no argument for it not being anywhere else.

i dont think its a direct relationship in this way. but where can you prove this idea is mistaken? we are all staring at a black box.

Ok gentlemen, let's do a little exercise.

We'll take 5 players that will be representative of typical entropia players. Each player deposits $100. For simplicity's sake, we will assume no transaction fees or minimum withdrawal amounts. At the end of one month of play, they arrive at these results:

Player 1: 0 ped balance. - This player played very heavily, sold everything they looted to the TT and paid out a lot in markup
Player 2: 500 ped balance. - This player sold some loot at markup, TT'd the rest.
Player 3: 900 ped balance. - Player was very economical, selling everything at markup and paying out as little as possible, but came short of breakeven.
Player 4: 1400 ped balance. - This player was the one selling all their items to other players, and through markup, was able to turn a profit. This player will withdraw 400 ped of his balance during the same month.
Player 5: 800 ped balance. - This player decided the game is not for them, and will withdraw their entire remaining 800 ped balance during that month. (EDIT - Changed to 800 from 1000 to reflect some playing of the game)

What is Mindark's net revenue for this month? Feel free to make any additional assumptions needed to explain unknown variables such as the amount of decay MA keeps, how much goes to the loot pool, etc.

My answer:

($500 deposits) - ($120 withdrawals) = $380 net revenue

Any income model you come up with should be able to explain this scenario. My answer may be the most simplest explanation, but remember: the guys at Mindark are not mathematical geniuses. They are business men. I have many doubts about their ability to create a system more complicated than this.

Now if you guys can't come up with an answer to this problem, even with me allowing you to make any additional assumptions as needed, then I have to conclude that you have no clue what you're talking about. If you can't explain your own theory or position on this, then you are just simply arguing with me for the sake of arguing, in which case, I will be done discussing this topic with you.

I really would like you to answer this though. Because, at this point, I really have no idea what is going on inside your heads, and showing me how you think it works would help.

 

[JohnCapital]

This player will withdraw 400 ped of his balance during the same month.

How? I thought minimum withdraw was 1,000 peds.


Except for this, I see no real problem with your example. Other than to say that MA also has (skipping the 400 withdrawal issue) $240 in liabilities at the moment.