How does MA and FPC make their money?

simple: Prostitution

By scraping off as much money as they can from the ingame funds without at least chasing away to many participants.

MA make their money from the difference between deposits and withdrawals.

Decay and loot return are set only so as to affect players' mentality.

If the balance between deposits and withdrawals ever don't cover MA's costs, then the RL creditors (employees, taxes, banks, etc), will get whatever cash MA have, any Ped balances or deposit history are irrelevant.

chevrons said:

MA make their money from the difference between deposits and withdrawals.

Decay and loot return are set only so as to affect players' mentality.

If the balance between deposits and withdrawals ever don't cover MA's costs, then the RL creditors (employees, taxes, banks, etc), will get whatever cash MA have, any Ped balances or deposit history are irrelevant.

Click to expand...

Building further on this, decay and quite some other fees and issues where MA takes money from the system are only meant to calculate some kind of safe bottom line of money in the system that MA should not consume. At the moment I believe their safe bottom line is very low, hence bad returns for a very long time already.

Visualized:

Total money in PE
------------------------------ A

Total in decay/fees

----------------------------- B

Money MA takes out of the system without decay/fees counterpart

------------------------------ C

Reserves

------------------------------ D
Bancrupcy

A-B= money that MA actually can use without doing any harm to the system. This money has been paid by the participants, directly to MA.

B-C= money that MAs balancing manager carefully has to balance in order to pay the bills on MAs side which exceed their income of A-B, meanwhile keeping the community happy enough to not see to many players leave out of frustration. Also the money paying for withdrawls. As soon as the withdrawl time is raising again this means that the balancing manager has taken to much from this part eg. MA needs to much from these reserves to pay the bills compared to the deposits they have received recently.
So, B-D= all money ingame which hasn't been paid to MA as decay or a fee. This money pays bills and withdrawls, forms the lootpool and represents the tt value of all ingame items.

B= the safe bottom line
C= the bankrupcy bottom line

As long as A-B pays for all MAs bills and thus B=C, the system is very healthy and the way I believe mr. Timkrans once envisioned his Universe. As soon as money from B-C is needed to pay for the bills things are getty tricky and I truly believe we are in this situation for A LOT of years already, no matter what MA says about what their income is. When bills need to be paid and the money is there, only on paper it would be wiser to not spend that money, you WILL use that money to pay the bills. Period!
As soon as C=D and all reserves are gone, MA would be bankrupt.

C is a very thin line to walk on, B as the bottomline for MAs income would be the fairest towards the plyers and the most healthiest for the EU economy. But I truly believe MA is struggling for years already to reach B=C.

Got that ya'll? Nothing else to it.

Accounting

Since I am accountant for a living, I'll put in my 2 cents. Putting in a deposit is like buying a gift card at a store. This deposit is a liability to the company. In this case, a fee is charge at purchase(revenue). One might say this fee only covers the credit card fees, but that is irrelevent. It is still revenue. Any event which decreases the total value of your deposit is also a revenue to EU(unless it is a player to player transfer). This includes what we refer to as decay, ammo use, crafting losses, auctions fees, estate rent, withdrawal fees etc, but since a loot pool must be created only a percentage of all those activities is taken as revenue and the rest is funneled to fund loot(exactly like a casino). This percentage allocation can be complicated in various ways. Perhaps they only take revenue from some activites and not others. It may take all equipment decay and no auction fees or a percentage of each. In the end, the percentage of all the various ways to reduce your ped value taken is all that matters. The percentage may change (just like a casino) either manually or by some formula. The player exchanges are what makes it all different than a casino. Some player exchanges are taxed via the auction fee and some are not.

The other unique aspect is the company sells off virtual assets to players/investors making them virtual share holders since those assets can be used to profit from other players. Casinos have owners and/or shareholders, but they don't sell individual slot machines or sections of the casinos which is essentially what is happening here. These virtual assets have some amount of investment to create(programmer time, etc.), so when these items are sold some percentage of the sale is profit.

I imagine that the total deposits not yet taken to revenue is also significant and either generates interest revenue or is used as low cost capital. From what I read on withdrawals, It seems they manage cash outflows carefully. I think it would be smart of them to speed up the withdrawal process in order to improve confidence in the game economy. I imagine most people who withdrawal ultimately end up putting it back in (just like a casino, winners tend to gamble more after winning some), so I really don't understand the withdrawal delays people are writing about on here. I think the delays make people wonder about how solvent the whole game economy is, since deposits into EU are received by them instantly. Confidence in an economy is vital. If the bank told me I had to wait 30 business days for my withdrawal, I would never put a penny in there.

Some of the theories in here about how MA / FPC make their money are amazing to me. Especially considering that there have been official statements reguarding this and their financial reports are available for anyone who wants to read them... NightHawk is 100% right, a percentage of decay is taken, auction fees go to the loot pool, ammo spent and materials used up in crafting go to the loot pool. How does this work with melee weapons you say? Easy. not ALL decay is taken, only a percentage. Some of the decay from that melee weapon is treadted exactly the same as ammo and goes back to the loot pool.

All this has been said before in threads from MA and FPC in just the short time I've been playing EU. It's not some big mystery where they get their revnue.

they also get the taxes on the LAs and shops that are in locations no participant owns the LA to, i.e. Omegaton, Sakura, Genesis, and a few other locations. Might not be a lot, but it's more then nothing.

It's simple...

I deposit $15 and get appropriate amount of weapons/ammo/etc.

Then I hunt and get loot that I can sell for ped.

If my items didn't decay or my ammo didn't run out, I could hunt indefinitely and it'd all be profit.

We would still need to deposit for the initial equipment and later on when we upgrade depending on how lucky we're selling our junk. We'd gradually get better weapons/gear in order to save time. But think about how big our storage would get if things didn't decay. Every player would have dozens of copies of every gun in storage. Costs would plummet for items as more of them entered storage. Players would deposit less and less in theory because prices would collapse as more items were created. There'd be mountains of loot with no where to go. All of this would have to be stored in a database/file-system too. Every MMO i've ever known HAD to have a way to limit loot storage because there's a physical limit. Eventually too many items lag the server and you too because they have to be sent across the internet.

I can't imagine a game without some form of decay. It's needed even if the economy isn't RCE. Games that don't have in-your-face decay for items (the need to repair) limit item/loot accumulation in other ways by limiting drop rate and/or by deleting old accounts and/or by deleting items left on the ground for more than 5 minutes and/or by changing the price and/or by making the game less item-centered and more stat centered instead and/or etc. The fact that EU uses decay doesn't stand out to me.

They could have taken this game in a million different directions. And no matter where htey went with it because this is an RCE players would always have been skeptical or dismissive or hostile towards MA. Many players (not any in particular) just don't seem to understand that there's finite currency in the economy and that this means there's a hard limit on your ability to make cash. This is economic pvp. Not everyone can profit in fact even in the best circumstances only 50% are going to profit, and that's about as unlikely as micheal jackson rising from the dead and looking like he did in 1985 (before he went under the knife). Since we know MA taxes deposits (and other things in the game, like auction and ul decay) this further decreases the number who will profit to somewhere between 15% - 35% in my estimation. And if you take into account that capitalism is probably in full swing you should cut that figure to 5-20%.

There's a pot of gold and there's a limited amount of gold in it that players put there and who gets it and runs or profits is dependent on a dynamic relationship between MA and the players. But make no mistake, no matter what MA or the players do there's a set limit on how many can profit because there's finite currency.

We all get caught up in the trees and don't see hte forest. Stop analyzing and nitpicking little mistakes everyone makes. Step back a little bit and look at the game overall. There're ins and outs.

Same tyhing going on in hte world we live in. Generally, there's finite currency (but the US is printing money and living on a chinese loan). Not everybody can be bill gates. Only so many people can be X rich or X poor.

It's a battle out there for resources.