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"Fun" Money on Magic Online

If you haven't heard by now, Magic Online is undergoing some significant changes in the ways we enter events and how we are awarded prizes in those events. So far the response to this announcement has been mixed. People who have free "god accounts" (i.e. Wizards employees and others associated with the brand) have come out vocally in support of the change in a very Mitt Romney-esque manner:"Collections? What are those? Something poor people have? I've got free power nine!" Lee Sharpe got a fluffy interview on this week's Downtime with the always lovable Rich Hagon and spent a half hour talking about how wonderful these changes are going to be without a single mention of the downsides. Yes, I understand Downtime is a promotional tool for Wizards, but from my perspective the entire interview came across like an infomercial — or worse yet, some sort of propaganda film. On the other hand, the reaction from the playerbase has been overwhelmingly negative with a hint of confusion thrown in for good measure. People have been selling off their collections (an overreaction in my opinion), prices have been dropping (my collection is down 10 percent over the past two days) and the ticket has been devalued by many major vendors (from 0.95 to 0.90). While many people have already shared their opinions on this change, today I'd like to break down the issue from my perspective. 

The Problem

One of the big problems on Magic Online over the past few months is that the prices of boosters has been extremely low, which most people agree is the result of the huge increase in the price of redemption (from $5 to $25) implemented just before Gatecrash was released. Unfortunately Wizards (apparently) did not view going back to the old redemption price as an option; although this may be the easiest solution to the mess, it would cut into profits.

Booster prices are important because boosters are the prizes for winning constructed events. For instance, when you play a two-man queue, each player pays in 2 tix (1 ticket = 1 dollar) and the winner of the match gets one booster. This system works fine when boosters are worth between 3 and 4 tix. Wizards basically gets to sell a booster for MSRP and the winner of the match can immediately trade the booster for tix so they get between $3 and $4 for their 2 tix investment. Recently, however, the boosters awarded for winning an event have had a value of closer to 2 tix which means you could win infinite matches in a row (obviously impossible) and still not grow your collection (or worse yet, even lose money). 

Due to feedback from players, Wizards decided it needed to do something to fix this problem. Losing money even when you win an event is not a sustainable model; people will just stop playing events. So after the formation of an "Economic Strike Force" (which ironically did not contain a single member with an economic degree), Wizards came up with a solution.

The Solution

Wizards decided that constructed events needed a more consistent payout. Instead of dealing with the fluctuation in booster pack prices, winning an event should have the same EV when a booster is worth 1.8 tix as when it is worth 3.8 tix — a good idea. They also realized that having constructed events pay out fewer boosters should stabilize (increase) the price of boosters, which is true. Constructed events put boosters into the system and limited events take boosters out of the system. Reducing the number of booster coming in while keeping the number going out the same will decrease the supply of booster and should increase prices on the secondary market. In theory, I like both of the ideas. As long as they are implemented properly they should be a positive for Magic Online players. 

The Implementation

Leave it to Magic Online to come up with a good idea and then implement it in the most illogical, confusing and problematic way possible. Instead of creating a booster exchanges, lowering redemption prices or any of the other solutions players have proposed over the past few months, Wizards decided to do exactly what a weak economy should not do: create a brand new currency. Better yet, the currency they created isn't even real.

Play Points

Remember when the Simpsons went to Itchy and Scratchy land and Homer is convinced to trade his real dollars for Itchy and Scratchy Money that "works just like regular money, but it's, er... fun" only to find out that no one will except his "fun" money? Well this is what is happening on Magic Online with "play points." Play points are the new payout for all constructed events on Magic Online (although 8-man and Daily Events also award a small number of boosters in addition to play points). Win a two-man? You get 30 play points. An eight-man? 140 play points and two boosters. A daily event? 360 play points and six boosters. The big problem is play points are phantom points. You can't trade them, sell them, or do anything with them except enter another event. 

Wizards is trying to convince us that one play point is worth 1/10 of a ticket, and that they are more "fun" than real tickets as Lee Sharpe mentioned in his interview since it will allow for most cool things to happen in the future. We've been hearing this about leagues for how many years now? But in reality, constructed events are now paying out Itchy and Scratchy Money, which is worthless — by worthless I mean worth less than WOTC is suggesting.

Let me put it this way: I have a $10 gift card to Chipotle. For some blasphemous reason I don't like Chipotle so I decide to sell my gift card for cash so I start asking people to give me $10 for the gift card. No one in their right might is going to give me $10 of real money (that they could spend anywhere) for $10 of Chipotle money (that is only good at the restaurant). They are giving up the flexibility of going to Starbucks, getting their car washed, or buying a copy of Sorin, Lord of Innistrad. This flexibility has real value. If I want to turn my gift card into cash, I'll probably have to sell it for $6 or $7 to make up for the buyer's loss of flexibility. Play points are even less valuable than this gift card because you can't sell/trade them even if you wanted to.

Imagine this change in the world of paper Magic. Instead of paying out $4,000 for winning a Grand Prix, the winner will get $1500 and free entry into the next 35 GPs they attend. Or you win a Pro Tour and instead of $40,000, you get $5,000 and 2,000 t-shirts that say "I'm a Pro Tour champion." What if you don't attend GP's very often? What if you don't want to wear a fresh copy of the same T-shirt for the next 10 years? Wizards doesn't care — since they value the 2,000 t-shirts at $20 each, from their perspective you are actually coming out ahead in the deal.

Turning Fun Money Into Real Money

Now there is one way of turning the Itchy and Scratchy dollar you win in constructed events into real money: you can use your fun money to play limited events, but here their are two problems. First, this process takes time. Under the old system you could win X packs from a constructed events, sell them to a bot for Y tickets, and in just a couple minutes you could have something of real value in tickets that you could use for any number of purposes including buying cards, playing more events, or turning them into actual money you can spend in the real world. Under the new system you'll need to sit through several hours of limited (which are unaffected directly by these changes, except for the fact you can now use play points to join events), hope you perform well enough to win real prizes (aka booster packs), and then turn the packs into tix. If you are a very good constructed player you will end up with a backlog of play points — a backlog that you will either require you to quit your job and play limited events 16 hours a day to cash them all out, or just come to grips with the fact that winning another queue or daily is literally valueless. While players who regularly play both constructed and limited will be less impacted by this change, players like Gerry Thompson who almost exclusively play constructed events definitely get the raw end of the deal (which is ironic, since the change is marketed as a way to help constructed players). 

Maybe more importantly, adding another step into the cash-out process (and by "cash out" I don't necessarily mean turning tix into actual money; the same thing holds true for getting tix for other purposes like buying cards to build a new deck) effectively doubles Wizard's rake. When you enter a limited event with play points you are, in essence, paying full MSRP for your packs and tixs ($4 per pack and $1 per tix). Assuming you can sell the boosters you win for 3.5 tix (based on the assumption that pack prices increase as a result of this change), a 50 MWP will leave you losing $5.50 every draft. Even at a sterling 60 MWP, you'll be losing nearly $3. This is a huge price increase for people who play a lot of constructed. In fact, at a 50 MWP in limited, Wizards is taking 40 percent of the constructed winnings when you attempt to turn them into tix. 

As I mentioned before, play points are not worth as much as Wizards is suggesting, but this doesn't really matter in the context of turning play points into tix through limited because there is no avenue to acquiring play points except for playing constructed. So even if the ratio is 15 or even 20 play points to 1 tix instead of WOTC's 10 to 1, you are always paying Wizard's rate when you "buy" the tix. A market value for play points doesn't exist because there is no market. If play points were tradable, this would be a different story. 

Basically, under the guise of saving constructed players from low-pack prices, Wizards is actually taking a significant amount of money out of the pockets of constructed players themselves. This change is especially painful for the very best constructed player who will end up with an unusable, unsellable, and untradable backlog of play points, and the average constructed player who won't be able to use their winnings to improve their decks.

Who do these Changes Hurt?

  • Constructed Grinders: If you are looking to make playing Magic Online a source of income, the dream is dead. Not only is the cost of cashing out significantly higher (as we just talked about), but the best events for grinding (Dailies) were gutted. The cost of entry was doubled and even counting the fun money at full Wizards value, payouts were only increased by 26 percent. 
  • Most Constructed Players: If you already have a significant Magic Online collection and only care about playing as many two or eight man queues as possible for testing purposes, this change isn't that bad for you. If you compare it to playing for 2 tix boosters, it's probably a net positive. However, new players who are looking to build an inexpensive deck and slowly expand their collection from their winnings get crushed since their winnings can no longer be easily turned into new cards or decks. 
  • Average/Bad Limited Players: Assuming this change has its intended effect of increasing booster prices, joining a limited event will be more expensive. This means if you do not have a reasonable expectation of winning prizes, you will lose more each draft than under the old system. 
  • People with large collections: While this is likely (hopefully) a short-term problem, the value of cards on Magic Online has crashed over the past couple days. While this is likely due to a combination of forces (the end of Modern season and normal sell-offs in preparation for the Magic Origins prerelease events), there is little doubt that the play points announcement is playing a significant role (most of the people I've talked to attribute between 30 and 60 percent of the downturn to the payout changes). 

Who do these Changes Help?

  • Good Limited Players: While average and poor limited players will lose more per draft, good and very good limited players will actually come out ahead with packs being worth more. When packs cost $2, you'll pay a total of $8 for a chance of winning $16 (a 100 percent gain). When packs cost $4 you'll pay $14 for a chance of winning $32 (a 129 percent increase).
  • Constructed Players that Only Care about Playing Another Event: If you have no real interest in cashing out or growing your collection, these changes actually help. You don't have to worry about low booster prices and instead you know that, no matter what, a good performance in a two or eight man will guarantee you at least another event and a half.
  • Wizards: They get more money in their pocket. Even better, they get to do so under the guise of fixing a problem.

Moving Forward

First off, I'm not selling my collection and I don't believe you should either (this is especially true now that prices have already decreased). While I'm unhappy with these changes, we've been through worse in the recent past (for instance, November 2013 when Daily Events went offline or the switch to V4) and the general belief among the Magic Online sfinance community is that price will recover and this is a short term blip rather than a game ender. 

In fact, I'm very tempted to start buying over the next week or so. A complete set of Khans of Tarkir has fallen over 10 tix in the past four days on Magic Online while the paper price remains unmoved. If this trend continues, there may be some pretty sweet arbitrage opportunity in redeeming sets from Magic Online to sell on the paper market. This isn't even considering the opportunity to buy staples you want to play with on Magic Online at a significant discount. Take these cards, for example:

I also think that it is likely that Wizards will be forced to make changes to the payout of Daily Events — either that or they will die a slow death. It's difficult for many players to justify spending four or more hours playing an event even when the EV is good, so changing the payout so that it is not significantly better than shorter events really decreases the appeal. In fact, one analysis of the new payouts posted on Reddit declared that "average players will find better results dropping [from Daily Events] to the 8-man queues." (I should note, I don't agree with most the general conclusion of the post since it fails to recognize that the actual value of play points is significantly less than what we are forced to pay for them, but it is true that the comparative EV of 8-mans and Daily Events is much closer than before). If you are interested in a very good statistical breakdown of constructed prize payouts under the new and old systems check out by Mattia De Colle.


  • Starting August 12, all constructed events on Magic Online (with the exceptions of PPTQ's) will be paying out exclusively or mostly play points (aka "fun money" or Itchy and Scratchy Money).
  • Wizards has pegged the value of play points as 10 to 1 event tix, but in a more real sense they have significantly less value since they cannot be bought, sold or traded.
  • Turning constructed winnings into cards, tix or cash is significantly more difficult as a result of this change. Instead of just trading your packs to a bot for tix, you need to play another (typically limited) event and hope to perform well enough to earn prizes with actual value.
  • It will be harder for an average player to get the cards they need for their decks without putting money into the system either through the store or by buying cards from a vendor.
  • Daily Events are basically dead until and if Wizards changes the payout. 
  • 8-Man and 2-Man constructed queues are better than when booster prices are low if you don't mind being paid in Itchy and Scratchy Money, but worse than when booster prices are high. 
  • Card prices are currently in a free fall which I plan to ride out. Everyone I've talked to agrees that this is mostly likely a short term problem and not the death of Magic Online.
  • If prices continue to drop, I will strongly consider buying more cards rather than selling my collection, either in hopes of redeeming cheap paper sets or to see future gains on Magic Online.
  • Magic Online is a very significant part of Wizards' profits (30 to 40 percent of total revenues per Worth in 2008) and despite their incompetence, they have a major stake in seeing it succeed. 


Anyway, that's all for today. I know this is a confusing topic, so if you have any questions make sure to let me know in the comments and I'll do my best to answer them (although I'm trying to figure all this out right along with the rest of you). As always you can reach me on Twitter (or MTGO) @SaffronOlive. 

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