Let me bring you quickly up to speed. Diablo 3 is a hack-and-slash dungeon crawl game released by Blizzard Entertainment — the same company behind World of Warcraft and Starcraft. When it was finally released last month, Diablo 3 had been in development for 11 years — but for the most part, except for much-improved graphics, the game is really just a gentle evolution of Diablo 2. The story is awful, the game is embarrassingly easy on Normal mode and almost unplayable on the highest (Inferno) difficulty, and the fact that the game cannot be played offline caused all sorts of connection issues during launch. In South Korea, this last point even led to a government investigation and refunds for affected players.

By far the most significant addition to Diablo 3, however, is the real-money auction house (RMAH), which was turned on a month after the game’s public release. In Diablo 2 (or any MMO), you can buy items and gold from the black market. You transfer real money to a shady figure via PayPal, and you receive in-game, virtual items and gold in return — or not, if you’re the victim of a scam. With Diablo 3, Blizzard decided to formalize and sanitize the process. In the Diablo 3 RMAH, you can buy and sell items and gold for real money — just link your PayPal account to Blizzard’s Battle.net service, and off you go.

Being plagued by gameplay, loot, and connectivity issues is bad enough — but, to put it bluntly, the addition of the RMAH simply ruined Diablo 3. Now whenever an item drops, instead of equipping it or giving it to a friend, you immediately think of its real money value. Now you don’t play the game for fun; you play for money.

More than that, though, Blizzard turned the entire userbase into an army of sweatshop slaves.

You see, on every single auction transaction, Blizzard takes a cut. For items, the cut is $1 (or the equivalent in your country). For commodities (gold, potions, gems) it’s 15%. It gets better!

When you set up an auction, you have to decide on where the proceeds will go to: either to PayPal, or your Battle.net Balance. Any money that goes into your Battle.net Balance is nonrefundable — you can only spend it on other Blizzard goods (such as a WoW subscription or more D3 auctions). If you choose PayPal — i.e. you decide to cash out — then Blizzard takes another 15%. There’s no rationale behind this additional 15% tax; Blizzard even admits that you might be subject to further PayPal fees.

So, for example, if I sell my Sword of a Thousand Truths for $20 and decide to receive funds via PayPal, Blizzard takes $1, and then 15% of $19, for a grand total of $3.85. Just so you begin to understand the scale of this, items readily sell for $50 or more.

You can also buy in-game gold for real money. Blizzard takes a 15% cut of all gold sales, and then another 15% if you cash out to PayPal.

It still gets better.

In a stroke of genius, Blizzard set a minimum price of $2.5 per 1 million gold. To put this into perspective, you can farm around 500,000 gold per hour; so, before Blizztax, you can earn $1.25/hour. This stops inflation, which slowly decreases the value of gold. This also provides a very solid backstop for item pricing: If an item costs 1 million gold on the gold auction house, then $2.50 is a good starting point on the RMAH.

Then, of course, there are bots. Bots are software programs that automatically gather gold. Almost every online game, including Diablo 3 and World of Warcraft, is plagued by bots. Usually these bots are run by gold farmers: You buy 10 (or 100, or 1000) copies of D3, and then just leave the bots to farm gold. Each bot can earn $1.25 per hour. This is significantly higher than the minimum wage in most non-Western countries. Alternatively, you replace bots with low-wage Asian (usually Chinese) workers.

In other games, where black market trade is rife, bots are obviously frowned upon. In D3, where there’s a minimum price for gold — where Blizzard always gets at least 15% of every transaction — bots don’t matter. They can’t ruin the economy — they just stand to make Blizzard more money. The best bit, with regard to bots and gold farmers, is that they’ve known from the start that the RMAH would come — and so they’ve saved up billions of gold and awesome magic items for one truly epic payday.

Blizzard even gets its pound of flesh from quitters: If you quit, of course you’re going to sell all of your items on the RMAH. Furthermore, Blizzard has said that, in the future, you’ll be able to sell entire characters on the RMAH.

Finally, just to tip you over the edge, think about this: What if Blizzard itself started selling gold and items on the RMAH? The FAQ states that “at this time” Blizzard doesn’t do this — but in the future, who knows? The Diablo 3 auction house is anonymous — the seller is never listed — and so Blizzard could easily sell gold and items without anyone noticing. What if Blizzard decided to sell special items on the RMAH? Uber-fans of games and franchises will pay almost anything for unique or exclusive items.

To be honest, this entire scheme of turning players into workers is brilliant — at least from the point of view of Activision Blizzard’s shareholders, anyway. I wish I’d thought of it. The RMAH stands to earn the company billions of dollars. Heck, at $1.25/hour, it could even elevate entire swathes of China and other developing countries out of poverty.

Unfortunately, Blizzard seems to have forgotten the most vital variable when designing the RMAH: The players. If everyone logs in for the sole reason of finding and selling magic items, who will buy them? For Diablo 3 to succeed, it needs a critical mass of players who want to spend hundreds of dollars on gold and items. For this to occur, the game itself has to be worth playing. When players realize that the end-game is awful and merely designed to feed the RMAH, they will leave the game in droves and Diablo 3 will die.

Read more about Diablo 3’s always-online DRM