Intrinsic motivation is sustained by novel challenges that are well-balanced against the player's skill level
Unless, of course, you are talking about social gamers who are just there to to enjoy the community aspects... or to roleplay... or to find a girlfriend... or to enjoy the graphics... or because their friends invited them... or because it's the only MMO on the PS3... or because they like the franchise... or the storyline... or hope to date Yuna... or brag about learning Japanese while playing...
That's quite a part about motivation one should not overlook when talking about game design: motivation, even the intrinsic type, depends a lot on the audience you are targeting. Your principles certainly apply to many, but just as certainly there are many a narrow focus on the reward mechanics you consider pivotal does not apply to. Just my 2C.
I could write books on the subject, but I'm trying to be poignant here. The vast majority of the MMO subscribers have gameplay-oriented goals and motivations. It's a very small percentage that encompasses all of those other motivations combined. I would not agree that there are "many" who these principles don't apply to, not in any meaningful relative terms. The social element is the most compelling, but here it generally depends upon people who are enjoying the gameplay, and these days, there are numerous online social alternatives to MMOs. I didn't say that it wasn't an aspect of intrinsic motivation, mind you, just that it wasn't among the most influential. Four or five down the list, perhaps, but not likely at all to be the reason why the game succeeds or fails, is my point.
P.S.: In reality, the line between extrinsic and intrinsic motivation is quite blurry.
It's really not. You can look at Deci and Ryan's theory of self determination and think of it as a blurry spectrum, but that whole perspective sort of glosses over the discrete nature of motivation (and is not especially well-defended). The line between extrinsic and intrinsic motivation is simply this: Did you want to do it, or did you not want to do it, but did it anyway? If you try to examine it as a complex, long-term behavior such as "playing FFXIV," or "raising a child," only then does it start to look murky. If you're looking at it discretely, as in, "doing something in FFXIV right now," or "interacting with my child right now," the lines become black and white very quickly. The latter is how the effective experience designer works--they look at the parts of the experience required to build the whole
experience. Playing FFXIV is comprised of many discrete instances of motivation, that frequently modulate between intrinsic, extrinsic and amotivation.
But yes, a question like, "Are you intrinsically motivated or extrinsically motivated to play FFXIV?" is nonsense. Conscious and subconscious states are far too ephemeral to give meaning to such questions.