Let's Talk: MMO Economies (LONG!)

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Let's Talk: MMO Economies (LONG!)

Postby [FDG]Sundae » Fri May 15, 2009 4:38 pm

This is a cross-post from the Fudge forums. It's a discussion of MMORPG economies, their general failings, and what a company needs to do in order to create a stable, functioning economy. Very long, sets some ground-work, and leaves it open to discussion.

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Between Guild Wars, EVE Online, World of Warcraft, Last Chaos, Ultima Online, and all those other silly games we've tried now and then, we've all played a darned large quantity of MMO-style games.

This is a discussion of economies. In particular, it's a discussion of how to properly plan an MMO economy and make it function IN LONG TERM. By "In Long Term" we mean at end-game stages and at end-of-franchise stages, such as a game announcing no further expansions or content. Let's ignore the "announced the game will be shut down" possibilities - that's an end-of-the-world scenario, and all bets are basically off at that point.

Failures of Existing Games:

Guild Wars: The economy of Guild Wars is entirely driven by demand for new elite items. "Necessities" are either free or very cheap. For example, a signet is only about 15K to buy a guild hall, skills are 1K at a trader, as are capture signets, and ID kits for your items invariably make a profit on their costs within 4-5 items. When Eye of the North was announced to be the last content pack, any item not of absolutely insane rarity fell off in price within two months. Everyone who wanted one had one, and with nothing new on the horizon in the future, there was no point in focusing on trade profits (unless you were trying for one of the insane rarity items). The insane-rarity items are well beyond the means of even an above-average player who tries to make a profit, which effectively means this was not a valid means of maintaining a stable economy. In short... money never leaves the economy in Guild Wars, and now there's nothing new to buy with it.

EVE Online: The largest issue with EVE, and hopefully Scythe42^ can add a bit of insight here, is the degree of economy inflation over the last few years. My data ends at the end of 2007 unfortunately, but from 2005 to 2007 (the last report from the economist that EVE hired to study their game), EVE-Online had a 70% annual inflation in prices, while total player wealth went from about 1.5T to 80T in the same time-frame. That's a 60-fold increase in wealth, which based on the player counts at the time puts the wealth increase at roughly 30-40X in total ISK value *per player* up through 2007. You were healthy middle class at the end of 2007 if you had 450B ISK, and from what I'm seeing in SA, this is no longer the case. Splodey - please give insight if you have any.

Last Chaos: This game's economic failure is obvious: The only thing that is of any value in the game is leveling up, because nothing ever happens. Therefore, the only items of true value were those which allowed you to level your character up faster. Gems which increased your experience gained per kill sold for more than anything else in the game (for equal levels - high end armor would sell for more than a low end gem, for example, but a high end gem would easily dwarf the high end armor). In the time since I last played it, the prices for gems have increased 1000-fold, due to the majority of the existing player-base reaching areas where they could make that much more money. Effectively, the low-level characters are shut out of the economic system, which has resulted in a two-bubble economic system of low-end activity and high-end, where the prices are meaningless to one bubble, and the items are meaningless to the other.

Ultima Online: Ultima Online has no drain from the economy except in the Felucca facets, which are PvP permitted. However... even there, there is little loss due to the addition of item insurance to the game. In early days prior to the EA take-over, you could be attacked and killed (and honestly far too often, IMO), losing every item you owned after being killed. While it was no fun as a newbie character (and thus I don't fault EA in making the new shard arrangements for no PvP areas), it resulted in the ability to not lose any of your wealth when you die. For about 1.5K (maybe it was 5K? Either way - it was an insignificant amount), you could "insure" an item against death. If you died, the insurance would kick in and instead of the item dropping on your corpse it would instead appear on you when you resurrected yourself. You therefore never lost your rare gear, and therefore never had to go buy armor / weapons / stuff.

As of 2007, the only items of value in Ultima Online were discontinued Samurai-expansion rare armors (0% chance of drop), old holiday items (0% chance of drop), Stat/Skill Scrolls (1% chance of drop from high level PvE bosses in the PvP shards) and Doom Artifacts (0.2% chance of drop from a specific set of high-level PvE bosses). Everything else has plummeted in price to the point of being practically common. You cannot sell anything else reliably, and don't really need to. The "average" player has no access to Stat / Skill Scrolls, old holiday items, or Samurai-expansion armors unless he has been playing for 5+ years and spent a large amount of time grinding and was in a strong PvP guild. By definition, he is no longer an "average" player if he is in that classification. The average player's only chance is to go to the Doom Artifact areas and grind for items, which he can then sell for large amounts of money that he... can't actually buy anything with because the only thing he 'needs' are Doom Artifacts.

When I left the game, the hobby among rich players was to make houses and lock down large piles of gold and bank-checks on their roofs to show how wealthy they were. Sometimes they'd spell out their names with 1,000,000 gold checks. One guy macro'd a set of actions where he would yell "HANSEL AND GRETEL, FOLLOW ZEE BREAD CRUMBS" and then drop a 10,000 gold check on the ground, wander off into the woods a bit, and repeat it. He left a line of bank-check 'crumbs' all the way across the main island, with players following after him to pick them up.

Somehow, that just seems like it's a failed economic experiment. Coincidentally, none of the free-shards have managed to succeed either.

WoW: Someone with more play-experience please comment. All I know about is general inflation in the game, but since it still has expansions, we may not be seeing end-effects yet.


So here's the topic!!!

How do you build an economy in a game that will last? How do you maintain it?



Developing an economy:

There are a few things you need to balance in the system: Total money in vs Total money out vs Total Available Wealth Sinks.

Defining:

Total Money In: This is based on the possible definitions of "wealth" that your character can take on. Pure currency, item drops, holiday gifts, etc. Anything that comes to them at no net-expenditure of resources (other than player's time) is part of Total Money In. Edit: Items that cannot be traded and do not diminish demand for other in-game items are not money. For example, the Nevermore Bow in Guild Wars is not Money In because you cannot trade it, customize it, or do anything with it, and most people aren't satisfied with only one skin of weapon anyway.

Money Out: Money out is separate from Wealth Sinks. Money Out is wealth (items, currency, etc) leaving the economy for various reasons, such as players quitting the game, deleting characters with gold on them, getting banned, dying and taking a hit to the their bank box as a resurrection penalty, etc etc. These are likely to make up an insignificant portion of the economy compared to wealth sinks under MOST economic models in games. Other possible options could include taxes on your game-house, income taxes, insurance fees, auction fees for the In-game auction house, etc. Basically, these are non-voluntary means of taking money out of the economy. Tax/fee scenarios could increase the amount taken out and cause it to be a more significant factor.

Wealth Sinks: Wealth sinks tend to make up a much larger portion of money leaving an economy in a game, at least under current models. These tend to involve prestige items, appearance modifications, purchase of property, NPC-sold items of value, etc etc. Other potential options could be time-cards or account credits being able to be purchased through the company, not players, for in-game currency. Please note that I twice indicated the use of the system and not player-to-player sales of these things. Buying items of value from another player, assuming they didn't have to at some point pay money to the system for that item originally, does not take wealth out of the system. It simply transfers it across the system, possibly consolidating it within a small percentage of players as the items will eventually decrease in value due to drop rates. Time-cards bought from players does the exact same thing, because real-world money is not part of the in-game economy (let's ignore strange Korean games, btw). Their time-card transfers wealth to them, and play-time to the other person, but does not create wealth directly. (Yes, the player playing longer creates wealth, but that's a 'feature' of a game, not a wealth creation tool.) If an animal trainer can give you a little pet dragon who follows you aroung chirping for 10,000,000 gold, that is a wealth sink. You can't trade it to anyone for more than 10,000,000 obviously, because if so they'd just go get it themselves. All it did was remove 10,000,000 gold from the system and give you a "prestige" item.


The trouble wealth-sinks tend to have is that they are not long-term stable, especially prestige-based systems. Soon enough, either everyone has one of the items, or they're common enough to see that they aren't treated as 'prestige' by the non-owners anymore. Typically, prestige-based wealth sinks require maintenance by the main company to make sure that there are either new ones coming out to maintain demand, or the sinks have to expire eventually.


So we get the following system for total system functionality:

Players, Items, Money -----> Game System -------> Players, Items, Money

Where the arrows indicate "P1,I1,M1" entering the system, and "P2,I2,M2" exiting the system. The game's goal needs to be to keep not necessarily a set quantity of income in the system, but a set demand in the system. This is where things become difficult to design. Clarification: 1 = In, 2 = Out. That's for comparison's sake if we try to do logical statements in this discussion.

The largest issue games tend to see at the end-game is P2 > P1 as well as stratified I1>I2. As a quick, short, dirty approach to it (that's what she said?) - if more players are leaving the game than coming in, new sources of demand for services and sinks cease to keep pace with the high-end monetary engine.

I'll quickly touch on stratified I1>I2. Low level I1 only assists low level characters. That tends to be the case because low-level items don't help high-level characters. Meanwhile, high-level I1 tends to be popular everywhere. Everyone demands good I1, because eventually they'll level up enough to use it, or perhaps the game doesn't even have item restrictions like that and just lets anyone use anything. When P1 is >> P2, an increase in high-level I1 is usually not significant, because there is plenty of demand. When P1 is stable relative to P2, an increase in high-level I1 will drop the demand curve. I expect this will be nearly linear in trend, but have no data to back that up as it'd also depend on the game. The worst case scenario is as demonstrated in Guild Wars right now: P2 >> P1, I1 >> I2. The supply of high-end items is increasing at a significant rate due to high-level players having nothing better to do in an end-game scenario, while very few new players come in who demand the item, and other players getting bored and leaving the game. Item saturation IS POSSIBLE. Everyone who wants an item can get it eventually, easily. Remember when Yakslappers were 25-35K each? Good luck getting 2K for one now. The same trend has occurred for higher end items as well - Voltaic Spears have seen a 45% decrease in price in the last six months, and relative to the start of Eye of the North have seen an 85% decrease in price. Remember Saurian Scythes, prior to raptor-farming saturation? I1 >> I2 can be blamed for that. The decrease in ecto prices can be blamed on a combination of I1>>I2 and P2 >> P1. Nobody needs ectos anymore.

There's the ground-work for this post. I'd like to talk about this, if anyone's interested, and see what a *good* economy for an MMO could consist of.

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Re: Let's Talk: MMO Economies (LONG!)

Postby [FDG]Sundae » Fri May 15, 2009 4:51 pm

Splodey's posting a bunch of info for the Eve Online economic situation over at Fudge. I'll edit this post and place it here when we reach a decent stop-point.

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Re: Let's Talk: MMO Economies (LONG!)

Postby [FnG] Hanno » Sat May 16, 2009 12:27 pm

I can see you have those nights when you can't get to sleep either and can't stop your brain whirring.

Good analysis there ;-)
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Re: Let's Talk: MMO Economies (LONG!)

Postby [FDG]Sundae » Sat May 16, 2009 3:57 pm

Nah, this is what happens when I go to work and have nothing to do. ;)


~S

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Re: Let's Talk: MMO Economies (LONG!)

Postby [FnG] Hanno » Sat May 16, 2009 8:41 pm

[FDG]Sundae wrote:Nah, this is what happens when I go to work and have nothing to do. ;)


~S


Thats when I get to play games :cheerleader:
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Re: Let's Talk: MMO Economies (LONG!)

Postby [FDG]Sundae » Sat May 16, 2009 9:34 pm

Jerk. :)

So nobody has actual suggestions on what could make a functional MMO economy? (Given there's only one suitable economy in any given MMO ever, as far as I can tell, and that's Eve Online, that's a bit worrisome.)

Or should I check back in a week once people have finished reading? :rolleyes:

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Re: Let's Talk: MMO Economies (LONG!)

Postby [FnG] LcNessie » Sat May 16, 2009 11:30 pm

Well... I guess that 'Money in' should be roughly the same as 'Money out'. Only problem is, that that's quite hard to balance...

What you could use are these: Meatsinks... In the Kingdom of Loathing, meat is the actual currency, so that's why. In other games it would probably be called goldsink

http://kol.coldfront.net/thekolwiki/index.php/Meatsink
With kind regards, Mathijs
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Re: Let's Talk: MMO Economies (LONG!)

Postby [FDG]Sundae » Thu May 21, 2009 1:19 am

Wealth sinks (gold sinks) are actually the entire point of the post in the end. :) The intent is to determine a way to develop a gold sink balance that doesn't either fill up over time (Obsidian Armor, when demand for it dwindles) or doesn't need maintenance (special events / fancy hats / whatever).

I'll copy / paste the posts from the Fudge thread into this later this evening.


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