Making/Money: EVE Economic Review Reviewed

Each quarter, the economist over at EVE Online, Dr. Eyjolfur Gudmondsson (there are supposed to be accent marks in there but I can't figure out how to make them appear), writes up a review of the in-game economy. There has been a noticeable lag in times past between the schedule for these quarterly newsletters and when they were actually distributed. October saw the release of the Quarterly Economic Newsletter for Q1 of this year and the promise of QENs for quarters 2 and 3 to follow in November and December, respectively.

Today, we'll take a look through what Dr. Gundmondsson has to say about the economy from January to March. I do encourage you to look through the PDF of the QEN for yourself ... and just ignore that they talk about June 2008 in future tense.

The newsletter starts with talk of deflation for the quarter. This may seem a bit strange as prices generally tend to increase in MMOs with the expansion of the money supply. What it could indicate is that the supply of goods has kept pace with, if not exceeded, the supply of money available to purchase them.

Deflation is not necessarily a bad thing when you think about it. There's more money out there and more items to be had. Given how far out we are from the period when this happened, I don't take much stock in the statement that they are reviewing whether corrective action needs to be taken to address the deflation.

Increased specialization has begun to take over for major producers. EVE is particularly set up to have this with the way the training is structured. As discussed in the QEN, it is also advantageous to the market as those with the most training have the lowest cost to produce and can therefore offer their goods at a lower price. This may also contribute to the deflation in that as players gain experience they reduce their costs. More experienced players can undercut less experienced ones in the market and still turn a profit. So the cost of the goods may very well decrease unless demand increases for them.

Speaking of supply and demand, a good chunk of the QEN was devoted to price indices for minerals, primary producer products, secondary producer products, and consumer products. Primary products include "advanced raw materials", datacores, and other not-quite-base materials. Secondary products include blueprints, trade goods, and more advanced components for production. Consumer products are anything that can be purchased for direct use rather than further production.

For those unfamiliar with indices, they're a way of benchmarking prices the whole economy by looking a bunch of individual prices. They start at 100 and then move depending on how the prices change. Usually, we would look at the current time period as compared to the prior time period in evaluating change in a price index, but here it gets confusing. The Trinity Expansion to EVE came out in December and caused unusual spikes in the price indices. December therefore saw price spikes across the board as characters demanded and produced more items.

Overall, prices on minerals were up by the end of Q1 as compared to December (even with the spike), prices on primary products were down, prices on secondary products were down, and prices on consumer products were down. Comparisons of March to January are also made in the QEN as an indication of how the economy progressed through the quarter.

The last few pages in the newsletter are devoted to a discussion of suicide ganking. Though the issue has since been addressed, during Q1 this was a big problem for mining vessels. Essentially, PvPers would attack mining ships in high security areas prior to CONCORD arriving to shoot them down. The loot plundered from these ships was worth more, particularly in January and then again in March, than in other recent times making the incentive that much greater to run swarms.

Though each type of mining ship technically saw net increases to the number of units in the market, there are interesting differences between them. Here, when referring to the destruction rate, it is the number of destroyed ships divided by the number of produced ships. This does indicate the total percentage of each type of ship destroyed, merely the percentage of the ones produced. It helps to determine how much production was done merely to replace lost items. (Note: the Rorqual was not included in the analysis)

In the Tech I series of mining barges, the Retriever had the highest destruction rate at 36.4%. The Procurer, on the other hand, had only a 5.4% destruction rate. This difference could be due to the basic economics of ganking the ships. The Procurer carries very little cargo and therefore provides less incentive to those who would come in to suicide gank. The Retriever has armor hit points, making it more difficult to destroy, but also carries more cargo, therefore increasing the incentive. The Coveter, the high end of the mining barges, had a 13.4% destruction rate, possibly due to the difficulty in destroying them.

The Tech II series of exhumers follows a clearer pattern. The Hulk had the highest destruction rate at 41.4%. The incentives here are enormous. Not only are the Hulks capable of carrying the largest cargoes, but the ships themselves were also worth the most at around 100 million ISK each. Next most targeted was the Mackinaw at a 32.5% destruction rate. The high rate here may be partially attributed to the attunement of the ships towards ice harvesting, a very profitable specialization. And lastly was the Skiff. Exact destruction rate cannot be calculated as the QEN merely lists that an average of under 100 vessels were produced each week and an average of 17 were destroyed. Our best guess is somewhere therefore just over 17% of Skiffs were destroyed. This is not surprising as, of the exhumers, it has the cargo hold.

That's the QEN in a nutshell. After five years, EVE is still growing, the economy is flourishing even in the presence of deflation, and the highest perceived threat, suicide ganking of mining vessels, has now been combated.

What do you find most interesting in the QENs? Do you have any questions on the analysis presented by Dr. Gundmondsson that we can help answer? As we continue to review these newsletters, what would you like to see or find most helpful?

Alexis Kassan is a numbers nerd. She spends her days with statistical programs and her nights with spreadsheets and textbooks. She's also a MMORPG addict, having gotten sucked into Ultima Online at a formative age. In her time away from work, books and games, she can usually be found drowning in pools of sprinkles - now usually accompanied by her husband, an avid CoX player. If you have a question about in-game economics or how crafting fits in with them, hit her up at alexis DOT kassan at weblogsinc DOT com.