Gear inflation has actually been a concern of mine since about halfway through Wrath of the Lich King's expansion cycle. Back then, it was armor penetration that really set off my gear inflation warning bells, a stat that's since gone the way of the dodo. If you remember ArP, you remember that it start acting extremely weird at higher gear levels and often had to be adjusted and capped to keep it from doing things like reducing target armor into the negative.
In essence, for a brief period after Ulduar dropped, ArP could actually cause your target to have negative armor values so that their damage taken was increased by a percentage instead of just reduced by a percentage. This was very wonky. It was quickly capped and the stat adjusted. But by ICC levels of gear, it was possible again to reach 100% ArP, and doing so was absolutely your best bet as a melee DPS.
Now, let's be honest: Gear inflation is the inevitable by-product of a game where one increases in power via leveling and gaining new gear. It must happen. If you simply look at gear from original World of Warcraft's 1 to 60 game, you'll see that gear steadily increases in power and that raid gear from MC to BWL/AQ and to the now-vanished Naxxramas-40 steadily increases in power. Indeed, Naxx-40 gear was such an upgrade in power that it was roughly as strong as blue drops from level 70 instances. You could raid Karazhan in Naxx-40 gear. The Burning Crusade dealt with gear inflation differently than its successors did because it could.
What got us here
Gear inflation in the current game is the legacy of Wrath of the Lich King's runaway success and its extrapolation of the BC model of badge gear. BC introduced the badge system with badges of justice, which served as a form of currency allowing people running heroic mode 5-man dungeons and later raids (badges were originally only found in 5-mans but were later also given to raid bosses) to purchase items to supplement or even replace their current gear. It was intended to help players who simply couldn't get a specific piece to drop, but as new tiers of raiding were released and new item vendors were placed into the game, badge gear itself became a means for players to leapfrog content. Many guilds farmed Karazhan and ZA for badges they used to buy gear in order to raid Mount Hyjal, Black Temple and Sunwell, bypassing previous raids like Tempest Keep and SSC. (This was made viable by the removal of raid-wide attunements.)
By the end of The Burning Crusade, the system was fairly well established, but Wrath of the Lich King went further in making raiding accessible with both 10- and 25-man versions of every raid while also creating the first heroic mode raiding. When this was first implemented, it took the form of the infamous Sartharion encounter. You could go into the Obsidian Sanctum, clear all the adds and the three mini-boss drakes, and engage Sartharion for a fairly straightforward fight. Or you could leave the three drakes up, engage Sartharion, and fight each of the drakes as they added to the fight. You could do the fight with one, two, or all three drakes alive and get progressively better loot and a chance at a mount.
Rough beasts, heroic modes, and spiralling upwards
The inclusion of heroic modes in a similar vein in Ulduar (including Algalon, WoW's first heroic-only boss) marked the point where the game's itemization really started to inflate. Raids started to progressively produce higher and higher ilevel gear. Vendors also continually spawned, carrying gear on par with the raids. Finally, heroic 5-mans with increasingly better gear were successively introduced. Both the Trial of the Crusade and Icecrown Citadel launches were accompanied by 5-man dungeons (one for TotC, three for ICC) with gear on part with older raids, while each new raid effectively had three tiers of loot (10-man normal, 10-man heroic/25-man normal, 25-man heroic), which meant that by the end of Wrath we were looking at ilevel 284 gear from the Lich King. Comparing epic weapons from the start of the Wrath era to the end of it gives you an idea. Comparing the Burning Crusade equivalents sets it into stark relief.
The best two-handed weapon you could get in Wrath of the Lich King does nearly twice as much damage as the first epic you were likely to get. Meanwhile, the best two-hander from The Burning Crusade does less than half again as much damage, from 109 to 148 DPS. Believe it or not, Cataclysm actually does its best to combat this trend. However, with damage going up, even just comparing the middle tier of Cataclysm's raid content with the easiest to obtain epic weapon implies that by the end of Cata's life cycle, weapon damage will have nearly doubled again.
And none of this takes into account stat inflation on every upgrade, which is a huge cause of damage inflation. Gear inflation is relative to every statistical upgrade every piece of gear causes cumulatively, and it directly affects the game. The reason bosses have millions upon millions of health now is so they can stand up to 18 or so DPSers who can each do between 20 and 30k DPS depending on fight conditions. This statistical inflation is directly the result of itemizing so many continuous upgrades in Wrath of the Lich King due to the pressure of heroic mode content requiring superior gear as a reward for its superior difficulty.
Why each expansion pushes the next upward
This matters because the legacy of that inflation affects the design of leveling zones: Cataclysm had to provide green leveling gear that approximated that level of power, dungeons and zones that challenged that level of power, and so on. The Burning Crusade solution, where people who raided the upper tier of vanilla content didn't get any upgrades until Karazhan, simply isn't a solution. You can't design content that people who've been waiting for it will breeze through with no upgrades any more than you can design content that demands all people leveling through it go kill the Lich King on heroic first. Content degrades. You have to design for the people who will be running their Deathwing-killer main to 90 in three days and for the one who's going to roll a level 1 monk and may hit 90 by 2013.
Blizzard has been aware of this for years. It wasn't really much of an issue in vanilla WoW or BC because not enough people really got to raid past BWL/AQ, and so the majority of the player base did get upgrades in questing or instancing. And going from BC to Wrath, it wasn't a problem leveling from 70 to 80 because the itemization in Wrath quest zones and dungeons caught up to Sunwell gear by around level 75 or so.
But the Wrath heroic raid and 10-/25-man itemization, combined with the success of the Dungeon Finder system and Emblem of Frost farming and the wide plethora of raid-level gear from vendors (including the first tier of ICC-level item sets), meant that more people were well geared and geared in ever-increasing item levels than ever before. In essence, designing Cataclysm so that there were no upgrades for ICC heroic level raiders until 85 would have meant that even the average player would have had to wait a while before getting one. This is why items dropping in world quests and normal mode dungeons outshone Shadowmourne. It's either that, or don't design upgrades for most players until they're raiding, which runs counter to the idea of getting players to progress through 5-mans to 5-man heroics and then to raiding.
As I said, Cata does its best to combat this trend. Even the new 5-man heroics coming in patch 4.3 only match up with itemization in the current raid; they don't blow past it. But even so, gear inflation continues and will continue until we see numbers like on these two theoretical breastplates. We could see it in patch 5.3, or 6.3, or Blizzard could even slow it to the point where we don't see it until patch 7.2. Eventually, however, we will see it, unless steps are taken to give us an entirely new kind of reset, one that resets us in some manner as well as gear.
There are two solutions mentioned in the Dev Watercooler. They're not the only possible solutions, but they're two potential ones. You can read them in that post fairly easily, I won't belabor them. Either is serviceable.
Mega-damage vs. squish
The mega-damage solution is essentially just a change in notation. Rather than expressing health as 187,999 health for your level 85 tank, it's expressed as 187K. You don't crit for 22,198 damage; you crit for 22K. We do it all the time when talking about these numbers anyway.The downside of this is simply the weirdness factor of telling someone that your level 95 tank has 129M health. The biggest problem with this is that computers (even today's) don't love it when you throw enormous numbers at them all the time.
This also has the effect oif making older content more relevant, because it means that the numbers on the mobs there can and will be adjusted closer to the numbers you'd see in current content. If BC endgame bosses drop ilevel 90 gear, then that gear is clearly superior than most of Wrath gear until you get to Wrath's endgame, and the same for Wrath bosses and Cataclysm-level gear. The squishing effect will lead to rebalancing that brings all raids closer together in terms of numbers dealt and taken across the board. Illidan in Black Temple suddenly looks a lot closer to the Lich King.
Either way, we will need to see some solution proposed and implemented to this issue. Mega-damage may be the way to go in Pandaria while squishing is fully thought out, tested and implemented. In a way, squishing is to ilevels what Cataclysm was to the old world, a vast rebalancing effort that will do more than just compress gear ilevel, it has the potential to greatly extend the life of older content and make it valuable for more players.
The news is out -- we'll be playing Mists of Pandaria! Find out what's in store with an all-new talent system, peek over our shoulder at our Pandaren hands-on, and get ready to battle your companion pets against others. It's all here right at WoW Insider!