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CCP Games video interview on the Council of Stellar Management
MMORPG.com's video scoop from the Leipzig Games Convention wasn't limited to info on EVE Online's upcoming expansions. They also got some face time with Lead Economist Dr. Eyjólfur Guðmundsson of CCP Games, who discusses some of CCP's projects and initiatives, namely the Council of Stellar Management (CSM). Dr. Eyjólfur shares his point of view on the process of having players interact with the developers on affecting the development pipeline. He also addresses the poor voter turnout in the CSM election, which was not surprising given the general apathy many people have about real-life elections, he comments. The interview largely focuses on Dr. Eyjólfur's experiences with the CSM, but given his role in the company, he also mentioned the economic impact of factional warfare on the market in EVE. More information on this aspect of EVE should be covered in one of his forthcoming Quarterly Economic Newsletters, he says. Be sure to see the video at MMORPG.com if you're interested in seeing more about the Council of Stellar Management and the economics of EVE Online.
Making/Money: Economic Equilibrium is MIA
When I first started playing MMOs I was in college. I'd bounced from major to major but ultimately settled on Economics (from a starting point of Medieval and Renaissance Studies - how'd that happen?). Like other economists in games like EverQuest and Ultima Online, I was thrilled to find a lively economy and interested to apply classical economic models in the study of it. The most basic of these models is the typical supply and demand curve. Any economic model starts with price and quantity. The higher the price, the more suppliers want to sell but the less consumers want to buy. As the price decreases, more consumers are interested in purchasing, but fewer suppliers are able to produce profitably. In theory, there is a magical level in the middle where supply and demand meet. That is equilibrium (see graph). What I have since found, which is furiously debated by other economists in the field, is that the typical supply and demand curves do not fit well with the economies of most MMORPGs these days. Depending on the game, add-ons used, and availability of additional market data, there may be sort of invisible caps to the price, and thereby the quantities, of goods traded. Furthermore, auction house fees and vendor sales act much in the same way as taxes or subsidies in real world economies.
The bright side of gold farming?
Let's face it. Gold farming and RMT are the bane of many players' experiences in MMOs. Bots spam poorly-spelled gold ads in every MMO title with anything even resembling an in-game economy. From a player's perspective, it's a huge problem, and not surprisingly leads many to dislike the idea of RMT. But aside from the occasional media coverage of 'digital sweatshops,' most of us know relatively little about how gold farming operations are actually run, or what effects they have on real world society. Professor Richard Heeks from the University of Manchester has put together a substantial piece of work on gold farming. The Working Paper's abstract states Heeks' intention "to provide the first systematic analysis of the sub-sector." The paper is titled "Current Analysis and Future Research Agenda on 'Gold Farming': Real-World Production in Developing Countries for the Virtual Economies of Online Games." (Say that three times fast.) It provides an overview of gold farming followed by an in-depth analysis of its economics, sociology, enterprise, and development. In terms of development, the paper considers the benefits gold farming may create, particularly for workers in Asia. While there is a wealth of information in Heeks' work, one aspect that stands out is a question it raises: Which is more important in the grand scheme of things, socioeconomic progress for people in real life, or the enjoyment of a game?[Via Virtual-Economy]
Improving your inventory management in Dungeons and Dragons Online
Have you ever wanted to make more money? Sure, we all have. But the folks at Turbine actually want to help you out. The official Dungeons and Dragons Online site has an ongoing series of articles exploring the best ways to make a quick buck in Xen'drick. You're saying to yourself now: it's easy to make a coin or two. Just go out and bash a kobold to death. Too true, and lucrative, but what about after the bashing? Your pockets will be full and you'll be left scratching your head. The first article is all about inventory management, and tips for using collection bags to their full effect.The second piece in the series is all about vendors, brokers and tavern keepers. All about where to sell your stuff once you have it organized, this piece also outlines the outlines you'll see on items. Every item has a relative rarity, which you can see based on what kind of frame is on the item's description. Especially important is the distinction between brokers and regular vendors - brokers are much better bets for rare or magical items. Don't sell your good old +1 to just any guy in a shop. Make sure to check back with the site, as future articles will cover other money-related elements like the auction house.
Making/Money: MUDflation IG vs. IRL
We have tackled the subject of mudflation tangentially a few times of late. It seems to have suddenly become the economic buzzword of MMOs. We have all experienced it. We have come to expect, if not accept, it as part of the games we love to play. And though Wikipedia, in its infinite wisdom, has dubbed it an in-game only phenomenon, I posit a different approach to looking at this occurrence. Mudflation is an immediate devaluation of previously owned items due to the gain or release of newly available items. This is not unlike technological advance in that the release of the latest new toy makes all others somewhat obsolete. The differences here are the perceived need for the item, the amount of devaluation, and the time frame in which this occurs.
Forum Post of the Day: To each according to his need
It seems the vast majority of drama we've heard regarding guild banks comes from ninja schemes and disgruntled members. Vaela of Hyjal expressed her exasperation with guild banks in the Guild Relations forum. She feels that there is an imbalance between players who donate resources to the guild bank and those who make the most withdrawals. The original poster asked for suggestions on systems to fairly distribute guild bank resources. The responses focused on cooperation and reciprocity with the guild bank. The purpose of the guild bank is to fun the guild's activities and exchange objects of value. In the end, the system comes off as a communist type of public ownership arrangement, as opposed to the free trade system that rules the auction house. To quote Karl Marx, "from each according to his ability, to each according to his need." Communism as we've known it has largely failed, most likely because people don't fully buy into the system.
iPhone versus iPod touch pricing: Say what?
What does it mean when a 16GB 3G iPhone costs about the same as an 8GB iPod touch? Is it the AT&T kickback economics finally coming into reality? Or are we going to see an iPod touch price drop sometime soon? Face it. The iPhone is just a better device than the iPod touch. And if you can get one cheaper? Why not. It has a built-in speaker and microphone too, assuming you can get past that activation screen. So if you have the choice between buying one or the other, the iPhone is a really sweet alternative. And if the iPod touch comes down in price? Even better.
Making/Money: The Diminishing Need for NPC Vendors
An interesting post was put up on our sister site WoW Insider a few months ago now which told the tale of the NPC merchant at Imported Boomsticks in Orgrimmar. Though my home base in World of Warcraft is usually this bustling city, and I have visited that shop many times for repairs and the unloading of grey/white items, it was eye-opening to note that I was one of the people referenced who did not remember the name of that NPC. None of my characters have used guns (not a moral thing - just a convenience one), so I never had a compelling reason to see what was offered for sale or pay much attention to this little shop. I just knew it was there for me whenever I needed to stop by the auction house and take care of some repairs and bag-cleaning at the same time. It then occurred to me that, other than trade goods and recipes, I really hadn't purchased much of anything from the NPCs on any character. It never seemed worth it. There always seemed to be better items to be gleaned from questing or selling goods that other players would pay for. Why, then, are there still NPC vendors selling their wares around Azeroth?
How much is an iTunes download worth?
How much is an iTunes download worth? About 70 cents, if conventional wisdom is correct. That's the commonly quoted number for the iTunes money that gets passed back to the record labels. And according to the New York Times today, the record labels are angling for more. They argue that broadband music sales through the mobile iTunes store somehow should bring them a greater profit than sales through the standard iTS, pointing to industry practice for ringtone and ringback sales. I don't quite understand their reasoning. I think most phone-based ringtone sales are outrageously overpriced. Increased sales volumes will benefit the labels even at the current wholesale prices. Ah well, another example of Underwear Gnome economics in action. %Poll-14432%
The cookie monster economy in Pirates of the Burning Sea
The Terra Nova site views virtual worlds and massively multiplayer gaming through the lens of academia. Don't hold that against them, though; the insights of commentators like Richard Bartle, Ren Reynolds, Edward Castronova, and Timothy Burke make for some darned interesting reading. This week Mr. Burke writes about the player-driven economy in Pirates of the Burning Sea. Plagued with problems from even before launch, the developers are working hard to correct some economic inequalities.Burke examines those economic problems, discussing the issue of perceived player wealth, and the system's input/output issues. "In Pirates of the Burning Sea, the faucet-sink relationship is skewed in an odd way. The faucet is as it is in many virtual worlds: players run missions and sink NPCs to earn money. The sink, however, is player-produced commodities ... The economy is a kind of Potemkin Village: on the surface, it looks like the economy of an economic-sim game like Port Royale with many primary and secondary goods being produced and listed that evoke the setting and mood of the game. But it doesn't function very well, though a few players are fooled by the surface into imagining its depths."
Curing mudflation before it starts
For many players, the mysteries of a virtual economy are best left as that -- a mystery. The numbers, the abundance of terminology, it all conspires to create an environment where players generally don't want to know why the economy works, they just know that they'd rather it did than it didn't. Is that really too much to ask?Steve Williams of Living Worlds proposes some potential solutions for curbing mudflation -- that seemingly unstoppable inflation that occurs at the endgame when players accrue large amounts of currency and the once high price of rare goods comes tumbling down. He proposes that it's actually possible to limit the amount of currency available in the economy by allowing players to use alternative currencies like vendor trash to barter for basic services like armor repairs. It makes sense, since repairs and vendor trash generally exist in limitless supply and don't actually need to be a part of the economy proper. This is only Part One of Williams' proposed system, so we'll have to check back again soon for his full set of ideas.
Making/Money: My value chains are broken
There's a person out there who claims that all they need to know about business can be learned from World of Warcraft. A fine sentiment, to be sure, but I take issue with its accuracy. Today we are discussing the first of their eleven business topics: value chains – and why they don't work. In brief, value chain analysis states that for any good requiring multiple stages of production (meaning you don't just rip it out of your backyard and eat it), value is added at each level of refinement. Therefore the price should increase along its path to becoming a finalized product.
Who is winning the gold farming war?
The PlayNoEvil blog has obtained gold sales information from one of the multi-game gold farming services. The service provided the site with currency sales values over a period of nine months. Site author Steven Davis examined the data with an eye towards the effectiveness of banning, anti-RMT task forces, design changes, and other preventative measures. If currency values went up, then there was obviously less currency entering the marketplace; this would indicate successful campaigns against the farmers. The result is a fascinating scorecard in the war on RMT. He's got data for Final Fantasy XI, Guild Wars, EVE Online, Runescape, EverQuest 2, and World of Warcraft.So what does the data show? Essentially, that not a single thing done by any of the developers/publishers has had the effect of increasing currency prices. Moral outrage and crackdowns aside, prices for every currency tracked by the site have remained more or less steady. The only effort that seemed to have any effect at all was Jagex's recent trading technique patch, which temporarily spiked Runescape gold to twice its previous value. Since then, prices have returned to normal, indicating the farmers found a way around Jagex's changes. Though it's been noted elsewhere, it's also interesting to reiterate that gold prices on EverQuest 2's publisher-supported RMT servers don't vary from the norm across the game's servers. That is, even with a legitimate option people are still willing to engage in risky third-party RMT. We want to make the observation that the RMT company involved here has every reason to falsify data. It's fascinating stuff, but should be taken with a grain of salt.
Making/Money: Newbs at Auction
... And we're not talking about selling accounts on eBay. One of the most frustrating aspects of being a new player in an established game, to my mind, is the cost of start-up crafting materials. Hit up any public market area, auction house, trade square or similar as a newbie and you will see what I mean. Even low-level items of any use (i.e. not vendor trash) are sold for seemingly absurd amounts given the time that would be required at early levels in order to generate the money. It can make the start of a new character infuriating and the game too taxing (pun fully intended) to continue. Why does this happen? What makes these things so costly? Why can't we all just get along...? (Oh wait, that's another column entirely)
EVE Online calls RMT evil
GM Grimmi of EVE Online comes out strong against RMT in an official post called 'Real money trading is bad, mkay?' In no uncertain terms, RMT activities are said to be linked to keyloggers, phishing sites, and hacking attempts, and lead to real-world illegal activities like fraud and theft. Grimmi then goes on to say that there is a service available to players who want more ISK that is not only legitimate, but also helps both the game economy and supports other players: the Secure ETC Trading system.From the post: 'When you buy an ETC and then sell it for ISK via the Secure ETC Trading System you are directly contributing to the growth of EVE as the code will be applied to an account and someone will be using it to play. Some players do not have the means to pay for their subscriptions with credit cards or similar and the Secure ETC Trading System helps them pay and play. The economics are quite different as well since wealth is redistributed between active members of the community rather than injected into the game.' This is a much more creative approach to fighting RMT activity than simple banning of accounts (though that happens as well). Bravo, EVE, slam evil!
Age of Conan economics 101
You'll be spending a lot of time chopping peope in half in Age of Conan, and will likely get very good at it, but at some point you might want to learn a thing or two about making and spending money as well. Thankfully, the official site has provided a guide that is sure to help Hyboria's budding economists in their quest for coin.In truth, for the most part it's a fairly basic look at some familiar systems that are in the game. The currency will consist of gold, silver, copper and tin, and you'll be able to buy/sell/trade with both NPC merchants and other players. A crafting system is mentioned but no details are given. The most interesting aspect of the guide is the Tradeposts. These will be similar to the Auction House seen in so many other MMOs, but with key differences. It will combine marketplace, mailbox and bank in the one interface, and items can be listed for sale straight from your bank. It is stressed that this is not an auction -- there is a set price, with no bidding involved. Tradeposts will be available in both regular cities and player cities as well, which is great for anyone with a dream of a self-sufficient outpost. Check out the full guide for the rest of the economy details.
ESA releases video game economics study
An economic study commissioned by the Entertainment Software Association (ESA) found the industry continues to outpace US economic growth, but is that really that hard these days? The report titled Video Games in the 21st Century: Economic Contributions of the US Entertainment Software Industry found between 2003 - '06 the industry grew 17% annually, while the US economy grew 4%. The shocker in the report is that for the 24,000 individuals employed in the US, the average salary was $92,300 in '06.There a lot of big numbers with billions attached to them speaking of the industry's economic impact on various states. California is currently the largest employer of industry professionals with 40% of the industry's population and a $1.7 billion contribution to the Cali economy. Of course, Washington state came in second with Microsoft and Nintendo's HQs located there. We're a little more curious about the mode salary rather than the mean. The $92,300 sounds peachy, but we're pretty sure that high-level executives screw up the average. We're guessing the quality assurance ground troops don't eat porterhouse every night and burn Benjamins on the weekends for fun.
Financial bigwig says virtual worlds leading digital currency charge
Andy Kyte, vice president of Gartner, Inc., told Gartner Symposium attendees last week that virtual worlds such as Second Life are "contributing to the drive to use electronic currencies." This comes from a ZDNet report on Kyte's talk about the potential of electronic currencies to reduce overhead costs for pretty much every one. He said Singapore has already introduced an electronic currency and that the rest of the world is watching what happens there.He also said, though, that online currencies like Second Life's Linden Dollar carry with them security issues that create "phenomenal opportunities for money laundering and tax evasion." Those issues would have to be resolved before online currencies similar to the L$ or EVE Online's ISK can be used with confidence in the real world.[Via Worlds in Motion]
Linden Lab CFO question and answer, this Sunday
Linden Lab's Chief Financial Officer (CFO), John Zdanowski (better known as Zee Linden) will be taking questions for one hour on Petunia Island in Second Life on Sunday, 4 November at 11AM SLT (US Pacific). If you've got questions about Linden Lab or Second Life that only the CFO can answer, prepare your questions and come along. Be prepared, Zdanowski is apparently going to be present with video and voice, rather than in his avatar as usual - so there's not much point in showing if you don't have the network or equipment to support it.
Exhibition teaches youth about WoW, Second Life
If you're in the American Northeast and you love games, you might be interested to know that the Federal Reserve Bank of Boston is hosting an exhibition about the role computer games have played in New England's economic development, and that said exhibit includes coverage of MMOs. This is all part of their New England Economic Adventure program.Subjects of the exhibition span from the birth of computer games -- Spacewar!'s creation at MIT, according to the press release -- to present day titles like World of Warcraft, Star Wars Galaxies, and Second Life. Organizers hope the exhibits will teach kids how technological innovation and entrepreneurship can spur economic growth. Old-school arcade games will be free to play at the exhibit too.If you ask us, the folks at the Federal Reserve Bank of Boston have come up with a brilliant plan -- bait kids with Frogger, then make them learn something!
