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Economics of Online Gaming
PGillingwater writes "The Walrus has a nice article up about the economics of on-line gaming communities. Starting with the original 2001 paper which shows that Everquest has a GNP greater than India, Bulgaria and China, and going on to the billionaires of Ultima Online and the Mafia takeover of The Sims.
"He began calculating frantically. He gathered data on 616 auctions, observing how much each item sold for in U.S. dollars. When he averaged the results, he was stunned to discover that the EverQuest platinum piece was worth about one cent U.S. -- higher than the Japanese yen or the Italian lira. With that information, he could figure out how fast the EverQuest economy was growing. Since players were killing monsters or skinning bunnies every day, they were, in effect, creating wealth. Crunching more numbers, Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.""
Not yet, although I'm wondering how long it'll be until players start outsourcing their in-game quests to India. :-)
http://www.juliandibbell.com/texts/blacksnow.html It's already been tried - see link above. Some enterprising guy ran a China Everquest sweatshop where the employees played Everquest all day, and whatever they collected was sold for profit.
That is what lots of kids do
The guides in the game (who are unpaid volunteers) are starting to get replaced, along with most of the GMs (who are employees of Sony, and used to be located in San Diego and UK) with GMs working in India.
Now I don't know enough about Everquest et al. to make this thought coherent, but I'll try. Presumably there are organisations (guilds?) made up of co-operating players. These have assets, generate revenue, trade, etc.
:)
So, they should be able to issue stock! Seriously, why not?
In fact, I expect it would be easier and more natural for a derivatives market to emerge (e.g. players trading futures contracts for in-game commodities, etc).
I wouldn't be surprised if that sort of thing doesn't already happen informally, of course. But if one could buy into an investment fund / unit trust which dealt in virtual equities... definitely at the "high-risk" end of the spectrum though!
If you think about some of the business models of public companies whose shares you can invest in via the conventional stock market (ahem SCO ahem), might you actually be better off putting your money into Everquest equities?
Just a thought.
These sigs are more interesting tha
I never did play Everquest. But, I played Shadowbane, an Everquest-like game - where players completely controlled the economy, built cities, and created nations and guilds and fought among one another..
The first two months the game was out. One million gold pieces went for ~$100 on Ebay. It took my brother's farming character about 5 hours to earn $100. He made about $500 on Ebay when I decided to get the game. Twenty bucks an hour isn't bad for playing a video game..
Soon after I got it, gold quickly lowered in price. After about six months, 100 million gold went for $100 on Ebay. The economy was completely flooded. Any remotely valuable in-game item sold for millions of gold - or an impossibly-long farming time for a new player.
I read that some new MMORPGS that are coming out are actually going to try to take advantage of the players' willingness to pay for an advantage. Supposedly, people will be able to buy uber items that are impossible to get in-game.
--- We need more Ron Paul!
But there are sites that specialize in trading real-life dollars for in-game currency and vice-versa. I've recently started playing FFXI, and this has become a bit of a sore spot with fans, as gil (money) is in rather short supply in the game, and you need to spend a lot of it to have up-to-date equipment and be a good asset to a team (the game is weighted HEAVILY against solo play after about level 10 for all but one job class).
Some people with the Windows version are using "bots" to mainly do two things: fishing and camping for Notorius Monsters. Fishing is pretty straightforward: you sell the fish. Notorius Monsters are one-of-a-kind monsters that only appear sometimes, and often drop excellent items (Leaping Boots go for at least 250,000 gil at the auction house). Even without bots, players would have to "camp" these monsters for hours for the possibility of getting the item. But now they have even less of a chance, as people grab these items, sell them for gil, and sell the gil for dollars.
WMBC freeform/independent online radio.
I think you guys totally missed what this guy meant. He's not saying you as the player are making $3.42 and hour, he's saying that the character in everquest is making the equivlent of $3.42 an hour. Of course this has a much less value in the real world, mentioned earlier.
Virtually, and this is why it is interesting, all those toons in EQ, are doing quite well for themselves.
It would be interesting to do a study like this on a newer MMORPG, like SWG, because their economy is far more intergrated into the gameplay.
How real is the value of some old stamps or a comic book that no one will ever read?
One line blog. I hear that they're called Twitters now.
"isn't this like valuing every ticket in a theatre based on the price the touts are charging outside the event?"
Er, perhaps but how is that inaccurate. If the resource is scarce, a tout's price is the true price. Indeed there is a very interesting study to be made of the prices charged for tickets to events. This is particularly true when the audience are from different identifiable groups who have very different socioeconomic means. But that is a question for another time.
It is certainly true that if you tried to sell every EP piece on the net the marginal value would decrease but the analysis could be modified to model that. In other words rather than the raw value ascribed to each EP from the author one could examine the proportion of the EQ economy that is "liquid" (ie trading) and then discount the total value of the economy based on the marginal decrease in value of the floating portion as the amount of floated portion increases. This sounds pretty simple to me.
"The first thing to do when you find yourself in a hole is stop digging."
Try to buy any other currency or commodity with it. You can't. The only way is first selling it.
Conversibility is a non-intuitive Economics concept. China's RMB is exactly a non-convertible currency: you have to go to a currency board set by China's government to be able to exchange it.
Leandro Guimarães Faria Corcete DUTRA
DA, DBA, SysAdmin, Data Modeller
GNU Project, Debian GNU/Lin
This takes me back to the heyday of Magic: the Gathering. Comic book and gaming store owners discovered they could make more money on cards by opening the booster packs and selling the cards individually. The less scrupulous owners would put the less desireable rares back in the packs and reseal them. However, eventually, supply caught up with demand and only out of print cards (Black Lotus, Ancestral Recall) were still selling at a premium. And while kids still play, the market for cards is not nearly what it once was.
My point in telling this little parable is that the economics of online gamming are very dependant on the sustained interest level in the game. A small drop in people playing the game could cause staggering changes in exchange rates between Everquest and Real Life. As well as the fact that in order to maintain the economy as it stands, Sony has to either force users to purchase large amounts of consumables or create ever more powerful and expensive items for people to invest in. Stay tuned for my next segment where I discuss the pros and cons of Guns vs. Butter.
bance.net
I can identify with that completely...
;-). I have an open source project I can play with when I feel I want to do that. I love reading fan sites for advice and tips (beats working! ;-), I just don't like having to read them as part of in depth research because the game system is unbalanced or unituative to the extent that if I don't read them I'm just wasting my time and effort doing the wrong thing.
and the damage model for combat is a points based system - so if you get the math right, you can consistently win (or conversely, get it wrong and lose).
To go off topic a little bit:
That's what always drives me nuts about the likes of EQ & SWG. Basically, it's up to who reads up the most online to work out the mathematically best combination of skills and then just grinds for a month or two till they have those attributes, and change their skill sets as appropraite whenever the developers nerf/buff something.
It runins the creativity and fun aspect for me. It's about as much fun as seeing who can optimise their MySQL database the most, or write the fastest XML parser. I DO think that sort of thing can be fun, just not what I want to do in a *game* most of the time (or I'd be playing Robocode or something
I know it's hard to make a game that relies on a little more action (like say PlanetSide) due to lag, and the fact that the games engine would actually have to perform half well. I realise not every one wants an MMOG to play like version of Planet Side (think Unreal 2004 with vehicles, but larger scale - with hundreds of players and levels up to 8 kilometers square and persistant character growth), and I'm not sure I do, but a comprise is needed I think.
The best game I've seeen for this is City Of Heroes, it's still basically stats based underneath but thanks to a very fluid engine (decent netcode and fast rendering) it's able to rely more of knowing when to use a power and what power to use, as well as building up a character. The tedious specific details are hidden while not being oversimplified. There is still room for creativity because you can choose from a wide variety of skills to mix and match, or simply build a character that is uber at one specific type of thing.
Unfortunately the 'missing incredient' that shows if this approach can really work is PvP, which isn't coming till later (via an expansion pack, City of Villans). Given the system though, I imagine could create an uber PvP character, but you could equally create a character who would be perfect at counter acting that character.
EVE online combat is like that - you have such a wide variety of attibutes to choose from, a few things become standard (e.g. warp core stabilisers are virtualy a must, so you have a better chance at warpping out if you are in danger even if your opponent tries to scramble your warp) but much of it is entirely open to personal preference and so far more creative.
Having given up SWG a couple of months ago, I play PlanetSide, EVE and CoH (in that order) these days. I will likely get bored of CoH - dispite how well polished and solid underneath it is - I'm starting to feel the lack of depth (lagely due to no PvP or wider ongoing story arc, whcih I'm sure will be addressed as they say). PlanetSide and EVE both have great futures though, I think I'll be keeping them reguardless of what else I pick up.
This marvel leads to a big problem:
I started playing Lineage II lately. There are complete areas inhabited only by Bots and Farmers. Bots are Programs which gather gold (scripted characters with hacked clients). Farmers are users which make a living from the virtual income. Both sell their gold/items through auctions and other eCommerce to (some) users. All three clases are not highly regarded by other players.
Regards, Martin
P.S. Please do not missunderstand me: If i had no income and could earn some living by playing a MMORPG, i would probably do it too. The problem is a direct consequence of the social gradient. I have no real solution for this... Banning the sales in the real world is only a measure of limited use.
I agree, EQ(most MMORPG's) do create an environment where you feel compelled to play, and I believe that if they didn't they wouldn't succeed in the market. As unhealthy as it is why would developers not make a game that requires long term commitments.
What MMORPGS's do provide that sets them apart from most venues that "online friends" meet is that they provide a structured environment for activities and goals that people can achieve. Unlike most single player games most MMORPG's don't have a final objective (winning) and much like real life, personal satisfaction is gained through friendships/achieving goals that you set for yourself.
I am a figment of my own imagination.
I know that a lot of people at school here play poker on the internet and make something like $1000 a night (real money), so it seems like Everquest is not exactly the big money here.
I used to read Caltizzle. I was a lot cooler than you.
Interesting. It would appear that the economies in online games are in a state of hyperinflation
:)
:(
I find it intersting too, but it's deeper than that, not all games have the same condition...
EQ and SWG have similar (not the same, SWG has more depth/complexity, but untilmately similar) economic models. MOST games do seem to suffer from the trading of in game credits off line, or of powergamers setting prices, making items more and more expensive, thus presenting a barrier to entry.
One shining example of a game that *doesn't* have this problem, and that has slow *deflation* (but kept up by a fixed level of the worth of raw materials and the time/effort/risk required to gather them) is EVE Online. It's got slow deflation at all times on the very expensive items, e.g. the cost of an uberbattleship was 100 Mil ISK last month, it's now 90 Mil ISK (and you can view trading results via the in built stock market, so it's great for having a stable market, though of course rip offs and bargins are still to be had). The difference isn't as noticeable with lower cost items (where the potential profit margin is smaller) but overall this is great news for players, as it means they can afford to spend more time blowing each other up and having fun with PvP, and not worrying about how much it will cost them.
Partly I think this is down to the unquie and superior skill system, where there is no limit to the skills you can learn (unlike other games such as SWG, which force you to be a fighter OR a crafter - you can't be good at both as the number of skill points are fininte, meaning crafters are rare and so can charge high prices). It's also down to how you learn skills - you pay for the appropriate skills (from another player, or from an institution like a space academy) and you devote time to racking up skills in that area, the training continues while you are off line.
Level I takes typically 20-60 min, while Level II skill in something might take around 2 hours or more and Level III a day or more and Levels IV and V days and weeks. You don't actually have to 'grind', just devote the time to learning it. From there you need to buy the blue print (single use, or unlimited reproductions), get the raw materials (easily enough done via mining or even more simply, on the open market) and rent some time in a station to begin some construction.
I know it may sound a bit complex, but honestly in reality it's all very simple and straight forward (thanks to a pretty clear interface), and the low barrier to entry keeps prices down.
They also introduce new technologies, such as new ships or the next generation of a given technology (so that items can be created that drain less power, use less ship CPU time, etc) which are rare and so the 'expensive new toys' for those with the cash to spend, while the older technology gets cheaper (but not cheaper than the raw materials).
It's the only game I've played with a wide and stable economy though, most MMOG do have hyper inflation, I put this down to bad gameplay design (though to be fair, while some of the problems are obvious, others are more subtle and harder to spot for non-economics majors, so it's understandable that as MMOG's are new there will be bad economic models initially). It may take a few iterations for developers (especially the likes of SOE) to start seriously thinking about them though.
And, for those of you in Europe (and thank god the US hasn't fallen this far, yet...) no laws restricting your "working" hours to 37.5 or 35 or some such per week. You wanna buy that 100k supersword, "work" 80 hours per week if you wanna. No politician riding to the "rescue, for your own good."
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
While I have never played the game myself, other then for a few minutes just to see what it was all about, I have had friends literally stay in the house for weeks so they could play the game. It is amazing what a hold it can have over some people.
Let's turn that around to something a bit more apropos of Slashdot....
While I have never had sex myself, other than a few minutes looking at a magazine just to see what it was all about, I have had friends literally stay in the house for weeks so they could play with each other. It is amazing what a hold it can have over some people.
Ok, so you get the rather obvious point, here. Folks get involved in activities or communities and become engrosed. This is human nature. EverQuest is NOT a video game (a fact which Sony continues to this day to fail to understand). EverQuest is a community, much like Slashdot or the local coffee house. Just as people enjoy those activities and get more involved, they do so with EQ.
When I was a teenager I spent weeks in my room working on a rubick's cube.... which is worse, that or chatting with an old friend from college while whacking on an evil dragon?
At least there's some social contact in the EQ option, which is more than many people in my field get on a regular basis.
Any time there is profit to be made by ruining an online economy, there will always be people lining up to make it.
1. You start off as a 'newbie' at the city of your race with a rusty sword (or similar weapon appropriate for your race and class - magicians, for example, have a wooden staff - my main character was a magician, and I leveled several magicians over time). You are near the newbie area - a monster area near the city with the lowest level creatures in the game - you fight these creatures to level up.
2. The money comes in as a result of 'looting' the creatures you kill. Sometimes they drop money. Most times they drop gear - weapons, equipment, or in the case of 'wild' animals - hides, bones, etc. The items are either sold to AI merchants for cash, or to people who need the items to pursue their trade skills. Over time as you get to higher levels, you amass more money which you keep in the bank (every town has a branch of the bank - which allows you to not only keep money, but serves as a 'safe deposit box' for your extra items that you may have accumulated inbetween transactions - or as needed for your trade skills). You can exchange money and items to other players in game - and so trade evolves.
3. When you want to leave the game you 'camp' - basically this saves the current state of your character and exits you from the game world. Wherever you camped is where you show up the next time you login - which is why you don't want to camp in a 'bad' location (where monsters spawn-in, for example, or on PVP servers where bandits are known to gank players for their items - probably not a problem now with new anti-loot rules for most PVP servers). As mentioned, if you fail to pay your bill, they will save your character until you reestablish your account - up to a maximum time limit (1 year?). At one point I left the game for 6 months and came back to find my characters just as I left them.
This brings up another point: I found it hard to leave the game when I had so much invested in my characters. When I finally left for good, I made it a point to give up all my worldly possessions of my main (high level) character. I then deleted the character completely - thus sealing the deal. This was suprisingly uplifting - the 'death' of this character freed me to move on.
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
Additionally, I was explaining what 'appeared' to be happening when you played the game - not the specifics of the mathematic calculations behind the hell level.
It seemed to take longer to kill the creatures and what you did kill gave less experience. Additionally, there were levels where your spells were ineffective against higher level MOBs - due to the fact that you really needed the next higher version of a particular spell to be effective - not available until you reached that higher level (catch-22?!).
So I think what I said applied - and may apply to a certain extent even today (try using a level 1 spell against a level 20 monster - particularly a magic user type - to get my drift).
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
Almost forgotten in the of the MMPORG: multi-player play-by-mail games.
Most of these were fairly simple strategic tournaments. Flying Buffalo Inc. was the big wheel of this industry. It's still in business, running games like Starweb for afficianados.
A few companies ran open-ended society games which were similar to Civilization or Masters of Orion.
The biggy was "Tribes of Crane" by Schubel & Son. It was entirely paper based. You led a tribe of nomads on a barbarian world. If your tribe found something neat, or your shamans learned a new spell or whatnot, you got a paper chit explaining it. Money was in the form of paper slips too. You spent money by mailing it to the game master or another player.
I played another S&S game, "Star Master." You designed an alien species, picked out a homeworld, and did standard Masters of Orion type stuff ("Explore, Expand, Exploit, and Eliminate" or something like that). If you engaged in trade, you could earn EUs, and trade them in for tech advances.
There was a vigorous out-of-channel trade in artifacts, money, and even entire species. People leaving the game would sell their empire to the highest bidder. That's what I did.
Some of the trading was illegal. After the "Central Galaxy" filled up, S&S opened up the "North East Galaxy." It was many, many months away by fast spaceship. Essentially a different universe.
Central Galaxy and NE Galaxy had different-colored EU chits. Not exchangeable in-game. However, a few players had species in both galaxies. They acted as middlemen.
Small scale and under the radar compared to the economic sideshow of Everquest, but still interesting.
American company with money opens a production facility in Tijuana. The article says the workers were "unskilled Mexican laborers," which would presume two things: 1) their time isn't worth much to begin with (unskilled), and 2) they are "laborers," so they are going to be earning a wage somewhere (hopefully), regardless. If they were school-aged children, that would be another matter, but the article doesn't say that.
If the rates they were paid were too low compared to what other companies in Tijuana were paying, then the company would have been unable to hire anyone in the first place. More likely, the wages were competitive with what was being paid in the region.
Was the company evil for doing this? Well, 24 unskilled Mexican laborors had steady employment that they were compensated for. Not only did the laborers receive compensation, but the money they received was invested into the local economy as they bought goods and services.
Well, maybe the work they were doing was too demanding. Hmmm... sitting in front of a computer, playing a game for eight hours at a stretch. Yeah, sounds like a rough life.
Sorry, I just have to disagree with the author's attempt to cast the company in a further negative light (yeah, they were dirtbags for selling nonexistent computers)... but I have to say, I think this idea is brilliant. It just can't be sustained, though, because the game developers are either going to fight with you and prevent you from building up a meaningful income, or they are going to wise up and compete with you by selling characters and items themselves.
But it looks like there might be a brief window of opportunity right now to make a buck.
And the idea that poor people don't want to work hard ignores the fact that quite a few working poor bust their asses at two jobs just to get by at the minimum wage, which has lost its meaning when it can't support someone working full time in most parts of the country. If you have to work 80 hours per week to get by or sit on your ass and pick up welfare, what will you do? Raising minimum wage would let people work reasonable hours and stay off of social programs.
I'm in the hole of the broadband donut.
I'm starting to see this occur with Eve Online as well. Recently, a 3 Account bundle went for over $1200 (US) on eBay. And it appears that ISK (the currency) is averaging 1Mil ISK = $1 US. So, if you're heavily into mining rare ores and can gather 10M worth of minerals in an hour then you're making around $10 an hour. Not bad for playing a game.
TheTiminator
Atitd (A Tale in the Desert) has only player made currencies (you learn to make paper and print money).
Two currencies now survive what was a 'battle' of sorts between different currencies. The main one, TN, is maintained by players who post prices of their goods online, and the value of TN slowly shifts over time.
Another currency, Goodscrip, is tied in value with a notion they call First Good, where the tradehouse maintains a supply, giving 1 First Good (10,000 Goodscrip) value to the first good of a type in their store, and it drops logarithmically, so that if they have N goods in stock, they are worth log2(n+1) First Good value.
Its really a fascinating system, and the prices of all goods quickly converge on supply and demand based prices.
Goodscrip explanation is up at http://wurb.com/goods/ - very neat system.
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