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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.""
Think you could cut me a check?
But it doesn't affect my economic situation at all. Should I use more lotion?
Has there been any outsourcing to Everquest yet?
Don't blame Durga. I voted for Centauri.
If each platinum piece on Everquest == 1 cent real life, then the programmers should create 1,000,000,000,000 platinum pieces in the game and give it to themselves. Then they would be rich!!!
Come play Heroes of Might and Magic Mini online.
Just what the EverCrackHeads need, another reason to stay glued to the computer. 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. My friend honestly did not want to stop playing because he feared he would miss out on something going on within his "clan". How ironic that he missed out on so much that happened in the real world with his "friends" and "family".
Please do not let scientific accuracy interfere with the intended humourous/interesting/insightful value of this comment
The article fails to take into account that those EQ platinums aren't conversible. Meaning, you can auction them off in eBay, but only a minority will ever be. If they were a real currency, not necessarily the US dollar, then they would be convertible and these measurements and comparisions would make sense.
In that case, the value of the EQ platinum as a commodity would be much, much lower.
Leandro Guimarães Faria Corcete DUTRA
DA, DBA, SysAdmin, Data Modeller
GNU Project, Debian GNU/Lin
I played EQ for a year and a half, averging 20 hours a week. (Quite a bit as I look back) When I "got out" I sold my character on a auction site and got 800 dollars for it! I couldn't believe it I thought that it was awesome money. Then I realized if I averaged out my time and what I got for my character, it was only like 50 cents an hour. That being said, my average was more like a "minimum" every week with some weeks being > 35 hours of game play. The other thing this study doesn't take in account for is that Sony ACTIVELY (when I played, things may have changed) fights out of game transactions, and selling in game money and items for real money. So your "PLAT" may be worth a cent each, but good luck cashing in!
1) Start playing these games when they first come out.
2) Build up a bunch up high level characters and items.
3) Sell them on ebay, or other RPG auction sites.
4) Profit!!!
like valuing every ticket in a theatre based on the price the touts are charging outside the event?
Not bad, however... You do need to pay for a constant internet connection, ( EQ here, so some light form of broadband ) a PC, electricity and one EQ account. I don't think that with these constant costs substracted, EQ will be a very good job...
Hate me!
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.
Since I can't reach the page, I don't know why he only used 616 auctions (or however many he used). But you can use a tool obtained HERE for about $100 or so that will analyze Ebay listings for the past 2 weeks or so. Using this data you can get a MUCH more accurate reading that a measly 616 listings, which aren't even close to being correct since something around at least 80% of the business goes through IGE/Yantis these days. And don't forget Playerauctions which I can't access here at work due to the proxy but they don't get mentioned hardly at all nowadays despite the large amount of traffic going through them. If you want to read through more reliable reports you should instead roll around HERE (terra nova blogs) where doctors, lawyers and all sorts of other people that have been analyzing this stuff before you created your first level 1 female elven monk, lurk around.
More like almost two and a half years Rip van W.
One line blog. I hear that they're called Twitters now.
Articles like this just make me want to get away from my computer and go enjoy the sunshine.
biopowered.co.uk - catalytically cracking triglycerides for home automotive use since 2008. Just say no to big oil!
I have recently picked up the game of Texas Holdem. I figured out that it was costing me around $8.00 to play online.
So I can make $3.00/hour in one online game to fund an $8.00/hour in another online game.
Heroineware anyone?
hmmmm. If I could only reverse the two then I would be in the money. Sounds like a plan
If if was a fifth then we would all be drunk--Words to live by
Dr. Retarded Check out what they have done now.
These games are so one dimensional (I am a recovering Evercrack addict - so I know what I speak of). Working on an assembly line would be more stimulating than building tradeskills in the game; 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).
That being said, there was an addictive quality - particularly when playing with the same group of people you know in the real world (many of my coworkers played at the time). I don't know if it was the color scheme, or some subliminal message they strobed in the background between frames; whatever it was, it made it very hard to stop.
Sadly, most online games are built for the least common denominator - for folks who want instant action, and little thought put into the gameplay, with few exceptions.
I have recovered from my addiction - and I warn everyone who considers buying the game: don't do it!
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
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.
The piece you reference was cotemporaneous with the original paper, which was indeed published over two years ago. This latest piece is an update published in the June 2004 edition of The Walrus, which has just been slashdotted up the wazoo. Anyone grab a mirror?
Anyway, if you are able to read the article, you'll find a lot more in-depth analysis of the original paper, plus comparisons with other gaming systems and economic activity -- including extortion, prostitution, outsourcing (the Black Snow gang in Mexico) and even the disproportionate dominance of male gender characters.
Paul Gillingwater
MBA, CISSP, CISM
Then I realized if I averaged out my time and what I got for my character, it was only like 50 cents an hour Yeah, but you're PLAYING A GAME. If anyone wants to pay me 50 cents an hour for playing games, email me. I'll give it to my girlfriend so she can go shopping, which in turn will give me more game time.
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.
The caculation of GNP assumes the fact that the 1st platinum piece sold (converted) to USD has the same worth as the 100 millionth, which is clearly an unsafe assumption for the report to make about a currency of an online game, even though this fact is usually taken for granted about real currencies.
In online games, people tend to not want to sell their in-game pieces just because they spent so much time earning them, inflating the real value of the platinum pieces. For example, if I were to value a ring I don't have so much that I would not sell it for a trillion dollars, that doesn't mean that if I were given the ring, my GNP would be greater than a few countries'.
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.
Its all about leveling your character(s). It is really one giant level treadmill (think of a hamster in a cage running furiously on his little cylinder).
As you kill more creatures (or build your tradeskills) you gain level points. As you increase in level you can more easily kill the lower level creatures; however, you also do not get as much benefit from these creatures, and thus must move on to an area with higher level creatures to allow you to level faster again.
This process continues indefinitely. There are certain levels that are called 'Hell Levels' - mainly due to the fact that your particular character is at a point where there are no monsters that fit the level of your character, or the skills available to your character make it difficult to make headway - so leveling slows to a crawl.
Tradeskills follows a similar pattern, at each level you can build more interesting and/or useful items - that you then sell to other players, which finances further development of your tradeskills.
I found this process to be very boring after awhile. So I migrated to a PVP server (player versus player) - where the players could fight each other, in addition to the monsters. This made it much more interesting. I tried all of the different PVP servers (one allowed free for all, and the other three were team servers of various makeups). This was my downfall...I was glued to the game after that.
Finally, the fact that my peers were able to level faster (I have a family after all, and couldn't spend the same hours my single friends did in game), stripped me of my leveling party, and it became a boring slog...at which point I was able to extract myself, and go cold turkey...
Been clean and EverCrack free for 3 years now (knock on wood). Of course I am now involved in World War II Online - but I can stop playing at any time and step away - that is the key. A game is just that - A GAME. It shouldn't take your concentration for every waking moment - which EverQuest requires, particularly at higher levels (if you camp out deep in a dungeon, for example, that required your whole group to fight into - when you come back and login again, you will have to fight your way out alone, which might be impossible depending on the monsters in the dungeon - so you can't just stop playing until you are at a relatively 'safe' location).
Hope that helps you get an idea about what the game is about.
Lodragan Draoidh
The more you explain it, the more I don't understand it. - Mark Twain
Of course,m the problem here is you have to play the game to make money. One guy tried a scheme in Star Wars galaxies to automate this. Here's how well he did.
I'm hatching a plan to steal Unreal Tournament 2004 vehicles from the other team and then sell them back on Ebay. You want that tank back, blue? It'll cost you!
You can't equate an EQ platinum piece with 1 US cent, for the simple reason that a cent is a symbol (having the backing of a nation and its mints) recognized worldwide as having a specific relative value.
Everquest equipment, plat, etc. are valuable to some people - a subset of the 300,000 people who play Everquest, an infinitesimal fraction of the world's population - but believe me, if you tried to exchange that '319 platinum' for a cheeseburger or video rental you'd get nowhere. If you took this guy's study, and a bonded note guaranteeing the user 319 Everquest Platinum, into a currency exchange... how much real currency do you think you could get for it? Does anyone really believe they could get anything close to $3, or even $0.01?
There is no stable rate of exchange for EQ platinum to real world money, except among a tiny, ultimately transient subset of EQ players. This is like quantifying the value of a sunday sermon based on analysis of the donations that week...
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.
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.
Any time there is profit to be made by ruining an online economy, there will always be people lining up to make it.
I didn't play M:tG back in the days of the Power Nine, but I estimate it's still the case that you can make more by selling the cards individually - most sets have one or two rares which sell for four times the cost of a booster, and the last couple have uncommons which sell for twice the cost of a booster. Sell the commons in chunks of 100 cards on E-bay, and you've probably got a viable business model. (I haven't done a complete analysis, but AIUI there are a few businesses running on a model similar to this).
I'll give $5000 for a BFG that doesn't need to charge and has unlimited ammo!
...we hear the Fed. Chairman Greeenspan talking about the upward pressure on inflation because of the EQIPEC (EQ Item Producing and Exporting Countries) are restricting demand and therefore driving up the value of the Platnium. Then pressing on he states that we should start 'mining' the American lunch hour reserves and use this otherwise down time to produce more domestic EQ Items.
>>There are certain levels that are called 'Hell Levels' - mainly due to the fact that your particular character is at a point where there are no monsters that fit the level of your character, or the skills available to your character make it difficult to make headway - so leveling slows to a crawl.
Hell levels were removed years ago. The level transitions are all fairly smooth now. And there is plenty of content for anyone at any level these days, with 200+ zones to play in.
It doesn't hurt to be nice.
There are programs like MacroQuest for botting in EverCrack. Some of the scripts are for making tradeskill items, those are primarily used when there is some tradeskill recipe that makes a profit (which happened last year, depending on cpu speed, up to around 50kpp per hour; and to throw people off the scent, they started rumors about a broken banker in zones like najena or befallen). There are other experience making scripts. There are even some folks who find fun in griefing botters. The folks who spend time writing the scripts and code for MQ could probably make more money writing their own games. But oh noooooooos, we be evercrackheads here.
It's available on SSRN . Search 'castronova' and take your pick. Or go here. One thing: EverQuest's GDP PER CAPITA is bigger than India's. I don't why people keep reporting it as 'EverQuest's GDP is bigger than India's.' It isn't. That would be absurd. PER CAPITA. {sigh}.
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.
You can't keep the value of currency higher than it would usually be. You also don't want it unfairly one way or the other.
Money is an abstraction for value, it is a unit that can account for goods, services, time, quality and any other factor.
Currencies only have relative values to each other. This is backed by the goods you can buy.
The million platinum pieces don't have a value themself, only that of the underlying good.
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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