I have read times and again questions about online games and economy: if they are related, how much, if it’s important for an online game / MMO / MMORPG to have an healthy economy and so on.
Readers who stumble upon this blog from a Google search might want to check the many markets, finance (both game and real life related) articles present on this blog. They’ll find out how at a certain point I have given inspiration to EvE Online™ economist Dr. Eyjolfur Guðmundsson for a presentation he gave at his last Fanfest. This has been an huge honor for me, as EvE® Online™ is known for its rock solid economy model and Dr. Eyjolfur Guðmundsson has been a very competent game economist, known to the point to later get hired with a prestigious position of rector at Háskólinn á Akureyri (University of Akureyri).
Other references: my work has been used to improve tools like the Guild Wars™ 2 premier gold / gems charting tool, EvE Online’s EvE Marketeer website (more charts), to have created an EvE economy blog and to have setup realistic EvE market charts that look exactly like real life ones.~1~
It’s not immediately apparent, but a MMO economy is what makes or breaks it.
Games with a stale or over-inflating economy are doomed to fail. It’s that simple. Even in games where economy seems to be completely irrelevant, it’s still a fundamental factor. A single player game, even a non RPG based game, can easily break if its numbers are off. In a MMO markets and economy are even more important, because they implement a community and communication tool between players <=> players and between players <=> developers.
Two main kinds of MMORPG market places: “global auction house” vs “local markets”
Games economies and markets come in all sorts of kinds, but they may roughly be classified into two main categories: games with a central market place and games with regional, local markets / market places.
Games usually use simplified economy models, therefore the strategy used to place market places also influences markets, which in turn inflences the economy. Therefore from now on I’ll use the terms without making too many distinctions.
Global auction house model
The first names that come to mind are World Of Warcraft® and SWTOR®. You get one or very few, centralized “central exchanges” where everything is listed at once and together. This is a quite popular kind of model, because players may find everything they want in a single, convenient location. However it comes with drawbacks and issues that have broken some MMORPGs in the past.
- Single, convenient location where to buy and sell items.
- Very good for games where dropped gear is the best gear / where bind on pickup gear is the norm.
- Markets quickly achieve economy of scale and spreads reduction.
- Looks fairly “realistic”: markets in the real world these days are inter-connected and easily accessed.
- Game becomes shallow for certain categories of players.
- There’s no wallets segregation. Later in the article I’ll explain these specialistic terms.
- There’s too much money velocity.
- Gold farmers, exploiters can easily break the economy and destroy the game.
- Looks realistic but it’s not. It’s actually too “magic”. In real world markets you cannot “teleport” items across the world from seller to buyer.
- Hostile to crafters: since “life” in a MMORPG has no costs and prices spread shrinks trending to zero over time, their work and investments (be it recipes costs, special quest lines to do in order to unlock certain crafting skills…) are not rewarded at all. Their wares become unprofitable to craft, their price becomes equivalent to the bare value of the item components and materials. The usual outcome is: nobody cares to craft anything any longer, everyone just sells raw materials, which usually achieve a premium because they give experience to those who buy and work them into refined materials.
Both of these games rely on a very important factors: travel times and high wallets segregation. These greatly help avoiding the economy to become “too hot”, over-inflate and help fighting gold farmers and exploiters on a macro scale.
In these MMORPGs, players don’t have a central exchange or trade hub or auction house. They have several local markets and players must bring their wares to these. Moreover, prices are not visible from everywhere nor across marketplaces: they are local and known only to the local market being browsed.
- It’s possible to have items relevant to a certain region being conveniently listed right there.
- Very good for sandbox games, for games with strong crafting, where dropped gear is not expecially prevalent or good and where a good portion of the drops is freely traded or bind on equip.
- Markets maintain profitability for the individual participants.
- They are realistic, because we are talking about items markets, not about “virtual” securities markets.
- Good wallets segregation.
- Low money velocity.
- It’s time consuming to find and offer items: you need to travel all around.
- Players with an “arcade” or “action game” mentality dislike having to go find the best deals and generally employ their time into an activity they feel it’s boring.
- Bid / ask spreads are larger than central marketplace MMORPGs. Whereas this is a nice bonus for crafters, who may charge a premium for their work.