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Vahrokh Vain > Economy and finance > Market mechanics > Online games and economy

Online games and economy

8 February 2015 By Vaerah Vahrokha

Why local markets tend to yield better economies

Very few AAA titles, backed by huge pockets of the likes of Blizzard™ and Electronic Arts™ have the power to closely keep in check their economy. It’s extremely easy that glitches, exploits (usually “items dupe”) or gold sellers take over the economy and completely and permanently break it.

I still recall Warhammer® Online, born as AAA title with a great Intellectual Property behind it. However its developers have been very negligent at many things including keeping economy at bay. It came with a central auction house economy model which broke fairly early. Expecially after the last Game Masters were dismissed, between items duping and other escamotages, prices would multiply over the span of few weeks. The few, new players would find basic items priced at 1,000 times more than they could afford. All round, dire design flaws doomed that game to extinction, economy being so broken certainly did not help slow down its demise.

For a company without endless resources, it’s safer and – in the long run – healthier to implement a de-centralized economy model where markets are exclusively local. Even the listing has to be only regionally available or have significant barriers.

Why, you’ll ask?

15+ years of MMO playing and 7 in EvE Online™, have teached me that the most fundamental factor in a MMO (and in real life too!) is “velocity of money and information”. It’s the speed money and information may circulate in the economy, expecially between players. The quickest the velocity the higher the risks of the economy deviating from an healthy status.

Global markets and listings are a big deal for that.

A global “auction house” promotes everything that takes benefit off fast exchanges and quick price information delivery: China sweatshops gold sellers and market manipulators.

Even “legitimate players” enjoy a first phase of benefits (the comfortable access to everything with an uniform price) but later get blasted by the effects: one town for any reason (usually logistics and dominance do a lot with that) becomes more and more prominent until it becomes the “one stop shop” where everybody clump on, leaving everywhere else as a desert. This is the core of the “hub city” concept we also see in WoW and other centralized economy MMOs.

But in WoW you tolerate the fact that one city per expansion becomes the one with players in it, there are no advanced gameplay concepts in there.

In other 3rd generation MMOs, expecially sandbox, heavy role play games, you want towns to have people in them, else other features (like player housing) fail, whereas you get players complaining they can’t find an home next to the one relevant city. I have seen a bit of that in example in Istaria™ (when it had enough players to have important towns, like Aughundell and Bristugo).

Another effect is that people like me know how to hugely exploit central markets to become billionaires fast, this greatly harms both the economy and the “game new blood”, as new players come in and find a resident elite with the best stuff (unavoidable in vertical progression MMOs) but also with endless billions to use and gain power, items, armies.

Another effect is given by the very self healing and self optimizing nature of the markets: whatever item, over time it SHALL become unprofitable to craft as market movers close the profit “gaps” between demand and supply. When you know you only have one market place to deal with, you can flood it with endless stuff and basically kick out all the weaker competitors. Yes you may see many similarities with real life, because markets are real, markets represent human power / strength relations and attrictions between humans themselves.

Last but not least, slower velocity of money helps with wallets segregation. This obscure term (used in EvE) represents how easy is to transfer wealth between players. EvE economy would be far less solid if it did not discourage wealth transfer in every way. Once again, experienced players are able to amass untold amounts of wealth by stripping others (there are 1,001 ways to do that, believe me). Making it harder and slower helps slowing down the creation of the “formidable elite” effect (described above) that hurts MMOs after few years after their birth.

Basically, well made economy MMOs are smaller representations of what happens in real life, expecially if they are sandbox. You all see what happened with globalization: an huge leap forward to global markets optimization that is killing the millions.

A subscription based MMO cannot afford this, because players feel entitled to have fun (!), not to become the last, unfortunate and expendable cog in the efficient, min maxed machine.

The only advantage in a centralized economy (and auction houses) MMO is the ready availability of every item’s price. That is, it’s of great comfort to know that what you look after has been actually crafted by somebody and you know where to go pick it up.

A big example is Elder Scrolls Online: markets enjoy the benefits of being segregated, there’s no reason to really strip other players off their money (besides being nasty). However players complain because they don’t know if their needed items exist and where to get them.

It’s still possible to pick a middle ground. People don’t absolutely need to know where to find basic consummables and materials, those are so readily available everywhere. The issues is with specific, usually crafted, hard to get items.

Therefore it’d be possible to implement local markets but with a “valuable items post” where to place custom made stuff (of good quality, NOT every “grey level up crafted item”). Access of that items post would be subject to restrictions, like in example, being able to look at it only 3 times a day, having to pay a tax to look at it and so on. And even then, the “valuable items post” would “merely” state in which town those items are located, it would not magically teleport those items to the buyer like a mediocre MMO “auction house”.

Finally, in the past MMO developers have greatly under-estimated the importance of keeping MMO economy metrics. They repeated the same mistakes and ignored how much it’s dangerous to let easily undetected loop holes being exploited and cause the “creation / duping” of items and money out of nowhere.

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Filed Under: Market mechanics Tagged With: economy, game, market

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Open, High, Low, Close (and sometimes Volume) data, is a finance industry standards format used to represent price evolution during a certain period of time (daily, weekly, hourly...). OHLC data are consumed by financial analysis applications and by charting software to represent price action.
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Meta gaming is a broad term usually used to define any strategy, action or method used in a game which transcends a prescribed ruleset, uses external factors to affect the game, or goes beyond the supposed limits or environment set by the game. Another definition refers to the game universe outside of the game itself.
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Emergent gameplay refers to complex situations in video games, board games, or table top role-playing games that emerge from the interaction of relatively simple game mechanics.
sandbox
A sandbox game is a type of video game design where a player can roam freely through a virtual world and is given considerable freedom in choosing how or when to approach objectives. Sandbox emphasises a paradigm where, as in a physical sandbox, the user is entertained by his ability to do as they wish creatively and with there being "no right way" of playing the game
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A sandbox game is a type of video game design where a player can roam freely through a virtual world and is given considerable freedom in choosing how or when to approach objectives. Sandbox emphasises a paradigm where, as in a physical sandbox, the user is entertained by his ability to do as they wish creatively and with there being "no right way" of playing the game
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