   MMORPG economies, few thoughts (long read)
  Topics covered in this post:What is an economy? Why is the economy so important? How has the economy changed over time? What is money in an MMO and where does its value come from? Is there room for improvement in the Faucet and Drain style economy? Part 1 What is an economy? There are many definitions of the term economy. Some are simple and some are fairly complex, but to put it simply the economy can be defined as: Activities related to the production and distribution of goods and services in a game. Or, if you prefer a more complex definition: The orderly arrangement and management of the internal affairs of a game where goods and services are exchanged in a free market where the prices of goods and services are influenced by supply and demand. Either way, the economy is basically an accepted framework for player transactions that deals with wealth and how players determine the value of objects and services within the game relative to one another. Why is the economy so important? To determine why the economy is important, let’s think of multi player online games without player economies. Virtually all FPS’s (first person shooters) and RTS’s (real time strategy games) have no economies. This is because the focus on games of these types is simply to end the game, usually as quickly as possible. How much money or stuff you have when you win or lose makes no difference. MMORPG’s are persistent worlds where the goal of the game isn’t simply completing a list of objectives on the way to an ultimate goal that will end the game. MMORPG’s are highly social, cooperative, interactive and sometimes adversarial games where players can engage in a myriad of activities like, exploration, quests, combat and trading to name just a few. Players can work solo or with as many people as can be formed in one or more groups that work together. Players can make decisions about what they wish to accomplish and work toward their goals. Gaining skills, exploring, gathering aren’t in themselves, part of the economy, they are aspects of the game that are facilitated by items or services within the game that are part of the economy. When a player thinks about their success in game, how much money and the quantity and quality of that they have obtained, relative to other players, is one of the most common ways a player can determine their level of success. If the players goal is to have the best armor, be at the top of the kill list, or be able to craft the best weapons in the game, all of these goals are facilitated by obtaining better items or purchasing services from players or NPC’s. Without an economy the persistent MMORPG would simply be players fighting NPC monsters and collecting stuff. Unused items would simply be discarded. Players would not craft (unless for themselves) or trade with other players, basically an MMORPG would be a persistent single player game a person plays with other people. This would of course limit the social aspect, which is what separates persistent worlds from other types of games in the first place. How has the economy changed over time? Traditionally, players collect items from interactions from NPC’s and trade items they don’t need with other players for items they need, or coin-of-the-realm which is then used to purchase items from other players or NPC’s. Some items are player made and others are obtained questing or simply by killing a particular monster and receiving an item as a reward. It’s common for players to adapt their game depending on where the game’s best items come from. If players make the best items in game, then players seeking items will gather the raw material needed to make them. If NPC’s, via questing or drops make the best items, then the trend will be toward those activities to gain the rewards given. Games like Starwars Galaxies and World of Warcraft™  and others formalized the player auction market where players can sell unwanted items, and with little variation it still exists roughly the same way today. The recent trend, pioneered by World of Warcraft™, seems to be to take much of the complexity out of the economy. For example, in World of Warcraft™ Players typically cannot sell “top tier” items they gain via questing or items given as random drops. This ensures that if a player wants a particular item, he must complete the quest that gives the item. A player cannot buy these items because the game forces player to bind “top tier” items to the character. After that all a player can do with a top tier item is sell it to an NPC or salvage it for raw material, both methods ensure that the item cannot be obtained by a player without participating in whatever task is needed to obtain a particular item. The point is that player markets are typically filled with what can be called “tier two” items. The majority of the items that can be sold or traded between players are second tier items. Those items considered top tier items that can be bought and sold between players usually have a few uses and have to be replaced repeatedly (e.g. potions). There are some instances where players can trade top tier items, but usually one part of a several part set, the rest of which must be obtained in PvE. Strategically speaking, this keeps players on the never ending quest to obtain better items. Even if a player gains all the best items, the next expansion will offer better items, and players, who want the best items, go back to trying to earn them. What is money in an MMO and where does its value come from? In the real world, money is in some sense a representation of labor, which of course takes time. So we can express money’s value in the real world this way: T x W= E Where T= Time, W= Wage and E= Earnings. Wages are earned as a product of labor where the wage earned for that labor over a given period of time (usually an hour) is predetermined between the person/s providing the labor and the person/s requesting the labor. Earnings are usually paid in the default currency of a given society. Our money is the dollar (EDIT: oops, if you live in the US). The value of money comes from what can be obtained with it, the labor that it took to obtain it and the reasonable assumption that money will retain its value over time. Because everyone in our society recognizes the dollar as valuable, and most people have some idea of what the dollar can buy, then a person will take a dollar in trade for an item or service they want to sell. In turn they will use the money earned to buy what it is they actually want. Think of it like this: money is what you give when you don’t have what the other person wants. In other words, if I sell a pair of skis so I can buy a bike, I would gladly exchange my skis to a person who had the bike I want. But the chances of that happening are slim, thus we exchange money. This is something known as the “coincidence of wants”.   Check it out here: http://en.wikipedia.org/wiki/Double_coincidence_of_wants,   indecently, this is a really good reason to stay away from bartering as a primary source of trade in your MMORPG. In society, there are virtually an endless number of things that can be bought with money, that is to say that virtually everything that is created can be bought and sold. This is one of the aspects that gives money value. Most people value their time, I think it’s ok to assume, that most people, if given a choice, would be doing something other than providing labor (work) with their time. The game world is a little different and as such the emphasis of value of money in the game economy is different than it is in the real world, that’s because money is earned over time, not working, but playing. This means, as a general statement, that people place less value on their time in a game then they might at work, thus, little of the value of money in a game comes from the idea that it was work to obtain. On the other hand, players place much of the value of money on what can be obtained with it. Because items facilitate player goals, and items can be bought with money, this fact makes it highly desired. Ironically, the longer a person plays  there are few things (relatively speaking) for players to spend money on, as players obtain more and more of what they want, the value of money for those players’ declines.   A third factor is that most games eventually reach a point where the amount of money in the economy relative to the amount of goods rises, this leads to inflation and players will often look to redefine the currency in the game by trading in rare items (things of universal value) as a form of payment.  All of these factors contribute to the devaluation of money in game and ultimately can make the game a lot less fun to play. One of the side effects is that players become more willing to give money and items to other players or alts. The impact is negative because new and casual players who have little to offer  established players.  This is because rewards in game are in no relation to the level of inflation in the economy. Another problem is that there is no intrinsic link between money and the things that it can buy in a game, what money can buy in game is clearly finite and many players reach a point where they have little need for money, or where the effort to acquire money is small, relatively speaking. The trend in games has been to move away from free and open markets (I’m not even going to address games with micro transactions). Players, earn most of the items they need directly from the game in the form of quests and drops. This means that players are rewarded for their labor, not with money but with items. Many of the items obtained this way cannot be traded or sold to other players. When players have what they need, money becomes, intrinsically speaking, practically worthless. Ultimately this all contributes to decreased complexity, which limits depth and social interaction and ultimately, fun. Is there room for improvement in the Faucet and Drain style economy? World of Warcraft™ , Lord of the Rings Online™, Warhammer™, Everquest™, Starwars Galaxies™, Dark age of Camelot™ and many others have been very successful and have entertained millions of players using the traditional Faucet & Drain style economy. It would be silly for me to say that these games have done something wrong. Part of the problem is the “if it’s not broken don’t fix it” mentality, but all of these games suffer some version of the same problem, of course how big a problem depends on your point of view. If you enjoy questing, and fighting NPC monsters, then there may be no problem for you, but if your focus is on player to player interaction, then the problem is more pronounced. Certainly there are enough players who wish to play a game more focused on open player vs. player concepts to support a game that breaks away from the systems that a vast majority of the games use today. The focus of these games is between the player and the game, player to player interaction is secondary. Even if the goal of the game for a particular player is to focus on other players in the game, the reality is that player to game interaction is mandatory to collect the means (items) in game necessary to remain competitive in the player vs player arena.   How many players can say their success is due to superior play on not do to superior items?In all of these games it’s only a matter of time before the player base has acquired so many of the games top tier items, that there is little left to do other than repeat what has already been done. Few games offer PvP outside of instances, and those that do offer little tangible reward or any real reason to fight other players beyond the hope of simple self improvement. New content in the form of expansions gives players the opportunity to play the game (all over again) in order to acquire more powerful means. The reality is that while the scenery has changed all that has really happened is that the developers have reset the economy so that player can spend the next several months trying to re-acquire the means to be successful in whatever aspect of play a player has chosen, be it PvE or PvP. One simple improvement would be to tie the faucets to the drains. That is to say that the economy can be balanced by increasing or decreasing the money supply when the amount of money and raw materials in the world as a whole rises relative to the amount of goods. This idea is discussed here: http://www.flyingscythemonkey.com/new_page_1.htm. I agree with many of the assessments, and I think it is possible to follow the suggestions here, but I believe there is a better way. The solution involves a more competitive aspect between players. That is not to say that NPC’s aren’t a tangible part, but success against other players in the game will be just as important as success against the developer created challenges and content. The point of this article was not to go into my solution to the problems I see in the MMORPG genre, rater discuss MMORPG economics. If your making your own game and are still early on in development and would like to discuss my solutions, feel free to PM me…. If you want to read a more in depth presentation on the problems I see in the F&D economy, read my presentation here: http://show.zoho.com/public/talinguard/MMORPG%20economics1   
  I would suggest that this thread be moved over to the GDLounge.My (quite) simple reply:What is the main currency of the game world worth to the player at in any given time, set of circustances or events within the players's mind, within the current frame of his avatar's situation?That is, in essence, the entire structure of a player-driven economy.(Very) Simple example:Mine, Enterprise, Fight, Research? Easy to say, tough to answer- especially to the would-be big guy newbie.   ;  To miss out http://en.wikipedia.org/wiki/Comparative_advantage from an article on MMORPG economics is a strange omission.   ;  Long-Haul Trucking:------------------On my way to work, I stop at a store that sells unusually cheap energy drinks. One of my co-workers pays me half the difference to pick up his supply. So I have become a trucker, ala Space Rangers 2, hauling goods from where they are cheap/abundant, to where they are desired/uncommon.So I am satisfying a demand. No one else wants any. Mission accomplished. If someone else lived in my neck of the woods (competing for this same business), then we would probably have to split the difference three ways insead of two, making it less valuable to do.If my vendor brings his price up to where half the difference doesn't cover my effort, then I'll stop buying from him, and my co-worker will get his stuff from near his home.;Quote:Original post by ROBERTREAD1To miss out http://en.wikipedia.org/wiki/Comparative_advantage from an article on MMORPG economics is a strange omission.Very good point.  I thought about it, but chose not to include comparative advantage simply because the post was already getting long.  I think I will expand the article as a number of people have expressed their interest in the subject and enjoyed what I wrote.Thanks for the input.;Quote:Original post by Dex JacksonI would suggest that this thread be moved over to the GDLounge.My (quite) simple reply:What is the main currency of the game world worth to the player at in any given time, set of circustances or events within the players's mind, within the current frame of his avatar's situation?That is, in essence, the entire structure of a player-driven economy.(Very) Simple example:Mine, Enterprise, Fight, Research? Easy to say, tough to answer- especially to the would-be big guy newbie.I think your explanation is looking at the economy at the extreme macro level.  I choose to provide a more in-depth look at game economics. Your explanation doesn't provide a lot of insight to most people. My goal was to explain the economy, in general, in a more practical sense and offer a little more usable information......You speak of circumstances,events and time frames, I wanted to speak to what some of those circumstances, events and time frames are.;Quote:Original post by AngleWyrmLong-Haul Trucking:------------------On my way to work, I stop at a store that sells unusually cheap energy drinks. One of my co-workers pays me half the difference to pick up his supply. So I have become a trucker, ala Space Rangers 2, hauling goods from where they are cheap/abundant, to where they are desired/uncommon.Finally someone to discuss the economy.  I don't know much about "Space Rangers 2", but in an MMORPG that allows collecting goods from one area where they are abundant and taking them (for low cost to the player) to an area of low supply/ high demand is a mistake that many MMORPG's have made, at least for the sake of a more immersive economy.  In Eve Online players can go to the edges of space and collect raw materials that are in high demand with relatively little effort, but there are three obstacles standing between that player and profit.•Time•Cost of fuel for guaranteed safety•Enemy playersThere is only one way (that I know of) that you can bring goods to market in a short period of time and that's with the use of a freighter that allows you to make several jumps at one time, thus making your trip safe, but expensive (fuel).  Most people can't afford freighters thus they must make several jumps (sometimes as much as 1/2 an hour or more) and are subject to attack by enemy players all along the way.  The mechanic allows for increased meaningful conflict, local markets, and a sense of increased immersion.[Edited by - Talinguard on May 19, 2009 8:27:45 AM]