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Games Entertainment

MMORPG Economies Explored in Depth 203

Obscure Economist writes "The Social Science Research Network (SSRN, http://www.ssrn.com) has just posted a free download of "On Virtual Economies," a new broad-focused study of the market for MMORPGs. Think of it as a less descriptive, but more predictive, follow-up to my paper on the EverQuest economy of last spring. The link, for those interested: http://papers.ssrn.com/sol3/papers.cfm?abstract_id =338500. Comments and criticism appreciated. Edward Castronova, Associate Professor of Economics, Cal State Fullerton"
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MMORPG Economies Explored in Depth

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  • by Anonymous Coward
    If you could do an in depth study that was actually insightful about the actual economy, you would be hailed as a genius (you might even win a Nobel prize). As it is, you're simply a geek with way too much time on his hands.

    MMORPGs are fantasy. They are artificially created by game makers and players are bound by the limitations that the game makers put in. If fake money is always created and never destroyed, then there is essentially an infinite amount of fake money and any item can eventually be attained. If there is a scarcity of money, then the game would be uninteresting because newer players would always be at a disadvantage to older players who have amassed more wealth and can thus buy more powerful stuff.

    It's just a game. Play it for fun. Repeat until it sinks in.
    • I think you miss the point.. Yeah, MMORPGS are geeky (and a waste of time IMO) but consider it a small-scale model for the real world economy and how the real economy might be under different circumstances. No, it's not the same as the real economy by any means, but it's an interesting sociological "experiment" (though more of an observation.) Besides, not everything needs to have a practical application. Some people just enjoy this kind of stuff. :)
    • But people do pay real money for virtual goods, money, and characters (though, admittedly, illegally). If this were common enough a currency exchange factor would emmerge. The money has some worth to some people. If MMORPGs become more dominant and widespread in the future, virtual money might be worth something to a lot of people.
    • by TGK ( 262438 ) on Tuesday October 22, 2002 @06:38PM (#4508823) Homepage Journal
      Interestingly enough, US Banks have the power to create and destroy money.

      The way it works is this. MyBank (insured FDIC) has a certain amount of money on deposit with its local Federal Reserve Bank (NY, Phillie, Whatnot). The Federal Reserve then sets a multiplier, allowing MyBank to loan out Z*Deposit where Z is a number chosen between 1 and however many Cherios Allen Greenspan ate for breakfast this morning.

      MyBank then lends you that money. It just up and lends it to you. It didn't have the money to lend, but the Fed said it could so it does.

      The key to the entire system is the ASSUMPTION that money is scarce. Or rather, that money has inherent value.

      In the case of a MMORPG money is created (typicaly) by killing stuff. This killing of stuff is work, and requires the player (or a cleverly written bot) to spend time persuing this activity.

      This time is equivilent to work. As long as people feel that they have to work to get money and that money in turn can be used to get someone else to work for them (or something else) the economy will keep going.

      So in essence, as long as the player can not randomly create money (but can work for it), it really is just as valid as any other national currency (except perhaps the old Lira, which was so worthless as to require several million to buy a mellon)
      • slave (Score:2, Funny)

        by yerricde ( 125198 )

        (except perhaps the old Lira, which was so worthless as to require several million to buy a mellon)

        "Lira" was the currency of Italy until it switched to the Euro. "Melon" is either a fruit or a large female human breast. "Mellon" is either the M in CMU [cmu.edu] or the Sindarin word for 'friend' (pl. "mellyn") and is the password to the Doors of Durin (topical: the Doors of Durin are in a fantasy world [google.com] that just hasn't been MMORPGized yet [ign.com]). I assume that you aren't referring to "buy a friend" because as far as I know, slavery is illegal in Italy and the rest of the European Union. Or "buy a friend" as in a campaign contribution on the part of a political action committee?

        OK, that was a bad joke.

      • The key to the entire system is the ASSUMPTION that money is scarce.

        Unfortunately, that assumption, when taken to its logical end (i.e., that a national or world economy is a zero-sum game), is responsible for a great deal of the childish and dangerous class hatred in the world.

        My monetary success does not mean somebody else has to fail so I can continue to make money. Likewise, my monetary failure does not guarantee that someone has succeeded where I should have. Or, to paraphrase P.J. O'Rourke, people assume that an economy is a pizza and, if you have too many slices, I have to eat the box.

        And regarding the Lira, a couple years back one of the local radio stations here in Omaha had a game: "Who Wants to Be an Italian Millionaire?" If you answered three questions right (or something like that), then you got that day's equivalent of IL1,000,000, which if I remember correctly worked out to about forty or fifty dollars when you performed the "neon-bumwad --> real actual money" conversion.

    • I suppose you'd also consider game theory, at first developed around simple "I help/hurt you, you help/hurt me" to be done by people with "too much time on their hands?"

      Since e-cash is, at some point, going to become a reality, and MMORPGs are small scale models representing this, this is an important area.

      Besides, where else can an economist find as interesting a research area?
    • I think you missed the fact that one of the most important cources in academic economy is game theory.

      No, it is not about games as we know them, but about simplistic economic models and how people responds to them and how they develop.. As such MMORPG are excelent speciments, especially because they through ebay and such now has an exchange-rate between real and virtual money.
  • by Anonymous Coward
    MMORPHG's are excellent devices to model real world problems around. Here at the Fui Institute in Japan, we have used several MMORPGH's worldwide to map several social issues.

    For example, the interaction between human beings are very nicely mapped in a MMORPGH. It's true, the newbies usually play the games as a game, but after a while they fall into place and build a sense of reality. When this happens, they try to model the MMORPGH based on their real world. This is very interesting no?

    Unlike the Sims, MMORPGH's actually put you in the place of the character, thus you are more attacched to your character than with Sims. You tend to be a lot more emotional and a lot more envolved. We have done several research among Sims vs MMORPGH. It would be interesting when the new Sims MMORPGH game comes out.

    Thank you.

    Dr. Thakiro Nagoobalhu.
    • Heh, a troll. I bet he's gonna get modded to interesting as well.. Fui Insitute? A Japanese named Nagoobalhu? There's no L in (native) Japanese, idiot.
  • Hawaii (Score:2, Funny)

    by GaLupo ( 583949 )
    MMRPG's at my school are a way of life for some ppl. Helped my roomate last year go to Hawaii by sellign soem everquest accounts.
  • by flogger ( 524072 ) <non@nonegiven> on Tuesday October 22, 2002 @06:29PM (#4508762) Journal
    there is this /. article. [slashdot.org] that showcases someone's ideas [player2player.net] about how to unbalance a game with exploits in the economy.

  • by Espectr0 ( 577637 ) on Tuesday October 22, 2002 @06:29PM (#4508763) Journal
    Since they are subscription based and need servers, piracy is cut down , almost all of it. What i don't approve is that the games cost full price like every offline game plus the subscription, which is not cheap at all.

    At least anarchy online allows you to test the game for free
    • by rogueuk ( 245470 ) on Tuesday October 22, 2002 @06:34PM (#4508799) Homepage
      a lot of times, a while after the game has come out, there's a huge discount to get a lot of new players into the game. I remember seeing asheron's call about 6-8 months ago for 10 bucks plus 2 months free subscription...at a cost of 10 bucks a month..

      so you end up with a net surplus of 10 dollars in your wallet for those 2 months.
      it's a pretty decent deal if you like those games.
      • DAoC definately does NOT cost as much as a single-player game initially.

        When I bought my first copy, it was $30 - Most good games are $50+ these days.

        When I bought my second copy recently, it was only $20 - Take into account that the game comes with a free month ($13 if paid a month at a time), and that means the game cost $17 and later $7 initially.
      • Asheron's Call, Dark Majesty (which is the full game) costs $20 with a $20 mail in rebate. It includes one month of service. Basicly they need to charge something for it so the retailer can take a cut and will stock the game on the shelf. By the time you get the rebate, Microsoft/Turbine is actuall paying out money to get you to try the game.

        Now that they're finally going to start banning combat macroers next month, it's even worth trying out.
    • by Dirtside ( 91468 ) on Tuesday October 22, 2002 @07:08PM (#4509088) Journal
      What i don't approve is that the games cost full price like every offline game plus the subscription, which is not cheap at all.
      The cost of purchasing the game box is there to offset the development costs of the game -- i.e. all the money spent paying the programmers, artists, designers, and managers who develop the game to begin with. For a modern, first-tier computer game, this process can take two to four years; all that money is invested in the project before the company gets a single dime from customers.

      Now for a regular game, once the game launches, there's some followup (patches, fixes, etc.) but the amount of effort is small compared to the amount of effort that went into creating the original game. But with an MMO, once the game launches, the company is also providing servers for you to play on. Providing that service is an ongoing cost; you have to pay people to admin and maintain the servers, pay for new or replacement hardware, pay for bandwidth, electricity, etc. It's a significant chunk of change, which is why there's the ongoing fee. In addition, MMOs tend to have additional (free) content introduced down the line; the monthly fee pays for this as well (although full expansions are usually Sold Separately, and the development costs for the content in those expansions are paid for by the box cost... in theory).

      AO allows a download of the client to test out the game, but if you want to play the game, you still need to buy a game box (in order to receive a registration key). Most MMOs don't have this option, since downloading a 1 gig+ client just to test would be an additional huge load on their bandwidth.

      There is a reason for the up-front cost plus the ongoing monthly cost; it's just odd that so few people seem to understand that running servers that can handle thousands of simultaneous players for months at a time is an expensive thing to do.

      • by Hott of the World ( 537284 ) on Tuesday October 22, 2002 @08:16PM (#4509501) Homepage Journal
        And yet somewhere, somehow, people manage to do it at no cost to the users. Thats just insane! I mean, with all the costs associated with running BATTLE.NET, I'm surprised that Blizzard is not bankrupt...

        • As someone else pointed out, Battle.net is something akin to Napster - It just keeps track of clients and tells them where to connect with each other. It might store some information, like character data. (i.e. act as a savegame repository, in the case of D2)

          Napster had no problem commanding massive bandwidth overloads all over, but their servers themselves were not strained much at all.

          MMORPGs require the client to be connected directly to the server, which means the server and connection have to be a LOT beefier.
      • There is a reason for the up-front cost plus the ongoing monthly cost; it's just odd that so few people seem to understand that running servers that can handle thousands of simultaneous players for months at a time is an expensive thing to do.
        I disagree. I think developers need to decide whether they are selling a product or a service - and not both. I wouldn't mind the subscription fees as much if the client was free but I feel it's unfair to play both ends.
        • I think developers need to decide whether they are selling a product or a service - and not both.

          Why can't they do both. I the real world, this is very common. You sale a product and then have a services arm ready to service that product for your customer. This seems like it exactly parallels that. It makes tons of sense if you stop and think of it. You have a product, you sale your product. People need to have the product serviced, so you sale the services.

          If they didn't charge for the product, the service rates would have to go up. It's not like you're looking at saving money by not having one or the other. Likewise, if they didn't have a service rate (monthly charge), the product cost would be through the roof as it would more than likely be hundreds of dollars per copy. Not to mention you'd probably have to constantly buy upgrades...something which is already included in your monthly service fee.

        • I think developers need to decide whether they are selling a product or a service - and not both.
          The "product" and the "service" are two parts of the same thing. The way MMOs are designed, one without the other is useless. The product (the initial game box with all its content) cost several million dollars to produce over the course of a few years. The service (running the servers) costs a large fraction of a million dollars *per month* to run. It's a much riskier financial bargain if they give one or the other away for free, since it becomes a lot harder to break even. If they didn't charge for the game box, they'd have to charge more for the service; if they didn't charge for the service, the game would cost more. It's simple economics. There's nothing "unfair" about "playing both ends," and you're ignoring the fact that every subscription-based MMO gives you a free month (or more) of service included with the initial game. Earth & Beyond was $45, and that includes a free month of service. A month of service normally costs $12.95. That means the game was really only $32 to me, which is a pretty good price for a game like that (most first-tier games cost $50-$60 when released).
  • by thefinite ( 563510 ) on Tuesday October 22, 2002 @06:29PM (#4508771)
    Quote from abstract:

    It will also raise certain constitutional issues, since it is not clear, today, exactly who has jurisdiction over these new economies.

    Don't the games already dictate the control of these economies? MMORPG game makers decide the rules of the economy according to what they think makes them enjoyable. Granted, if you are selling EverQuest items on Ebay, then you are subject to U.S. economic laws, but why would any government care about the economic activities in a virtual world, except in areas that affect their own economies? There may be an answer to this I don't see. If so, what is it?
    • MMORPG game makers decide the rules of the economy according to what they think makes them PROFITABLE.

      That is the sole motivation.
    • thefinite writes:
      "Granted, if you are selling EverQuest items on Ebay, then you are subject to U.S. economic laws, but why would any government care about the economic activities in a virtual world, except in areas that affect their own economies? There may be an answer to this I don't see. If so, what is it?"

      If you think about the selling of "plat" (platinum) obtained from Everquest on eBay, you're basically talking about a commodities market and the people running the game are essentially printing money.
      • The only commodity being sold is the time that it takes someone to gather the plat to sell on ebay. Since the vast majority of us sell our time (and expertise or muscle as well in most cases) to make a living, this doesn't seem very different.

        • by limekiller4 ( 451497 ) on Tuesday October 22, 2002 @09:07PM (#4509742) Homepage
          Danse writes:
          "The only commodity being sold is the time that it takes someone to gather the plat to sell on ebay. Since the vast majority of us sell our time (and expertise or muscle as well in most cases) to make a living, this doesn't seem very different."

          You are 100% correct ...but this qualifies for oil too. Or electricity. Or or orange juice or porkbellies. These are commodities. And they're regulated because if you do not, it is possible to manipulate the environment which will result in profit with no risk for the manipulators and assured loss for those not "in on the deal." Hence 'insider trading.'

          Whether the item in question is lawfully obtained by the sweat of your brow has nothing to do with the problem. Everquest isn't regulated. An admin could, conceivably, give themselves or others plat. Yes, there might be internal safeguards in place, but are they adequate? Can someone code a script to do that work automagically? Or even worse, can the system be hacked outright?

          The result of "printing script" (ie, money) is that it devalues the legitimate money and this leads to inflation and relative devaluation. In other words, if there exists 1,000 units of money in an environment and we both have half, if you can print yourself 5,000 units, we now have 6,000u of money in circulation and my lot is significantly devalued.

          Granted, this is an extreme example, but it is only provided to illustrate the point.
          • Pork bellies are a real, physical commodity: the people who make it truly are "bringing home the bacon" for the rest of us. So is electricity. To expect the federal government to treat a made up currency in an imaginary world inside a computer game as being just as important as pork bellies and electricity is demeaning to pork bellies and electricity.

            Creating plat out of thin air does not devalue legitimate money, it only "devalues" plat, and if you think that has any real value in the first place you have a problem. If you buy 1000 plat for 1000 dollars, and then the EverQuest administrators create 5000 plat and give it away for free, you will end up looking like an idiot, but those of us who are REALLY not "in on the deal" in the sense that we don't even play EverCrack will just point at you and laugh for taking a mere game so seriously. At no point is actual real-world currency ever created, destroyed, or devalued by this process.

            Buying plat is like buying video game tokens: when a sensible person does it, they understand that they are basically just throwing their money away, but they expect to at least have a little bit of fun doing it.

      • the people running the game are essentially printing money

        No they're not. They're printing virtual money, in a vitrual world. They can make all the virtuamoney they want, and sell it for real world money, but only when people still want it. There is no net gain in the amount of real money, thus no devaluation of existing real money.

        Saying they're printing money is like saying that since my time is valuable to some people, being a live is printing money.
  • not gonna happen (Score:5, Insightful)

    by dirvish ( 574948 ) <dirvish&foundnews,com> on Tuesday October 22, 2002 @06:30PM (#4508780) Homepage Journal
    Virtual Economies will have to expand immensely to have any real effect on real economies. Sure, people trade some EverCrack stuff on Ebay but it is a miniscule amount compared to the rest of the economy. It really has no effect on the real world. How can a virual economy ever have something that is truly valuable? I can't think of an instance and I don't see one coming about.
    • by Brian_Ellenberger ( 308720 ) on Tuesday October 22, 2002 @06:44PM (#4508881)
      EverCrack may not have an "immense effect", but there are plenty of instances of pretty much worthless things gaining value because they are rare and people want them. Look at stamps. Little pieces of scrap paper with a face value of pocket change. How about baseball cards? Just cheap cardboard. The pictures and information on both are easily duplicated. So why in the heck do people pay hundreds or thousands of dollars for them?

      Heck compared to a stamp an Axe of Power or a level 99 character seems much more interesting and useful for entertainment. As long as it is sufficiently rare and useful, people will attach some sort monetary value to it.

      Brian Ellenberger
      • As long as it is sufficiently rare and useful, people will attach some sort monetary value to it.

        This is two lines after you were talking about stamps and baseball cards? How about:

        "As long as it is sufficiently rare, people will attach some sort of monetary value to it."
    • Very true.. except.. (Score:5, Interesting)

      by Inoshiro ( 71693 ) on Tuesday October 22, 2002 @06:45PM (#4508898) Homepage
      A virtual economy, like any economy, must barter in scarcity. After all, it is scarcity which forces the choices of economics on people.

      The most obvious object which a virtual economy could manage is time. You can't turn time into an encoded form on a computer which can be played back at any moment. By farming out your own time that you are willing to spend on some problem, you could get some credit that would be useful to negotiate time off of someone else's hands for a task you need completed by a certain time. It'll be the ultimate in specialization, where you need only know one thing well, because you can use that skill to aquire the credits that you use to buy the time of other people who specialize is some task you need completed.

      If this sounds a lot like your day-to-day job life, it is. But it breaks down if you look at it from a non-time perspective. Things that are not direct people services aren't scarce in a digital world. You need to move to something else for the creation and release of digital knowledge, something like the street performer protocol [firstmonday.dk]. Then the goods (which, when released, are not scarce) can have the creators of those goods still benefit.

      Traditional models of scarcity and resource utilization do not apply in a virtual economy. Once one copy of something is released, infinite copies may be made at any point. The only thing you, as a content producer, can do is set how much you want to release that product. This is the next step (IMO) in the evolution of economic theory because it'll allow people to make things on their own, without a big corporate body (RIAA, MPAA) taking a cut off of everything. Prices will go down, and creations will go up.
  • by Drawkcab ( 550036 ) on Tuesday October 22, 2002 @06:31PM (#4508781)
    No, I didn't waste 1000 hours this year playing EverCrack, it was important research!
  • by Pave Low ( 566880 ) on Tuesday October 22, 2002 @06:32PM (#4508785) Journal
  • No real value (Score:3, Insightful)

    by Anonymous Coward on Tuesday October 22, 2002 @06:32PM (#4508789)
    "It will also raise certain constitutional issues, since it is not clear, today, exactly who has jurisdiction over these new economies. "

    Uh, it's pretty obvious, Sony (in the case of EQ) "owns" your gear and gold pieces, etc. There is no value to it - it's just 0's and 1's on their server, and when you sign up for an account, the licence spells this out.

    Why does everyone have to take something fun (a game) and try to assign real life value to it? It makes MMPOGs less interesting when you know there are people who "cheat" by buying and selling items in real life. That's not the point of a game!
    • Re:No real value (Score:2, Insightful)

      by GigsVT ( 208848 )
      Why does everyone have to take something fun (a game) and try to assign real life value to it?

      Because people spend tons of real life time on the game, which is worth real money. After someone works 5 hours for an item, they expect to have some ownership of said item. That doesn't always work out, but subconsiously they feel they own it.
    • Re:No real value (Score:5, Insightful)

      by orthogonal ( 588627 ) on Tuesday October 22, 2002 @07:14PM (#4509127) Journal
      Why does everyone have to take something fun (a game) and try to assign real life value to it?

      "Value" is simply what somebody is willing to pay for something.

      Obviously, people are willing to pay to play the game. They value the enjoyment they get from playing more than they enjoy spending that money on something else (or holding on to it). So they purchase a game subscription, trading real money for access to the game.

      Some people value the status (or the ease, or whatever) that comes with a more capable "avatar", more than they value having real money, so they're willing to trade real money for game money (or experience points, or "lore" or "fungi tunics")

      Recently a forty year old can of an artist's excrement was bought for several thousand dollars by a museum. It was "valuable" not for its potential use as fertilizer, but as "art".

      A original copy ("original copy"? An oxymoron or not?) of the American Declaration of Independence was sold for over eight million dollars, despite the fact that anyone can download the exact text -- or a photo reproduction -- for free. Are the words valuable then? Not, apparently, as much as the context they are in.

      Even real money is simply a social convention: its utililty for any use other than trade (its "intrinsic value") is virtually (pun intended?) nil. Real money is useful only insofar as people will trade goods and services for it. When real money is perceived as not being as useful for trade, its value collapses, and we have the super inflation exemplified by Weimar Germany or present-day Argentina.

      Which is more valuable to you, a dollar or a month of game play? What if it's your only dollar, and you're hungry? Which is more valuable, a million dollars or a month of game play? What if you could only buy cans of artists' excrement with that million? What if you know you'll be dead in a month? What is more valuable, a million dollars or the Declaration of Independence? What if it's an electronic copy? What if it's the only remaining copy (electronic or not) remaining in existance? What is more valuable, the single remaining copy of the Declaration, the single remaining copy of the Bible, the single remaining copy of Moby Dick, the single remaining sequencing of the human genome?

      What's the value, to me, of the last letter you even got from your high-school sweetheart? How much money would you charge me (i.e., what's the value of it to you) to sell me that letter, if I told you I planned to burn it?

      "Value" changes with circumstances, with the surplus or scarcity of what you have and what can trade for, and with your, uh, "values". "Value" is what you can get for something, less what it's worth to you not to part with something.
  • by 0ddity ( 169788 ) <jam1000_77@yahoo.com> on Tuesday October 22, 2002 @06:34PM (#4508796)
    National economies are suffering now that online economies are manipulated through dubious means using real world monies. The value of the EverQuest currency currently exceeds the value of the US dollar. Other markets are experiencing similiar downfalls. One solution proposed by Microsoft Corporation is to alter the virual economies with DRM technology to facilitate fair usage of currency. RIAA sources say that they are also working on a solution but offered no details.

  • On art and games (Score:5, Interesting)

    by GigsVT ( 208848 ) on Tuesday October 22, 2002 @06:35PM (#4508803) Journal
    people reveal that they are willing to pay money to be constrained.

    This is an interesting observation. As many of us know, cheating takes all the fun out of the game for most normal people (15 year olds that crave attention and respect in an unhealthy way excepted). In art, self-imposed contraints are what makes good art. Without contraints, the games become meaningless.

    I think when bugs are discovered in games that allow rampant cloning of items or free money to spread, is parallel to what would happen in society when and if we discover a way to make a "replicator" type device.

    These games do make an interesting microcosm for sociologists to study. Identifing the differences is more interesting, since once we identify how it is different from the macro-society, we can use it as a model.
  • Intuitively shouldn't the economies of games like EQ follow the rules of those for flea markets. If buying/selling/trading isn't sanctioned by SOE (which it isn't) the economy is basically a black market. Otherwise some entity would have oversight (SOE for instance) and allow people to buy/sell/trade as they please for a standard fee, like the $13.95 or whatever a month it is to play EQ.
  • Don't be so sure (Score:2, Interesting)

    by g00bd0g ( 255836 )
    If you have read the Diamond Age by Neal Stephenson you know about the Metaverse. I think it's fairly likely that something like this will eventually evolve from our current internet. At that point the virtual economy may very well become big enough that it will impact local and global economies in a big way.
  • by microbob ( 29155 ) on Tuesday October 22, 2002 @06:39PM (#4508833)
    Could Inflation threaten the EverQuest economy?

    A funny read on the BBC [bbc.co.uk].

    I'm sure some people take this stuff waaaayyyy to seriously.

  • by Jon Erikson ( 198204 ) on Tuesday October 22, 2002 @06:44PM (#4508887)
    Despite the expanding popularity of games like EverQuest and it's huge array of derivatives and competitors to suggest that the "economy" (and those quotes are deliberate; to suggest that any of these games has anything like a real economy is patently ludicrous) is in anyway comparable to that of real-world markets is... well, just wrong. Any Economic 101 student should be able to tell you that.

    As such any talk of jurisdiction over these "new economies" is just a pipe dream by over-addicted players; there is quite simply no such new economy at all, merely players (and sad, cheap addicted ones at that) within the current economy, trading their resources for ever more ephemeral rewards.

    Indeed it seems like such talk of new economies is nothing more than subliminal advertising; trying to talk up the game to make it more important than it is. After all, it certianly suits the makers of the game if it's seen to be more "real"... even this sort of "negative" publicity is good for it since the sort of person that has such a pathetic life they get addicted to online games seems to be craving a reality of sorts, preferably one where they can overcome the crippling social, mental and physical deficiencies that plague them in real life. There is no genuine MMORPG economy. There's just a fringe of people who really need to get out more, trading within the regular economy on sites like EBay.

    • Despite the expanding popularity of games like EverQuest and it's huge array of derivatives and competitors to suggest that the "economy" (and those quotes are deliberate; to suggest that any of these games has anything like a real economy is patently ludicrous) is in anyway comparable to that of real-world markets is... well, just wrong. Any Economic 101 student should be able to tell you that.

      However, the author of this (and other) papers about virtual world economics is a Associate Professor of Economics [fullerton.edu] who probably knows a little bit more than the average Economic 101 student..

      Perhaps he's researching virtual world economics partially just for the reason that current economics theories don't cover MMORPGs well and thus aren't able to predict the amount of (real) money involved in the games.

      Did You read the paper? It was interesting reading, although I admit that most slashdotters probably just can't take a 44-page paper on one sitting, as even short one-page articles go unread by many posters..
    • What, are you saying that, by virtue of being on a computer, traditional laws of supply and demand don't apply? I would say that "any Economic 101 student" should be able to tell you that economics can be applied to anything, you just have to adjust the rules. MMORPGs may have some very bizarre economic rules, like constant devaluation of formerly valuable items due to expansion packs, or an in game currency that is almost totally worthless, but that doesn't render the system impervious to economic analysis. In fact, that makes it all the more interesting. By testing our models of economic analysis on social situations very different from those that exist in the real world, we can see how flexible they are.
  • by Doctor Sbaitso ( 605467 ) on Tuesday October 22, 2002 @07:07PM (#4509078) Journal
    NASDAQ up 21.42 points
    Dow down by 8.21
    EverQuest SE up 1.50
  • (pg 12) ... My ass. I have never in 9 years of gaming seen people more immersed in a game that miniature strategic gaming. These are people that will play the SAME game through hundreds on meticulous through months. Remember times where it would take 9 hours to do 2 rounds. This is immersion in all its details. If anything, you are more immersed as you actually have to think as opposed to everything being handed to you on a plate. Thing with online games and MMORPG's is people don't have to think, its immersion for the masses. Its 5-minute thrill in 10-minute worlds where everything is provided to you.
    • Your last sentence is laughable. It's a countless hour thrill in a 4+ year world where everything is just beyond your grasp. That is Everquest.
      • And how does that compare to the single Star Fleet Battles campaign I have been in for 7 years now? Everythign is not just outside your grasp in everquest....you all start playing another game and bet your ass Sony will start making it in your grasp. The latest high level premade character packs you can buy from Sony are examples of this. The thing miniature games have going for them is once you buy them..they are yours, regardless of what the company wants or the economy demands. I have spent $20 and have enjoyed myself for years on that game (~8->12 hours a week).... how much have you blown on evercrack? Where will everquest be in 4 years when the popularity runs out?On to greater and better...where is all your valuable time spent, gone, useless. Sure there are dedicated players ever much as dedicated as real life hobbiest, but they can't support the game along. I dont' care if my games makers go out of biz or not, I can always play the game, now or 50 years from now. One of my favorite games to still play is Renegade Legion Leviathon ... FASA discountined this ~1993 and FASA itself out of biz ~1999 ... yet I dont' seem to have any issues *immersing myself in it*. Your whole enjoyment is driven my mass market economics. Evercrack can't survive a loss of population the way real life games can OR even MUD's. When you product is driven my mass market, your quality suffers and so do your hard core games. And of course people will move on, better graphics, faster games, better engines ... it doesn't end. You can stay still in the computer business. (Everquest is about to die itself...everquest 2 on the way...an upgrade == complete repurchase of everythign you already invested even if they have an import function. They will add somethign to make everquest 1 players go and buy everquest 2). My 700 page ruleset covers all I can and ever need to know to enjoy my games endlessly. Hard to upgrade minatures (well besides better paint jobs).

        MMORPG ARE 5 min thrills w/ 10 minute worlds. Its the same reason chess (with a board) will be here 500 years from now and everquest will barely be remembered.
        • Jeezus man!

          7 years in one Starfleet Battles Game? Yikes! And I figured my week of doing a StarBase assalt with a friend was pushing it.

          Now, I'm reduced to playing Interplay's interesting but somewhat lacking StarFleet Command Orion Pirates. It's almost but not quite what SFB was.

          Just wait till I get you in the sights of my Andromedan Mauler my friend. You will wish you were somewhere else.

          As for Everquest, I played that game for at least 2 full years. Very immersive, very nice - I just hate Lady Vox though... she sux... can't kill her... she wont die! Die dangit! Jeez.

          Oh sorry... got a little carried away there. EVAC!
  • by RobinH ( 124750 ) on Tuesday October 22, 2002 @07:11PM (#4509103) Homepage
    I've been following the development of a new MMORPG, called Star Wars: Galaxies. The designers are trying some new concepts with the economies, and they really seem interesting:

    1) Raw resources only exist in a set quantity. When a resource runs out, it is replaced by a brand new one, and the old one will never be available again. All the designs and items using the old material will become rares, meaning: a) designers stay busy, and b) prospectors stay busy.

    2) You only get crafting experience when an item is *used*, not when it's made. Therefore, you are naturally motivated to make things people want, not whatever increases your skills the most.

    I'm really interested to see how it turns out.
  • by raehl ( 609729 ) <raehl311.yahoo@com> on Tuesday October 22, 2002 @07:13PM (#4509114) Homepage
    The only question is how much real money is it worth. When you get down to it, buying EQ characters or equipment on Ebay is no different than buying a movie or videogame or shelling out $40 to go to Six Flags. It's paying for entertainment. Buy powerful character, be more entertained. Selling characters and equipment is the same thing: Providing entertainment to someone who is willing to pay for it. It doesn't matter that the entertainment in question is 1's and 0's on a server somewhere, or that there's no "sink" for it (i.e., a way for money to leave the game). If more and more EQ Platinum becomes available, like any other currency, it'll just suffer rampant inflation. Sony creating lots of platinum, or players exploiting bugs to create lots of platinum, is no different than Mexico printing up lots of pesos to pay off national debt. It just makes the value of the platinum/pesos worth less in dollars.

    EQ money is the same as real dollars - it represents production of a tradeable product.

    When people buy EQ "Stuff", what they're REALLY buying is the TIME of the people who generated that stuff (or more accurately, they're buying the time they now don't have to spend getting the stuff themselves.)

    EQ Platinum *IS* money, moreso than real platinum. Can't do anything with dollar bills, can't do anything with EQ platinum, but people will give you stuff for both because they believe other people will do the same. That's where it gets its value - not because of any useful properties, but just because people BELIEVE it's money.

    One of these days, people won't play EQ anymore, and EQ money will be worthless. You'll be able to buy billions of EQ platinum pieces for $1 because no one will believe they have any value anymore.

    Its exactly the same reason you can buy millions of Afghans or Lira for $1. People stopped believing the money was worth anything, so you needed a lot more of it for someone to trade you a dollar for it.

    • When people buy EQ "Stuff", what they're REALLY buying is the TIME of the people who generated that stuff (or more accurately, they're buying the time they now don't have to spend getting the stuff themselves.)

      I'm sure this is true. But doesn't it strike you as odd? Someone pays to play a game and later pays to to avoid playing the game.

  • Thanks to some bugs quite a few people used macro's to actually get a lot of money, and subsequently flooded the market with a millions of plat for relatively cheap price.

    This actually caused issues to the economy in that platinum was now rather worthless...Quite interesting on how this effected the economy of EQ.

    StarTux
  • i can't think of an instance and I don't see one coming about

    The whole point of value is that it is subjective. What one person would pay a lot of money for another would happily throw away without a thought. Clearly then these virtual economies are presenting value, albeit in digital form, to some people and there is nothing to indicate that this phenomenom will not continue to grow.

    Value and quality are interesting topics for programming geeks and engineers alike, but the best book I have ever read on the subject is Robert Pursig's 'Zen and the Art of Motorcycle Maintenance', which should be made compulsory reading for any first-year computer graduate (IMHO).
  • by Dirtside ( 91468 ) on Tuesday October 22, 2002 @07:32PM (#4509240) Journal
    The economic model in Earth & Beyond is an interesting change from games like EverQuest. It's closer to DAOC's model, as I understand it (I'm not very familiar with DAOC though).

    Basically, the best items are player-made versions of loot-only items. Players can make better-quality items than the NPC merchants sell, but the best overall items aren't sold by merchants at all, but rather are dropped off NPCs that you have to go out and kill. So player crafting is important, because it yields the best items; but hunting is also important, because in order for the crafters to make those items, they (or others) have to go out and kill monsters to get those items in the first place. A big problem with EQ's economy is that *all* the best items are dropped off creatures. The best player-made items are pretty good, but do not compare to loot items.
    • Not quite there yet (Score:3, Interesting)

      by Andy Dodd ( 701 )
      Currently, player-made items in DAoC cannot be the best in the game. Armor can have the best AF, and weapons can have the highest damage, but they don't have the magical bonuses that people REALLY want. As a result, especially thanks to the "epic armor" received after a quest at level 50, there's only a demand for 2 of the 4 tradeskills.

      This all changes in 6 days, when Spellcrafting and Alchemy (The ability to give items magical bonuses and make potions) finally goes live. At that point, Mythic's original promise that players would be able to MAKE the best items in the game will finally become reality.

      That said, DAoC's economy is a bit more robust than EQ's - The problem with EQ was that certain crafted items sold for more than they cost to make. This is what the free-money exploits take advantage of. In DAoC, EVERYTHING is a loss except for one of the lowest items, which will net you 7 copper per build. (Note: Macro this all you want, it would probably take a day just to make one gold, whereas a player could make that much in a few minutes solo farming.)

      Also, DAoC has a couple of inherent "cash sinks" built into the game. While EQ's economy primarily consists of buying "rare items" that enter the game but rarely exit, probably 50% or more of the cash in DAoC's economy is used to buy wood.

      Wood, you say? A key part of DAoC's endgame is realm vs. realm battle. Part of RvR is taking over enemy keeps and holding them.

      Upgrading a door to level 5-6 usually costs a few hundred gold worth of wood. Holding a keep for two weeks against attacks can make an entire guild go flat broke. (This happened to my guild - People are just beginning to recover their cash reserves well over a month later.)
      • Do any of the online games have the equivalent of enchanting your own weapons (like Morrowind) yet?

        Being able to buy a Dai-Katana at the market for 100 gold and then enchanting it with soul stealing and high fire and shock damage for 5 seconds on a target (the amount of time in between my swings) was a very cool experience ... being able to craft several and sell them would be great in an MMORPG.
        • 6 days. :)

          The new crafting types to go live on DAoC's servers on the 29th (note: www.camelotherald.net has lots of DAoC news) are Spellcrafting and Alchemy.

          Spellcrafting:
          Adding magical bonuses to crafted items. (Equipping item gives +5 intelligence, +2 Cold Magic, etc.)

          Alchemy:
          Ability to craft armor dyes cheaply
          Ability to add particle effcts to weapons (Make em' glow - Pretty much useful for eye candy)
          Ability to make statbuff potions (Adds points to an attribute for 10 minutes)
          Ability to add "procs" to weapons/armor - A weapon with a proc will cast a certain spell when it hits in melee combat. (A guildie of mine has a sword that procs a fire DD spell, aka fire nuke pretty often). Reverse procs will cast spells (5-sec armor buff, etc) when armor is hit in melee.

          There's a lot of info on spellcrafting/alchemy on the Herald, and on many other sites. (People have been playing with it on the DAoC test servers a lot)
          • Sounds quite impressive; any screenshots of the interface for doing these things, especially the custom effects?
            • None that I have.

              Glowing effects - You can probably see that if you go to various sites (camelot.allakhazam.com, daoc.stratics.com, etc.) - Since these are already implemented on dropped items. It just happens that soon players will be able to customize them.

              There used to be a really good friar staff shot at camelot.mmorpg.net, but they've reorganized the site and I can't find it anymore. (Entire staff glowed red. My staff only has a green glowing ball at the tip.)
  • I always wondered why the publishers of new MMORPGs always insist on charging the standard $44.99-49.99 market price of computer titles when they release a MMORPG? The obvious exclusion is EverQuest with their expansions, but that is hardly a new game, and I am not sure that the expansions are complete games (I don't play that game, I don't know).

    It would be more sensible to charge $20 for the game along with the inclusion of a free month. That would spur first and second month sales by removing the hint of caution that $50 puts into people when they go to buy a game that they know they cannot return, might suck, or might lag horribly for them.

  • Define "Real" (Score:5, Interesting)

    by Mahrin Skel ( 543633 ) on Tuesday October 22, 2002 @08:04PM (#4509426)
    As probably the only one in the thread who has designed a virtual economy from scratch and had a few hundred thousand people beat on it, I found the paper very interesting. I also work for the first company to get sued because we stopped someone from converting virtual money to the real thing. This stuff isn't hypothetical to *me*.

    What is real, when we're talking about economics and communities? Is the community of baseball card collectors real? Are the economics of fine art auctions based on rational decisions?

    People "live" in these worlds. They have friends, lovers, rivalries, and the *emotions* are certainly indistinguishable from "real". You may smugly sneer at the inconsequentialness of it all, but what would your ancestors of a few hundred years ago think of you? How many of you make a living directly producing something you can hold in your hands? How many of you have jobs you can't quite get your grandparents to understand?

    How many people who read /. routinely hunt and kill their own food, or till the soil to grow the wheat for their daily bread? How few people actually make things *essential* to daily life in this modern age?

    The worlds I build are virtual. The communities that appear in them are real.

    --Dave Rickey

    • ...and yet they are not. The commodity that you invented was real: the game, the software itself. The "world" within it is not.

      Comparing emotions to the value gold is ridiculous.

      • Comparing emotions to value is not ridiculous, as any psychotherapist would tell you; people pay a very large amount of money every year to be happy. Not to live, or to eat, but to be happy. Why is there so much more money in pro sports than roofing? Why are the expensive homes filled with entertainment equipment? You obviously weren't thinking 'big picture' with your comment; peoples' feelings, emotions and perspectives _are_ the reality we live, the reality _you_ live.
      • The vast majority of the value of gold is emotional (the "oooh! pretty!" factor), so your statement is obviously false.
  • My impression (Score:5, Insightful)

    by mao che minh ( 611166 ) on Tuesday October 22, 2002 @08:09PM (#4509462) Journal
    I played Ultima Online of-and-on for about 3 years. My playing days ended a good year or so ago, but I spent so many hours obsessing over the particulars of the economy that much of it remains vivid in my mind. If there is one thing I can add to this discussion it's my belief that a "virtual economy" (like those in MMORPGs) can easily "run away" from the administrators of the game. The factors that give online economies their frailaties can not be applied to real world models.

    When I first started playing Ultima Online, 10,000 gold pieces was a considerable amount of captial, and real estate of the lowest kind ran one roughly 55,000 gold pieces. Even with a considerably large user base, supply and demand of the various core resources (wood, cloth, ore) of the game was in a remarkable state of acceptable flux. Inflation was well controlled. The demand of "rares" (items that varied in degrees of difficulty to obtain) drove their prices high, but never to unreasonable levels.

    This all ran smoothly, much like a real world economy of small nation might run. But then came factors that real world economists do not have to fret much over, factors that only exist in the virtual world. The most significant was that people started cheating. Specifically, a considerable amount of people found clever ways to mass produce gold by the tens of millions.

    You might ask "why didn't the admins just remove all of the excess gold?". Well, they didn't know exactly who cheated, and therefore could not effectively enforce an across-the-board gold removal without losing valuable customers (where the real $$$ comes from). I stopped playing for a short period of time, and when I came back it was a new UO. Houses that were once 55,000 gold were now 1.5 million. Much sought over rares sky rocketed to values of 10 million gold (or more, I am told). New players (and long time players that decided not to cheat or purchase wealth off of Ebay) were now rendered "impoverished" for the duration of their UO life. Basic materialistic goals that players could pursue, goals that were promised to new players on the back of the box, were simply unattainable.

    OSI, the company that runs UO, tried a plethora of schemes to make the economy bearable again. They failed utterly, and UO subscriptions continue to dwindle. What differentiates a make believe economy from a real one is the fact that people can do make believe things in a game. No one can dupe 1.5 million dollars out of thin air in the real world.

    • The effects of duplication bugs were far smaller than simple design imbalances- monsters yielding thousands of gold were trivial to destroy once you got a tamer up to high enough of a level, or a bard. And don't even get me started on the effects of sunken treasure or So one could rack up lots of gold completely within the confines of the game.

      I'd blame the designers' lack of understanding with regards to gold faucets and sinks for UO's situation. Only recently have they started to get a handle on it, and it's far too late.
    • Re:My impression (Score:5, Insightful)

      by bbaskin ( 24236 ) <bryanbaskin@noSpAM.sbcfreakingglobal.net> on Tuesday October 22, 2002 @09:46PM (#4509926) Homepage
      >No one can dupe 1.5 million dollars out of thin air in the real world.

      Actually, this is not quite true. Central banks have almost always done this. The Federal Reserve "creates" money out of thin air, buys government debt with it and thus tries to alter the various interest rates to what the Board of Governors desires. The central bank's control of the volume of dollars is nothing more than a monopoly on counterfeiting. This also shows that increasing the volume of money is the cause of inflation, both in the real world and the virtual.

      The laws of economics apply to people no matter where they interact with each other and counterfeiting is still counterfeiting no matter who does it. It is a distortion of the economy and will eventually lead to its collapse. It's happened in the real world and evidently has happened online, too.

      Inflation is evil, it is theft, it is a stealth "tax" (when used to buy government debt), and it is caused by government monopolies on the production of "money". Only a hard money system (much like an online system where people can't cheat) can save us from these problems.

      Think about it, they don't call it "gold" in the games for no reason. It's been money for 6000 years all across the world until the beginning of the 1900s when governments banned its use and started cranking out pure fiat money. And look what has happened to its value. $1 today buys what 5 cents bought in about 1913, the year the Federal Reserve was created. Even at the "low" rate of about 3% inflation today (according to the Cleveland Fed) every dollar you earn today will only be worth 17 cents in 60 years. That's a tough hill to climb when planning for retirement.

      Inflation is theft.

      Bryan Baskin
      • There's nothing magical about gold. The demand and supply of gold both vary in a way not related to the cost of anything.

        How many milligrams of gold did it take to buy a loaf of bread in 1913? How many today? What about a motor car? What about a computer, which actually has a higher gold content than either of the other examples?
      • The value of money isn't just relative to how much of it there is, but the VELOCITY of it as well. Velocity is an economic term for how fast money is spent. Let's say we have an economy with 100 people and they all start with 100 dollars. Additionally, lets assume that everyone works their 40 hours a week producing whatever they produce. (Shoes, investment advice, whatever.)

        Now lets say over the course of the year, everyone spends their $100. At the end of the year, that means that on average, everyone also received $100 and has $100 at the end of the year. Per capita income: $100. GDP: $10,000.

        Now lets say that the next year everyone produces the same amount, but spends their money once in January, and then after they receive it, spend it again in February, and then after they receive it, spend it again in March.

        That means that on average, everyone received $1200 over the course of the year, for a GDP of $120,000.

        But since production didn't increase while velocity increased 12x, everyone has 12x more money to buy the SAME amount of product with, so you get 12x inflation.

        Even though the SAME 10,000 $1 bills were involved.

        Point is, inflation is not a simple matter of printing more money. It's a matter of how much there is and how fast it's spent, coupled with how much your production increases. Inflation/deflation is ACTUALLY (change in amount of money*velocity of money)/(change in production).

        Ideally, your change in the amount*velocity of money increases at the same rate your production does and prices remain stable. If I produce 1.2x as much stuff as last year, having 1.2x as much money is a good thing.
    • No one can dupe 1.5 million dollars out of thin air in the real world.

      Sure they can. It does tend to piss off the Secret Service, though, and they can get downright testy about it.

    • 55,000 gold pieces was a considerable amount of captial, and real estate of the lowest kind ran one roughly 55,000 gold pieces.

      But then came factors that real world economists do not have to fret much over, factors that only exist in the virtual world. [...]

      [...] and when I came back it was a new UO. Houses that were once 55,000 gold were now 1.5 million.

      If this doesn't sound like the real world, then you obviously don't live in Silicon Valley. Example: Note the lovely boards over all the windows and the rotting walls on this 900 square foot home! [mlslistings.com] only $489,000!

      Any semi-localized windfall, legitimate or otherwise, even if it only affects a small percentage of the population, is going to drive up prices.

  • Asheron's Call 2 (Score:3, Interesting)

    by zaffir ( 546764 ) on Tuesday October 22, 2002 @09:15PM (#4509790)
    I'm in on the AC2 beta test (it's a free, open download at fileplanet), and they've taken the player economy to the next level - there are NO NPCs involved. You either get items from monsters you kill, or from ones you craft. And crafting is open to everyone - it doesn't require you to use skill points that could otherwise be spent in combat skills. This could be very interesting; it's a much more hands-off economic structure as far as the developers go.
    • It should require skill to craft a weapon / armour though. It allows players who choose to develop that skill to make a killing selling their high-quality swords and armour.

      If you're saying that it doesn't require skill to craft a weapon at all, but more skill = better weapon, then fine ...
  • I've noted that with most MMORPGS, on eBay, the real money isn't in the items themselves, but in high level characters. This is probably because of the insane amount of time it takes to level. Basically, impatient players or players with lives (heh) buy the time from other players, so they can enjoy the high level gameplay without the time investment.

    An exception to this would have been the Diablo II expansion right after its release. Accounts basically sold for the value of the individual items. I sold a single item (the Eaglehorn bow) for $1010 USD about a week after the release of the expansion. Of course, Diablo II has sort of been destroyed by hacks. Even if it weren't, graphically, the game looked old when it was released. Now, it just seems ancient.

    I'm really looking forward to World of WarCraft. [blizzard.com]

  • The reason that you'll never see an accurate economy in a game is the same reason why people play online games: People want to escape to a better place.

    An economy is a careful, thrifty management of resources, such as money, materials, or labor. Having an economy requires someone to work boring and unpleasant jobs. This includes monotonous jobs in a factory/office/farm/mine/store/vehicle with paperwork, early/late hours, and homework. However, gamers don't like to be managed - when they have too many boring tasks in an online game, they go play another game that's more fun. In a game there is no need for food, shelter, or clothing to survive. Everyone is looking for adventure and as a result they constantly raid or fight each other. If you want to constantly raid new lands like Gengis Khan's horde then play Everquest (it gets lonely if you don't stick with the horde though). If you want to fight other players in large team battles then play Dark Age of Camelot. If you like boring jobs, log off and save up for a nice house. Forget about a gamer economy because no one has to be there.
  • Who Cares? (Score:3, Interesting)

    by delus10n0 ( 524126 ) on Wednesday October 23, 2002 @11:09AM (#4513370)
    If you're spending (say it with me) "real life" monies to advance yourself in a GAME, you are a loser.

    And if your arguement is that this is for entertainment, well my friend, I only paid once for my copy of Soldier of Fortune II, and it's offered me endless hours of entertainment. Same with Half-Life.. Unreal Tournament.. Tribes.. WarCraft III.. Quake2.. etc..

    I don't have to pay to advance my character or stats in these games. My level of fun isn't going to depend on whether I have some piece of "r4r3 ph4t l3wt" or if my character doesn't have a sword with +1 against ogres. I can just play, and not worry about such things. Nor do I have to pay a lame "monthly fee" to keep playing the game.

    Consequently, EverQuest sucks the wang, and you all need to get lives.
    • Heck yeah. I agree with you completely. While I cant say that I wont ever pay a monthly fee for a game, I CAN say I will never ever BUY someones stuff from them using "real money". Thats just lame. the subscription fees arent horrendous, and I guess if you spend 2 hours a week (avg movie time) you got more than your 10 bucks worth out of the game.
      • Yeah, but if you go to a movie with a chick, you might get laid. Playing EQ, the best you could do is masturbate without your mom walking in.
    • Lets put it this way -- I wouldn't do it, but I could just as easily say "If you spend real life monies to buy a hint book, you're a loser" since I've never done that either.

      That said, there are lots of people who aren't like me, and that doesn't make them ilegitimate players; perhaps poor players, but as long as they don't break the game's rules, players nonetheless.

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