Previous posts in the series dealt with taps and sinks.  This one will go over the balance requirements to keep an economy stable and useful.  I realize that this is next to impossible to achieve over time, in that inflation is always an issue, but hopefully games can avoid hyper-inflation or a barter-only system due to poor economy.

Crafters

Your typical MMO has crafting and that’s supported through harvesting activities.  Many of these systems provide a linear scale of quality for components, where after a certain point the material has no further use.  This is often parallel to actual content (e.g. dungeons).  It’s a problem during the life of a game and exacerbated after an expansion.  You’ve just invalidated and entire stream of content and material and killed a potential market.  I’ll use mining as an example.  You’ll find bronze, iron, steel, and mithril – increasing in quality and level.  The downside is that once you’re able to craft mithril items, bronze has absolutely no value.  Iron and Steel are just as bad.  In a 4 tier system this is 75% of the content. In a 10 tier system, you’re at 90%.

Complex crafting systems use all material at all times.  EvE is a good example where even the low level materials are still useful for refinement in other components.  Sure, there’s a bit less value due to sheer volume of low level items, there’s still a market.  A system might trade 1,000,000 bronze and only 10 mithril but both are trading.

Item Levels

Making the former issue worse is item levels and redundant crafting.  Every patch increases the available power to players but rarely does anything for crafting.  So while at launch the top tier crafting is about 5% lower than raid gear, by patch 2, you’re looking at 25%.  Having the ability to perhaps upgrade previously crafted gear would be a huge bonus, to close the gap somewhat.  This ensures items are always relevant and always part of the economy.

Item Loss

This is a bit tough for systems to integrate if they don’t do the first 2 things above.  If item acquisition is extremely restrictive, where there is only one path (typically raiding) then item loss cannot work.  PvP games, or sandbox games allow for multiple paths for gear acquisition so that item loss isn’t so drastic.  If you died in UO and lost some gear, you could always find a crafter/vendor and re-equip at about 90% of the power you had before.    Similar to EvE where ship loss is common.  Losing items means an exchange of gold (or other currency) is required to replace that item.  There’s typically an AH tax or a vendor upkeep tax on that transaction.  For a typical themepark MMO to include item loss, it requires an extremely robust item exchange service below it.

Stuff the tap and open the sink

In design planning, there are set sinks along the path of progress.  These are usually linked to training costs, travel costs and equipment costs.  The first is easy to calculate, heck in some places it’s nothing.  The second is a bit harder but in most linear games it’s easy enough.  If the game is open, say as GW2 is trying for, or TESO appears to lean, then costs can get a bit higher.  Mounts factor into this.  Equipment costs are much different if there’s no item loss.  In a themepark that just throws out items continuously, repairs are meaningless as is item cost.  In a controlled item environment, say like FF14, repairs are expensive and item acquisition is only available through crafting/dungeons.  Depending on the estimated costs for leveling (a sink) you can estimate the actual requirements for the taps.  If you need 100g from 1-20 but the basic taps are giving you 500g, then there’s going to be a massive problem.

This gets worse at max level where items cannot be traded.   Neverwinter straddles this line with top gear being tradeable if it hasn’t been equipped.   Item loss isn’t possible but there’s a larger money sink (by players skipping time) to move up the ranks.

Trading done wrong

Diablo 3 is a perfect example of a broken economy, even though it’s not really an MMO.  It’s so broken that they are going to pull out the heart of it in a few weeks.   From 1-60 the cost was nothing.  From 60+, if you were farming inferno and dying, then the costs were based on repair.  It was a binary system of progress, where content was gated upon stats.  For example, you could clear Act 1 rather easily but Act 2 was impossible for some.  This meant that you farmed Act 1 until your gear level increased and amassed hundreds of thousands (or millions) of gold.  Since the gear that dropped was so poor, you HAD to use the auction house to progress.   Gems and recipes were useful for everyone so a “commodity” market exploded to support it, regardless of level. You ended up with a choice.  Either play a few dozen hours and make no progress or spend the same amount of time “playing” the auction house and doubling/tripling your power in order to progress.

Trading done well

Similar to D3, Path of Exile has a complex crafting/trading system based on bartering.  There is no gold.  You have all sorts of modules that can increase the stats on an item and there’s no baseline for trading.  3 orbs of transmute are the same as 50 identification scrolls as 1 orb of alteration.  It’s hard to keep track of it all and the result is that if you want to trade, you need to be educated.   It makes for a system of interesting trades with no floor or ceiling.

Moving forward

We’re in a spot now where we can look back and see at what worked and what did not and hopefully avoid future problems.  Clearly there are core design issues that need to be addressed – it’s not a simple fix after a few months.  Items drops, crafting, item binding, travel costs, vanity items, repair costs, gating and dozens of other sub systems all need to work together.  Beta metrics are usually pretty good on this front, in that you can measure income and expenditures and make holistic changes across the board.  The more knobs you have to play with, the easier those changes can be.  The end result is that games today need more sinks to combat the ever increasing taps.

The previous post in the series went over a high level view of economies and focused primarily on the taps (system generated wealth), the transfer of wealth and the patterns/tools that enable both.  This post will focus on the other end of the equation, spending.  This is accomplished in a few methods, but systematically through sinks and drains.

Down the drain

A system drain is one that is pervasive to all players.  It’s always there, always active.  Very few games have effective drains as it’s a continual upkeep.  F2P games have drains, where there’s an energy cost to perform an action.  Repairs are sort of a drain but if you avoid combat, it doesn’t matter.  EvE’s clone system is a drain but if you never die…

Sinks are targeted for activities that remove wealth from the system.  Auction house fees are the most obvious example and the easiest to measure.  Repairs, housing upkeep, crafting, travel fees, NPC purchases (like training and mounts) are all sinks.  There’s a baseline sink, based on assumed wealth at a given time.  This is strategic planning, where you decide if you want the sink to be an inhibitor to progress or simply an afterthought.

So shiny!

WoW is a solid example, given it’s age.  In Vanilla, mounts were available much later in the leveling curve and unless you were penny pinching, odds are you couldn’t afford one at level.  When you saw someone with a mount, it was prestigious.  As the game progressed, and the monetary barrier went away, everyone had a mount.  Eventually Blizzard reduced not only the level requirement but it made the cost a fraction of what it was.  A sink of 100g for 7 million players to a sink of 10g, is an order of magnitude.  Prestigious mounts in WoW today are acquired through achievements and boss kills, rather than outright cost – with a few minor exceptions.

Sold!

Auction house sinks are the most common and related to real life.  A vibrant AH community will flush out millions of gold per day.  There’s a catch here, where an AH has or does not have a posting fee that is non-refundable.  In the latter case, the AH actually acts like a bank and misses out on a massive sink.  It doesn’t have to be a large posting fee.  RIFT at launch didn’t think this part through and their non-refundable fee was much too high and it prevented a market from opening.  It should be large enough to pull money out of the system but small enough that commodity sales are not negatively affected.  

EQ1 didn’t have an AH for a long time.  It suffered from massive inflation, where an item would increase in platinum price on a near hourly basis.   The Bazaar came in, and while it wasn’t ideal, it drastically reduced inflation and made the game much more accessible to new characters.  AH design, or wealth transfer, is the heart and soul of an MMO economy.  The better thought out the toolset, the more responsive and intuitive, the easier it is to control the economy.  I’ll get into this in another post.

Kaboom!

Item loss is a great money sink.  Outside of UO and a few smaller sandbox games (SWG of a sort),  the real prodigy here is EvE.  Darkfall, for all Syncaine’s rumblings, does not get the concept of an MMO economy.  Items in EvE take time and money – sometimes lots of both.  A Titan will take months to build and to buy.  Losing it has a massive value, emotionally as well.  But the smaller crafts, they have value too.  And because EvE has a net-loss system for PvP (where you always get less than what’s available at the start), there’s a constant drain on all resources.  In most MMOs, the Uber Sword of Awesome only gets replaced when you find the Awesome Sword of Uber with better stats.  It then makes all the previous content obsolete and useless to the economy.  If there’s always a chance at item loss (which is an entirely separate discussion) there is much more trade, and therefore more drain on the economy.

If you build it, they will charge you

Housing and player customization is my absolute favorite money sink.  It is 100% optional and can have some crazy fees attached to it.  Prestige/comfort/individuality are traits that align very well with people who have a lot of wealth in the first place.  A person doesn’t buy a 100,000g mount for practical purposes, they buy it to show off.  Same with a house and costumes.  Where player customization has a one-time cost, per item, item acquisition is constant.  Housing also has a bunch of one time fees (smartly they should be upgrade costs on the domicile, instead of entire new plots of land).  It also should include an upkeep cost, comparative to the value of the house.  A shack should cost X, a cottage filled with items Y and a castle with butlers Z.  If you can afford the upgrade, you can afford the upkeep.

To sum

Sinks and drains are designed to keep inflation in check.  They are there to systematically remove money and counteract the system taps.  When there is a lack of balance between the two,  money starts to lose all worth for older players.  It does however make new players start at a massive disadvantage.  If the average player is sitting on 10,000g and a new player can only acquire 1g per day, that’s a pretty big hill to climb.

Few games launch today with adequate understanding of MMO economies.  Many look to WoW and try to copy today’s implementation, which has gone through 9 years of refinement and inflation.  WoW today is not a good example of an economy.  It will take some smart people to fix that gap.

I have an unhealthy passion for numbers. Spreadsheets everywhere. This covers my gaming habits – at least the more complex ones. I map out strategies for Starcraft, scribble trading notes from a small town and run giant spreadsheets for MMO gold making.

The next series of posts will focus on MMO economies and covers the inputs, outputs and systematic requirements for balance. It will focus primarily on PvE, since there are very few PvP games to use as examples outside of EvE.

Let’s get started.

Economics has two major fields: macroeconomics, the study of systems as a whole and microeconomics, the study of individual markets. Few people get either of them but most understand the basics.  Interesting fact – if you’ve ever written a personal budget, you’re in the top 10% in terms of financial management.

Open That Tap

At a macro level, MMO economies function on a tap/sink model. The tap is how much money the system generates and the sink is how much it takes back. Most taps seem small at first but due to scaling factors, pump in tons of money.

Let’s take a 1 hour play session as an example. You complete a few daily quests for 25g each, collect some materials for 2g each, kill some enemies who drop 1g each. In an hour, without actually trying, you’ve made nearly 500g. This is what I call easy money in that everyone has access to it with zero skill required. It’s also a constant flow, so that the available money in a system (the total across all players) is continually increasing. WoW, growing at 500g per hour, generates about 300,000,000g per hour across all characters.

I Can Eat Air

Still in a macro view but now focused on wealth for the playerbase, the large majority of money is found on only a few players. This is due to a very low standard of living cost. For a typical player to consume the game, there are some minor hurdles – typically reserved for travel and repairs. This is a true pittance, somewhere around 20g per hour, in bad cases. They don’t actively need more money so they don’t think about getting more. That’s where the moneymakers come in – people who make money just to make money.

On a good day in WoW, I could make 50,000g from the auction house – one day it was 300,000. I made 10,000g per day from Rift and more Astral Diamonds in Neverwinter than I knew what to do with. People that didn’t need/want the money, didn’t pay attention to markets and I made a killing.

Buy Low, Sell High

Macro view once more and this one deals with patterns. Did you know Tuesdays are the highest profit day in an MMO? That Saturday nights are the best time to buy? It has to do with player logons and priorities. Weeknights have less people who have less time. They are more focused on getting things done, like raiding. Weekends have tons of people and the market is flooded. People just post items, dropping the price by a penny each time. I did this in Diablo3 to test a theory on gems. Started with 100k and at the end of the month had about 150,000,000. Expansions are good too, where people are leveling up new characters. Farming low level materials for a few weeks before, then selling them at a huge markup makes a lot of money.

Crafting

Crafting is more micro-economics, in that you move wealth from one person to another on the basis of time and it’s highly volatile and specific.  “I don’t have time to make this, I’ll buy it”.  The “ore shuffle” dance being the exception, no system generates more (a tap) from crafting.  If items are not consumable/destructible, then the market gets flooded and the floor drops.  Glyphs in WoW are a perfect example.  In LK, they were consumed upon use, then in Cataclysm you only ever needed one.  PvP games are much better at this type of market.  The recent battle in EvE had a $300,000 opportunity cost and people will want to replace what was lost.  There’s a real market here as there’s a real cost of living expense.

To Sum

In all games, there are system taps that put money into player’s pockets.  Some systems make it easier than others.  Given a general low cost of living, most people don’t even think twice about economies.  Games that do however, be it with large sinks, PvP costs, housing maintenance (all in the next post of the series) make players much more conscious about the economy.  Finding the proper balance between both is key.

With all the talk about economies and market, I’m reminded of a note from ex-Diablo 3 head Jay Wilson while at GDC2103.

…the company had a few assumptions about how the Auction Houses would work: He thought they would help reduce fraud, that they’d provide a wanted service to players, that only a small percentage of players would use it and that the price of items would limit how many were listed and sold.

Which in hindsight, is probably one of the most ridiculous statements ever made about MMO economies.

Remember now, Blizzard runs World of Warcraft, a game that supports over 9 million players and has had an auction house since launch.  And that service interacts with absolutely every single character, without exception.  How you can come to the conclusion that a game that is based 100% on gear, tradeable gear mind, would not use the Auction House is mind-boggling.

But this isn’t a post about how history has shown that WoW’s economy was a fluke but more about the fact that very few games are able to purposefully implement a real economy.  Everyone that has tried to replicate WoW’s has failed – including GW2 – in that nothing matters but the current end-state.  Anything you acquire up to that point is essentially meaningless.  Games that take a holistic approach to gear, where it matters more than end game (UO and EvE are two examples) have had long-term success.

A quality, long lasting MMO clearly requires a functioning economy.  It is invariably the glue that connects the various systems (crafting, PvP, PvE, etc…) and rarely gets the appropriate amount of thought.

That being said, the game itself has to be fun to have a non-niche appeal.  Otherwise you reach games like A Tale in the Desert, which is a great game but not one many have heard of.

Here’s hoping that both Wildstar and TESO are paying attention.  Economy drives the playerbase and the playerbase drives the game.