MMO Mechanics: MMO Economies

Editor’s Note:  This is the first in a series of articles talking about the ins and outs of given MMO mechanics.  I’m no game designer but I research a lot and have been gaming for an obnoxiously long time.  I’ve played MUD’s, MMORPG’s, MOBA’s and have been a PC and console enthusiast for as long as those things have existed.  I’ll be citing appropriate references where possible and as always comments are turned on, so please disagree if you do.

MMO economies are weird as heck.  Given their completely artificial construction, you’d think you’d see more actual economists attempting to take advantage of the simulation possibilities available with them.  Sadly, no.  Regardless, in most single-player video games, economies are only simulated, and most act as a gate for content or abilities that a player works their way up through as they play, as an alternate to experience.  Weapons, armor, consumables, etc, all provide a way of increasing a player’s power and can be a nice alternative or supplement to a leveling system.

Most MMO economies go one step further and allow for actual trade between players.  This creates markets which we can then buy and sell goods on, track purchases, and use that information to possibly take advantage of and become rich, and “win” for some form of winning.  I’ve known players to focus their entire gaming experience on these goals and it’s somewhat surprising to me that the infamous “marketeer” has never been given it’s own character class in any game.  But many modern MMO’s drop economies into their games without really understanding enough about what purpose they should serve in the game, and end up making more problems for themselves down the line.

So what types of behavior should developers be trying to encourage when they create markets?  What is the end-goal of your market?  Trade isn’t an answer, that’s just an activity.  And depending on how that trade is regulated determines what behaviors your player base ends up displaying in your market.

The point of any game is to have fun.  Duh!  Therefore the point of an MMO economy and a market should ultimately be to have fun as well.  The trick is how do you create fun by playing a game of fake trading? There are lots of answers to this.  You make your players feel like they’re getting value for their time and effort.  Or you make your players (virtually) rich and encourage them and everyone else to try and get rich too.  If your market has high liquidity, then you greatly increase the odds of making more players rich.  If your structure is rigid and locked in, then only your top marketeers are going to “win” and this sets up issues around monty-hall styles of gameplay or worse ignoring the market (and thus a whole sub-section of your game) entirely.  And this is just one of the basic problem that designers need to be able to answer about their in-game economies.  While I’m not sure how much economic theory is needed to answer these questions, I know that most efforts actually trying to work out these issues fall very short. Complicating all of this is the fact that your trade economy will likely be tied closely into your crafting and loot economies and those will exponentially increase the complexities of your markets.  So how should designers address these issues?

For a basic primer on how most MMO economies work and some of the most common problems found in them, you can’t go wrong with this great 8 minute segment by Extra Credits:

It’s a great video and gets to some of the key issues with MMO economies right away.  Money flows in and money flows out.  How do you keep the value of that money from degrading, while also providing an experience that encourages players to try their hand at it.  After all, if people think their money and time are worth something on the market, they’re more likely to try engage and HAVE FUN.  Most money sinks fail in their efforts to control the problem of MMO economies because they either don’t go far enough and players just ignore them or they go too far and players avoid them.

The most effective sinks I’ve found, are the ones that focus on the most excessive behavior of marketeers and turn their psychology against them.  Want to be a gazillionaire?  Okay, you can do that, it’s just going to cost you half a gazillion dollars.  No problem for you, right?  When you force players who want to be rich, to really have to work at being rich, you’re basically doing two things.  You’re still giving them the status and rewards they crave (being rich), but by forcing their energy into the sole purpose of making themselves rich you reduce the impact of their fortunes on everyone else.

Caps on the amount of physical money a player can carry, combined with things like costly premium bank slots, extra inventory storage, the use of alts to store money, or even additional accounts needed to store the loot/cash, all provide sinks to those who want those vast sums of money and also puts that money to use storing itself, as opposed to flooding your economy and making mischeif.  These are the kinds of problems you want your high end marketeers to have.  “OH where will I keep all me money?”  “Well Mr. McDuck, you can store it in this super vault here, where you can swim in it and look at it and count it all day, for HALF your fortune.”  “Highway Robbery!  Oh well, I knew it was a problem when I started.  Let me get my bathing suit.”

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Actual In-game footage

But that only solves one problem in your economy.  Why should people play in a market if they can’t get rich, or at least wealthy enough to buy what they need?  Solve this problem and you solve a lot of issues regular players have with markets.

Most markets in most MMO’s use the WoW model.  WoW uses an auction house to control the buying and selling of goods on their market.  Auction houses are, by their very nature, sellers markets.  Sellers come in, put up their wares, and allow buyers to come in and bid on their products.  Sellers are in a prime position in these kinds of markets.  In addition to getting a premium spot in the buying/selling cycle they also see the entire history of the goods they’re selling and those of others as well.  These markets are rife with speculation and usually suffer from at least some hyper-inflation.  All this leads to barriers to entry that are very high for the average person.  If you want to get rich in the WoW market you have to REALLY want to get rich.  Just scrounging together 5000 gold so that you can buy your master level flying mount can be a huge challenge and require significant levels of farming to pull off.  Fortunately, there are better models out there.

In 2010, Simon Ludgate, reviewed several MMO economies and came to the conclusion that Eve Online (were you really surprised?), had a great economy.  The key thing they did differently, was that in their auction houses, buyers had the option to place buy orders in them.  These buy orders acted as a pull against the speculators and high end sellers on the market and forced the value of goods closer to their actual in game value, which made the market more fair for everyone.  Eve Online also does several other things mentioned elsewhere, from it’s onerous death penalties, to it’s use of real world money to help keep it’s in-game currency stable.  It also helps that it has an actual economist in-house working for the company, overseeing everything.

Most game companies can’t afford a real world economist (though I wish they could).  So, are there any other means to control the amount of speculation and make the market actually approachable for more than just the marketeers who thrive in those kinds of environments?  (And please note, I’m not using marketeer as a pejorative.  Being a marketeer is a perfectly reasonable thing to do and should be an expected way to play the game.)

Ralph Koster talks at length about how they didn’t introduce an auction house into Star Wars: Galaxies because it basically would have ruined the profession of entrepreneur in their game.  An auction house can create what’s called a total information economy and thus those who can take advantage of the information available to buy/sell at the cheapest, tend to win out over everyone else.  A real world example of this is Amazon.com.  There are no more mall bookstores because when you can buy books super cheap on Amazon, why go anywhere else?  The same thing happens with auction houses as well.

A possible answer then is to limit the amount of information available to a buyer and seller when they enter the auction house.  By making all trades anonymous and limiting the number of known trades on any given item, you create a system where you still have all the basic components of a market, speculators, arbitrage, and all the rest.  But you make the amount of information available to just the most recent purchases of an item, and thus make it very difficult to do any kind of long term manipulation of that item.  You end up with a system where the top of the line and most popular items are heavily traded on, but everything else tends to fall towards it’s actual market value over time, creating a 2-teired model of market activity.  A small top tier, where the best of the best marketeers converge to do battle with each other (a form of PvP).  And a much larger, broader, lower tier, where everyone else can engage to buy and sell the lesser popular and more common stuff based on an item’s actual value.  Though heavy marketeering is still possible in a limited information economy, the ability of any marketeer to corner a given sector of a market is much harder given the limited information available and thus reduces the barriers for non-marketeers to engage in your economy more generally.

Combined with significant sinks on the storing and maintaining of a vast treasure horde, a limited information economy can be a great option for producing an MMO economy that has multiple levels of engagement.  Players who won’t or can’t compete at the top-most levels, can still engage the market for the stuff they need, while the big marketeer girls and boys fight it out at the top for the big prizes and the prestige of being at the top.  This gives a developer the ability to focus on what money sinks they actually need, versus penalizing players for griffon storage-rental, boot repair, or you know, actually playing the game.

Once you add in solid crafting and loot systems that don’t work against each other or the rest of the game, you can produce a virtual economy that’s healthy and stable, while still allowing for a wide variety of activities that simulate events in real world economies.  All while giving ample opportunity for everyone to engage in a manner that feels fair.  We’ll talk more about what those crafting and loot systems can look like in later posts.

This is by no means an exhaustive discussion of how to craft a proper MMO economy, as there are surely others.  Agree?  Disagree?  Let me know in the comments below.  Stay tuned for more.

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3 Responses to MMO Mechanics: MMO Economies

  1. j3w3l says:

    I have to admit that I do like the idea of a low information economy but then, we could take that further than just market based differences and into crafting types, recipes and of course random places for certain mobs and resources to spawn.

    Also, I generally don’t think the idea of crafting, selling and being involved with an economy is to be fun. Like you said, power is obviously a part with those that want to be mega rich but then there is also the feeling to be needed. Or in cases like SWG to build a reputation. There is far more tere emotionally than just fun and I think that’s why so many of the systems have failed of late.

    The ficus on fun – make it simple and quick. add minigames, better quality of life functionality. No resource competition and in the end it becomes a system that is both devoid of fun and all the other reasons you might enjoy it.

    ALso.. YAYYY for comment system!!!

  2. LockOn says:

    YAYYY indeed.

    I think a low information system for crafting that would obscure recipes or types and resources would be counter to what a solid crafting system should be. But perhaps I’m misunderstanding you.

    For me it’s about removing the barriers for entry. If it takes a huge amount of energy and time just to start something, I tend to put it off until I absolutely have to, if at all. The fewer barriers to entry to a given system there are, the more it will be used.

    Feeling “needed” is an interesting counter to my fun argument and not one I’ve put as much thought into. That would definitely be worth exploring more.

    Regardless, thanks so much for stopping by! Hooray, interesting gaming discussions! Victory achieved!

  3. j3w3l says:

    hmm – obscure for certain things i guess but not the system as a whole. SAy, you have multiple slots for materials on a weapon you cna add too and depending on the materials you add and the quantity can change the result. If you want you can just add iron, pump out a sword but then there is a huge amount of exploration and mastery to the system.

    With gathering and resources, my favorite system was firefall. In that you couldn’t be sure where to get a certain resource. there were no set nodes just a random spawn around the world, that ranged in quality and quantity as well so this meant constantly exploring the world for these places. I found that incredibly engaging and loved exploring for these and felt so much excitement finding those high quality resources. One again easy to get into as these spawns are everywhere, you could walk a little from spawn, call down a thumper and gatehr stuff but if you wanted to do more, and make it as a primary style of play it has a depth there too.

    AND YES – being needed is huge. For the solo player and for those being part of a guild

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