Some time ago Shamus Young wrote an excellent piece explaining why in-game economies in most RPG’s are horribly broken. To make a long story short, it is because every time a player character visits a local dungeon he comes back carrying 15 magical swords, 6 enchanted breastplates and a large sack of gold. Trying to simulate real economy in a world where the PC can basically produce very expensive items out of thin air at will is just not going to work because it would lead to insane price fluctuations. When the original Fable attempted a supply/demand simulation crafty players quickly realized that you can game the system quite easily. You simply walk up to a vendor and buy all the healing potions (for example) he has. Seeing his supply dwindle and huge spike in demand the AI would increase the price at which the vendor was willing to buy the healing potions back from you. So you sell him all of his stock back at a profit, and the price of the item drops again since the vendor now has lots of it in stock so you can purchase it on the cheap again. Do this enough times and you will have more money than you could actually ever use. And the reason why you are able to do this is that you earn most of your money by questing and killing respawning monsters. So no matter how you set up your virtual economy – a questing and grinding PC will eventually always accumulate quantities of wealth that would otherwise be unheard of in the game world.
Shamus mainly looked at single player games but MMO’s suffer from very similar problem. Many of them however found a solution to this issue in the form of money sinks such as mounts or various other prestige/vanity items. But in addition to the static vendor based economy most of these games also have a separate dynamic player driven marketplace – which also tends to be broken. I’m going to use World of Warcraft as an example here because that’s the game I’m most familiar with.
WoW has a crafting system that allows players to gather ingredients and create new items from them. For example a leatherworker uses leather must be gathered from animals by a skinner. A blacksmith uses ore that can be collected by miners… Tailors and engineers can craft items out of various resources that drop out of mobs during questing. Since at any given time a player can only have two professions you would think there would be a vibrant market out there where gatherers sell raw resources to crafters and crafters who sell their wares to everyone else. Conceptually, you would also expect it to work more like a real world market. For example you would expect a leatherworker to be able to go to the market and buy bunch of leather, then use it to make fancy leather armor and sell it with a profit. This is however not how it works.
In WoW auction house raw resources are very, very expensive but the crafted goods you can make out of them are mostly worthless. This is especially true at lower levels where you are much better off trying to sell raw leather than to make it into something – that is if your aim is to make money. However higher level items are also mostly worthless. For example a high level tailor can make a cool flying carpet mount but you have to be a high level tailor to use it. This means that all of his potential buyers are other tailors who can make the same item for themselves. In fact the only way he could hope to sell that item is if he priced it at below the auction house cost of the ingredients that were used to make it. And thus, the economy is broken. Why is that though?
Gathering leather, copper, linen, wool and other common crafting materials is a time consuming process. It essentially forces you to go out there and visit the pick-up spots or grind specific mobs all day. A lot of players don’t want to bother with this tedious chore but they want to level up their crafting profession quickly to be able to make powerful high level items (for themselves or for their buddies – obviously not for sale). They are willing to pay big money for the luxury of not having to do the tedious gathering grind. New players who are just leveling up their first character are happy to pick up the slack and do the grinding for them, selling them raw resources at marked up prices. In fact they can get away with hiking up the prices as high as the market will bear it. But how high is that?
Well, in a game like WoW which has been running for a while it is pretty high. The people who are willing to pay premium for raw resources are usually seasoned players who already have one or two characters that hit their level cap and are rolling in wealth due to the very brokenness of the static RPG economy and escalation of quest rewards that Shamus described in his article. Whenever the decide to pick up a new profession they make a new character and transfer a fraction of that wealth to them to start them off. And so the economy remains broken.
That’s how it works in WoW though. I’m not sure if there are MMO games out there with economies that don’t suck because… Well, I don’t play MMO’s that much. I hear that when Star Wars Galaxies first came out it actually had a working economy that made some sense – or so goes the legend. I have never actually played it, and it was later irreversibly broken so that it could be more Jedi oriented and more like WoW.
Also, I’m pretty sure someone will mention Eve Online on the comments. For the record, I have played it but was very underwhelmed by the gameplay. Basically I found it very boring. Flying in space was boring – you just select a target and go get a cup of coffee while your ships flies there on autopilot. Combat was boring as well. You just select a target, tell your ship to circle around out of the other guys weapons range and go watch TV. I won’t even mention mining which consists of pressing a button every and staring at your ship shining a beam onto an asteroid for a solid minute. I love reading about the crazy hi-jinks that take place in Eve but playing it was putting me to sleep. That said, their trade system seemed to be very complex and well developed and the game itself is a bit different from your average “quest and grind” MMO so chances are they actually made it work. Any Eve players on here who can confirm this?
Do you have other examples of broken MMO economies? Are there other games out there in which the economy works they way it should? Let me know in the comments.
There is a turn based game called Kingdom of Loathing that had very strange market dynamics. There is a flea market that all users can participate in, but it is frequented mostly by lower level players that don’t have access to the player run shops in the mall (there are various advantages to selling in the mall, mostly that you get charged per item to have it in the flea market). In the flea market, raw materials that low level players come across naturally based on the areas they adventure in are relatively highly priced, with the low level items crafted from them were at a slightly higher price. Higher level items were mostly unavailable, however.
Once players matured into the upper levels, they invariably started using only the mall, which had its own pricing dynamics. Raw materials were usually unavailable, or they were bought immediately. Items were generally priced in accordance to the level you needed to be to obtain them, and it worked fairly well. Of course the people that had been playing long enough to be at insane levels obtained large amounts of money, but there were frequent sinks for this.
The economy drastically changed when it became possible to start over at level 1 as a new class and keep all your items, and one class specific skill. Raw materials started to become plentiful and cheap as people acquired all of the skills needed to make/find them, and items began to be priced by rarity, where items that took many turns to gain were relatively high priced, but even then, the prices always fell. It became that in the mall, the only high priced items were the ones that you needed to donate to get, or ones that were newly available in the game.
The nice thing was, though, that the flea market economy seemed to me at least to be relatively untouched as it was only used by new players who hadn’t yet acquired a store.
It has been several years since I last played, however, and it could have all changed by now.
Game economies will always be broken. People pay for items giving experience (such as raw resources), while the end product of those items are worthless compared to the average uniques or special items.
In MMO’s, the best item is the only thing good enough to use. Something less makes you vastly inferior. This is also linked to many players becoming the best they can be (e.g. hitting the level cap).
But that’s the way it should be. If MMO’s copied real life in the trading/market business, it would take ages and ages to have a serious thing going on.
@ Jereme Kramer:
I keep hearing about KoL but I have never actually tried it. I always thought it was basically a joke game that someone made to make fun of MMO’s but it seems that a lot of people play it quite seriously out there. :)
@ Adrian:
Yeah, very true. Then again, I think the original Ultima was a bit like that. Every once in a while I hear veterans telling stories about that game and how it was hard core (full looting upon death, pvp, crafting took forever, you could actually own in game land, etc…).
I think this is a perfect opportunity to plug Cory Doctorow’s “FTW” if you haven’t read it, its free digitally and well worth picking up the physical copy too. Its more about gold farmers and such, but it has a great explanation of how in-game economies work and how people try to mess them up and such.
Also in your eve online description you say “pressing a button every” and don’t finish the, and I am sooo confused on what you were going to say :D
I actually found that my favourite in-game economy, is also my favourite MMO and the only one I have actually wanted to play after the trial and actually paid for, which is Pirates of the Burning Sea.
The real reason why the economies are hard to balance is that things don’t decay online. In the real world, everything decays, breaks, needs maintenance. Even the most rock-solid house made by the most talented architect in accordance with the most stringent guidelines needs maintenance. And then there’s stuff like food which takes a big bite out of everyone’s budget (well, maybe not the obscenely wealthy). In an MMO, once you’ve shelled out for that horse, there’s generally no ongoing cost. Get a car (or a horse) in real life and your transport keeps on costing, and not insignificantly.
Most MMO economies are a giant pot of ever-increasing currency with little or no outflow.
I have just discovered the Guild Wars 2 blog. I liked Guild Wars 1 quite a lot. Although it had typical MMORPG flaws, it was not as bad as WoW. So I was intrigued to see what Guild Wars would do about it and especially the economy part. To my surprise, one of the authors for the game storyline is Ree Soosbee, who also wrote the first stories for my favorite table RPG (Legends of the 5 Rings). That’s already a good point. They hint that the economy has been addressed in the game. I am still sceptical, but it is probably the only game I will buy this year, so I’ll let you know once I’ll have reviewed it. They also claim that they addressed the grinding/spreadsheet problem of others MMORPG’s. While I am excited about it, I am not expected too much, to be honest. But I was amused that their blog was pretty much answerign all of Luke’s (or mine) grievances about MMORPG. Do they read you? ;)
@Jereme
The economy aspect of kol has largely unchanged (wasnt playing back then thou, it just sounds about right,I quit pre-ascension and started playing again in January).
Ive seen a bad MMO (it had great pvp, and some nice item related things, quests sucked, leveling was a grind, bad balancing) been absoultly destroyed by the developers attempting to “add features” to the economy. The kind of item that was super rare, was instead being worn by a week old character, and there was nothing added at the highend.
@Luke
Kol is worth a look at, its MSORPG (massively single ….), in that the game is your own “instance”, with the exception of clan dungeons, the joke side is there, but its only one aspect of the game. It would be quite interesting to see a review of yours on kol, but it would probably take some time to get momentum going
My experience with Invictus has thus far been encouraging. There are no gear or gold drops from either bosses or trash mobs. Instead, they drop crafting materials NPCs can use to make gear. Crafting materials purchased at the AH are bound on purchase. Gear loses durability over time and is expensive to maintain. Once an item has reached its maximum enchant level it can’t be sold. However, used gear can be sold. The only way to honestly procure gold is by successfully completing battles and/or selling crafting materials. My highest level character is in mid game at L40 and has just enough gold to meet her needs but not all of her wants. That’s about the way things should be at that point.