Wednesday, March 4, 2009

Geekonomics: A Blog on Bling

With massive-multiplayer games blooming to big business, and bringing in the big bucks, much more media attention has been bent towards understanding the economics of these behemoths.


This attention only make sense. Once a successful business model has emerged from a volatile market, it's simply bad business not to know how the model works. For example, when I came over to Florida as a young but optimistic Cuban immigrant, and clawed my way to the top of the 1980's cocaine boom, everybody wanted to know how I did it. My secret? Don't get high on your own supply.

First I got the money. Then I got the power. Then I got the weeeeeeemon.

An exceptional amount of work has been devoted to understanding the real-world economics of such systems. Over at GigaOM, Wagner James Au breaks down the top earners in the market. A lot of the data he reports is not what you'd expect, much of it owing to the boom of Korean MMOs, which operate under the principle of Free-to-play-but-I-guess-you-can-pay-for-some-stuff-like-maybe-a-shirt?-why-don't you-go-get-your-mom's-credit-card-and-we'll-figure-it-out gaming. To be fair, it was a really nice shirt.

Fashionably black is the new black.

Things complicate, however, when you begin analyzing the internal economies of these games, and the ways in which virtual economies meet and affect real ones. Lines become blurry, and definitions become softer. Where some MMOs are designed with commerce in mind - Second Life operates through the continuous investiture and circulation of Lindenbucks, And EVE Online is based upon the very premise of a functioning in-game economy - not all MMOs are devoted to such a maintained system. Most operate under a “dealer” principle, which controls how money flows from, and back to the game. Consider the act of “grinding,” where monsters are killed repeatedly. Upon their bodies, gold or valuables are found.

This is pure van Helmont stuff happening here: The valuables didn’t ‘come’ from anywhere, so much as sprung into existence from the aether. This can approximate a rough time-to-money system well enough, but things get squirrely when trade between players in introduced.

Look at the difference: A player pays another player hundreds of gold for a valuable or rare item, and that money stays in circulation, and can be further invested. But if a player purchases an item from a non-player character vendor, that money vanishes - sometimes to the tune of thousands of gold for the most expensive articles.

Enter the goldsink: the various sites introduced to any functional MMO operating in this system, in which hundreds of thousands of virtual moolah vanish every day. In this way can the value of in-game currency be controlled, even manipulated towards inflation and deflation. People’s purses a little too light, and you can introduce new quest lines that provide players with faster ways to accrue goodies than ever before. If there’s too much money clogging down the system, the introduction of a few new vanity items can suck all that troublesome cash out of the system in a matter of weeks.

Pictured above: Troublesome Cash

This needn’t be done to simply manage the economy - it can also be done to maintain a play environment. As a case in point, consider Blizzard’s management of World of Warcraft in the months preceding their second expansion. Knowing that players of their game would have to be given new ways to occupy themselves in the doldrums between their first expansion and the next, a new location was introduced: One that contained, in addition to a new 5-player dungeon “instance” and a new 25-player “raid” dungeon, a plethora of daily quests that provided gobs of easy cash to players - far easier, in fact, than previous environments had allowed.

In addition to these additions, if players spent enough time grinding “reputation” with a factions associated with these new quests, they could invest their hard-earned virtual cash on.. a title. For one thousand gold, a player can be “NAME of the Shattered Sun.

To be fair, that is pretty impressive-sounding. I wouldn’t even know how to begin to go about shattering suns.

So: To keep real customers from spending their real time elsewhere and thus stop forking over real money, Blizzard introduced a new virtual place where they could spend their virtual time, amassing virtual wealth to currying virtual favour with some virtual people, to the point that one is given the elite privilege of spending all that virtual money on something that has purely aesthetic value to impress other (real) folks in a virtual space.

Compare that to a virtual mount, which at least helps you cover virtual terrain, or virtual gear, which has direct applicability in interfacing with a virtual environment (read here: pwning). One thousand gold gets you a bunch of virtual letters, stapled to your virtual face, approximating Ozymandias-level posturing. “Look on my works, ye Mighty, and despair!”

Not this guy. But, close enough.

This may be the central difference between economies like those found in traditional MMOs and virtual trade experiments like Second Life and EVE. In the case of the former, at the end of the day, any changes applied to the system in place are may not be to facilitate commerce, but to keep people on the teat.

- Rook


  1. "On the teat" hyperlinking to is comedy gold.

  2. It's the closest I can come to tricking somebody into clicking to a joke website.

    Instead of linking to something disgusting, or obscene, or of the "horrors-man-was-not-meant-to-see" variety, I link to mothers sharing that most natural nurturing bond with their children.

    It's meant to shock internet-dwellers out of their hipster catatonia with images of a singularly natural beauty.

    I consider it a Neosentimentalist, Post-postironic statement. Hopefully it will counter the groundswell of Retroclassicist Postcyberpunk Neorobofetishism that's been the norm lately.

  3. Just kidding.

    Actually, I just like the phrase "on the teat."

  4. And who can blame you for that.

    I'd love to see a comparison of online economies and traditional point-based loyalty programs. They share many common elements. I wonder if has ever considered teaming up with WoW and making something happen. Hells yeah I'll trade 500 gold for a Best Buy gift card!

  5. That point is a site where sames like Second Life shine - the ability not only to put funds in, but to draw them out. I'd be interested to see how many Lindenbucks are converted back into Actual Peoplebucks, and in what quantities.

    I too would love to spin WoW gold into straw... it fits into my general policy of "Money for nothing, and the chicks for free." I could see them allowing players to cash in on-brand, say gold for WoW card game stuff.

    The only downside in design would be preventing an opportunity to "cash out", say if and when there's a mass exodus from WoW to who-knows-what. Spending money for intragame rather than extragame rewards forces players attention further into the MMO, and adds to the ever-growing pile of reasons to never, ever, ever quit until we get hit by a bus or something.

    But then who will grind our rep? Who indeed?