Psychochild's Blog

A developer's musings on game development and writing.

9 December, 2012

How to design a game economy
Filed under: — Psychochild @ 5:14 PM

Okay, I made a big deal about the economy of Guild Wars 2 and how I did not view it as a fun system supporting to the game. Given that there was a lot of discussion about this, and that I’m an MMO designer, I figured I should post something detailing what should go into the design of an MMO economy.

What are the goals of economic design? What are the important factors? What should be avoided?

As usual, these are my opinions based on my experiences playing and designing games. I have a background in business, but I’m not a formally trained economist; this is probably a good thing as I’d likely not have much soul left over if I were. ;)

Goals of the design

A game economy should be more than just a way for players to make and spend money. A typical faucet/drain economic system with endlessly respawning monsters ensures that players can accumulate money, so if a player wants to gain money, he or she can just by playing the game and being as frugal as necessary.

Most games tend to have economies where players will easily accumulate more money than they can use; in other words, the faucets run faster than the drains. For many people, particularly the Achievers that these games cater to, having an increasing amount of money is its own sort of fun; so you expect a bit of inflation as a result. But, man games later add “gold sinks” to the game in order to give players something to spend their money on once the “make the numbers go up” goal has become less interesting for people. Too much money in the system also tends to alienate newer players, as prices for items will increase significantly beyond the spending power of a new player if the established elder players have significant cash on hand and can simply splash it around on the most desirable stuff.

We’ve also seen people who like to play with the economy for the fun of it. We’ve seen this in pretty much every major game, from the crafters in UO, to the people in the tunnel of East Commonlands in EQ1, to the people who spent way too much time updating plugins to keep track of prices on the Auction House in WoW. Even Meridian 59 had people who would farm items to sell to others, but this was rarer as people would usually keep the good stuff for themselves or their guild for fights. We’ve seen a change in the focus of the economy through these games, where more modern games have a shared focus on crafting as well as the rare drops that were important in earlier games.

So, what should be our design goals? Some people might be tempted to say that the goal of the economic design should be to simulate the real-world economy. This is the wrong goal. The goal of a game economy is to be fun.

Making the economy fun

Okay, that’s a fuzzy goal. What does it mean when the economy is “fun”? I think there are two parts to this answer: the short term and the long term.

The short term is pretty easy to figure out. It answers the question: “Can a player get the stuff he or she needs?” For example, can a newbie get enough money to pay for training he or she needs? Can a new player who decides to go into crafting find a market for buying materials and selling products? Does a player have a pretty good idea of how much money they need to keep going? Also simply accumulating money will be a sort of Achiever-focused fun for some people, but like any increasing number there needs to be some context or game element associated with it so that they can show off.

The longer term starts to get a bit less precise, but I would sum it up as “Can a player get the stuff he or she wants?” Does the player have goals to work toward for saving money? Can the player identify ways to accumulate money that he or she finds fun and that matches his or her playstyle? Can the player earn enough money to feel “rich” (or at least financially stable and secure), even if he or she isn’t the wealthiest person in the game?

Obviously, there are a lot of devils in those details. So, let’s analyze what elements make up an economy.

Economic elements

Obviously you have two primary elements in a game: currency and items. If your game uses a typical faucet/sink system, then the game will create a supply of items and currency for the players to use. (So few games use closed economic systems that I’m not going to go into much detail here. Needless to say you should read up on the original resource design for Ulima Online and how it evolved if you want to consider closed systems.)

As I said in the last post, economics is really the study of scarcity. This is one of the tools in a game designer’s toolbox for creating a fun economy. Note that scarcity doesn’t only relate to how common an item is in the entire game. You can have scarcity of an item in a particular location, assuming there’s some cost to transport items; we see this in EVE Online, where shipping is a risky task, and buying items cheap in one area and selling them for a profit in another area of higher demand is a valid playstyle.

Another measure is usefulness. For currency, the usefulness is measured in how useful the currency is for interacting with NPCs, or any other system that effectively takes money out of the economy. For example, money will always have some measure of usefulness in Guild Wars 2 as long as you can convert gold to gems to buy stuff in the cash shop. For items, the usefulness tend to relate to gameplay aspects: a +4 sword is going to be more useful to an a +3 sword. A snag here is that usefulness can change based on other circumstances, such as your level in a level-based game. At low levels a +1 to a stat might be a big increase, at mid levels, it might be an insignificant change, but at high levels in competitive areas like raiding or PvP some people would knife their own mothers for another +1 even though that bonus is probably vanishingly small; but any advantage is an advantage compared to other people. Therefore, player behavior is a vital factor in determining usefulness.

What a designer must do

So, remember, the designer is in charge of everything in the world. Scarcity and usefulness are up to the designer. And, in a live game like an MMO, these aspects can change significantly based on changes to the game.

It’s important to consider the effect of any changes to the game, as well as other design considerations. For example, if one of your design philosophies is that players should be able to move around the map fairly freely, it’s going to hard to have geographically-defined rarity. Also, changes after launch need to be considered carefully, a you don’t want to frustrate new people coming to your game by making the economy feel stacked against them.

A good economic design needs to straddle the extremes between too much and not enough. Think of it like gaining xp: going up levels too slowly will bore many people, but give them a “push button, get infinite xp” button that trivializes the game and everyone will get bored. Same thing with the economy: if money is too hard to get, it feels frustrating to play with the economy. If money comes too fast, then it feels trivial and leads to problems with inflation.

Of course, as I said above, player behavior plays a huge role in the economy as well. A classic example is when players choose a new form of currency when the developer-define currency (gold) becomes worthless through oversupply (such as from a dupe bug). Players will often take another item in the game (probably stackable) with some usefulness and use it as a substitute currency. As I’ve mentioned before, players used some spell reagents as a medium of exchange when dupe bugs made the in-game currency nearly worthless.

Unfortunately, the specific design of a game’s economy really depends on the game. So, it’s hard to get into details unless we focus on a specific game. So, let’s do that. :)

How to fix GW2′s economy

Let me add in the usual caveats at this point: I’m not a GW2 designer, merely a player. I have no special access behind the scenes. Usually a game’s development is much more complicated than it will seem from the outside, so these recommendations might be worse than useless given some specific quirk to the game.

Also, fixing an economy after launch is extra difficult because you have to manage player expectations. Even the most buggy and broken system will have some supporters out there. Changing the economy might alienate some people who have worked to master the current setup. It’s also entirely possible that GW2 needs to focus more on retaining players rather than attracting new ones given their business model.

As I said in my previous post, the economy is great if you’re buying. It’s easy to buy a full upgrade of gear for only a few silver, much cheaper than pouring time and game money into crafting. On the other hand, I think a better economy would help players, especially new ones, earn gold easier. I’ve noticed a flood of gold farmers in GW2′s main city. So I guess there must be some people who find it preferable to buy gold from shady websites than to earn it in game or even use in-game systems to buy the gold.

I’ll also note that it seems that the GW2 designers have been trying to address the problem. The new “donations” system with the Mystic Forge that was introduced with the Lost Shores update seems like it was intended to take items out of circulation. But, it seems those steps have only slowed things, not improved them. And, according to an interview, they are monitoring the economy closely. (Although I have to admit that they seem to not quite share my design goals.)

Analysis and potential solutions

I think the main problem with Guild Wars 2 is that there’s no meaningful scarcity. This is a natural consequence of a lot of the design decisions focusing on ease and convenience for the player. The loose server situation, the global economy, the always-available trading post means that every item that can be sold will be sold. This means that supply will be huge. Unfortunately, it seems demand has not kept up, so there’s a downward pressure on prices. Any opportunities to turn a profit on supplying the undersupplied will be spotted by one of the millions of other players.

Having a lot of competition also forces prices downward as people try to undercut each other. If you post up an item for 99 copper pieces, the next person likely try to undercut your price by 1 copper (or match you, but let’s keep this simple for illustrative purposes). If you’re competing against 5 other people who use the same tactic, the going price drops by 5 copper. 20 other people = 20 copper. So, what happens when you’re competing with a few hundred thousand other people? Yeah, the price drops to the minimum and stays there; this is pretty much what I’ve seen in GW2.

This is problematic for two main reasons. First, it trains new players away from using the trading post. If 95% of the items I find won’t turn a profit on the trading post, is it really worth checking for the 5% of the time it is? The other problem is that it discourages crafting as an economic activity, as the amount of time and money you pour into the activity will be unlikely to be worthwhile. As the dev from the interview linked above wrote, “We make sure things don’t get too cheap, which robs players of a feeling of accomplishment, just as we makes sure things don’t get too expensive, which makes it difficult for new players to buy things.”

How can you address this issue?

  • Decrease supply. Basically means reducing the drop rate. The problem is that will punish new players who will want goods but not have the good fortune to have been around to collect as much money as the established players have. Another option would be to revamp crafting to have cheaper recipes that are easy to create in mass quantities to lower the flooding of the market with items people grind through.
  • Increase demand. As I said, the donation system seems intended to help take some items out of the system. However, players have figured out the “most efficient” way to get the items, and buying stuff of the trading post isn’t it. It’s also harder to “force” players to buy and consume more stuff elegantly, compared to simply reducing drop rates.
  • Change how items are sold. This means changing how the Trading Post works, likely to reduce supply. An easy change would be to make sales postings only good for a limited time. This would cause items to be taken off the marketplace as items listed by inactive accounts disappear. It also creates some risk of listing items for sale, as your posting fee might be wasted, as it is in other games.
  • Create local markets. If you create inequalities in supply, this creates opportunities for people to exploit. It also creates mini-economies where you’re not competing against every other player who has looked at the trading post that day. But, given quick teleportation, creating geographic markets as in games like EVE Online is not really possible. But, there are divisions that are already created and exploited for gameplay effect…

Designing localized server economies

The main purpose for the server divisions is to create World vs. World (WvW) groupings. One server is pitted against others in a fight and allowing players to form communities and get to know each other. So, let me propose a design that uses these divisions to help the economy.

In essence, each server has its own economy. Now, I realize this would require a lot of changes and would require a load of testing, but here’s an initial concept.

  • Otherwise unbound items are “bound” to a server. Any items you get are bound to a specific server where you acquired the item. This isn’t a strict binding, and it might be better to come up with a better name, but let’s go with it for now. Items you get in overflow servers are bound to your home server. Items you get while guesting on another server are bound to that server. Any item that is bound to character or account does not necessarily need to be bound to a server.
  • You keep your items at all times. Any items bound to a server travel with you when you do. If you’ve picked up a super-awesome rare item and then transfer to a new server, you keep that super-awesome rare item.
  • Trading Posts only show items listed on your server. If you post an item on the trading post on a server, it only shows up when you search on that server. This creates the local economies on each server.
  • Trading server-bound items on another server costs in-game money. Let’s say you are from server A and have an item bound to server A, then transfer to server B. While on server B, if you want to trade the item or list it on the trading post then it costs a bit of money to rebind it. This price would be a function of the vendor price of the item.
  • Items bound have an indicator on the UI, mouseover shows the server it’s locked to. You could use a different color indicator to show soulbound vs. server-bound items as well.
  • Money and gems are unrestricted. You can earn and spend money freely on any server without restriction.

In essence, if you’re playing on a single server the experience of using the trading post will remain largely unchanged. Prices will change, of course, but that’s an intended goal of the system. It would probably be good to unlist all items on the trading post and refund any listing prices to give each server a fresh start to create their own economies.

Two other thoughts: First, you could adjust drop rates on a per-server basis. Make scales drop a bit more on one server, but totems drop more on another for a month. During that month, people who want to play the market could identify trends and carry the items to other servers to sell if there’s a profit to be made. Or, if you were worried about speculators and monopolists, have the trading post list all items for sale, but include the cross-server markup automatically, paid by the buyer; this is how EQ2 handles sales across the “good/evil” divide within a server.

As I said, this would require a fair amount of coding and testing, but I think it would improve the economy and make it more fun for more people with a minimal amount of disruption to other aspects of the game or to player behavior.

So, what do you think? Would this make the economy more interesting? Or do you see some fatal flaw I didn’t?







26 Comments »

  1. I don’t know if separating the servers would really work as in the end your only prolonging a critical mass of items and resources.

    the only way I can think is to have a meaningful and consistent way of removing items. Something like item item degradation would keep up a continuous demand, it would work with the transmutation system so you can keep a favourite look the only thing is I don’t know how that would work now since they are going the vertical progression route.

    Comment by j3w3l — 9 December, 2012 @ 7:30 PM

  2. j3w3l wrote:
    I don’t know if separating the servers would really work as in the end your only prolonging a critical mass of items and resources.

    Probably. It would give some time to come up with and introduce more changes, though. I see this more as a first step toward correcting the system, and a way to stop the “underbidding by 1 copper leads to minimum prices” issue that has become all too obvious, at least as I’ve been playing.

    Something like item item degradation would keep up a continuous demand…

    I think that would be too disruptive to introduce at this point. It’s something that could have been designed into the game in the first place, but introducing it now feels too much like changing the terms of the agreement. My goal was to change the system with the least amount of pain as I could. Not to say that all pain can be avoided in the future as they adjust the economy, though.

    Comment by Psychochild — 9 December, 2012 @ 8:18 PM

  3. My longstanding issue with in game economies and crafting is a fundamental one. Traditionally, skilling up crafting requires producing goods. Thus, as each player works up his crafting skills he produces a vast quantity of goods – more than several players would need.

    As a result, zounds of people are trying to sell those goods to recoup the training costs, and flooding the market.

    Instead, I’d argue that materials should be consumed but no goods produced as the most efficient means of raising skills. This reduces the supply on the Trading Post to that which is made specifically to sell. People won’t make a good to sell when it’s sale value approaches its material cost.

    This way, you can get more of a self regulating market. It’s not perfect – prices will still fall – but at least those looking to craft for profit aren’t competing against those producing en mass to raise their skills levels (almost every other player)

    Comment by Derrick — 9 December, 2012 @ 8:28 PM

  4. Item degradation could be introduced only in a new class of items. Maybe particularly shiny hats will also be degraded by the snow. In this way the current items are left free of direct change, while still having something that will act as a drain.

    Building off what Derrick suggested, there could be “training-quality” items, which are of significantly lower quality than those normally crafted, but that also give a faster skill-up. That would still leave the option of crafting for skill and selling, but I imagine most players would just go for the faster option and not bother with the selling of their product.

    Comment by klepsacovic — 9 December, 2012 @ 11:42 PM

  5. Items in Ultima Online could be looted from your dead body, by mobs or players. Weapons and Armors had item wear, you could repair them to be 100% as effective but if you did this over and over, there was a point where you simply had to replace the armor or weapon in question as it became fragile, lost durability.

    This would have worked wonderfully for GW2 – at least at max level. I think people would level too quickly out of the lower levels to make item wear a problem. That it is difficult to get a lot of money outside of a few really lucky drops, mostly by selling Orichalcum and Ectos could be quite intentional:
    The easiest way to gain cash is to transform gems to gold. To get Ectos you ideally you have a Black Lion Salvage kit from a chest or you have to buy it from the shop. This is quite profitable for ArenaNet.

    There are three different kinds of equipment: Those who require dungeon token currency and a lot of time investment, the exotics that are crafted and require a lot of ingame cash that you either acquire slowly or buy in the store, finally there are the “rare” quality items that are sold for next to nothing that allow even Mr. Supercasual & Clueless to get really good gear for next to nothing.

    Comment by Longasc — 10 December, 2012 @ 2:01 AM

  6. I’m of the very firm belief that MMORPGs do not need any kind of player-to-player economy and that having one undermines what I believe should be the core function of the game, adventuring and exploring in a virtual world. The real people in any MMORPG are the NPCs. PCs need to fit into their world, conform to their standards, follow their codes of behavior. Player economies add an awkward bridge to the outside world that rarely, if ever, makes any sense.

    Unfortunately I’m not able to confirm from experience that an MMORPG in which player-characters can only obtain items by making them for themselves from materials they themselves have resourced, or by buying them from NPCs, or by killing helping NPCs would actually be, as I posit, more immersive, believable, convincing and enjoyable than the status quo because, well, there isn’t one. I wish someone would make one so we could find out.

    As for GW2 I have anecdotal evidence to offer here of the inaccuracy of the oft-repeated received wisdom that the economy is great for buyers and but not for sellers and that you only make money on high-level gear drops. On my first run to 80 I made all my own armor and Mrs Bhagpuss made all my jewellery and weapons so I didn’t us the TP for gear at all. On my second run to 80 I ignored my gear altogether and used whatever I found. On my third and fourth runs to 80 (currently at 70 and 51), I developed the habit of going to the TP and replacing all my gear every ten levels.

    While it may be true that you can buy “something” for every slot for a pittance and that some crafted gear sells for vendor+1c, just try buying the gear you *want*. As in every MMO I have ever played, low and mid-level gear is scarcer than high level gear and good low-mid gear is often very scarce indeed. Even with the global TP, I cannot always find *any* acceptable item for some slots, not with the stats I want. Rare quality gear in the 40s and above sells for 20s and up per piece and is too expensive for me even to consider. Masterwork, which is what I mostly get, sells for 1s to 5s on average in the 50s, with some pieces reaching double figures. Vendor cost for this stuff is still in copper.

    GW2 is only a few months old. The Trading Post that was full of gear that fell like autumn leaves and worth about as much was a new game phenomenon, seen in most MMOs that I’ve played from launch, albeit magnified by the global nature of the market. That’s over and it won’t return, except for expansion blips, maybe. The market isn’t anything like mature yet, but in six months’ time, go look at mid-level gear and see how “cheap ” it is. I’m betting that by then if you want to kit yourself out through the TP, wearing Fine will be the best most new players can look forward to.

    That’s one major reason I don’t like player economies. Within a short space of time the virtual world replicates the same “have” and “have not” society we really live in, where it makes far more difference when and where you were born and who your parents were than what your own abilities are.

    Comment by bhagpuss — 10 December, 2012 @ 3:00 AM

  7. Yeh I don’t think Item degradation could ever be possible now as they have had a design approach that is just not conducive to promoting it… and yeh it would a rather abrupt change now that would take far more work to implement that server specific TP.. having a surplus of items and resources is inevitable though. Although the gear upgrade route via crafting could possible work in the market as long as it is well timed and thought out.. creating a demand through obsolescence certainly works in our consumerist market now.

    The issue with resources is that considering where the bulk of the population is corresponds to what items you have in abundance.. the reason why middle level resources and items can often be quite expensive.

    As has been said on the forums before the only way to flatten out the economy would be to promote more people to those areas, the down leveling really doesn’t go far enough in this regard. Although in the end you still create a funnel towards end game gear, and an accumulation of resources. you either. need to go all out with crafting an economy or don’t really worry about it

    @Derrick
    I believe waste kind of has to be a natural part of the skilling up process for it to produce a more valuable end product. Without the resource and money investment it is far easier for the individual to just skill it up themselves to produce any needed items, no reliance and a stagnant market. To create a stable market one part is to have a reliance on others

    bah would write more but it’s bed time in Aus

    Comment by j3w3l — 10 December, 2012 @ 5:52 AM

  8. A good case study would be Globs of Ectoplasm, which if you look at the 1 month timeline clearly shows an increase in value of the item. Globs of Ectoplasm are gained by an RNG chance when salvaging rares and exotics of a high level value. They went up in price because they are now also used for the latest gear upgrades. This has created a surge in profit for salvaging rares.

    Therefore the rare market has been bootstrapped, which further bootstraps the materials market because people can craft rares to salvage. Mithril ore price has doubled in the last month in response. So a player caring for nothing but selling can go out in a high-level area and gather mithril ore now with increased profitability. How could they not want to be attached to the market?

    This is not even discussing the vast amount of items that can be flipped. Yesterday I did Troll’s End, a jumping puzzle with food nodes at the end. I gathered grapes knowing in advance they were worth the gathering cost, and when I sold them to the highest seller (instead of a sell listing), I noticed that there was 50% difference between the lowest sell order and the highest buy order. How could a player not notice this market inefficiency? Compare this to Globs of Ectoplasm with 1-2% difference because that market is so efficient.

    Anyway nice post. Lots more to think about. :)

    Comment by Ravious — 10 December, 2012 @ 6:53 AM

  9. I have missed a step in the reasoning : how do we go from the short-term / long-term goal of being able to obtain something we need/want to having a fun economy ?

    The second part I have not fully understood is your definition of a fun economy. From what i have understood, for you a fun economy is when someone who work on it can biggest profit than someone who don’t. That mean that some people will be “better than the market”, and thus a lot will be worst/equal than/to the market – and the market will be less efficient than possible (= higher prices ).

    About crafting : as long as crafting is easy/accessible to everyone, crafting production will always be useless – and cost more than benefice. Why ? Because people want to be able to craft, and are ready to pay for it => no benefit.

    In GW2, having the best in slot for every level, cost 2-4 times more than NPC price for lvl 30-40. The economy was screwed by the diminishing number of player/time played : as seller put thing in place before buyer can buy it, there is an over-supply. As soon as the population stabilized, the price reach an equilibrium ( as in lvl30 – 40 ).

    Comment by Ettesiun — 10 December, 2012 @ 8:12 AM

  10. Psychochild:
    Even if fracturing the economy were plausible at this point, I’m not sure it’d help much. The glut of blue-grade items isn’t just by two or five or a dozen, but of dozens. Individual server communities might have more market inefficiencies to make money from, but there aren’t that many servers or that many opportunities. The specific question of crafted items is even more problematic: as long as the output item is worth a little over 15% more than the input materials, people who’ve already mastered a crafting skill can and will start crafting to fill the orders.

    There’s three places to mess with. The first is that is supply. Fine or Masterwork grade items can be bought from karma vendors, and karma is almost always worth less than coin. Combine in the drop rate, it’s simply got such a glut it’ll never make sense to deal with. There are a few, limited, exceptions — some stats like Magic Find don’t often show up on Karma vendors — but short of changing the game’s systems at a very deep level, blues and greens simply are going to have too much supply to reasonably trade. Meanwhile, rares are virtually unknown until the late game: they only very rarely show up on karma vendors (and often for levels of karma not viable at that level), and only very rarely drop. There’s space to work, there, except that rares are so much more expensive to craft that few people will work on them when leveling a new crafting discipline.

    Second is demand. Blue items don’t soulbind and thus can stay in the market until sold or salvaged, and green items last about five levels. The only other use for them, Mystic Forge gambling or donations, aren’t providing interesting or worthwhile returns right now. ((Part of that is the low return on Commendations, combined with the high cost of donation paper.)) There are items where demand is high — see Globs of Ectoplasm, Orichalcum, and Gossamer, along with tier-5 and tier-6 crafting components — but these are the exceptions, rather than the rule.

    Thirds is limitations. The two ways to make money from a market are to fix inefficiencies, and to provide a thing of value. Right now, however, there aren’t many things-of-value that a player can only use to craft: almost all items are sellable in their base form and that base form is more useful (can be stored for less cost, can be turned into more things, and/or provides a skill level in the conversion). There are account-bound and character-bound items, but these either aren’t used in crafting (Mystic Forge ingredients) or are Cooking Karma sinks (bananas, apples, etc). There’s a lot of design space for limitations, depending on whether you want to favor gameplay (skill points are pretty directly correlated with playtime) or favor less hardcore players (once-per-day crafting, Mystic Coins, and a few other mechanics can favor players who only log on for an hour or so a day).

    Making the crafting output valuable is probably a more essential starting point than changing how the market itself works. Rare-grade craftable armor and weapons aren’t worth the time, for most folk: dropping the material cost, crafting level requirement, and/or increasing the skill gain per discovered Rare would help a lot, and also make it more worthwhile to craft for oneself while leveling. Making things that can’t be bulk-produced would also limit the auction house market flood issue. So on.

    bhagpuss:Even with the global TP, I cannot always find *any* acceptable item for some slots, not with the stats I want. Rare quality gear in the 40s and above sells for 20s and up per piece and is too expensive for me even to consider. Masterwork, which is what I mostly get, sells for 1s to 5s on average in the 50s, with some pieces reaching double figures.
    Low-level rare quality gear usually isn’t worth it to purchase. And most of the difficulty in getting the ‘acceptable’ items for any given slot is that the auction house doesn’t search terribly well; as a crafter, I can tell you most every set sells for less than a half-silver over material costs.

    Longasc:To get Ectos you ideally you have a Black Lion Salvage kit from a chest or you have to buy it from the shop. This is quite profitable for ArenaNet.
    Player experimentation has shown strong evidence that Black Lion Salvage Kits do not return Ectoplasm more often than Master’s Salvage Kits. BLSKs are primarily useful for their ability to reliably return upgrades, such as gems or runes. ((The listed chance to recover rare ingredients seems to only apply to finding +1 tier items, such as gossamer from level 60-80 cloth items.))

    Comment by gattsuru — 10 December, 2012 @ 12:27 PM

  11. Derrick wrote:
    As a result, zounds of people are trying to sell those goods to recoup the training costs, and flooding the market.

    Aside: I see a Heroes of Might & Magic reference. ;)

    Yes, this is a problem with the model. However, other games have had the same setup with less problems. In particular I’ll reference LotRO that had a similar setup, where you had to create a bunch of stuff to advance levels. But, I remember finding more of a market for my items than in GW2. Given this, I think the economy is more to blame than the underlying design.

    Tipa mentioned in a brief Google+ comment that EQ2 had a good way to deal with this, where you could do “writs” that would consume materials but would give no usable goods, but would give experience to your guild. That would have worked for GW2, I think.

    Longasc wrote:
    Weapons and Armors had item wear, you could repair them to be 100% as effective but if you did this over and over, there was a point where you simply had to replace the armor or weapon in question as it became fragile, lost durability.

    As much as I love this idea, I can’t see a modern game getting away with this. There’s too much of an expectation that your gear is something you retain and is part of your character progression. The design of the Ascended gear and the outcry about that shows that gear progression is indeed part of the game design now.

    bhagpuss wrote:
    I’m of the very firm belief that MMORPGs do not need any kind of player-to-player economy and that having one undermines what I believe should be the core function of the game, adventuring and exploring in a virtual world.

    An interesting proposal, but one I don’t is possible in reality. All games have an economy at this point, and it has become a major focus in pretty much every major MMO in the past decade. Even if you explicitly didn’t create an economy in a game, if there were any sort of trading players would create an economy. Perfect example of this is Habbo Hotel, where there’s a complex exchange rate between different types of furniture (see slide 11 in that presentation). As with most things in games, it’s often better if the designer takes a hand in designing a system, rather than letting players create a monstrosity that might work fine for them, but violate other goals of the game (like being approachable by new players).

    While it may be true that you can buy “something” for every slot for a pittance and that some crafted gear sells for vendor+1c, just try buying the gear you *want*.

    I’ve had no problems. Then again, I’ve been fine with blue-quality upgrades. Investing a lot of money or ingredients into more complex gear seems counter-productive to me as you’ll outgrow it pretty quickly. Plus, GW2 is supposed to focus more on player skill rather than merely on time spent grinding. So getting higher level gear seems more rewarding than getting better quality gear, particularly as you’re leveling up. I did the “go to the TP every 10 levels and buy cheap blues as an upgrade” method for my engineer from levels 40-80. Hell, I might start a new character and just equip level 5 blue-level crafted items and see how far I get in levels before the character feels unplayably tough; I figure I can probably make it to level 40 or so before I feel put upon, and probably more from killing so slowly rather than being ineffective.

    The market isn’t anything like mature yet, but in six months’ time, go look at mid-level gear and see how “cheap ” it is.

    I’ll wager a GW2 gold piece that it’ll look the same if not worse, barring noticeable developer intervention. There are two reasons for this: first, no subscription fee means that there’s less attrition from players not paying the subscription anymore, so the supply of goods won’t be diminished like it is in other games. And, even if people leave the items stay posted on the trading post. That means those hundreds of items listed at vendor price +1c will stay there until there’s enough demand to wipe out that inventory in addition to whatever else is posted. Something needs to change, and waiting it out won’t work given the game’s design.

    Ravious wrote:
    A good case study would be Globs of Ectoplasm, which if you look at the 1 month timeline clearly shows an increase in value of the item.

    Sadly, the site you linked seems to currently be down. Would love to poke through some of those charts.

    As I was commenting to a friend, ArenaNet cheated their asses off to make sure that the high level economy wasn’t as hideously broken as you have to collect a ever-loving ton of items for the Legendary items. High level jewels (which make up 5 of your 11 item slots) also require the globs, so there’s a steep demand. But, compare this to something like Malachite, and I’ll bet you won’t see such a rosy picture of price movement.

    Also note that there are two possible reasons for a price increase: the demand is outstripping the supply, or there’s a major case of inflation going on with the economy. It’s probably the former, but the latter is also something that could be an issue. I see a lot of people running around with blue commander icons on the map; something that requires a mind-boggling (to me) 100 gold to buy.

    This is not even discussing the vast amount of items that can be flipped.

    Flipping incurs risk, though, and doing so effectively requires a vast amount of information not available inside the game. I found a lucky rare mace drop on my engineer, so I decided to post it it. Lowest rate was 1g 9s or so, meaning about 5.5 silver in posting fees. Unfortunately for me, a bunch of other people posted the same items and it didn’t sell for 2 days. I pull it down, re-list it and undercutting the lowest seller by a copper (a price of 98s or so), and it sold in minutes.

    When I sold in LotRO, I didn’t have to figure out what time of day people are more likely to post, or more likely to buy, in order to sell my stuff on the AH. I didn’t have to track prices over time to figure out trends. I went to the AH, I posted my stuff. Sometimes it sold, sometimes I realize I was a bit greedy with the pricing. Sometimes I’d speculate and post some stuff up to see if it’d sell (like Lembas in LotRO), and if it sold well I made more. But, it was all data I collected in-game.

    Ettesiun wrote:
    I have missed a step in the reasoning : how do we go from the short-term / long-term goal of being able to obtain something we need/want to having a fun economy ?

    Sorry, I did skip a few steps. To put it simply: consider that Raph Koster’s A Theory of Fun says that fun is about learning. If a player can set goals in the game (get stuff I need to play, get stuff I want in the long run) and then learn how to play the game accomplish those goals, it’s a form of fun. If a player feels frustrated because he or she doesn’t know how to reach the goals or has to do things he or she doesn’t find fun (grinding) to reach the goals, then it won’t be fun.

    I apologize, but I don’t quite understand the rest of your post. I assume English isn’t your primary language. If you would like to discuss this further, feel free to post a followup question or contact me directly in your primary language and I’ll find a translator.

    gattsuru wrote:
    Even if fracturing the economy were plausible at this point, I’m not sure it’d help much.

    I think it’d help. As I said above, some elements of the design, particularly of crafting, aren’t that different from games with a lot more robust economies. And, as I said above, I think this would be a step that would give a bit more breathing room to implement more features to fix the economy. Anyway, I counted 24 U.S. servers and 27 European servers. Assuming they’re all part of the same economic network, that’s 51 sub-markets that could be formed. That means an oversupply of a dozen dozens (a gross, or 144 items) would be split into an average of 2-3 items oversupplied per server. That means a lot less downward pressure on prices in each economy.

    There’s a lot of design space for limitations, depending on whether you want to favor gameplay (skill points are pretty directly correlated with playtime) or favor less hardcore players (once-per-day crafting, Mystic Coins, and a few other mechanics can favor players who only log on for an hour or so a day).

    Agreed. As I said, my goal was to disrupt things as little as possible. When I ran Meridian 59 I tore out, re-design, and re-implemented a lot of systems to improve them. But, I know how much effort that was in just a small game; a huge game with a ton of players like GW2 would be even more complex. And, the last thing you really want to do is to go with something new and completely untested that just makes things worse when you’re trying to fix them….

    Anyway, great discussion everyone. :) Thanks!

    Comment by Psychochild — 11 December, 2012 @ 12:36 AM

  12. I personally initially felt that the GW2 economy was working just fine, however, possibly I was just looking at it from the point of view of a trader.

    The problem, I suppose, is that the best way to make money was trading; flipping items using buy and sell orders is by a huge margin the best way to make gold in GW2. In other games, flipping items had to compete with speculating, farming, crafting, dailies (wow), mission running (eve), gathering, trading on daily or weekly patterns and a number of other ways of making money.
    GW2, however, seemed to be all about flipping items; looking at gold seller and gem prices, flipping items seemed to make more than my day job. It out shadowed everything else, and I seem to have mostly stopped playing.

    Comment by Ben Sanders — 12 December, 2012 @ 3:43 PM

  13. I think crafting should be aimed at people who particularly like crafting rather than at everyone. Part of the problem is games trying to make everyone craft in this case by giving enough exp to tempt people who don’t like crafting to do it for the exp. I like the idea of crafting giving exp to a crafter class however.

    Mobs drop some of everything: coin, gear, exp etc and there’s no reason they have to. It might be easier to control if they didn’t.

    Crafting could be made to involve subcombines but you don’t get the skillups till the end combine where you get all the skillups at once e.g. a sword involves
    - bare hilt
    - bare hilt to finished hilt
    - blade
    - blade to tempered blade
    - finished hilt and tempered blade to sword
    so 5 combines in all but you only get 5 skillups (or in EQ terms 5 chances at a skillup) at the final combine.

    Make donating looted gear useful
    - donate to faction for faction points which are used to buy better gear
    - donate to temple for buffs
    - have the best items able to be levelled as your character levels but requiring some kind of gem or rune obtainable from named mobs or by donating lots of standard looted gear

    (i particularly like the idea of a warrior faction giving you some padded cloth chest armor at level one which can be levelled and at level 6 it turns into padded leather, at 12 to studded leather, at 18 to chain, at 24 to platemail, at 30 to full plate. the levelable gear would be the coolest looking until endgame replacements.)

    sub-divide the best gear slots by class so for example a warrior class might be
    - best chest, weapon, shield slots from faction quests (levelable)
    - best helm, legs, arms from named mobs
    - best belt, cloak, boots from crafters
    the reason simply being to put your economy eggs in different baskets so you can tweak them separately

    Given GW2 is already live i guess the gear sink is the only simple way – maybe even making the donation points dynamic so the points for an item go up if there’s a glut of that item and go down if an item is rare.

    Comment by bubble — 14 December, 2012 @ 2:13 AM

  14. This week in Guild Wars 2

    [...] Psychochild’s Blog — How to design a game economy[...]

    Pingback by GuildMag — 14 December, 2012 @ 8:15 AM

  15. Great post. Guildwar 2′s failed economy is part of why I didn’t stick around there – I love being able to be a crafter and merchant and make money. When I was playing, crafting was a gold sink and the trading post was a clusterfudge. Here are my impressions on what went wrong there:

    - Worldwide Trading Post: by not limiting this to smaller markets of individual servers, it becomes very hard for individuals or groups of people to change the market prices. This may seem good, but what it means is that the greater common denominator of clueless sellers wins out, as you can see in the Trading Post, to the point where they had to implement a feature so you couldn’t sell items below their freaking vendor price! Attempting to tweak market prices is simply not possible on a scale this large without the coordination of a LOT of players with a LOT of gold.

    - Anywhere access to the Trading Post: This is a huge problem. While it seems great to a questing player to be able to toss up junk on the TP without having to go there in person, what it means is that people are using the TP as a mobile vendor to sell whatever is in their inventory. There is no thought or strategy to the postings, and people don’t care if the items are sold far below market value; they just want them out of their inventory. Items then bypass a basic auction house price floor – without the mobile trading post, people would have to decide if it is worth selling an item to a vendor or on the trading post. Convenience overrules this type of decision. ANet’s later addition of a “minimum price” on the TP didn’t really fix this. It just bumped the price floor up.

    - Deceptive/Unwieldly UI: The trading post has a high chunk of hidden costs built into it, which seem designed to actually discourage people from using it to build up a healthy server economy. In addition to the cost you are told about, there is also another chunk of money taken out if you sell the item (I think it’s 15%; it’s been a while since I read ANet forums). These fees also scale really badly, especially at the low end of price ranges. The lack of expiry time on auctions and the hidden additional costs for using the TP combine with an awkward UI to make it a headache to really use beyond casually. It’s hard to make money by buying out and relisting (and thus bumping prices up) due to the heavy listing costs. Sure, you lose money by doing this normally – but when the listing fee costs nearly half as much as the item, it’s not worth it.

    There might be further problems with the ease of gathering and drop rates for items, however I think limiting TP access would actually go a decent ways towards addressing that. When players actually have to make decisions about inventory, gathering becomes a more specialized job. As is, everyone can just gather as they go and post raw mats up when their inventory gets full. If that was disallowed, many players would drop out of the gathering market, deeming the time:profit not worth it. Supply would go down and prices would naturally rise.

    In short, I get the feeling that the whole thing was designed by someone who hates auction house players and wanted to make a system to “prevent” them from playing the market. It’s expensive to use the market as a merchant, the market is far too easy to use to just unthinkingly slap up item and the lack of an expiry date mean that the low priced auctions just keep building up – and it’s not worth it financially to buy them out, since you can’t hope to control a global market. The problem is…we need auction house players. These players keep the economy vibrant and help ensure items retain value.

    Comment by jjloraine — 14 December, 2012 @ 10:32 AM

  16. GW’s failed Auction House

    [...] just read a great post over at game developer Psychochild’s blog. In it, he addresses various issues plaguing Guild [...]

    Pingback by The Casual Everythinger — 14 December, 2012 @ 10:53 AM

  17. What if you have local area trading posts that are connected by caravans. Allow the caravans to be attackable so there is always a risk involved and it allows some players to try and become highwaymen. Sure you can just travel to the area where people are selling what you want but I think this is fine.

    I also like the idea of removing people selling junk they are just leveling up with somehow. Perhaps if creating recipes slightly above your skills and failing taught skills and taught better then making something you have no chance of failing at. Adding some level of customization to crafting will provide another lever to compete with besides price. Person A may sell stock swords for 50c but person B sells swords that deal slightly more damage in exchange for being more difficult to block with or some such.

    Comment by Anthony Thomas — 16 December, 2012 @ 10:26 AM

  18. True to Design: What I’m Reading

    [...] How to design a game economy: http://psychochild.org/?p=1179 [...]

    Pingback by Managing the Game — 17 December, 2012 @ 8:23 AM

  19. Nice article.

    I think there are several ways to create a good economy in a MMO, the most disturbing thing for me is that mostly crafting is totally useless, some professions might be worth while mostly the weapon / armor smith professions are totally useless. The reason in most games is simply that the best items always drop from mobs in instances or raids.
    Some games like WoW ensure that these professions are still important since they give you special bonuses like +500 Endurance when maxed.
    If you have an economy in which all items are player created you won’t have this problem, ofcourse this might lead to other problems that if NPCs only drop resources the exitement spikes might be reduced a bit also an inflation would still effect the hole game.
    Important is a constant supply and demand, this can be achieved if items cannot be repaired. They have a durability and if it drops to zero your item is being destroyed and you need to buy a new one. In this case you will always have a huge demand an all kind of items.
    If you know go on and say you can create the sword with +1 which requires only several resources but in order to create the sword +2 you need to have the sword+1 plus additional resources you would also have a huge constant demand low level items even if everyone is already on max level.
    Now the only problem which is left is an Gold inflation this is the most difficult problem to solve ofcourse by implementing a gold cap you could reduce the risk but it would be a nice way. But by saying the auction fee depends on the price you want of your item you can handle this quite well the more gold you want for your item the higher the auction fee.
    If the fee is being calculated by using the right formula players might not want to insert their items for a huge amount of money meaning newbies with just a few gold can still afford to buy these items.

    Comment by Christian — 19 December, 2012 @ 8:26 AM

  20. [Links] Links for the new year

    [...] writes a really good piece on designing in-game economies. He also has some analysis and ideas on how to fix the GW2 economy, particularly focussed on whether [...]

    Pingback by Spinksville! — 2 January, 2013 @ 11:33 AM

  21. Re: Crafting and Item Removal

    UO had a thing later in life where you were given “bulk orders” to complete, where you would create . . . say, 25 Wooden Chairs, then bundle them and hand them in for a reward. Sometimes these were rewards useful to crafters (a special tool giving +5 to your Blacksmith score, wearing out after 100 uses). It was a novel idea and sunk items being crafted in excess. Of course, you also had players having to purchase furnishings from other players to fill their houses so . . . yeah, UO was a weirdly designed economy. (I also loved it.)

    And on EverQuest your crafted goods often would be dumped onto the nearest vendor, so the pressure was often to find recipes where the components were simple to get . . . the skill gain potential was high, and the vendor profit was enough to sustain you. This was often more of a problem higher up since materials had to be farmed off creatures and . . . yeah, that got to be a huge mess of losses. Especially if you were doing Jewelcrafting.

    I don’t think there’s anything which could be put into Guild Wars 2 which could do this . . . EXCEPT it already was added. The Captain Commendation procedure is simply the best way for crafters to dispose of their goods and then trade for exceedingly useful gathering tools (which last 2.5x as long as normal ones).

    Honestly, I have always run to the crafting in any game I’ve played to check it out. In very few games is it a worthwhile endeavor, yielding items which are always either behind the power curve or too expensive to be worth handling. EverQuest had the first half of the issue, Guild Wars 2 runs the middle (the ability to ensure you get the stat distributions you want make it useful for yourself, but not so much for others), and Ultima Online . . . once more, was way outside it (vanilla crafted armor and weapons were of dubious usefulness at the highest levels of play and the cost was *almost* negligible to create).

    Re: In-game economies

    Inside Guild Wars 2? The fun thing here is that items are entering the market while gold is often leaving it. The largest demand would be for particular high-level “Rare” crafting materials used in the climb for Legendary Equipment. (Lodestones, Ectoplasm, et cetera…) The vast quantities required, however, mean that there is a limitation on how many are actually leaving the market – if it requires 250 of Ancient Blade Shards to craft Ye Olde Broadsworde, then those items are only going to be leaving in bundles of 250 while they may be entering the game at a rate exceeding this. And then there are the people who will be stockpiling them, watching the market to other players for the opportune time to sell them off at the greatest profit.

    It’s really interesting, because there are very few games where items . . . once created . . . will leave the game. It used to happen more often, until developers thought that items wearing out was an idea which didn’t mesh well with MMOs. Honestly, I think it’s one of the places where it can make more sense; single-player games where things can break forever are a lot more problematic.

    And as noted, it doesn’t even need to be gold. Take gold out of the equation and it becomes a barter system. Meridian 59′s example is one but there was another . . . Diablo 2 and the unique ring “Stone of Jordan”. See, these were unique items which required both a high level of play AND a specific combination of criteria to get to drop, but they were used as currency instead of the in-game gold. Right up until they were broadly duped, then they got turned into a different sort of use – opening a challenging boss fight for people who wanted it. Details can be found elsewhere on the net, but it just illustrates the point:

    “An economy may evolve past the intended measure of value the developers included, to encompass another method of barter.”

    And another point worth adding in to be examined:

    “If your game allows you to trade items between two players in any shape or form, there will be an economy springing up.”

    Comment by Kereminde — 4 January, 2013 @ 10:22 AM

  22. On the “increasing demand” side, how about requiring swaths of low-level items for high-level crafting? This is done in japanese Gacha games by fusion mechanics — “fuse a gem of tier X with another copy of tier X to get that gem tier X+1″.

    Breaking items down into alchemical components is a similar (if slightly less powerful but more accessible) version of this (“Disenchant”, etc). Would those work by themselves? It would then be a matter of increasing requirements to match the ratio of buying power between the low-level and high-level players… Going from a sword +4 to a +5 could require the equivalent materials to 128 swords +1. That means low-levels have a reason to craft them!

    (Not sure if this is already done in GW2 — haven’t played it — apologies if irrelevant. ;) )

    Comment by Shade — 14 January, 2013 @ 2:14 AM

  23. No, Guild Wars 2 does something a little different . . . a little.

    See, every 50-75 levels of a crafting skill there’s a new tier of items. Such as:
    “Rawhide Leather” > “Thin Leather” > “Coarse Leather” > “Rugged Leather” > “Thick Leather” > “Hardened Leather” for leather pieces. Other materials scale up through six tiers as well (except for some specific rare pieces, used also for specific weapons/armor).

    It’s possible to transmute basic Tier N to Tier N+1 by combining like this:
    “250 Tier N” + “1 Tier N+1″ + “5 Tier N+1 Dust” + “Philosopher’s Stone” = “Random amount of Tier N+1″. You need the Dust from drops (MOST times this isn’t hard, and you CAN upgrade the dust via similar methods . . . not the same recipe but different methods) and the Philosopher Stones can be purchased by trading in excess Skill Points.

    (You get Skill Points for every level worth of XP you accumulate after you hit 80, but you will also have excess if you level to 80 and complete all the open ones on the game world map.)

    So, it’s possible to “transmute” materials . . . but it’s potentially more expensive than selling off the lower tier and turning the money around to purchase from players. Which is why so few people do the “transmutation”.

    Also, the recipes require a consistent amount of materials of each tier for each item. Every sword at any tier is going to require the same objective amount of metal for that tier, but the metal is harder to get your hands on. The “Fine Materials” are usually where the bottleneck shows up – you need 3/8/15 of the material for each item you do. When leveling up, you’re roughly doing 75% of the tier’s recipes once . . . making one of each weapon/bonus combination works better than just mass-production.

    The problem Psychochild has alluded to is that there really is a limited *use* for these products. Other players don’t seem to pay enough on the trading post to make them profitable, and by default NPCs’ payment will not cover the costs if you have to purchase materials off the trading posts. The best use for them currently was to make use of the “Donations for Lion’s Arch” to turn those unwanted equipment pieces into gathering tools or such.

    (Reference: The hub of the game’s world when talking about where the five races mingle together is the city of Lion’s Arch . . . and in the two events of “The Mad King’s Shadow” and “Lost Shores” it had actual damage done to two of the landmarks. A recipe was set up to convert 3 items of the same type + “Donation Wrapping” into tokens to show you donated . . . which you could then redeem for extra-use gathering tools, salvage kits, or weapons of a certain skin. In short “input excess stuff you don’t want, we’ll get you what you tend to use the most of”.)

    Comment by Kereminde — 16 January, 2013 @ 2:51 PM

  24. Yeah, as Kereminde says, there’s a way to upgrade the materials, but it’s a bit random. GW2 likes the randomness/gambling aspect a bit too much for my tastes.

    Comment by Psychochild — 17 January, 2013 @ 10:46 PM

  25. Looks like my post was translated into Chinese: http://gamerboom.com/archives/70363

    Pingback by GamerBoom.com — 23 April, 2013 @ 6:04 PM

  26. 2013 in review

    [...]The unfun economy also hammers home the point that I just fall further behind the inflationary curve in GW2 the more I don’t play, which reduces my interest to play even more.[...]

    Pingback by Psychochild's Blog — 31 December, 2013 @ 3:58 PM

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