The economics of MMORPG's is fascinating stuff

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The economics of MMORPG's is fascinating stuff
By Andrew Pollack
on 01/11/2006 at 10:39 AM EST
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The economics of MMORPG's is fascinating stuff (Andrew's Bl...
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A friend forwarded a link to an article written on the impact of "Farming" in the "World of Warcraft"
online game. "Farming" in this
case refers to companies set up in low-wage countries where players are hired to run characters which
generate in game wealth
which can be sold in the real world to players who want a leg-up for their in game characters. The ar
ticle does a decent job
explaining how farming actually happens but doesn't begin to accurately consider the impact on the in
-game economy, IMO. For
those who don't know, and MMORPG is a "Massively Multiplayer Online Role Playing Game". Think of it a
s "Dungeons and
Dragons" with potentially millions of people in your living room. The game designers try to create a
fully functional virtual world
which can operate on its own with little or now outside intervention.
Keep in mind as you read my commentary on this article are that I'm not a player, but have studied it
at least a little. I'm also
making some assumptions from the article in terms of the actual workings of this in-game economic env
ironment, and also
assuming that the people running the game are tinkering as little as possible. This last bit is a big
Some of you players out there can check me on this. Some of you economists can now laugh at my attemp
t to figure this out.
With reference to "Secrets of Massively Multiplayer Farming" --
First, I think Paul is missing a key economic issue here in regards inflation. As I read the article,
a great deal of the farming
happens in "Instances" -- which I understand to be repeatable areas in the game which are the same to
everyone and do not
change as a result of what happens in them in a previous use by a player or other players.
If this is true, an instance which is repeatedly farmed yields more items of value each time it is us
ed. Unless these instances are
"zero sum" in some way, meaning they have a "cost" to enter and the items found in them are accounted
for against this cost to
the system, the continued use of these instances by farmers would in fact increase the amount of gold
available in the system.
An economy works like this:
Each member of an economy - a worker - must buy things. To meet their needs, they spend money. Each m
ust also produce
things in order to earn enough money to meet these needs. We all know this. To "Succeed" in an econom
y, you have to earn
more than you need. Earning more than you need allows you to buy luxury items and spend time doing th
ings other than working
to earn more money. When you buy luxury items, you generate income for those who produce (or find, or
capture) those items.
In the case Paul describes, Farmers have a strange set of impacts. They do not buy luxury items, and
do not look for free time.
They spend 100% of the their time working to be most profitable while seeking maximum efficiency rath
er than style or joy when
outfitting or supplying their own needs. Basically, they skew the marketplace. The impacts of this sh
ould be very complex. Here's
what comes to mind:
Though you cannot, generally, compete with a farmer in direct terms of producing more raw goods which
have value in the same
time, you might be able to get more for specialized goods which are eschewed by farmers because you c
an hold an auction for a
longer period. This divides the goods in the economy into two classes. Those which are more easily fa
rmed become commodity
items, while those which are less routinely available become specialty goods. This mirrors the real w
orld, in fact. There are mass
produced goods and speciality or custom goods. Mass produced goods will suffer heavy downward pressur
e on price pretty
much all the time, while specialty goods will fluctuate much more with the overall economy. If player
s are earning "enough" to get
them past the simple needs which are satisfied by 'farmed' (commodity) goods, they'll have expendable
capitol for the luxury
items. If a majority are in that boat, luxury goods prices increase.
So far, all of this sounds like a fairly stable kind of dynamic economy even if it doesn't really mir
ror our own. If anything, it will tend
to be beneficial to players because their basic needs will become cheaper to satisfy, allowing them m
ore funds to customize and
be creative. Since customization and creativity are the motivational factors for players entering the
game, this is probably a good
Another impact of these side-economies which happen outside the game one, is that a player with non-g
ame funds can escalate
to a level of play they didn't personally earn. Is that bad? While I believe those players who earn e
very bit of recognition or level
or whatever may resent it, they'll probably find what really happens is the newbies tend to be easy m
arks. They're probably
playing over their heads. They'll tend to be less careful with purchases, which they'll make in large
shopping areas. They're the
yuppie suburbanites. They'll support the malls and fashion shows and so on. The die hard players then
, will be the ones who
know about the discount locations and the smart tactics that can only be gained from experience. They
'll beat the yuppies in
terms of getting the most for their trade goods, getting the best deals on their own supplies, and if
they go head to head will
probably have a significant tactical advantage from real experience.
While the yuppies put upward pressure on prices, the growth of farming tends to put downward pressure
on the same items. If
there were less yuppies, there could be less farmers. If there were less farmers, the increased non-g
ame costs for buying
in-game wealth would limit the number of yuppies.
It gets more and more complex the more you consider it.
Add a Comment
re: The economics of MMORPG's is fascinating stuff
By Luwow Goldman
on 03/21/2009 at 11:57 EDT
Not to sure what you are trying to say..I mean is it or is it not.
The economics of MMORPG's is fascinating stuff (Andrew's Bl...
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7/2/10 12:13 PM
Anyhow I know I am rambling but try to see it from someone reading it the first time without thinking
about it first.
<a href="" rel="dofollow">Luwow Goldman</
re: The economics of MMORPG's is fascinating stuff
By Chris
on 07/25/2009 at 11:29 EDT
The problem is the way that economics in game are implemented. We play against the game for money and
against each other for
Real people need to come into the equation when determining how wealthy you are relative to other pla
yers. I have posted my
solution to the problem in this presentation.
re: The economics of MMORPG's is fascinating stuff
By primebarsdaily
on 07/27/2009 at 16:04 EDT
I think this concept of virtual economies is fascinating. I'd agree completely that less farmers woul
d increase the non-game cost of
buying in-game wealth and minimize the nub population but it also brings down the value and GPD for t
he entire online economy. I'd
rather see how far we could go and how much we could learn from a virtual community and economy with
more wealth than those
that we inhabit in actuality.
re: The economics of MMORPG's is fascinating stuff
By Timpop
on 11/03/2009 at 01:06 EST
One thing you hadn't considered, is that the farmers (with mass amounts of in-game currency) and thos
e who earn in-game currency
through non-game bartering are able to drive the prices of specialty items well beyond what should be
considered affordable; making
it a lot harder for your average player to afford those items.
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