Lloyd Pickering's Blog

In my last post I spoke about looking into setting up a virtual economy and how the large players have people running these economies full time. In this post I would like to look at how to setup virtual economies are generally setup.

Back when I used to play Star Wars Galaxies I was fascinated by how MMO economies worked. At the time, being a player, I never really considered what went on behind the scenes, I always looked at the public, front end side and how to get the most out of things in order to maximise my in game profit. Then I saw a post by game designer Raph Koster on how the SWG economy was monitored on the back end which blew my mind. A copy of the original article is available here.

Not long after this a game called Eve online was released and I noted with interest that they hired a full time economist to manage and report on their in-game economy. This wasn’t the only incidence of economists looking at how MMO economies worked – Edward Castranova has been looking at virtual economies from an academic point of view since 2001 when he suggested that Everquest had a GNP around equivalent of Russia or Bulgaria and the currency had more value than the Yen or Lira.

Virtual Economies are often setup as a ‘faucet drain’ system so a certain amount of cash flows into the economy, and there are various sinks which remove the cash from the economy. The balance between these two determines the inflation of the economy. It is therefore critical that the game developers are tracking the inflow and outflow of money or else the economy will either a) run dry, or b) (more likely) inflate too fast. If this happens items become too expensive for new players to purchase from other players and the game essentially dies as new players drop out from being unable to participate effectively in the economy.

As if that wasn’t complex enough for a new, small company to manage, social games also complicate things because they offer some goods for in game cash, and some goods for real world cash. They essentially have two separate but overlapping economies to manage and balance. This balance is critically important in converting free to paid users. If the game is too easy without purchasing using real money, then no one would convert to paying customers, conversely if the game is too hard without using real money then players will drop out of the game because they feel like they are forced to buy goods with real cash to progress.

Oh yeah…and this is all on top of usual game design theory.