Games

Tech Bubbles in World of Warcraft

When virtual economies collide with real world values, funny things happen.

As numerous facebook games and MMO’s begin to introduce microtransactions, a system where you buy items in-game with real world money, the remarkable strength of economies based on things that are not real deserves a closer look. Since all the goods in an MMO are non-essentials, you are pandering to a person’s need to feel successful at something. An article by Kris Graft at Gamasutra on the psychology of collecting in-game items explains, “Achievements are unique and difficult enough that most players will choose a small handful and distinguish themselves that way. This is the same sort of process that happens in deciding who want to be as we grow.” The article acknowledges that working with friends, enjoying the game, etc. are also factors but the thing that makes someone absolutely need to have that rare piece of armor, to earn that one achievement, is the desire to stand out. This is a resource that you have to manage extremely carefully. Anthony Burch jokes in a Rev Rant on collectibles that the emotional satisfaction of collecting items in a game like Shadow Complex or Super Metroid is like eating a package of Oreos. The first one is delicious, the second still good, third wears down, until after about a dozen you start to feel sick. It’s the same reason a more expensive chocolate or candy bar comes in a smaller quantity, you risk the person disliking the product when they overindulge.

From http://www.blogcdn.com

Maintaining this resource of psychological satisfaction is extremely difficult because there is no finite quantity in an MMO. An article by Kim-Mai Cutler explains that in MMO games the rules of the system are very simplified. There are only ‘sources’ and ‘sinks’, things like taxes do not exist to free up or restrict resources. You have absolute information about all transactions and absolute control over what is being purchased. All of this control does little to mitigate the fact that when you tinker with even a simplified system, you can cause what Tateru Nino calls an economic earthquake with numerous consequences. For example, in the game Ultima Online they imposed a restriction on the amount of iron players could harvest to forge weapons. People just mined all the ore, the player weapon economy stopped producing, prices rose, and everyone demanded they just create more iron.

Matthew Skala goes into detail about the point Cutler makes on MMO’s suffering from singular costs. A game like World of Warcraft is problematic because there is only one drain on a player’s resources: buying stuff. It’s just collect money (from an infinite supply), purchase goods (from an infinite market), and eventually burn out as they hit the max achievement state. Or as Burch put it above, they end up eating the whole bag of Oreos. One commenter makes a very good point though, the game does have a tax system in the form of repair, skills, and extremely expensive commodities. Advanced skills are purchased, not automatically received, but it’s called ‘training’ instead of a leveling tax. Mounts are extremely costly, but are also highly sought-after in the community. The time required and cost of these goods should not be underestimated; one user points out that they have friends who have been playing the game for three years that still can’t afford the most expensive skills. Protecting the time duration for consuming goods, the spacing between each Oreo, is thus tantamount to maintaining the player’s enjoyment of the MMO economy.

Blizzard’s legal team, who are some of toughest in the business, actively prosecute any botting or cheating programs that circumvent grinding. The company also does not allow anyone to sell in-game items for cash if they can catch them at it. An article at T=machine cites the trial notes from MDY v. Blizzard, “Blizzard’s design intent is for the resources to command a certain high value, so that average players, who might get one or two of the resources in an average amount of play time, may obtain a decent amount of gold from selling them. But because characters controlled by bots flood the market with those resources, the market value of these resources is far less than Blizzard intended, and the average player realizes only a fraction of the intended value from the resources s/he finds.” That value is founded both psychologically and by maintaining scarcity in-game to create perceived value.

So the basic issue for an MMO economy is always going to be that on a long enough timeline all players will have the best gear and maxed out skills. You’re trying to figure out a way to keep them running on the tread mill by finding ways to appeal to that need to stand out. If there are too many Death Knights with the same kick ass set of armor and weapons, it becomes common and players lose interest. The solution in WoW’s case is two-fold: expansion packs and patches. An expansion pack for a game like Diablo 2 or World of Warcraft introduces a new continent to explore, monsters to fight, new skills, and new loot. All of these things are more expensive and more powerful than the previous version of the game. The result is something similar to what Karen Blumenthal at the Wall Street Journal refers to as a tech bubble. A bubble forms when there is a rapid technological or social innovation, as opposed to one that is slowly developed and adjusted to society. The innovation and the bubble are not always intrinsically related, the radio and car became prevalent in the 1920’s over a very short period of time just before the Great Depression. One person starts making a lot of money really fast, others get on board with their own schemes, and the urge to get rich slowly erodes common sense. The article cites two examples of superficial product booms during the internet’s arrival: beanie babies and handbags in the early 2000’s. Their perceived value directly related to a sense of temporary scarcity. The bubble burst because teddy bears and purses aren’t exactly hard to make, it was only a matter of time before the market flooded. In an MMO the same thing is true: people who want the best gear are going to get it eventually. As more do, value depreciates, and new ways to stand out must be developed.

You can see this in the real world value for items on websites that sell World of Warcraft gear. The expansion pack is the tech boom, the loot’s value rockets up and then bottoms out as everyone gets a hold of it. Finding consistent figures on this is really hard because technically these goods shouldn’t even be sold for money, so take this with a grain of salt. At Bank of WoW the value of gold money is generally stable at about $ 6.45 per thousand. The gear, however, plummets in value. At a gear website the top tier armor and gear will run you $ 1086.99 followed by a smaller set at $ 786.99. All other items and gear are $ .01. The latest expansion pack has been out since November 13, 2008, so this value depreciation only took a year to create. Player engagement is maintained by a steady process of patching the game, which constantly changes the benefits of gear and skills so the most powerful one will become weak and different ones will increase in value. Exchange and achievement are always pursuable options as the peak achievement state is modified.

Ultimately, it’s still difficult to find a stable economic system in a game because you can never be sure when it’s easier for the player to just grind for the item in-game. It’s essentially a massive exercise in asking the player what they think an item is worth: hours of their time or actual money? All the games have to do is make sure there is always something to buy and that players can't do it all the time.

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