The disadvantages of a player-based economy

Most MMORPG allow players to trade items and virtual currency in game. From this a in-game economy evolves, which in the case of big games like Everquest even has led to serious scientific studies on online game economies. While in the early games the economy was often developing in some unintended way, modern game design carefully considers the effect of design decisions on the game economy.

One possibility of an unintentional development is inflation. Inflation happens when more money than items flow into the game economy, looted from monsters, or by NPCs giving out too much money as quest rewards or by buying items. UO was suffering from that, with people paying lots of gold pieces for items that were only decorative. But most games suffer from the opposite effect, called mudflation, which is actually deflation in economic-speak. This is usually the result of virtual items not suffering wear and tear. Game designers quickly realized that players hate any system that makes their items degrade over time, as players grow very attached to their virtual belongings. So the item stays in the game economy forever, and every day the number of items in the economy grows, leading to a constant decline in the market value of the item. Fighting both inflation and deflation has serious consequences on game design.

Lets consider a fictional example in a fictional MMORPG. We will call the item the "Sword of Uberness", SoU. The designers decided that the SoU is dropped by a hard to kill dragon at the end of a difficult quest, because the Sword of Uberness is supposed to be "special", and not everybody should have one. So early in the game, people desire the SoU, and are motivated to go on the difficult quest to kill the dragon to get the sword. After some time, one of the few players owning a SoU gets an even better sword somewhere else, and decides to sell the SoU he doesn't need any more to another player. As supply is low and demand is high, the SoU is sold for a high price. Suddenly a lightbulb flashes in the brain of the player selling the sword. He made good money by selling his SoU, he knows how to do the difficult quest, and the dragon that was previously hard to kill is a lot easier to kill now, as the player has gained some more levels and is now using his better sword. The player kills the dragon a couple more times and sells every SoU he finds that way. Soon other players notice that this is easy money (provided you are of a high enough level), and start doing the same. Lots of Swords of Uberness are taken from the dragon. Supply rises. And as more and more people either get a SoU for themselves or buy one from another player, and the swords never break, demand is falling. Market value of the SoU is falling rapidly. And soon even low level players can buy a SoU for a couple of gold pieces.

And not only the price of SoU's is falling. Because the game also has a tradeskill system, in which a player can learn to become a weaponsmith. The weaponsmith can transform iron bought from a NPC or acquired by a certain amount of time spent mining into an iron sword. Of course the iron sword deals a lot less damage than the Sword of Uberness. At the start of the game, many people used it, because it was the only sword they could afford. But after the price crash on the SoU market, more and more people can afford a SoU instead of an iron sword. At one point the price of the SoU falls to a level where it is cheaper than the raw material cost of the iron sword. There is now no more demand for iron swords at all, and the weaponsmiths are unemployed.

The sad thing in this fictional example is that it really happened for a lot of items in Everquest. Some items dropped so frequently, that they totally replaced any player crafted items. And many players ran around with equipment that dropped from monsters of a level much higher than theirs. In consequence, game designers of later Everquest expansions and game designers of other games made a range of different decisions to combat this mudflation:

The most obvious decision is to somehow lower the influx of Swords of Uberness into the game economy. A reasonably good solution is to make the quest for SoU non-repeatable. Every player can accept the quest only once, and only one SoU per player can enter the game economy. While this solution is quite well accepted by the players, it still isn't much of a limit. Not every player wants a SoU. There might be character classes that can't even wield a sword. Or the player is using another weapon type, or another sword that is even better. If there are as many SoU around as there are players, the value of a SoU is still rather low. So many games put in another limit, limiting how many swords can enter the game economy per day. The dragon dropping the SoU only spawns once every 8 hours, so only 3 SoU enter the game economy per day. Now that solution obviously just slows down the mudflation process, without eliminating it. And if you limit the supply this way, you soon get players fighting over whose turn it is to kill the dragon, another typical Everquest phenomenon. This leads to "camping", people sitting for hours at the spot where the dragon is supposed to spawn, to reserve their claim on the SoU. Killing the dragon to get a good sword turns from a fun adventure into a money making chore. Players hate the process, but still do it to advance their character. The problem gets even worse when another typical solution is added: The dragon doesn't drop the SoU every time, but only 1 times out of 10 or so. Of course that props up the value of the SoU, but it does that by making the process of getting the sword as unattractive as possible. FFXI also uses the time limit and rare drop method, with so-called NM (notorious monsters) spawning rarely and then rarely dropping a good item. These are heavily camped and lead to all sorts of fights on the message boards.

Another approach to mudflation is to limit the demand for Swords of Uberness, by further limiting who can wield one. While in Everquest a level 1 Warrior was able to wield the weapon dropped by a level 60 monster, in later games armor and weapons are usually level restricted, or restricted to a skill which only comes with level. This lowers the demand for Swords of Uberness to people of a certain level. Less initial demand makes the quest for the SoU less of a money maker, and so less people go camping for it. This method also eliminates the competition between the Sword of Uberness and the low-level iron sword, but inside of the same level category the competition between crafted items and looted items still remain. That makes it difficult to have a well-working tradeskill system and good loot at the same time.

Now for some reason modern game developers have decided that a MMORPG economy should mainly be player based, presumably to encourage player interaction. Computer controlled NPCs, which fix the prices in all single-player RPG, and in many older MMORPG, have now been programmed to sell only at very high prices and buy at very low prices, with the spread made even higher than in single-player games, as to encourage players to trade among each others instead. And while in early EQ people still stood in the tunnel in the East Commons zone and shouted what goods they wanted to buy or sell, later EQ introduced a bazaar, and most modern games have some sort of place where people can put up items for sale to other players.

Of course the more you boost a player-run economy, the worse your problems with the Swords of Uberness get. If the main way to get new equipment is to buy it from other players, earning money becomes ever more important. And selling to other players becomes the major form of earning money. FFXI is very much a victim of that. Money is in short supply, and everybody needs it to buy equipment. Equipment rarely drops as loot, but ingredients for tradeskill recipes do. So people start "farming" low level monsters that are easy to kill in large numbers, just to sell their loot and buy useful equipment with the money. As the pinnacle of sillyness FFXI even allows you to buy many quest items from other players. You accept a quest to kill tigers and bring back their fangs as proof, go to the player market and buy the fangs, and then hand them in for the quest reward. Not very heroic, and not much fun. This is far, far away from the "Diablo" principle of the player mainly using the equipment he found as loot.

Why doesn't equipment drop as loot from monsters? Because even in Diablo you used only a fraction of the loot you found, and sold the rest to an NPC. There are different sorts of weapons, and of armor, and the game has no way of knowing whether you are looking for an axe, a sword, or a mace; whether you want gloves, boots, or body armor. So in Diablo you simply get one of each, pick what you need, and sell the rest for very little money back to the computer. As soon as you have a player-based economy, all that excess would be sold to other players, and cause mudflation.

Unfortunately this leads to loot in modern MMORPGs being not much fun. You nearly never find an item you can actually use. Instead you either camp some rare items to sell them, or farm low level monsters to sell their loot. And all this just because loot endangers the concept of a player-based economy.

I wonder if it wouldn't be a better idea to cut back on the player-based economy idea, and put the loot back into MMORPG. One simple trick would be to make loot equipment untradeable. Untradeable items are already used in MMORPG, usually for quest items. Excess looted equipment could either be sold for very little money to NPCs, or be deconstructed to provide raw materials for crafters. In parallel there would be crafters and tradeskills, producing tradeable items. There would be an indirect competition, people chosing either to use looted or crafted items, but there would be no direct competition. You might be able to craft or buy a sword with similar stats to the SoU, but if you wanted to wield the real Sword of Uberness, you will have to go out and kill that dragon yourself. And as there is no danger of you flooding the market with it, there is no need for the developers to force you to camp said dragon, it could be available all the time. I really like tradeskills and the ability to craft items, but I think good loot is a lot more attractive to the majority of players, and the existence of a crafted item economy shouldn't lead to us having to suffer bad loot. It would be nice to have a game with no farming, and no camping. A game where magical swords are special, because you had to adventure for them. Most players would rather play a hero than a merchant.
- posted by Tobold @ 2:59 PM Permanent Link