Friday, June 16, 2006

Price Stability in MMORPGs

The subject of how to keep game economies stable -- that is, to prevent both inflation and deflation -- keeps coming up over and over again. Price maintenance is about keeping the game's level of challenge balanced, especially for new and casual players. If prices rise too high, new and casual players can’t afford goods, making the game too hard. If prices fall too low, everyone can afford anything and the game gets too easy.

So, in a game where players can essentially create money and items, how can prices be kept stable?

The key to price stability is to hold the inputs equal to the outputs: the total amount of wealth entering the game should over time be roughly equal to the total amount of wealth exiting the game world. Some games have tried to do this with "closed" economies -- outputs are cycled back into the game as inputs. This approach has the advantage of insuring price stability, and resembles a simulation of a real-world economy, but it has the serious disadvantage of being very difficult to maintain.

Instead, most MMORPGs use an open economy model. Wealth enters the game world by simply being created out of nothing, and exits by simply being destroyed. In this "faucet/drain" economic model (originally developed for Ultima Online after the closed economic model proved too hard to manage), items are easy to create, but finding ways to remove money from the game economy becomes crucial. Compounding the difficulty is that some kinds of money drains are more palatable to players than other kinds. You can't just impose any kind of drain, because some kinds will make players so unhappy that they will quit the game.

So here are some ideas for MMORPG money drains. To reflect the point that not all ideas are equal, they're listed in rough order of popularity with players, from most acceptable to least acceptable. (It's important to realize that this is intended to be a descriptive list, not prescriptive. This is just an attempt to develop a reasonably comprehensive list of possibilities; I'm not saying that every game should offer all these drains.)

  • recognition for having the most money: (hoarding removes currency from the game economy) (Note: This isn't a true drain since money is not "physically" removed from the economy. But it's still a drain in that it does prevent money from having any practical effect on the game economy.)
  • purchase of system-created items: (Note: This isn't a perfect drain because players receive items for their currency.)
    • tradable commodity items:
      • "required" items (e.g., class-based basic gear not crafted/craftable by players)
      • consumables
    • unfarmable/untradeable luxury items:
      • house decorations
      • special clothing
    • one-to-a-customer benefits (such as a sign for a shop)
  • purchase of system-created non-items as status markers (titles, memberships, temporary appearance changes, etc.)
  • system-run games of chance (gambling):
    • lottery (someone will win big, but more will lose)
    • "house" games
    • NPC gamblers
  • fees:
    • public services:
      • transportation
      • skill training by NPCs
      • protection (city guards)
      • space for a player-operated public vendor
      • rental of public housing
    • maintenance:
      • structures -- usage/upkeep cost
      • objects -- damage repair cost (decay)
  • taxes:
    • on stored money
    • on each intermediated transaction ("auction house," Bazaar, etc.)
  • removal within the gameworld context (stolen by NPC thief, natural disaster, etc.)
  • outright removal by the developers
Note that this list refers only to money drains, to ways to remove currency from a game economy. But currency isn't the only form of wealth in an economy -- wealth also enters a game world in the form of items such as loot drops and crafted goods.

If your interest is to maintain price stability (that is, to avoid both inflation and deflation), then there can't just be currency drains. You’ll almost certainly also want item drains. This gives you another tool for keeping the total amount of wealth (money + items) entering the game world roughly equal over time to the amount of wealth leaving the game world.

Here are some possible item drains, again in rough order of popularity with players, from most acceptable to least acceptable:

  • selling items to NPC vendors (Note: this isn't a perfect drain because players receive currency for their items.)
  • recycling (e.g., junk dealer who takes multiple items and returns one item or some nominal amount of money)
  • consumables:
    • ammunition (bullets, arrows, etc.)
    • components (spell reagents, crafting subassemblies, etc.)
  • deliberate destruction by players
  • maintenance destruction (item is destroyed when condition falls to 0% through either usage or damage)
  • failure destruction (item is destroyed through some critical failure, as in combat or crafting)
  • destruction within the gameworld context (theft, story-based disaster, etc.)
  • outright destruction by the developers

One particularly good discussion of the factors involved in MMORPG economies is Zachary Simpson's analysis of the Ultima Online economy, "The In-game Economics of Ultima Online." Despite being written in 1999, a surprising number of the observations made by Simpson are still relevant to today's MMORPGs.

I strongly encourage anyone who's interested in this kind of stuff to review Simpson's essay. (Note: This is a Word document.)

In considering what might be effective money and item drains, it's useful to bear in mind what ideas actually don't constitute drains. (Not being a drain doesn't make something a bad idea; it just means it won't help to take stuff out of the game economy.)

For example, there's my Player Contracts idea (condensed version here). (I find it interesting to note that Simpson also proposes this idea as "enforceable contracts." One important difference is that he assumes that a third player would be required to enforce a contract, where I believe the game itself can and should fill that role.)

I think a player contract feature would be a valuable addition to any MMORPG that wants a meaningful player economy. For one thing, it would create a new reason for players to want to interact socially -- a Good Thing in a "massively multiplayer" game. But in a purely economic sense, a player contract feature would also help to level out the Pareto effect that concentrates the majority of wealth in a few hands. Instead of a few players hoarding cash, they'd be able to spread it around more by hiring other players to do things for them.

What's important to realize about this is that while it would be socially and economically useful, it would have absolutely zero effect on inflation/deflation because it would not alter the total amount of wealth within the entire economy. Letting players trade with each other wouldn't actually constitute any kind of drain -- rather than removing currency, it would simply shift currency from one player to another.

The same can be said about other proposals for ways to allow players to trade with each other. Player-to-player trades don't actually remove anything from the game world, so they can't be considered true drains. Only player-to-system interactions can be true drains.

Side note: There's an important difference between tangible wealth in MMORPGs and in the real world. In most MMORPGs, players generally aren't permitted to own or create two very important kinds of real-world property: land (real property, AKA "real estate") and ideas (intellectual property). (Side side note: property that is not real property is actually recognized legally: it's called "personal property," or "moveable property," or even "chattel property," and it's treated differently than real property in several ways under most modern legal systems.)

Concerning land, although players in some games can occupy land with a house or other object, few games allow player characters to actually "own" that land. (Second Life appears to be an exception to this, but SL is much more a social world than a game world.)

As for intellectual property, few game worlds allow players to create truly new kinds of objects or processes within the game world, either. The most you can do (if you're lucky and the game even has a decent crafting system) is make instances of predefined item types. So it's not possible to create original IP that either a character or player could own. (SL is again exceptional in legally acknowledging a right of players to own the scripts they can write to create new objects in SL. But again, SL isn't a game world.)

My question: What would a game economy look like that did allow ownership of real (virtual) property, creation of intellectual property, and the trading of both?

For example, suppose some MMORPG decided to allow characters to own land in the game world... would this require the game to have "eminent domain" rules? How would they be enforced? And what if players themselves could constitute the governments that applied eminent domain to some player character's land? Could this work, or would it only bog down in appeals to the developer?

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