I have recently been asked by the great guys at GameRates.com to write a guest post for them. I decided to write about Ed Castronova and his team’s results with regard to the Arden project.
You can see my post here. Let me know what you think!
Our friends over at VirtuallyBlind have reported that Blizzard has won the ongoing lawsuit against MDY Industries, the makers of the most popular World of Warcraft bot: Glider. I’ll leave the legal commentary to Mr. Duranske, because what we’re interested in here are the long-term effects of the World of Warcraft economy. As I said in another thread, a round of banning on Blizzard’s part caused a dramatic rise in the real-money value of virtual WoW gold. Could a similar increase in prices be on the rise?
While no official statistics could be found, I’d be willing to bet that the majority of botters use Glider. After all, it’s the most widely used bot that has sold a few hundred thousand copies (according to information that came up in court). On the other hand, many of the gold farming operations in Asia do everything by hand with extremely cheap labor (see this preview of an interesting documentary). So, if Glider has been deemed to be infringing upon Blizzard’s copyright whenever it’s in use, does this give Blizzard a right to shut down the sale of Glider? If so, would this drive supply of gold down and shoot prices up? Or will the hard-working Chinese prevail and keep prices down for us lazy players?
Recently the folks at Linden Labs and IBM have teamed up to port the first avatar between virtual worlds. See more here.
This is an interesting development. To what extent will characters/avatars/data be transferable between worlds? Will your 70 Tauren Warrior be able to hop in a car and drive around a virtual town? Will he be able to walk to the end of Azeroth and into Second Life? Probably not. More likely, you’ll be able to communicate with players of other virtual games…. even people playing your game, but on a different server. In the future, anyone playing any sort of online game will be able to communicate with everyone else. This is a cool proposition.
An important thing to keep in mind is that content from other games may ruin the feeling that I’m immersed in a world. When I’m slaying beasts in Azeroth I don’t really want to see some guy from Second Life flying around. It’ll be interesting to see how companies make use of this cross-platform technology without hampering upon the immersion and culture of each individual game.
According to a recent report by GameRates.com, a large banning effort by Blizzard has caused the price of WoW gold to skyrocket. Allegedly the ban nabbed many gold sellers and gold “mules”, characters with enormous amounts of gold that companies used to distribute their illicit goods. Blizzard used to announce the fact that they’d closed numerous accounts for violations of the TOS (including botters, gold farmers and the like), but recently they’ve decided to keep the bans hush-hush. I don’t know if their goal is to keep the community guessing or what, but I’d think that the bust of a bunch of gold farmers (who are the bane of a WoW player’s experience) would be a big PR opportunity.
Nevertheless, it’ll be interesting to see the effects of this ban. Will gold sellers start farming again, or will they move on to other games such as Age of Conan? WoW is still the industry giant at around 11 million subscribers, but perhaps there is opportunity to be had selling gold for other games. After all, less competition means higher prices and higher profits.
Some of the games that are free-to-play but charge customers for essentially useless upgrades actually make more monthly revenue per user than the paid subscription models do. For instance, Maple Story makes an average of about $20 per user per month just on crap they purchase in-game from the company. See full story here: http://www.playnoevil.com/serendipity/index.php?/archives/2046-NOTED-Free-to-Play-Fun-Nexons-Maplestory-earns-20-Million-in-Virtual-Item-Sales-in-2007.html
The question is: why hasn’t Blizzard moved in this direction? They’re a for-profit company, so shouldn’t they do what makes the most sense financially?
Blizzard’s stance has always been against RMT. I think their reasoning is that it undermines the hard work many people have put into the game. Why should I grind this character when I can just buy one from a botting site? Similarly, if people could just buy items/gold from Blizzard directly, there would be no incentive to keep playing the game. They would get bored very easily. Again, there’s no reason for them to spend countless hours defeating bosses to earn an epic item when some kid next door can whip out his credit card and achieve the same status in-game. Many gamers might be inclined to cancel their subscriptions, leading to losses for Blizzard. Maybe this is their argument?
Overall though, I think Blizzard’s stance is more on “moral” grounds than financial ones. They’ve always been dedicated to creating awesome games that are fun to play. The passion is there. While of course profit is one of their main goals as a company, I don’t think it’s their only goal. I think the Maple Story article makes this obvious. If their main priority was to seek revenue, they would have already started to sell goods directly to players.
Thoughts?
There’s an interesting post over at Terra Nova about the historical accuracy of video games. It’s true that most of the video games out today that depict war or other historical sequences are quite far from the actual truth. In a comment on that post I said the following:
“I think one of the problems with games about war is that sometimes the more historically accurate a game is, the less “fun” it is to play. Gamers like killing Nazis or running Rambo-style through the jungle. They don’t want to go on a patrol for several hours without encountering an enemy or see one of the many innumerable atrocities of war. War is horrible. If a game company were to develop a game that would accurately portray what it was like to first uncover the concentration camps in Europe, would it sell? Would the vast majority of people play it?
There are some (relatively) historically accurate games that found a balance between fun and education. One of my favorites is the Age of Empires series. I learned a lot from playing that game, and it was extremely fun too. I think if more games capitalize on this sort of balance they’ll get the history buffs and the gamers too. Win-win for everyone.
There can be a game that accurately portrays history while minimizing the more mundane aspects of it. We must also remember that playing a game needs to be fun. If it’s exactly like the real world, why wouldn’t we go outside and engage the real thing?”
What do you think? Can you think of any other games that are very historically accurate while still remaining fun to play?
Different people have different opinions on the effects of botting on the economies of MMOs. Most people are familiar with World of Warcraft (probably due to its 11 million subscribers), so let’s take a look at that. Yesterday (May 20th) hundreds of thousands of accounts were closed by Blizzard due to a new detection update that caught both of the most popular botting utilities, Glider and Inner Space. One of the most interesting things to look at after an event of this magnitude (at least for econ nerds) is the effect on the economy (prices of goods at the auction house) and the real-money value of the in-game currency, gold. First though, we must cover some ground as to what actually happens in a virtual economy.
Botters usually accumulate valuable in-game items which will sell to other players. They trade the items to the other players in exchange for gold, the currency in the economy. They can trade the gold to yet another player in exchange for real-world currency. The problem comes about because there is an endless supply of virtual currency and valuable items in these virtual worlds. As botters hack and slash away at their digital foes all night long, the computer creates more for them to fight. Each of these creatures drops a supply of gold and occasionally a valuable item. In effect, there is a creation of money and value each time a mob is slain. In the real world, money is never created. When the treasury needs to print more money, it slowly injects it into the economy as it destroys the old bills. No extra money is created. When the Federal Reseve wants to stimulate the economy, it buys back Treasury Bonds from citizens and companies. Money is again not created - it just changes hands.
With the constant creation of value in virtual worlds, inflation is inevitable. There is an unlimited supply of valuable items and very few sinks. Sinks are a way for money to be destroyed in an economy. In World of Warcraft, some sinks include mounts and item repairs. These are very effective sinks because they scale as a player levels - a mount is unnecessary at level 1 when it would be way too expensive, but it becomes feasable to purchase as a player levels. Similarly, repairs scale with a character’s level. Virtual economies constantly deal with inflation - dubbed mudflation in virtual economics.
When botters constantly farm gold and items, they contribute to the inflation of the economy. Money is created at a much faster pace than would ordinarily be possible with humans playing the character. Because people have more money, they’re willing to spend more on goods and services. As a result, prices of all goods and services rise. This leads to a demand for more money, which leads to more botters. This again leads to more inflation. It’s a downward spiral that is difficult to stop.
However, botters in WoW also create another good - items. This is very interesting because while more money is being created, there are also many more items being created. The law of supply and demand tells us that a greater supply of items would lead to their average cost lowering. So, what’s the intersection of these two effects? Does the act of botting counter itself?
To be honest, I’m not sure. It’ll be interesting to monitor WoWEcon.com over the coming weeks to see if the price on commonly botted items (Primals mostly) changes. This may tell us what the equilibium price of these goods would be in a market that’s not affected by botters.
http://terranova.blogs.com/terra_nova/2008/05/arden-experimen.html#more
Kind of an interesting post on the results of Arden, an academic MMO. “At stake here is the entire idea of using virtual worlds as a Petri dish. If fantasy gamers behave in ways that violate our most basic assumptions of economic normalcy, then it makes no sense to use virtual worlds to study large-scale economic behavior. If, conversely, fantasy gamers seem to be normal economic agents, then perhaps some of the behavior in virtual worlds does indeed generalize to the real world. If so, then we can consider using virtual worlds to conduct controlled experiments at the macro scale of society, where our most pressing problems seem to live (natural resource management, intercultural mistrust, information security, disease).”
That’s why the study of virtual worlds is so interesting! It allows us to poke and prod at a society of people without causing them any harm. They take the world seriously and thus make normal economic, social, and political decisions.
Hello world! My name is Christopher Armstrong and I’m an undergraduate economics student at the University of Pittsburgh. I’d like to start using this blog to record my thoughts on virtual economics and virtual economies (I have the most experience with World of Warcraft). I am very interested in conducting research pertaining to virtual economies, so please let me know if you’d like me to help you out with your research. I welcome any and all commentators on these topics. I know there are a lot of people interested in this field, and I hope to bring us all together.