Virtual economies and the shenanigans that go along with them have been on my radar recently. Not for any real reason – it’s just how the world goes. I find them interesting. They’re a nice blend of really old school psychology and economics, recent tech, and Internet sociology. What’s more, you can interact with them on a scale you can understand, unlike “real-world” economies.

My first example is the infamous BitCoin. It’s an attempt at a virtual, decentralised crypto-currency. I dunno if it’ll make it into the big leagues, but it’s doing okay so far (assuming you weren’t on mtgox). Anyway, I had a one-week interest in them a while ago. I learned the tech, created some coins and then forgot all about it. Just last night I was listening to a podcast that mentioned them, and for fun I looked up how much I could trade them for. Last time I had checked they were worth about $5, which would be gobbled up by any transaction fees. To my surprise, someone offered to automatically buy my handful of coins for a few hundred dollars. A few hundred real US dollars. They had a value of zeroty-zero dollars to me, so that was seen as an infinite improvement. So despite the whole idea being derided by some as a valueless system and its recent hacking woes, to me they had a surprising amount of value. Of course I’m getting the hell out of the market because it’s probably in a bubble phase, but it’s exciting to find real-enough money dropped down the back of my virtual couch.

My favourite game of all-time – Team Fortress 2 – recently went free-to-play. This is about a year after they introduced the Mannconomy (a way to use real money to buy vanity and usable items in TF2). The development of TF2 is quite unlike your other triple A games. When a new Call of Duty comes out, they’ll produce a bit of DLC to maintain interest. Support for the latest Call of Duty basically drops when the next in the franchise is released. Their model is to sell the game at a high price point (in Australia, about $90) and sell DLC for maybe $10 a pop.

TF2 took on an entirely different model. For most of its life you could buy it for $20, but the price dropped to $2 for special events. They released 218 updates over four years which included bug fixes, gameplay tweaks, new maps, new game modes and a lot of new items. All for free. With the Mannconomy update you could buy items if you didn’t want to work (or wait) for them. This model of building a community and a gameplay platform is quite unlike anything else out there. It’s been remarkably profitable for Valve and the community modders who gave items to the game. So profitable that they don’t want to sell the original game any more. Valve are really innovating and experimenting in this space. They claim they’re using this model for future games, and have integrated something similar into Portal 2. For many reasons I love that this model works. Subscription-based gaming doesn’t excite me. Free-to-play games with non-intrusive paid options do. And they’ve priced things reasonably (unlike some other companies).

Which leads me into Cityville. I had avoided Farmville like the plague. I had heard somewhere that Cityville (or was it Frontierville?) was the Farmville idea done right. I heard wrong because for a few hours last night I played Cityville and felt miserable about it. Cityville is free-to-play. You play within Facebook. It’s got a great presentation and is a nice casual SimCity clone. But man, do they want to milk you for all you’re worth. The tutorial sequence steps you through the game, but while they are explicitly introducing gameplay, they’re subtly introducing their pay system. You have a bunch of resources – coins, cash, energy and resources. You can buy extra resources with your credit card at any time. Buildings and decorations cost coins. You collect coins every so often through rental houses and businesses. Businesses need to be stocked by resources, which you get by tending farms. Most of these actions require energy, which is really just a turn cap. They use the same system Echo Bazaar uses – you get an allotment of energy per day, and it replenishes at one point per five minutes, to a maximum of 15. This is great at the start of your day – you collect cash and harvest crops and you’re flush with resources. But then you have used up all your energy and so you need to wait to get more to finish off objectives they keep giving you.

I get the idea of turn caps. You don’t want players to overload your system with activity and it’s a way to slow down level progression. But you just know that the bastards have done psychological studies so that you keep getting your attention pinged at just the right frequency so that you end up sitting on the game for far longer than you want. And when you snap, they’ve already spent the last ages reminding you that you can pay for more resources with your credit card. This is in parallel to them constantly suggesting you trade in social capital to spam your friends with Cityville events or invites, which is a whole other economy I’ll avoid talking about too much. You can avoid inviting friends to fill council roles, but that costs you cash resources, which I think is only attainable by paying real money. In the end, I couldn’t stand the distinct feeling of being in a Skinner box and being pressured into spamming my friends, so I booted Cityville from my apps with vengeance.

A game that does this right is Kingdom of Loathing (KoL). They have an adventures cap that is replenished every day. You can boost the number of adventures you have by eating food and drinking booze. The basic allotment of adventures you get is generous and they don’t replenish regularly so once you’ve done your turns, you can leave the game for the day. They also build up over a few days so you can play once a week or so and not feel gypped. Updates are free, and in theory you can get most of the content if you’re willing to work for it (you can build up in-game currency to buy items you might have missed). KoL’s constant development and servers are supported by donations. Each donation of $10 gets you an item called a Mr A, which is a usable in-game item. You can trade them in a specific store for items that change monthly, which might give you access to new content. They don’t bug you to donate. You can play forever without donating. You can’t pay for more adventures or anything like that. This approach is similar to TF2’s current model, and it’s worked for 9 years, taking a one-man game into a team effort with real programmers and beefy servers.

In terms of in-game virtual economies, I find KoL’s interesting. I’ve gotten into rare locations and acquired items that I could sell for a lot of in-game currency. But as the rest of the players get into those areas and gotten the same items, prices drop. You can see real fluctuations and market trends on a personal scale. You can try different market strategies: people have programmed bots to look for normal arbitrage points, and also where you can buy materials and combine them into something else that earns you significantly more money. There are bots in the newbie trading markets (the flea market) that block attempts of price inflation for common items. I run a store in the mall where I sell certain collectibles. I happily undercut the market for things I basically don’t care to have more than one of, but might slightly inflate prices if I have something that no-one else does. I also keep an eye on certain big traders and either buy lots from them, or avoid them to support the equivalent of “independent stores”.

It’s an exciting time. People are experimenting with all sorts of new economic systems that can interact with the traditional ones in interesting ways, even contrary to old theories. I’m unsure at how agile Big Finance is at adapting to these new systems, but it’ll be fascinating to see the new and old collide.

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  1. Paul Murray

    There are minecraft server plugins that create virtual economies. I farm wood and sell it at the “trade center” at mcau.org . Everyone bitches about the brice I charge, but sooner or later they pay it. Oh yes, they pay the price – $800 for a stack of 64 logs.

    The price structure is “anchored” by a store that buys/sells iron for 200, gold for 500, and diamonds for 1000. With no transaction fee, it’s effectively a bank.