Transcript a closed economy in virtual worlds

To have, or not to have…..
a closed economy in virtual worlds
CGO - Leipzig
July 31st – August 2nd, 2009
Eyjólfur Guðmundsson, PhD.
Lead Economist, CCP
CCP
• Founded in 1997
• Privately held
• Technology excellence
• Innovative game design
• Customer respect
• Vision and teamwork
• Headquartered in Iceland
• Grown form relative
obscurity to moderate
success
CCP
• An MMO production AND publishing
company
• Currently close to 400 employees
• Three offices worldwide plus one virtual
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Reykjavík (220 employees)
Shanghai (60 employees)
Atlanta (110 employees)
London (Server equipment – virtual operation)
EVE Online
• Large server population - 300,000
– EVE Online is a leader in online gaming technology, hosting
hundreds of thousands of players in the same persistent
universe.
– Global server
– Chinese server, fully localized.
• Liberating advancement
– The EVE universe is persistent, skills increase even while offline.
• PvP based on strategy, not levels
– Tactics have value in EVE Online. Experience and treachery will
often beat top-of-the-line modifications and fancy ships.
• Player driven economy
– Prices are formed on the market based on preferences and
purchasing power of the players – not dictated by the game
operator.
Massively Multiplayer Online Games
• Means hundreds, thousands or even
hundreds of thousands of players
participating in the same persistent
world.
• Single universe vs. multiple copies of the
same universe
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Virtual Worlds
• Virtual realities
– Trying to mimic the real?
• Alternate worlds/Alternate experience
– Communicate with other humans under different sets
of rules and regulations
– But the same economic principals apply
• Theme parks, Social worlds, Sandboxes, coffee
shops….
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OPEN WORLD
CLOSED WORLD
Subscription model
Free to play model
Micro transaction model
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$
$
Macroeconomic system
Spaceships/modules
Box C
Faucets
ISK
Box B
Box A
Producers
Consumers
ISK
Ore/minerals/components
Box D
Sinks
Open world design
• Allows for direct interaction between the
virtual world and the real world
• Evalution (i.e. prices) and exchange
between the virtual world and the real
world
• Do real world regulations apply?
– Second life (Banking issues)
– Entropia universe (Establishing real life
banking services)
Open world design
• If real life law and regulations apply....
• Limits your creative design
• Limits the sets of rule that can be used
• Limits the overall game design
Closed world design
• No direct valuation between the virtual
world and the real world
• Different rules can apply
• More open creative design
• Overall more interesting virtual world
design
Banking
• In EVE completely player driven
• Need to enable trust with the playerbase
• No guarantees from CCP as developer
EBank
• Build trust with the player base
– Internal rules on account access
– Audit procesess
– Transparent regulation and statistics
• CEO decides to break this trust
– The actual act of taking the money was not a EULA
violation
– Selling the money for Real Life currency was the EULA
violation
• The internal system allowed the bank to survive
Economic principles
• Open vs. Closed world design?
• Same economic principles apply
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Scarcity
Behavior
Individual decisions
Financial systems
Only a matter of practice – not principals
Monetary Theory
• Price stability
– Growth in money must match growth
in wealth
– Game balance issues
• Too much monetary growth
Inflation
• Too little monetary growth
Deflation
On the subject of money...
• Can designs be truly closed...?
• What about secondary markets such as
sales of currency for Real Life money –
i.e. RMT market?
RMT is bad
• RMT reduces the quality of a game
– Unusual player behaviour with increased
hardware load
– Often associated with hacking of player
account and other nasty stuff
• Constant fight
– Monitoring and banning
• But the RMT is there because there is
demand from the players
Enters PLEX
• PLEX is an in-game items
• Created by players that buy timecodes and then
convert them into PLEX
– PLEX (Pilot License Extension)
• Allows players to buy timecodes using in-game
currency
– Essentially free to play for those players.
• Allows players that want to have extra in-game
currency to aquire it through regular gameplay
PLEX
• PLEX is an additional tool to tackle RMT
• Provides additional services to the players
• Helps in keeping the world closed from an
economic perspective
• Protects the initital design of EVE ONLINE
So what to remember...... ?
• Open vs. Closed world design
• For truly alternative VW – keep them closed
• Economic principles
• Practice not principles
• PLEX as an example of actions taken to keep a
world closed
www.eve-online.com
Additional slides
• The slides following this one are
additional slides to be used in the
discussion after the initial
introduction
Changes in demand
Two types of weapons that
where sold at a similar
price.
Attributes of one of them
was changed – shorter
range but more explosive
power for torpedoes
(Siege Launcher)
Immediately changed the
pricing structure
Population distribution
Jita
Rens
Amarr
Just under 50%
never leave Empire space
Scarcity
• Fundamental assumption
• Would the gameplay by any fun if
there is no scarcity? Why not?
• The pleasure is in the journey - not
the destination
Behavior
• Individual decisions
• Evaluating options given constraints
– Based on preferences
• Results in valuation of options, i.e. prices
– Relative prices and relative scarcity
• The objectives are as many as the
players
– Impossible for the designer to “value” items
– Allow the players to exchange – player driven market
Principles
• Scarcity
– Local scarcity / “Economic Landscape”
– Overall scarcity
– Resource distribution
• Exchange
– Not self-sufficient
– Design with interactions in mind
• The Invisible Hand
– Applies to players, not static NPCs
Controlling the money supply
• Sinks or drains
– NPC Consumables
– Item Maintenance
– Transportation
– Special Rentals
– Taxes
Financial system
• No lender of last resort
• EVE central bank is only concerned
with direct money supply (M1)
• Private banking (Player driven)
Private banking
• Players have established financial
services
– Some ended up as Ponzy schemes
– Others simply went bankrupt
– But some made it as viable business
• EVE-Bank is not affiliated with CCP
but is the largest private bank in
EVE