(Un)Foreseen Consequences

I want to start off with a quote from Ravious of Kill Ten Rats:

“Players are simply wrong when they say Guild Wars 2 has a “failed” economy. Players that claim failure have a misconception of the economy they believe the MMO should have. It isn’t failed because supply and demand are working, just not in final products. The supply of a final product far outweighs demand, even with the trash compacting Mystic Forge. Still I’ve seen plenty of profit that can be made with small amounts of market inefficiency or player laziness. A failed economy would not provide such opportunities.”

My very first reaction was the following mental image:

Has it really been just four years? Yikes.

To be fair, yes, it matters what kind of economy one thinks is appropriate for an MMO. Personally, I am a fan of the whole “labor + resource = increased value.”

The week of Ravious’ post, we got a slew of Guild Wars 2 ping-ponging hotfixes. One of them was a sudden removal of Cooking materials from vendors; prior to this, the game’s only “Advanced Profession” could be leveled 1-400 for roughly 80 silver and a few thousand Karma. Some of the removed items, like the notorious Stick of Butter, suddenly started showing up in copious amounts in the bags of goodies that humanoid mobs drop. While there was an initial panic going from vendor to drop, Butter was quickly selling for 1c because it dropped in 5-8 stick increments and seemed to replace actually good drops 50% of the time. Then you had other crafting mats in the Tier 2 level going for vendor+1c even as their Tier 1 variants were still making bank. At one point there were 8 million Soft Wood Logs on the AH, for example.

Last Friday, ArenaNet’s generically-named in-house economist, John Smith, came out with a similarly generic post on GW2’s economy. The entirety of the relevant bits were the following:

We’ve noticed several markets that are clearly out of sync in terms of supply and demand. It isn’t interesting or fun to have a market flooded with items that contain very little value, so we’re making adjustments to the game every day. Players can expect to see these markets even out over time.

While adjusting the supply and demand will bring markets closer to non-vendor based equilibrium, there is still the matter of massive surplus of some items. To address the surplus, we’ve created some new, limited-time Mystic Forge recipes that use these items. These recipes create boxes that give chances for gold and some cool items.

The “adjustments” they made were recipes that called for 500 Sticks of Butter (Soft Green Logs, etc) + two other items to create a chest that could have up to a 2g vendor item plus some other cosmetic items. As should come to no surprise, the price of Butter (etc) skyrocketed. No doubt a large quantity of these over-supplied items left the economy permanently as people gambled their money away. And I have to hand it to ArenaNet, insofar as utilizing the Mystic Forge as both a hole to throw items into and a money sink simultaneously.

But I have no real confidence that John Smith knows what he is talking about.

Pondering over this whole economic episode has led me to think about the interactivity between all these moving parts and the unforeseen consequences. For example, I am a huge fan of individual loot and resource nodes; in fact, I think they are one of the best “innovations” of multiplayer games since… well, possibly ever. But if two players tap the same mob/node and get 2x more loot than they would in other games, that means games with individual loot/shared nodes will (potentially) have twice as many items dropping. You cannot just “solve” the issue by cutting drop-rates in half though, or making crafting professions require twice as many resources, because that leads to a dissatisfying single-player experience.

Then you build your game around Dynamic Events with huge, scaled mob encounters with AoE all over the place. Provided you have the chance to deal enough damage, it is not uncommon to go from zero to full bags of gear from just 1-2 of these Events. You are selling bag space in the cash shop, so you have an incentive to keep bag space tight. But being able to sell to the AH from anywhere – itself a supremely good-feeling feature – means players would rather list all this excess gear for vendor+1c despite it being at a loss, simply because a loss is better than destroying the gear entirely.

Nevermind the crafters dumping gear on the AH in 5-level increments, competing not just with each other but with all the generic item drops too. Considering you can get +10 levels worth of XP per crafting profession, and the cost of switching inbetween them is fairly trivial (compared to losing all your progress) there is always an incentive to at least start one or more professions on all of your characters.

This preponderance of vendor+1c gear means the average player can “Lease” upgrades throughout their adventuring career – buy the level 30 sword for 80c, use it until level 35, sell it for 79c, then buy the level 35 sword for 90c, and so on. This leads to the Diablo 3-ification of gear upgrades, making drops/Karma/quest rewards simply vendor-fodder for the 24/7 AH pellet machine. The entire concept of character progression breaks down, generally at the same time you unlock your level 30 Elite Skill and otherwise experience no further change to your PvE play-style.

I do believe Guild Wars 2 brings some extremely nice innovations to the MMO formula. However, I am getting the distinct impression that other MMOs do not have these features precisely because of all the unintended consequences they bring down the line. It is clear ArenaNet believes the Mystic Forge Will Fix It™ but I simply do not see how. Limited Time recipes eliminate surplus stock, but the fire hose of drops (and the roundabout incentives to post them all) continues unabated.

If John Smith can economy his way out of this, without ArenaNet dialing back all the player-friendly features, I will be hugely impressed. Otherwise, their best hope is probably fewer people playing the game.

Posted on September 17, 2012, in Guild Wars 2 and tagged , , , , , , , . Bookmark the permalink. 24 Comments.

  1. I think they’d get a lot fewer people listing stuff for vendor + 1c if they just told players more prominently in the UI what the AH cost of listing was going to be. But they won’t do that for the same reason that casinos don’t have clocks on the wall. They don’t want it to be so visible that you’re sending money out of the economy.

    But the more I play, the more GW2 feels to me like playing in a casino. I feel that I’m playing against the ‘house’ as much as the other players.

    There are a few too many random things (like mystic forge, small bags, random vegetable patches) that don’t need to be so random, enough that some of them break immersion (really? I can tell what onion plants look like but not carrots?). There are also some mechanics like the crafting tools which rely on players not wanting to keep bags full of the things to swap in for different zones, so they’ll tend to just use the most expensive ones.

    So Anet are motivated to keep a) pulling money out of the economy and b) providing money sinks to keep demand high, so that players will buy gems. It gives the game quite a different feel to something like WoW, where Blizzard don’t really have the same level of direct link to their profit from AH usage so they can treat it more as a toy.

    • The cost for listing is very visible.

      What they don’t show is the additional cost if you’ve successfully sold the item.

  2. > But if two players tap the same mob/node and get 2x more
    > loot than they would in other games, that means games with
    > individual loot/shared nodes will (potentially) have twice
    > as many items dropping.

    The same is true in any game where mobs respawn after being killed.

    The question is not if both can loot it concurrently or not or how fast mobs respawn. The only relevant question is “how much can I farm per time”. Individual loot/shared nodes have an impact on that but they are not the only variable.

  3. I see a very easy solution, Diablo style. Limit the number of auctions to 10 per account.

    It will cause quite a stir considering now people are listing every piece of trash they find but long term, this balances the oversupply, especially the oversupply coming from hardcore players playing 20 hours per session, and of course, botters.

    ArenaNet should sell auction slots in their shop, just like they sell bag expansions. Flooding the market should have a cost.

  4. Economists in the outside world rarely know what they are talking about so why should one working for a video game be any different?

    I agree with Ravious, only more so. I play MMOs to go adventuring and have fun, not to run an imaginary business or pretend to be a craftsman. As a buyer, I find it very useful that the TP has a large stock of things I *might* want available at low cost. I have will-power and I know how not to spoil my own fun, so I only buy what I know won’t adversely affect my enjoyment. I don’t buy much gear because if I did, how would I get so excited when a Yellow weapon I can use drops that I whoop out loud, as I did yesterday? On the other hand, if no gear does drop for a particular slot it’s nice to know I can just open the TP and fill the gap for a few silver.

    As a seller, I can sell my surplus stuff on there for a good profit. All my crafted gear, every single piece I have ever put up (which is only just over two dozen) has sold fast and for 2 to 4 times vendor, so this vendor+1c thing doesn’t seem to be affecting me directly. Once I reach 400 skill, that’s that. I won’t be making any more stuff so I don’t care what the long-term market is for crafted gear. I’m crafting because skilling up crafting is fun, not because I want to make money from it.

    GW2 is a leisure activity, a pastime. It doesn’t matter how rich my characters are, how well-equipped or even how effective they are. The one and only thing that matters is whether I enjoy playing them. The Trading Post and the economy matter only insofaras they help or hinder my enjoyment and at the moment I feel I’m being helped.

    I’m not exactly unbiased, though. I’ve never believed MMOs need economies in the first place. I’d be more than happy to have 100% of all gear dropped, self-crafted or sold by vendors. All those options are available in GW2 already, so if the economy does fall down a hole I can’t see how it would matter.

    • It would definitely be interesting to see an MMO follow a more single-player crafting model, just to see how things would play out.

      I am curious as to which items you keep saying you crafted at such a profit. And was that “profit” above the AH price of the goods necessary to craft the item, or did you gather them “for free?” There are definitely items (usually the yellows) that sell above vendor+1c, but that is because it costs 15 of the blue Tier mats to create, the prices of which typically destroys any profit.

  5. While it’s nice to have a working economy, it’s not the end of the world if crafters can’t make any money crafting. The game we bought was called Guild Wars 2, not World of Leathercraft.

    That said, I’m not convinced that the economy isn’t working. 99% of all the things I can make as a tailor in WoW sell for less than the cost of making them. The trick is to find the items that sell for more, and just make those. Crafters just need to do their market research before blindly cranking out items. I know, I know, most crafters aren’t cranking out items to sell, they’re doing it to level their craft. That’s fine, we all do that, and we don’t expect to be able to make a profit while doing so. At the moment, almost everybody is levelling skills and dumping the by-product. That will change. We just need to have a little patience.

    • What makes you think things will change? Even if the people dumping leveling byproducts on the AH stop at some point, the AH is global. That means if anything is profitable to craft, you are going to have 1,000+ people competing with you on a race to the bottom.

      You are right that it isn’t the end of the world. The buyers do win in this model. It is simply beyond annoying for the people who are interested in this sort of thing, just like it would be annoying to PvPers if the game launched without PvP.

      • Azuriel, the reason I think things will change is that eventually the current cohort of levellers will have maxed out their crafting and will no longer be crafting items for skillups and then dumping them.

        As for 1,000+ people crafting the same item? Well, ask yourself why this doesn’t already happen in Azeroth, on a smaller scale. Granted the AH there isn’t global, but all the same, there are a large number of people on my realm, all of whom could compete with me if they wanted to. Nonetheless, I seem to be the only person regularly making, for instance, admirals hats or red winter clothes. Why? Because most people don’t know these items are profitable. How do you find out in GW2 whether an item is profitable or not? Research. Research your market. Learn what the raw materials cost, learn what the item sells for, learn how many sell each day. This information takes a long time to gather – it isn’t enough to price items by just looking at what they cost today; they could be being sold cheaply or expensively today.

        Proper research takes a lot of time. Most people are just not doing that in GW2, and that’s why they can’t find profitable items to make for resale. 1,000+ people will never be competing for the most profitable items because 1000+ people won’t have researched the thousands of items on sale to discover the moneymakers, or even discovered how to get the recipe. 1,000+ people are selling trash that awards crafting skill-ups using recipes that fall into their lap.

      • As for 1,000+ people crafting the same item? Well, ask yourself why this doesn’t already happen in Azeroth, on a smaller scale.

        You are underestimating the impact of global AHs. Every individual WoW server has two economies, one for each faction. Even if you were the only person making Red Winter Clothes across an entire 50,000-person WoW server, you would still be competing with forty (40) people in GW2 for that one item’s profit margin, assuming 2 million players. And as the profit margin diminished via competition, most of those people would move on to the next most profitable thing, leading to even more competition. It is a race to the bottom.

        As far as research goes, for WoW, we have The Undermine Journal that does most/all the calculation for you. For a while, the GW2 version was http://giygas.justinvanderheide.com/ until it went down (probably permanently). Given how much easier it will be to cull prices from GW2’s AH (only one character is necessary), it is only a matter of time until another one comes along that can handle the traffic.

      • ” Even if you were the only person making Red Winter Clothes across an entire 50,000-person WoW server, you would still be competing with forty (40) people in GW2 for that one item’s profit margin, assuming 2 million players”

        If my competitors are increased by a factor of 40, so are my potential customers. In any case, the vendor+1c sales are not on items that the crafter is crafting to make a financial profit. I wrote a much longer article about it yesterday on my blog,

        http://casualnoob.blogspot.ie/2012/09/gw2-economy-working-as-intended.html

      • If my competitors are increased by a factor of 40, so are my potential customers.

        That is 100% completely and totally irrelevant. If you can make a profit selling 400 Red Winter Clothes, are you NOT making 400 Red Winter Clothes? I dunno, maybe you are fine just making a dozen. But I guarantee you that if I can sell 400 of something a day, I am selling all 400. Why wouldn’t I, assuming there wasn’t something else more profitable to do?

        Nevermind how the other 38 people feel about leaving money on the table.

        Aspects like market research and such are indeed barriers to entry. But again, in other games your potential competition must not only do research but also be on your server and faction. In a global economy, there will always be someone willing to work for less than you.

  6. What if they made you keep the item in your bag while it was in the AH? I mean, EBay doesn’t show up and hold the item in their warehouse for you.

    I mean I don’t think that would fix the problem, but if part of its is that tossing random crap on the AH is easier than vendoring it, that would fix that at least. Or maybe they need global vendoring with enough of a fee to make it better to just vendor crap like that.

    • Two very good suggestions.

      I would personally go with a “Sell to Vendor” button, both on Right-Click and also within the AH interface itself. That way, you can sell this as a bonus feature, instead of a roundabout means of fixing the economy.

  7. Having a maximum number of auctions available per account or per character would help.

    Adding a small fee for listing items on the trading post from out in the world would help, as well. If e.g. there’s no additional fee when you’re physically present, but a 10c fee at other times, that would remove a lot of the incentive for people to dump all this stuff at vendor +1c.

    “But if two players tap the same mob/node and get 2x more loot than they would in other games, that means games with individual loot/shared nodes will (potentially) have twice as many items dropping. You cannot just “solve” the issue by cutting drop-rates in half though, or making crafting professions require twice as many resources, because that leads to a dissatisfying single-player experience.”

    A few thoughts: first, you make a strange assumption here that nodes are being used by two players, instead of by 20 or 30 or 400. And ANet can very easily balance resources; it’s actually no different from balancing resources if it’s one player per node. What’s required is simply to figure out how fast the resources are flowing into the economy, and adjust accordingly. The simplest mechanism would be to throttle node spawns until the proper rate of resource acquisition (creation) is reached.

    I think ANet is handling the economy quite well overall so far. Granted, there’s a bit of unpredictability in any market, and it’s hard to precisely predict how fast money will flow in and how fast resources will be created and how much money will be drained out of the economy. Thankfully, in this era, those predictions only really matter at the beginning of a game’s lifespan; after that point it’s more efficient to base decisions on actual data about what players are doing. The Mystic Forge might or might not be suitable in the long run as a big drain to suck all the excess materials out of the economy, but then it might not need to do that; it only has to be effective at helping control supplies when materials are too common. ANet can then throttle those materials on the back end so fewer come into the economy, and in time balance can be achieved.

    • Sorry if it were not more clear, but I was using two people and the doubling of items/resources as an example. It is very true that the actual impact is much higher, especially when you join a resource node zerg-train.

      The problem with throttling respawns based on volume of ore/etc is exactly what I mentioned earlier: it negatively impacts the single-player experience. If I am running across entire zones and seeing zero nodes, my play session feels worse. And since the AH is global, it brings up questions as to why my Copper Nodes are suddenly not spawning just because there are a lot of bots on one of the other 23 severs.

      In a way, things like this are already throttled in WoW. A person cannot gather unless they have Mining/Herbalism/Skinning; if a botter is running rampant, the ore nodes are gone and no one else can mine them; only 1 person gets loot from a mob; etc. These things work, but they work because it has always been this way. Dialing back these features in GW2 now would cause a lot of ire, and you cannot really tone down the random gear drops without discouraging Events/WvW as a viable leveling path.

  8. Just allow people to post for less than vendor value and let the auctioneer NPC immediately buy it himself.

  9. “Personally, I am a fan of the whole ‘labor + resource = increased value.'”

    Sure. But the problem is, crafting in GW2, just like crafting in 99% of all MMORPGs, (a) involves absolutely no “labor”, and (b) provides a tangible reward to the crafter for the act of crafting. That’s why ‘crafting = reduced value compared to raw materials’ so often.

    • I wonder why more MMOs/etc don’t go with a sort of minigame crafting model. I suppose it might be annoying when you’re crafting 20 swords or whatever, but I can imagine having both a Craft All button and a Manual Craft button that perhaps makes higher-quality goods and gives more skill points.

    • “crafting in 99% of all MMORPGs, (a) involves absolutely no “labor””

      The labor equivalent in mmos is the opportunity cost of resource gathering and crafting time compared to what the same player could achieve if they were just fighting mobs instead.

      Ideally, as some players like crafting and some don’t, the balance should be set such that just fighting mobs was c10-15% “better” than just crafting with that 10-15% gap being made up for those people who particularly like crafting or trading because they particularly like those activities.

  10. On other option would e to simply eliminate finished items from loot drops and simply let an abundance of igredients from drops get listed everywhere. Btw really good analysis, I found myself agreeing even though I haven’t actually played the game!

  11. There is always using a resource for every weopn type. Arrrows for bows, swords need sharpening, staves need some magic resourve refilled – all gold sinks and still somewhat fitting into the game lore. The idea of limiting AH slots is annoying. I would rather see some sort of in-game monetary drain then obvious gold shop redirection. There is also the way that Atlantica Online went with multiple items of the same description being able to be combined into a greater whole.

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