Read the full economic report here.

EVE Online’s economist, Dr. Eyjólfur Guðmundsson, has issued a second macroeconomic report of the game, this time for Q4 2007. After reading through the report, it seems like there are some neat things being researched at CCP regarding various indicators of economic performance and growth. Much of the report’s analysis focuses on the impact of the introduction of the latest EVE expansion, Trinity.

The most notable addition in this second economic report is the introduction and explanation of a macroeconomic indicator for player production within the online economy. Called GUP (Gross User Product), this indicator measures the value of all goods and services produced in a period of time, minus the goods and services consumed by that production. Analyzing GUP, much like its GDP (Gross Domestic Product) counterpart in the “real” world, may give us some insights into the amount of growth an entire economy is undergoing. The explanation of where that growth is coming from and the means by which it may be maintained, however, are not necessarily illuminated by such a number. Hopefully future reports will illuminate more component-based (rather than aggregate) data on capital supply and depreciation rates so that some of the more popular growth models may be applied to the growing EVE market. The more detailed charts near the end of the report are great starts, but it would be nice to have even finer detail. Considering that this gentleman has access to everything, the marginal cost of producing such data should be low after the initial investment of researching the proper formulae.

One of the things I find most silly about this economic report is the fact that there is “a practical difficulty of not being able to reliably discern between a newly produced good sold on the market, and an old good re-sold on the market”. This is definitely a problem in real world economics; in online games, however, I have trouble rationalizing why this would be a problem. Presumably, every good possesses some form of unique identification (if for nothing else than to easily recover from a duping scheme). Well, if it possesses unique identification, why shouldn’t it also possess a relative timestamp or sale counter? Surely there is room in the database for at least one of these fields. That seems like a relatively simple solution to so great a problem. Regardless of whether such a feature was originally implemented in the game world, I doubt that it would be hard to add such a feature to all goods in the future.

In the introduction to the report, there is extensive commentary on what effect the struggling global markets will have on virtual world markets:

Will an economic recession cause decreased participation in the online world, or will the reduction in work hours (voluntarily or not) encourage people to spend more time producing virtual items in their online environment?

Excellent questions, but the following contains assertions that I do not completely agree with.

In the case of fixed monthly subscriptions, the marginal cost of spending another minute in an online environment is zero when measured in monetary terms. Hence, people with more time on their hands might contribute more towards their online environment, stimulating growth in virtual economies.

It is indisputably true that when a fixed monthly charge is incurred, the marginal cost of another minute is zero. It is also indisputably true that when marginal cost is zero, rational agents will consume until their marginal benefit is equal to their marginal cost. What’s not so clear, however, is that the opportunity cost that this agent faces for one unit of his time is zero.

Put another way: the monetary cost of an additional unit of play is zero, but the true cost may be far greater than that. A rational agent will play until his marginal benefit of additional unit is equal to his marginal cost. Thus, if we agree with the implicit assumption that struggling global markets lead to a recession, which in turn reduces the opportunity cost of everyone’s time, which in turn causes people to substitute toward the now relatively cheaper additional unit of play, we might agree that a struggling global economy will necessarily lead to a booming virtual economy.

In some respects, if recession is characterized by higher unemployment, then this might well be true. It’s still too early, however, to conclude anything.

Read the full economic report here.

One thing that I absolutely hate is having to alt+tab in games, or having to play in windowed mode. I’d imagine that many other people probably feel the same way. This happens most often in MMOs, mainly because there’s often need to get to browser windows and media players during extended periods of unbroken play. Just because of the nature of the online game, I find myself sacrificing optimal brightness/contrast and graphical quality for the ability to quickly alt+tab. It’s more important to have information at the tips of my fingers than to have 5 trillion more shaders on my in-game fingertips.

This is why I can’t understand why more MMOs don’t have these same capabilities in-game. Even EQLive had a media player capable of playing mp3s, if rudimentary. EVE is capable of playing the same, and I know that there are several other games with similar capabilities, but what about the big players? There’s not the slightest semblance of a media player in EverQuest 2 and World of Warcraft, and the former is one of the biggest resource hogs known to man. Alt+tabbing EQ2 is like playing russian roulette.

To the game’s credit, though, after logging back in recently I was pleasantly surprised with the addition of a browser window. Given the open source nature of the Gecko browser engine and the prevalence of the firefox browser, I’m completely at a loss for why in-game browsers don’t come standard in games. I don’t want to imply that it would be a walk in the park to add that kind of capability, but clearly the tools are there. Standards-compliant browser rendering engines are available, for free, to whomever wants to use them. My cell phone has a browser, why not my game?

Being a student of economics, I realize that specialization of programs independently of each other will result in better software (that is, if a game company writes their own browsers and mp3 players in game, they’re taking time away from developing features in the game, etc), but in a world where music and the web are two of the most important components of daily life (ipod, iphone anyone?), I hardly see the harm in providing these to gamers. Maybe the innovators behind xfire will expand their aim to the media/browsing world in the near future. At least that’s my hope.

Recents posts from Tobold’s and Random-battle have sparked a discussion of sorts on the merits and demerits of player-created content in MMORPGs.

I’m very intrigued by this idea, as it’s always been very popular with many offline RPGs and, more notable, most of Blizzard’s games up to this point. The big problem with implementing this kind of system in a massively online game is the balance (most MMO problems are). Who’s to say that some punk won’t just make an instance with one room, spawn a monster of incredible strength and amazing loot, load it up and kill it 50 times a day. Of course, that’s a somewhat polar viewpoint, but it’s what you have to keep in mind when tackling this problem. Players want easy kills, easy loot, easy status. I swear that online games would be a gold mine for sociologists looking to study human behavior and status symbols. So what’s the solution? How do we keep players from ruining a system like this?

One of Cameron’s suggestions, from his article:

Hire someone to review the player made content and deny it if it’s too broken or farmable. The issue here is that with the size of the community, this would require at least a few full time employees and they would still miss stuff. It would be a time-consuming process to review anything and they’d be wading through a LOT of crappy scenarios. Plus something like this is highly subjective.

That’s an excellent summary of the pros and cons of the solution. Time consuming, subjective, and a waste (for the most part) of human resources which could be allocated to far better uses.

As another possible solution, I commented on Cameron’s original post with this:

[…] what about a place where player-created content is voted on? It doesn’t seem like it would be so hard to create a system where players make content, other players play the content with cloned characters (peeled from their real servers and made to play these beta instances), vote on said content, and then once the instance receives a certain number of votes or consistent traffic, that instance is plowed with a fine-toothed comb and made ready for mass deployment by the developers?

Among run-ons sentences and rushed ideas, I think there is a spark of something good in there. Tobold mentioned something similar in his article, but I guess when I read his I envisioned more of a website devoted to voting, rather than an integrated experience within the game itself. Each run through of the instances by the cloned characters could be closely monitored for loot and exploits, et cetera. The idea of cloning the character is integral to this situation, since we want the player to feel like they’re progressing their character to some degree (and though they can’t save their progress, they won’t lose anything they’ve gained on their main server by dropping a clone and learning an instance). Without permanent loot or experience until final approval, these players aren’t losing much except by way of time (but MMO players in general place a low value on time).

One problem we run into here is that it’s still very possible for players to create sketchy content with exploitation possible. A solution to this problem is to require preliminary approval from a dev before the “beta” process can begin, but that goes back on the entire concept to some degree.

So where is the happy median? Players love content, developers love balance, and player-created content will be unbalanced by definition. One way to provide balanced player-created content is to entice, with a “carrot on a stick” approach, players to create quality dungeons and maps by giving them hope that their creation could be added to the game if enough player approval is garnered.

Are there any other pros or cons to this discussion not present in these articles?

In a time when making a PC game without online capabilities is suicide, having a generous pool of out-of-house testers is an invaluable asset to a company. Any gaming company with enough skill in marketing to create the slightest amount of buzz about their upcoming game is sure to have more than enough hands to make quick work of the network and non-ai testable features of the game. For a given game beta, who knows how many will apply? Certainly more than are needed. So who gets to play, and who gets the shaft? More importantly, why?

Personally, I’ve filled out so many applications for game betas that it doesn’t even phase me any more: I probably won’t win, but at least I can show my support for the game. I know that the person who will win in my stead likely has more hours per day to devote to the game, more background in beta testing games in general, and has probably even played through far more games than me in his lifetime. However, in all likelihood, this person will probably have a smaller social network, and will thus not be able to market the game as effectively as I could if I were chosen. So who is the right person to pick in this (somewhat polar, contrived) situation? Do you want someone to find bugs in the game, someone who will ceaselessly play the game for you so you can log his every move and figure out where the bugs are?

This person basically serves the same purpose as any well-scripted bot that the company can produce themselves; the only difference is that the human can be used to balance more aspects of the game, since it’s terribly difficult to script intelligence in bots to the point where weapons, maps, and other niche aspects can be balanced effectively. They’ll raise their own skill in the game and be better at it when it releases, and maybe even discourage some new players from continuing their patronage. This last scenario doesn’t matter in a one-time-fee game, but for online subscriptions it matters a great deal. Most subscription games, however, don’t allow persistence of your character from beta to release anyway.

On the other hand, there is the semi-hardcore gamer who will spend enough time playing your game to have made it worth your while in ways other than finding bugs. He still might find a bug or two, or at least get himself into a strange situation which will give you a good enough stack trace to figure out where the bug is. But, more importantly, and perhaps more valuably, he will talk with his friends about the game, raise hype, network socially with others online (and in person) and probably do more to promote the game in general than the introvert in the first example. To me, this seems a more valuable person to choose.

I say all of this because of a trend that seems to happen in gaming these days. Too many times, on too many beta applications there are so many small, finicky, nit-picky questions that are clearly there to weed out those who haven’t already beta-tested for 10 games in the past. How many games do you play in a given week? How many of those games are online? If this is an MMO/RPG, how many MMO/RPGs have you played in the past? Which ones have you spend more than 100 days playing? It’s questions like these which make it very obvious exactly what the company is looking for. However, none of these questions will yield anyone like the person from the second example, the socialite. If you want someone to actually test your game, fine. If you think your company is strong enough that it can’t use some free marketing (and really, who is so big that they can say that? if they can say that, then they probably won’t be staying big for very long).

In my opinion, the “beta test” marketing scheme is one of the best, as it gets people excited about your upcoming game. It gets people talking. If it’s a bad game, then bad news and reviews will come out before you’re even done. So what? For those who remember, the upcoming game Tabula Rasa was completely different in it’s first phase than it is now. It was so bad, so bland, so generic that the team actually listened to the people who would be playing the game and re-did it in it’s entirety. Now, that’s what I call useful beta test information. Alternatively, a game getting strongly positive hype in beta (a la, WoW, Halo 3, FFXI, EverQuest, need I go on?) will produce (I predict) a far greater stream of revenue in the beginning of the game’s life cycle than would a game without this same hype.

I’m not saying that game companies shouldn’t try their best to get the best candidates for the job; all I’m saying is that sometimes the best candidate for the job isn’t the introverted, downward-spiral game “g33k” who skips his own wedding for a raid. Sometimes, the best person for the job is the person who will make you the most money. Bugs can be fixed, but a game never releases twice.