Tuesday, June 26, 2012

Economies of Gaming Scale

It’s nothing new that economics in a video game, particularly an online one, are the driving force for longevity. I’m kind of more surprised that more economists haven’t been jumping into this field for research. There’s a lot of great potential there.


Yanis Varoufakis is one such man taking a job at Valve to look into the transactions made within their games.  Again, nothing new. We as the gamers of said games would probably have way more information to provide for this article then what Varoufakis was quoted for the piece. “You turn this into that, sell that, obtain thing, use thing to obtain more this. What makes it difficult to comprehend? That is how a number of comments are beginning to read. :D

Look at Second Life for example, a sandbox within a sandbox where real money is very much at play. Landowners, such as Anshe Chung who became the first real-world millionaire from Second Life activities, can make thousands a month. With a bit of investment and time, they are able to make a profit through a virtual world.

Millionaires are not common for video games, but making a profit and sustaining a comfortable life is very possible. Second Life is probably one of the prime examples since there’s the economy for Linden Labs with the purchase of currency to use within the game using real-world money. And then there’s the player economy of using the game currency to purchase things made by others. It’s a creative outlet with real world implications.

When you get into MMO’s and FPS, those have a different realm of economics. And then you throw in the free-to-play models and it all goes crazy. It’s an interesting area to study, and I think it could help solve a lot of issues in reality (both in terms of global economics and handling personal finances). The original article I linked is fairly pointless. Varoufakis shouldn’t have made any statements until he learned something that we, as gamers, didn’t already know. Of course we know the basics of how Team Fortress 2 runs. Currency is in keys and metals to open crates and make weapons. An in-depth analysis would have been better.

You know what would be a good study? PSN and Xbox Live sales for avatars. PSN lets you decorate a house and dress up your characters. Xbox Live has swag and random pets for your digital self. But there’s no trading between other people. You could say “well there’s Xbox Live points” but that’s really cash that you gave to Microsoft to get the points, in turn your sending them back to Microsoft for digital items. (You know those point cards you see at grocery stores? They make a very tiny fraction off the value of the card. Microsoft, Sony, Apple, they take 99% of the cut typically. The incentive is to get you to buy all of the candy and little products littered around the cards. Impulse purchases.) I’d be curious to find out how much less money Sony and Microsoft are making in comparison to Valve for TF2 because they don’t have a player-to-player economy. Or is Valve losing out because of that player-to-player market. Something to think about…

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