After a long break we decided to restart the Online Gamer Diary with discussions about online games that Logan had and still has with developers of the genre. Every diary tries to delve into a limited number of topics and tries to get to the bottom of things.

This time Logan had a conversation with Travis McGeathy of VR1 (who were working on Lost Continents) about the subject of inflation, deflation and economy in online games.

Travis
I like to clear up a common misunderstanding. Lack of item degradation will not cause inflation within an online game. Inflation is a persistent increase in the cost of items due to an abundance of available currency. Without item degradation, items that enter the game world tend to stay there. As such, you'll eventually saturate the game world and the item's price will decrease. It will not go up in price as it would in an inflation environment, but rather will devalue over time until it's more worthwhile for a player to sell it to an NPC merchant than to another player. If items degrade, this process will be slowed, but unless items leave the world at roughly the same rate they enter it, the deflation is unavoidable and, honestly, not really a problem.
As long as there is a continuous flow of new items to replace the old, as should be the case in nearly any persistent world game, currency will simply be spent on the shiny, new items rather than the old, over saturated ones.
What will cause inflation, though, is a lack of good money sinks. Without those, currency will continue to build up in the game world eventually causing the value of the currency to drop and prices to increase in compensation.


Logan
Hum. This is food for thought. With money sinks, I believe that lots of little ones are better than just a couple big ones. I also think money sinks that are an ongoing rental are better than the 'one time buy'. An example of the 'one time buy' was Verant and EQ's horses. Poor money sink. Things like reagents for spells are better money sinks. If someone can actually own land/buildings that opens a plethora of money sinks. The only part I disagree with is "...the deflation is unavoidable and, honestly, not really a problem." It would screw the new craftsmen. They couldn't sell their items at a profit - or at all. Whether the best loot is monster dropped or player made, having the items cost less and less would make it more expensive for any new craftsmen to build their skill up to whatever is the 'norm'.


Travis
Well, the point about item degradation not being a problem is that it's not really a big deal as long as new items are continually being added to the game to replace the old ones, which is pretty essential to a persistent world environment anyway. That holds true for trade skills as well. As long as they get new things to make that take the place of the flagging items (or, alternately, items are never introduced that replace the functionality of the trade items), everything works out. The tradesmen retain the ability to make useful items, albeit different ones than before. The previous items will still have a small demand from new players.
BTW, in my opinion, the absolute best money sinks are trade skills. They are a recurring cost and, when done properly, a recurring cost that people are eager to pay to reap the rewards.


Logan
With the first paragraph, I'd say that trades are more viable if new things are continuously introduced, however, if you have to 'level up' (or increase skill) on the low quality stuff that the new folks would definitely be screwed by having any of the low level (difficulty) stuff being 'unsellable'. Example: EQ - silver jewelry. Needed step in jewelry, completely unsellable. Your only choices are destroying it or selling it back to merchants at a hefty loss.
As to trade skills being a money sink, I think I will have to take the opposite stance on that. I've always seen them as a potential money maker for someone who has the time, pinashch (gusto - badly spelled) etc to figure out how to make stuff, make it then market it (or assign people to market it). I am hoping that with some of the new games coming up that we move away from seeing trade skills as a 'money sink' and begin to see them as an integral part to a vibrant online economy. [That's part of the reason that I am so against independent NPC merchants - why go through the extra hassle/risk of dealing with a PC if you can deal with an NPC instead?] I want people to be able to still buy silver jewelry for some good reason even years after the game has been released. Perhaps the maintenance is lower cost. Perhaps the decay rates of higher stuff are faster. There has to be some sort of solution. We just have to be creative enough to find it. I don't think it will be found soon. Everyone (from developers to publishers) is interested in the 'less risk' approach of 'follow the leader'. The folks at Verant said trade skills are a money sink. Hence, until we slowly wean off of that thinking, they will continue to be.


Travis
I think it's just a difference of opinion on what makes a money sink. A money sink is simply something that removes money from the game world. For trade skills, the trade skill items might be fantastic (in fact, the money sink works best if that's the case) and the craftsmen may become mad gazillionairs, but as long as they are purchasing at least some of the base trade items from NPCs, money is leaving the game world and the money sink is working.
And yeah, if you use EQ as the example, item degradation has hurt the value of lower end trade skills items, but it doesn't have to be that way. If you upgrade the trade skills as you upgrade the world items, you can ensure that trade skills retain a level of demand. Also, you don't have to put all the new stuff on the highest levels of the trade. Give the lower end something nifty too...make a silver ring with 5 charges of invisibility, for instance. Make it a little more expensive to create but require the same skill. The item would sell like hot cakes, the tradesmen retain a level of demand on lower end items, and the money sink is still there.
On another point, if you do the trade skills right, they should provide a service not available through other means. In that case, trade items' values don't degrade (or at least, don't degrade nearly as quickly) since there's not an easily available replacement item and the continual influx of new players provides a self-refreshing market. So, even the lower end trade skill items will continue selling for a very long time (probably the life of the game).


Logan
Hum. Smart on second paragraph. The only problem is that all of the higher level guys could also make the same exact thing. That's really not part of this problem but part of another I think of as 'all craftsmen are created equal and there aren't many crafts. In other words, if we both have 'jewelcraft' at 155, we can make the exact same stuff. Or if your jewelcraft is 155 and mine is 25, we both make the exact same sort of silver jewelry. Combine that with the problem that there aren't many crafts and it spells 'quickly glutted market' to me.
Dealing with the 'money sinks take money out of the world' thing, in the world I am thinking of, you could have an entire house built for absolutely zero gold. You'd have to get ore mined to make into tools, wood for walls, etc but you wouldn't have to spend any money. My versions of money sinks (as in getting gold out of players hands and destroyed) revolve more around the 'rent' concept.
For example, in UO, you have buildings that continue to stand even though nobody is using them. The player could have become dirt poor but hey - he still has a huge castle. If I had a world, I'd say 'land can never be owned'. Want some land? Gotta pay rent. Don't pay rent and everything on that land degrades at 4x to 10x (have to figure out) speed. I'd want to make it so that it becomes economically unfeasible to try to maintain a house at that speed rather than just paying rent. If I had a SciFi game and characters made a moon base, I'd charge them for air, artificial gravity, etc. That would really let someone know if they entered a 'cut rate' guild!!


Travis
Yeah, there are all sorts of money sinks that work in different situations. AC2, for instance, without any NPC merchants, will have to come up with significantly different money sinks than are used in current games.
The goal of any money sink is simply to reduce the total currency in the game world to combat inflation. I tend to group money sinks into three basic categories. Recurring costs that provide a service to a player are the best. This encompasses rent, trade skills, and other sinks where players see paying the cost to be advantageous, so do so eagerly. Below that, there are sinks that a player has to do in order to make use of something. These are things like spell components and repairing items that have degraded. They work, but tend to be done begrudgingly and seen as a "tax". The worst money sinks are ones that a player has to do in order to avoid incurring a penalty. Purchasing food and water is a great example. It gives no benefit, but must be done so you don't starve.
And you're definitely right...a higher skill craftsman can create anything a lower skill can, but if you're looking at an economy that grows by leaps and bounds instead of a trickle (level 1 items cost 1 coin, level 10 items cost 100 coins, level 20 items cost 1000 coins, etc.), the higher skill craftsmen rarely waste their time on the lower level items since the gains for them are miniscule...whereas the lower skill craftsman is cackling in glee over that 1 coin profit he just made.


Logan
Yes, but that's the problem. To take Everquest as an example, since we are both familiar with it: Name one 'slot' that only player crafted items can fill that you can't find monster drops for. None. If, for example, the only things that would work in the head slot were player crafted helms, player crafted tinkered rebreathers, etc, boom - you have a service not available through other means. Hence, everything degrades. This is why I'd like to have monsters drop NO loot - just components to make loot with.
Any of that make sense or did I miss your point entirely?


Travis
*nod* I don't like worlds that force trade skills down people's throats, though. I'm thinking more along the lines of trade skills providing items that are completely outside the scope of NPC drops. They aren't essential to playing, but they provide a benefit you can't get elsewhere.
Using EQ's focus items as an example, if those were only available via a trade skill, you'd have a high demand item that can only be obtained from a tradesman, but it's not an item that you need to play so people that don't want to bother with either making the item or finding a tradesman don't have to. The items would be valuable and not likely to degrade in price, as there is a pretty steady flow of new players that will need them. If you make it a whole line of items with the lower level ones giving a small effect and the higher level ones giving a large effect at a much greater cost, you have items that cover the whole range of player advancement and that provide for built-in upgrade options within the trade skill thus ensuring continual demand through the range of that skill.


Logan
I think that in order to have trade skills become more than just a way to throw away money/hobby for the rich, etc I think they will have to be forced down people's throats. But I think I've found a way to 'coat' the tablet to make it easier to swallow.
Let's say that I am a merchant and want to set up shop near a newbie area. I go and rent one NPC to buy (using EQ stuff again) 'rusty weapons' and another NPC merchant who sells 'tarnished' weapons (a step up from rusty crap people find). I set the prices to buy/sell at, give the NPC money to buy with, etc. Now the person who doesn't want to deal with crafting skills (in this example real low level EQ smithing) doesn't have to - they don't even have to deal directly with the guy who is doing the smithing. I think automated NPC's are the compromise between those that want trade skills and those that don't want to be bothered. You can also have those be 'mission generators'. Example: The guy who is buying rusty weapons will, after a certain amount is collected, begin muttering about how full he is or just ask the players "Do you have [a minute]?" If they say they do, he will ask them to take 'a box of rusty weapons' (not the individual weapons) to 'Fred's Blacksmith Store'. They then deliver the box to an NPC there and get a small reward. Presto!
Dealing with UO's 'focus items', I think the same theory would work. Some enterprising PC sets up an NPC called 'Mage Focus Items'. Not a lot of doubt about what he sells. If the merchant couldn't afford NPC's (those I consider a money sink as that coin goes away) then they have to go to 'Joe's Mage Focus Items Store' and buy them from Joe. If the items are really wanted, they may have their choice of three stores to choose from. The stores only work if the player absolutely has to be in one to make focus items. I think a lot of the pain associated to dealing with player craftsmen is that they can make stuff on the road. Hence, they could be almost anywhere in the world. In EQ, there are no 'tinkering stores' that one must be in to tinker - a simple 'toolbox' suffices. Hence, finding a tinkerer is a real pain.
I think that using these sorts of ideas would make trade skills viable as well as eliminating a lot of the pain in finding a PC to buy from/sell to.
Eh?


Travis
NPC merchants that sell player created goods would definitely be helpful for commonly purchased items, but you'll always have the hard-to-create trade item that is fashioned on an as-needed based. For those, NPC merchants don't work and you'll still have to interact directly with the tradesman. I think that's a good thing, though, as these type of games thrive off player interaction. NPC merchants remove that interaction, so it's good to have some items that still require it.
I do still disagree that you have to force trade skills down peoples' throats in order to make them viable. We play these games to have fun and escape from reality. After a hard day at work, the last thing I want to do in a game is spend hours doing more work. There are a number of players who truly enjoy this, though, and it's possible to make trade skills a rewarding enterprise without forcing everyone in the game to either take up a skill or hunt down someone to make items for them. As I mentioned before, one route is simply to make trade items perform a function unattainable through another means, but not a function that is absolutely necessary to play the game. In that way, the items are in demand, but people who don't want to bother with trade skills or tradesman don't have to.


Logan
I could agree with that to a degree. I don't think that having things like 'If you want armor you have to go to a merchant (or an NPC controlled by a PC) would really be 'forcing' it on the PC's - the sheer amount of people who choose to take up lives as craftsmen is staggering. I think that the type of game environment I am envisioning is not the 'beer and pretzels' type - I am envisioning a more dynamic 'must hook brain in' one. Certainly, beer and pretzels games (like Diablo2) have done well in markets - I just think that for a MMOLG it would be possible to have something more 'engaging'. I think though that this is a difference of play style that the individual player will have to choose for themselves. Some people want nothing more than to go 'wack-a-rat', get XPs, get levels, get stuff, sell/buy from NPC vendors - but I think that sort of game will become a thing of the past. Not quickly mind you - game companies don't want to risk it and keep 'following the leader' - but it will be a slow process. Therefore I leave it up to the reader to decide what sort of game world they want. I can see both advantages and disadvantages to either.


Travis
One point about having to buy or make everything of worth is that you take away a lot of the gratification of the kill. If you've just spilt blood and tears to finally taken down a legendary creature, having the reward immediately there is great feedback. If all you get is cash or an item that can be fashioned into something, you lose a lot of that gratification.
There are all kinds of players and the MMP market is diversifying to cater to them. I'm sure you'll soon see realistic environments where everything requires player interaction to happen. Whether those games will draw a significant number of players is unknown. My opinions here are based on the current most popular U.S. game model, that of Everquest. There will certainly be many more games that take drastically different approaches. Some will succeed. Some will fail. All of them will teach us more about the market.