The digital items economy
I've been playing a game called diablo 3 for the past month. The reason I play this game is very specific and it is because they have a real money Auction house for digital items that are found in the game.
Trading has been going on for 2 days now and I've managed to earn $130 from it, which forces me to conclude that the digital economy is very real. Yes, I had doubts at the beginning, but now the doubt all disappeared.
Thoughts? Experiences? Suggestions on how to improve and take advantage of such economy? All welcome
Get in early - it won't be that long before the gold farmers in places like China move in and crush it. I used to play World of Warcraft - and although it was technically "illegal" as to the terms of service of the game there has long been a market for virtual items. There are multiple organizations that pay young people very small amounts in various parts of the world to "farm" virtual goods (and characters) and then sell them.
To take advantage of it - go nuts early. Focus on the mind-numbing time consuming bits that nobody wants to do. Sometimes that's not flashy items but crafting things like potions that are cheap enough to be a common purchase for people. (Assuming such things exist in D3)
Surprisingly, we suffered from something worse in d3. Bot farmers by Chinese operating 100 accounts at a time. But nothing an experienced trader couldn't beat. I've been able to predict more or less thing's value change. For example. Bot farmer's gold price dropped from 49 to 7 per million. The day Real money came into play, it went from 12 to 7.
Not to mention, an environment like this is an economist's wet dream. Every transaction is recorded.
I never understood why game publishers leave money on the table. If users want to buy items, and the items have a marginal cost of production of 0, why not sell those items to users? Why let other users 'earn' money 'creating' and selling these items? Is it socially optimal having a bunch of impoverished gold farmers in the developing world slaving away making virtual goods?
fearful europeans are apparently moving money into bitcoin (among other places) which is rising
I think it has something to do with banking laws. If you allow two way $$ transactions, you are subject to banking oversight. D3 is where I first see two way free flow built in. EvenEve online (game with the most sophiscated free market mimicking real life) had to make do with selling game time as currency.
Originally Posted by andrewf
Bitcoin for example had no problems until it reached a large enough volume to require supervision. Now it has a bottleneck in the exchanges, as opposed to the original intent of having no centralized part in any of it's transactions.
Last edited by Causalien; 2012-06-15 at 12:31 PM.
Originally Posted by Lephturn
I have a few question for you with regards to in-game items, so I hope you can relate some lessons from WOW. What happens to the value of a very rare item over the life span of the game? Say, something that's worth $250 and is only worth this little due to a cap imposed by the game maker. Will future patches and expansions with better unique capabilities kill its value? Or will I be able to resale it, say... 5 year later for a much higher price (with the expectation of the maximum bid price cap removal) for its vintage value?
Causalien, I think there are several factors that play into whether very rare items will increase or decrease in value. I can give you some examples.
I used to play Runescape when I was in high school. For the first holiday event that they had, they released a special set of coloured party hats. These hats were subsequently never made available again, leaving a fixed number of party hats circulating in the game world. These hats were also purely cosmetic; they did not boost your character's abilities in any way. In that sense it was purely a status indicator. The colour of the hat also made a difference - the pink ones were worth the most.
Naturally, as more players started playing the game, and as more gold entered the economy, the value of these hats skyrocketed. During a second christmas event they released Santa Hats, also with a limited acquirement period. These hats also became very expensive, but were around 10-50x cheaper than party hats.
My friend recently sold his set of party hats this year for around $2300, and invested the proceeds into stocks.
I still play Team Fortress 2, which is developed by Valve. I am sure you are aware that this game has cosmetic hats for sale. In particular, the extremely rare ones with special cosmetic effects will go for over 300$. TF2 also has a similar "party-hat" items. The first few hats that were linked to promotions for other games were limited in availability, creating a fixed amount available for the community. Someone who paid ~40$ for a game a few years ago received a set of bunny ears that are worth over $80 at the moment. If you installed TF2 on a mac during a small promotional time window, you got a pair of in game earbuds that are worth over 30$ today. The prices of these particular items has constantly increased over time. These items are typically used as a de facto currency in high value trades.
However, I don't know if these examples are similar to your situation. It seems that you can acquire rare items but there is no limited supply for sale. You can follow simple supply/demand logic to see how the price might change. More of these rare items coming into the market will force a downward pressure on the price. Expansion and newer items with better capabilities will obviously send the prices down. The only thing that will keep prices up is if there is and increasing demand for the item. This can come from more new players wanting to buy items. It could also come if the item achieves some cosmetic value. However cosmetic value tends to depend highly on the availability of the item, and if it is widely available it will not be widely sought after.
TF2 must have a steadily declining player base now. So that contribution to the equation is probably neutralized and I can see a supply of new players having only effects on lower tier items that is not cosmectics, but game mechanic based. So what will happen to the item I have is similar to how they categorized all items before a certain day to be "vintage". I haven't logged in to TF2 for a long time, so I am not sure how those things are priced. (Heck, I'd really like to sell my primordial warrior badge, but those are bound to my account). If you have some experience with this, let me know.
Originally Posted by Dibs
However, the ones I am hoarding now will continue to be spawned in the future, the only difference will be that there will only be a few of them without certain special new properties, effectively marking it as vintage. This is what I am wondering if I should be banking on. That people will recognize the "vintage" property without it being specifically mentioned. Consequently, it is one of them where the stats are maximized, i.e. the random number generator generated the maximum possible value for all the property. Which is what makes it sought after, however, I believe this advantage will fade over time with new expansion and capabilities.
So in sum, is vintage value increase > property value decrease.
I'm not sure when you stopped playing, but TF2 is now free to play and is the most played game on steam. The author of the blog post that you mentioned earlier was hired by Valve and this would lend support to the idea that this economy is still alive and kicking.
Vintage weapons in TF2 are not worth that much, since there were so many weapons that were turned vintage at the time. As a comparison, those earbuds I mentioned before are worth around 528 vintage items.
22 vintage items can get you 1 key.
1 key = $2.49 at the store
1 earbuds = 24 keys = $60
1 Sunbeams Team Captain = 40 earbuds = 960 keys = $2400. (probably one of the most desirable hats in the game)
People will actually pay cold hard cash for these hats, with the goal of making more money.
I don't know much about what you are hoarding, but you will have to make sure that it has some sort of cosmetic value and that there wont be some identical replacement that will be better. Most players might just want to get the better, similar looking, item.