Tag Archives: economics

Recession-proof business models for online games

Coory Doctorow’s latest Guardian column looks at the ways in which MMO game designers are trying to make their virtual worlds immune to recessions and other external economic pressures. In a nutshell, it’s all about creating a partly isolated arbitrage economy that leverages the meatspace disparity between the cash-rich and the time-rich:

Seen through this lens, a “game” is just a bunch of applied psychology that makes kids work long hours to earn virtual gewgaws that adults are trained to desire. In this “Free to play, pay for stuff” world, kids are alienated from the product of their leisure by a marketplace where the game-company skims a piece off of every transaction.

The psychology of this is fascinating, since it all only works to the extent that the game remains “fun”. One key element is that skilled players (eg, kids) must not feel like the rich players are able to buy their way into positions of power. Game devs are advised to sell defensive items – shields, armour, dodging spells, but not offensive ones. A skilled player will still be able to clobber a heavily armoured rich player, given enough time (and skilled players have nothing but time, by definition), but may quit in disgust at the thought that some rich wanker is able to equip himself with a mega-powerful sword or blaster that gives him ultimate killing power. No one wants to play in a game where one player has an “I win” button.

(Just as a side note, I find it quite endearing that Cory has taken so naturally to British slang like “wanker” and “can’t be arsed”.)

While we’re on the subject of MMO economies, though, I might just mention EVE Online again. Not only is it unique in the connection between its in-game currency and the economy of its ‘home’ nation of Iceland, but in the staggeringly huge degree of obsession that its most powerful players can develop.

… consider that the game has both legal and illegal channels for real world income to bleed into the game. You can spend your hard-earned money on an in-game item called a ‘PLEX’ which can be used to add two months of in-game subscription time to a character, and then sell these PLEXes on the in-game market for in-game currency (isk). If you’re rich in-game and poor in reality, you can play EVE for free by simply purchasing PLEXes; if you’re rich in reality and don’t have time to make spaceship money, you can sell some PLEXes and buy as many spaceships as you feel like. Of course, many players go outside of the established CCP-sanctioned system and buy and sell both currency and characters on the black market of eBay; a substantial sum of hard currency can be earned by a diligent eBayer, and it is an accepted belief among many EVE players that some people are making a day-to-day living off selling isk.

And that’s nothing – read the rest of that report for stories of players spending literally thousands of dollars of real-world money on EVE campaigns, planning to sabotage the power lines to the real-world houses of other players in order to weaken their factions at the crucial moment, and more. No matter how many new worlds we build, we take our weird human flaws and foibles with us.

The road to post-scarcity

geodesic architectureIt seems that nothing can prevent Futurismic fiction regular Jason Stoddard from looking for the silver lining to every cloud – even beyond his fictional output. [image by dno1967]

Point in case: his recent article for transhumanist/futurist organ H+ Magazine, which glories in the sprawling title “First Steps Towards Post scarcity: or Why the Current Financial Crisis is the End of the World As We Know It (And Why You Should Feel Fine)“.

A lot of the ideas Stoddard raises will be familiar to science fiction readers, and many of his points are made by looking at the current situation from a different angle to the fashionable mode of doom and gloom. For example:

We’re also already starting to see some examples of near post-scarcity. Consider computers and communications. If you’re willing to use a computer that’s a couple of years old, you can probably find a hand-me-down for free, and then happily talk to your friends around the world on Skype using free public wi-fi.

Or consider that in the last Depression, the main worry was simply getting enough food. Today, the marketplace is more worried about maintaining the marketing budgets of 170 different kinds of toothpaste than about ensuring that everyone has toothpaste. There’s a lot of padding in the system. Couple a financial crisis with this overweight, inefficient system, and you have the stage set for the first transition to post-scarcity: a comprehensive rethink of our concept of value.

You could easily accuse the piece of being Panglossian, but I’m inclined to think that’s a deliberate rhetorical gambit on Stoddard’s part – countering an excess of negativity with a big slice of sf-nal optimism. I’m not that confident that we’ll end up in a nanotech-powered utopia devoid of all wants and needs within my lifetime, but then I’m also not convinced that we’re going to slouch our way into a scenario of global misery and decline. As usual, reality will probably end up somewhere in between the two idealised poles of punditry… but I’m not ashamed to admit I hope it ends up closer to Stoddard’s vision than many of the others.

The other side of Dubai

Last week I linked to a lengthy article on Dubai that didn’t paint it in an attractive light at all; it was pointed out in the comments (not to mention in many other places around the web) that said article was a bit of a hatchet job.

Via BoingBoing (from whom came the original story) comes a response from Joi Ito, a recent arrival in Dubai:

I’m still new to the region so I can’t speak definitively as a native, but I do know that the picture that is sketched is pretty biased and I think could be rightly called “bashing”. As far as I can tell there is a crunch going on, just like everywhere else, and the government and businesses are trying to figure out what to keep and what to shut down. There are a lot of solid businesses and a lot of solid business people in Dubai and like anywhere else, consolidation and downsizing is taking its toll.

[…]

I don’t want to sound too defensive about Dubai or the Middle East in general, but one thing I’ve learned from my still brief time is that it’s much more complicated than it appears. Just calling Muslim law and governance “medieval” and writing it off is ignorant. It’s very different and isn’t in sync with what many of us might think is “fair”. They treat bounced checks and drug smuggling very seriously. Moving to the Middle East casually and assuming that everything should be just like home is dangerous and I wouldn’t recommend it. However, I knew about the drug thing even before I visited and I learned about the “bounced checks land you in jail” thing on my first day.

He’s got some important points there; current media coverage is definitely playing to the backlash against conspicuous consumption and weird financial doings. I lived in Saudi Arabia for three years when I was a kid, and that part of the world operates very differently to the West – culturally, religiously and politically. It’s probably not fair for us to judge entirely based on our own standards.

That said, I don’t think it’s entirely out of line to point out that Dubai is still a very weird set-up indeed, and will quite possibly become an emblem of the attitudes and approaches that led us to our current economic situation.

The utter Ballardian weirdness of Dubai

Sheik Zayed Road, DubaiReading this may take you half an hour, but it’ll be half an hour well spent. Johann Hari of The Independent goes to Dubai and unearths a slice of desert dressed as utopia, full of half-finished buildings, jaded over-moneyed ex-pats and a colossal underclass of what are essentially indentured slaves. I knew the place was bent, but not this badly.

Time doesn’t seem to pass in the malls. Days blur with the same electric light, the same shined floors, the same brands I know from home. Here, Dubai is reduced to its component sounds: do-buy. In the most expensive malls I am almost alone, the shops empty and echoing. On the record, everybody tells me business is going fine. Off the record, they look panicky. There is a hat exhibition ahead of the Dubai races, selling elaborate headgear for £1,000 a pop. “Last year, we were packed. Now look,” a hat designer tells me. She swoops her arm over a vacant space.

I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. “I love it here!” she says. “The heat, the malls, the beach!” Does it ever bother you that it’s a slave society? She puts her head down, just as Sohinal did. “I try not to see,” she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.

Between the malls, there is nothing but the connecting tissue of asphalt. Every road has at least four lanes; Dubai feels like a motorway punctuated by shopping centres. You only walk anywhere if you are suicidal. The residents of Dubai flit from mall to mall by car or taxis.

It gets weirder and bleaker as you read through, making you realise that until recently the public veneer of Dubai was very effective in keeping us from seeing what was really happening… that and the complicity of our own willingness to accept what we’re told, of course. To paraphrase Mark Twain, the truth’s always stranger than fiction, because fiction is required to make sense. [image by chorcel]

Iceland’s economy is dependent on imaginary space pirates

EVE Online screenshotCourtesy of Jamais Cascio, here’s just another reminder of the fact that we live in a very strange world that gets stranger by the day. Point in case: the wrecked economy of Iceland is less real that that of the online space RPG EVE Online:

The in-game currency of EVE Online is the ISK. That’s right, the Icelandic króna. And where most multiplayer games have attempted to ban the translation of in-game assets to and from real-world money, EVE Online has not only permitted it but actively embraced it – so much so that daily speculation on world/game financial leverage is conducted openly on the official game web boards. As a result, the EVE Online ISK has remained fairly stable against virtually all the real currencies of the world for a few years now, fluctuating but not spiking, not crashing. There are people out there making an income, a real-life income, just handling the trades on the “floor”.

All of which is to say: Iceland has collapsed so thoroughly that at this point, it’s only economically viable export may very well be an internet spaceship game, and that internet spaceship game’s króna is for all intents and purposes a more real and valid and valuable currency than the actual country’s actual money.

Strange stuff is afoot in the Global Village, no? [image by Psycho Al]