by Accurax

The In-Game Economy of Guild Wars

First of all, I’d like to say thanks to all those people who have taken the time to read my original article, and a special thanks to all those who made such constructive comments and suggestions.

These second articles has been written with the intention of “pulling together” all the comments and ideas’s generated, and formulate a clear explanation of the mechanisms working within the Guild Wars online economy, its pro’s and its cons. Towards the end of the article, I will also present an argument for the effective structuring of an online RPG using guild wars as an example in case.

Understanding that this may run into a substantial piece of text, I spent a few days considering how best to lay it all out, I wanted it to be both readable as a complete work, and allow people the opportunity to see my responses to their specific comments / suggestions in the original discussion forum. So, I am going to write this article as a standard piece. However whenever I quote, or otherwise comment upon any subject that I feel you may have contributed to or commented upon, I will endeavour to mention your name in bold type. This I hope will allow those of you who simply wish to see a response to your post’ to use the Ctrl+F command on your browser to jump to those segments relating directly to you. (If you don’t find anything relating to you, when you feel as though you should, I apologise. The weight of response was simply beyond my ability to provide everyone with the credit they deserve for participating in this discussion).

Now, with all that out of the way, I shall begin to blow my own (and your) trumpet.

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It was established in the previous article that the 3 factors that form the basis of the Guild Wars economy were as follows.

1. The Players
2. The Tradable Items
3. The Gold

It was also shown that both items & gold are increasing in quantity exponentially as the game gets older. This occurs naturally as players find both whilst questing and farming.

Now the main subject of discussion within the original article was that of Inflation and, its effects both within the online world and separately its effects on games future from Arena-Nets point of view.

Wikipedia defines inflation as:

“Inflation refers to the increase in the general level of prices of a given kind. General inflation is caused by a fall in the market value or purchasing power of money within an economy.”

Sluggs, in his original post suggested the following

 “The quantity of gold and items does not increase without limit.”

Unfortunately this is incorrect. It is true that there are limits upon the number of items and the amount of gold that can be held by a given account, but it is not, I believe, in ANet’s business plan to restrict the number of copies of the game sold and therefore the number of accounts held. Remember, this game carries no monthly fee, and therefore ANet’s main source of funding comes from the sale of license fees.

It is therefore absolutely certain that the quantity of gold and items is in fact increasing without limit, new players will join, and veteran players will open 2nd or even 3rd accounts simply to hold their items and gold. I myself after being in the game only a few months have met people with multiple accounts (and even seen them for sale for in game gold).

“The economy isn’t in any serious trouble and isn’t heading that way; it has been deflating over the last couple of months”
     Sluggs

”However, oddly enough, according to this thread http://www.guildwarsguru.com/forum/s...ad.php?t=44867, the prices has been dropping.”
   Barinthus

It is true that prices on both crafting materials & “godly” items has fallen over the past few months. However, I would tend to put this down to a direct result of the opening of Sorrows Furnace rather than any true deflationary tendencies. The opening of a new area of the game will, without doubt dramatically increase supply of all items, therefore driving the price down. This is not deflation; the prices of the items are still inflated. It is simply a case of increased supply (or competition in the case of green items) has driven the price down. As such, once the shockwave subsides, and this could take time, all items will once again begin to creep up in price.

One post in the above thread mentioned by Barinthus particularly caught my attention, it was by Thejynxed and suggested amongst other things that:

”Less gold in the economy period (wealthier players moving completely to PvP, gold sinks, loot nerfs, etc)”
   Thejynxed

I have to admit, this is a point I hadn’t considered myself and I’d like to thank Barinthus for bringing it to my attention. It is true that the quantity of gold active within the economy may decrease as well as increase, and this is most likely due to Pve’ers moving over to PvP. Bear in mind, however, that these people may well have had massive stock loads of gold previous to moving to PvP. I think its hard to believe that they would simply delete those PvE characters holding it, even though they may not have actively PvE’s for some time.

It is also worth noting that we are fast approaching Chapter 2, now, this upcoming expansion will (I believe) be a retail release, and this means that Guild wars will once again be on the most prominent of store shelves, this of course is going to have three effects:

1) The new supply of items will attempt to drive the prices down (supply / demand)
2) The new players who buy guild wars for the first time when Chap 2 is released will attempt to drive the prices back up, by increasing demand.
3) The aforementioned PvE deserters will return (gold intact) from PvP to play the new chapter, and therefore will increase demand and drive prices up.

It seems to me that we are likely to see prices stabilize, and then increase dramatically after the expansion is released. I may be proved wrong (and hope I am), only time will tell on this.

According to Sluggs, the exception to the current reduction in price seems to be that of the superior runes, which appear to have continued increasing in price. It may be that the drop rates have been nerfed, but equally it could be that since “runes are only traded” (Sluggs), they are in fact more susceptible to inflation than other items. This, combined with a possible nerf, could explain a drastic increase in value.

“For someone who just bought the game and came out of pre-searing, who only has about 200g in his pocket, paying 8-12k for a sword may seem discouraging.”
  Diablo tm

This really does encapsulate the problem. The inflation within Guild Wars is never really going to affect those people who have been playing since Beta and have more gold than they could ever spend. However, it does seriously affect new players. Even if the quantity of gold drops were increased in pre searing to 100g for killing a Scale, this would only further increase inflation. New players may believe they could never compete, never be equal and they may slowly stop playing and give up.

So, why not simply remove gold from the game as so many of you suggested (MSecorsky, Lyra_song, and Cloud Moonstalker). This of course would move the economy to a system of pure barter.

Sounds good?

Well, I agree that the real problem here is the gold, not the items. However whilst removing the sun would stop skin cancer, it unfortunately creates more problems. Removing gold from the game would unfortunately only solve one thing; it would stop items being valued in gold.

However as dustbunny said:

 “If there is no gold, what will happen is another item will become the currency unit.”

 “If gold is the $1 bill in this game, obsidian shards and globs and ectoplasm are the $50 and $100 bills.”

So we remove gold, what happens is that an obsidian shard, ectoplasm or even dye’s become the currency. And although this may initially solve the problem, we need to remember that the supply of this “new currency” is subject to the same problems as gold before it. That is, it has no limit.

We would end up with a situation where instead of that perfect gold chaos axe costing 50-70k, it now costs 10 ecto’s. Inflation would still exist but with the added problem of no common trade commodity. Thus, the chance of being scammed or ripped off would increase dramatically. Increasing the drop rates of these new currency items would simply mean that the axe would cost 40 ecto’s instead of 10, its all relative.

Ok, let’s move away from gold, and address the problem of items,

“Why not just drop the whole concept altogether, as well as gold? All it adds to is farming, eBay and grief. Still have ectos, sure... but enough so anyone that wants them can get them easily or find someone with plenty to share. Still have fellblades... but without gold or 'rare' drops they're worth the same as any other sword, just look different.”
  MSecorsky

Interesting idea, if all items were easily available and anyone could get them then there would be no need to trade at all and therefore no need for gold. The problem of inflation would be instantly solved. Unfortunately, I think we may very soon find ourselves out of a game if this were to be implemented. I think Diablo tm said it best when he posted;

“If there is no gold, if all the rare items are no longer rare, everybody would have everything they'll ever need in the game.... Why should they continue to play if there's no longer the need to?” 

This of course could be a serious problem, but depending on how you look at it this situation already exists. Lagg made this post;

“First of all, let's set things straight. There's no such thing as "gold" or "items" having any value in Guild Wars. The only real commodity is time.”

This of course is totally true; unfortunately it’s also true in every other online game as well as in real life.

“As for the truly hard-to-get PvE commodities (ectoplasm, shards, perfect crystalline swords), they are reserved for the hardcore player base and offer no advantage whatsoever over the newcomers, apart from "looking cool".
Lagg

Again, technically true. These “rare” items do not offer any real advantage, apart from “looking cool” that is. However I think subjecting new players to the depraved depths of un-coolness is maybe a little on the harsh side.

Diablo wrote quite an in depth post sometime afterwards (post No’ 54), and I think it may be worth a read for anyone who’s interested. I liked his ideas very much, and I wish he hadn’t sold himself short. The idea is basically that you fix the quantity of gold within the system and have monsters only drop crafting materials. In this way inflation of gold would not exist, and since the crafting materials are single use commodities, item inflation would cease to be a problem in addition.

Diablo however pointed out a flaw in his own idea at the end of his post;

“3.) The Players.
This is one factor that can NOT be controlled. New people will buy the game and new players will join the world of Tyria, but with a fixed amount of GOLD, theoretically in the near future, people would become poorer and poorer (quite opposite of the problem we have now...)”

He is right of course, with a fixed amount of gold and new players entering the system all the time, theoretically the Guild wars economy could become extremely De-factionary. In fact, we may actually encounter the first ever online recession, if that ever happened, I for one would be taking a baseball bat to my computer.

However, this post had much merit, and in fact Diablo mentioned the answer to his problem himself, he just didn’t link the two situations together;

“Now about the Gold, gold can be regulated by having a set amount of gold in the game at all time (much like reality), it may be monitored occasionally by the Treasury (ANet) from time to time in case someone deletes a character with a storage full of gold... in that case ANet can artificially feed gold back into the system by either having a little "Government Liquidation" or "Giveaway event"... This way gold is no longer increasing exponentially but is kept in check by a third party.”

ANet can feed gold into the system, as old gold is deleted. Is there any reason why they can’t do the same when new accounts are activated? Monsters could only drop gold when there was a need to feed it back in, the only policy implementation required here would be to decide how much gold to feed back in, and where to have it drop.

I would suggest having small amounts dropped almost constantly, this would be much like the situation we have now, except that the drops would be “controlled” in order to maintain economic stability, based on the number of activated and deleted accounts.

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This last section leads nicely into my suggestion for a low maintenance, smoothly functioning online economy. I am going to use Guild Wars as an model for this suggestion. I am not suggesting that we start making drastic changes to the game as it is, simply that if it were done this way from the beginning I believe things would be better. So keep those flames to yourself please.

This suggestion is derived from my own research and from the responses posted on the original thread. As such I would like to thank everyone who participated.

Removing gold entirely from the game is clearly not a truly viable option; however a model such as that which follows may function:

• Gold ceases to be “manufactured” when monsters are killed, any gold dropped by a monster is a direct result of the need to introduce more to the system. This removes the problem of gold inflation.

• Items are still dropped by monsters.

• Crafting materials are still dropped; possibly increase the drop rate to account for the lack of gold drops.

• Nothing is sold by merchants apart from that which has been sold to them. In this way item inflation is controlled.

• The price to purchase items from a merchant is based on the stock level and the demand (as more are bought the price goes up, as more are sold the price goes down).

• Implementation of Auction Houses’. This increase’s buyer to seller contact and will allow for the fact that NPC traders are likely to only have low end items in stock.

• All gold caps are removed, players may carry and own as much gold as they can earn.

• Storage is increased, this is necessary if auction houses are to be implemented, as more people will begin to play the market “professionally”.

• Items are listed at there last sale price, i.e., the last price paid by an NPC trader.

• All gold paid to NPC traders is recycled into “controlled” monster drops in random areas of the game.

• A-net monitors the quantity of gold held on each account, and, if that account is deleted, or banned the required amount of gold is filtered back into the game.

• A-net monitors the creation of new accounts; every time a new account is created an amount of gold is “manufactured” by A-net and fed into the game.

(The correct amount of gold required when a new account is created would need to be calculated by A-net, as it would be directly proportional to the amount of gold in circulation at the time, the proportion of this held by players, and the proportion held by NPC traders and monsters.)

This system will control the economy, it will stabilise prices, reduce inflation, and create a system where new items can be introduced constantly without fear of “screwing things up”. The programmers would be able to spend more time working on content for the game, and less on dreaming up new gold / item sinks. The above system would create a level playing field for new players to start from, whilst simultaneously not hindering those that currently have, or strive to have great wealth.

It is realised that in the above system items, and crafting materials are not restricted. However, this ceases to be a problem when you control the gold. An ever increasing supply of items in a world where money is controlled would actually cause reduction in the price of these commodities.

This effect would therefore serve to actually increase a person’s wealth, as the buying power of a gold piece increase’s. This of course would be mitigated by the single use status of crafting materials, and the tendency for people to simply salvage lower end items.

Well that’s about it, its getting late and I’ve spent far too much time writing this (5 hours now), I know its not healthy LOL, but I would have felt bad if I didn’t respond to so many people.

Again I apologise if you feel that you didn’t receive credit for your post, or if you feel your post contained valuable material.

To participate and see the original Guild Wars Economy Explained post by Accurax you can view it here.