More from Ian Mortimer’s Time Traveler’s Guide to Medieval England:

“...blind horses are usually worth only about half their usual price. In case you are wondering why there are so many blind horses, it is because they have been stolen, and blinding a horse is one way to prevent it from finding its way back home or recognizing its true master.”

If you think we treat animals substantially better today, you need to do some fucking research.

Play Time

Analysis of MMORPG play as economic activity

Play Time: The Problem of Abundance in MMORPG

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This work provides a qualitative economic analysis of play within massively multiplayer online roleplaying games (MMORPG). Important sources of developer revenue and cost are examined. The player’s game wants are divided into four categories: accomplishment, content, power, and fellowship, and the genre’s particular way of satisfying these wants is revealed. MMORPG design conventions are analyzed, and shown to manage tensions between conflicting developer and player wants, while generally serving the developer’s profit motive. Finally, a solution to the problem of abundance is offered. It is argued that the game world’s apparent abundance is illusory; play value derives instead from scarce real-world goods like game content and player time.


1 Introduction

MMORPG are notable for the extraordinary amount of time that players spend playing them. For economists, the true cost of a purchase or other action is its opportunity cost, the value of the best alternative that was given up. When the opportunity cost of a player’s time is measured by their wage, even low-wage players invest hundreds of dollars worth of play time each month, making the nominal cost of the game — the box price and subscription fees — a triviality. Many critics (and some fans) claim that MMORPG are ‘addictive’2. Some blame their obsession with MMORPG for failing grades and failed marriages.

Though players are keenly dedicated to MMORPG, it can be hard to tell why or even whether they enjoy their time in the game. Some exercises, such as crafting or hunting, are extremely repetitive. Important spawn points are often the site of camping, where groups wait for hours at a time to loot rare mobs. In games where character attributes or skills increase through use, it is common for players to ‘practice’ these statistics by repeating the same action hundreds or thousands of times in a row.

This quest to accumulate game wealth recalls the problem of abundance. Game developers can instantiate game goods in arbitrary quantities; if they did so, would players obtain more value from play? Intuition suggests that there is no free lunch, even in fantasy worlds. As will be seen, that intuition is correct.

MMORPG look like ‘all fun and games’, yet for players they are not always fun, and for those who trade characters and items for real-world money, they are certainly more than games. The following pages develop these ideas and attempt to understand their economic implications.

2 Wants and constraints for developers and players

Economic phenomena result from the opposition of wants and constraints. In the game industry, there are two agents: the developer, and the player. To understand the economics of MMORPG play, it is necessary to understand what motivates and constrains these actors.

2.1 Developer revenue

Developers seek to maximize profits, which invokes the familiar trade-off between revenue and cost. Though game companies can earn revenue from other sources (by licensing game technology, for instance, or selling in-game product placements), most is derived from the sale of game services to players. These take the form of box sales, subscription fees, and fiat sales.

2.1.1 Box sale revenue

Box sales — thus named for the colorful game boxes found on store shelves — include sales of the basic game client, plus expansions3. MMORPG box prices drop quickly after release; a box priced initially at $50 might sell for $10 a year later. Players do not necessarily buy each expansion, either; casual players will have difficulty consuming even a portion of the content from a typical MMORPG. Box sales are thus an important but relatively sporadic revenue source. Their true benefit may be the recruitment of new subscribers, which boxes facilitate by manifesting a retail presence, and by generating reviews and other game press coverage.

2.1.2 Subscription fee revenue

The most important revenue source by far is subscription fees. An earlier generation of online games charged by the hour or even the minute for game access. Offered as ‘premium services’ by the ISPs of the day, these games usually cost around $5 per hour, though hourly rates could rise as high as $19 for some (Mulligan 2001, Mulligan 2000, Mulligan & Patrovsky 2003, p. 453). After AOL moved to a flat rate monthly rate for online access in 1996, many companies were forced to abandon this model. As of 2004, most MMORPG charge flat monthly rates, and these provide the bulk of the industry’s revenue. A typical MMORPG now generates some $120 to $192 in subscription fees per player year. This revenue (equal to the sale of at least three game boxes) incurs no packaging, marketing, or merchandising costs, and accrues whether or not the subscriber even uses their account. Subscription fees are the real payoff for developers and the investors who back them.

2.1.3 Fiat sale revenue

A third, more novel revenue source is fiat sale, which Project Entropia — an ambitious new MMORPG — uses as its primary revenue source. Game play in PE is theoretically free; the client is offered as a free download, and no subscription fees are charged. Instead, players are encouraged to purchase units of game currency (Project Entropia Dollars or PED, priced at ten per U.S. dollar) which can be used to purchase goods and services within the game (Project Entropia Infobooth 2004). The industry veteran, Ultima Online, recently made its own foray into fiat sale with its Advanced Character Service. For $29.99, this controversial service delivers a partially-developed character, saving dozens of hours of apparently unwanted play time4. Though unproven as yet, this revenue model should hold interest for developers and economists alike.

2.2 Developer costs

Developers face many costs, three of which bear directly on the service they provide to players: content development, bandwidth and server load, and customer service.

2.2.1 Content costs

The first and greatest cost is the development of content, the substance of the game itself. As will be seen, content encompasses many aspects of the game experience; it includes the designs of items and mobiles that populate the game world, the art, sounds, and stories that give it color, and the game play that animates it. Also included (for purposes of this discussion) are the technical details that support these elements, including graphics technology, plus database and network infrastructure. It is primarily content that differentiates one game from another. Content provides materiel for marketing, it influences reviews, and ideally, it produces an enjoyable play experience.

Content production requires unusual and expensive inputs such as game design, computer art, software engineering, and quality assurance. A typical MMORPG is the product of years worth of effort by dozens of specialized workers. Game companies can expect to spend millions on content before earning a cent of revenue. Compounding the expense of this process is the uncertainty inherent to software development; large projects can run years overdue, and the confluence of volatile computer technology and intense game industry competition adds even more risk. Though the most extensive and costly development takes place before launch, MMORPG maintain smaller, permanent teams to provide ongoing development. These teams fix bugs and exploits, and introduce new content to maintain players’ interest. Their wages are a significant part of the game’s operating costs.

Economists describe a good as non-rivalrous if, having been produced for one consumer, it can be provided to other consumers at no additional cost. Most intellectual property meets this criterion, and content does too. It is therefore a fixed cost that does not vary with the number of players or the quantity of play time. The consumption of content is examined in greater depth in sections 2.3.2 and 3.2.1.

2.2.2 Bandwidth and server costs

Bandwidth is a measure of the information that passes (or can pass) through a network. Load describes the processing work done by a computer, including CPU utilization plus disk and memory usage. A lack of bandwidth or server capacity can prevent servers from reacting promptly to player input, making the game difficult or impossible to play.

Bandwidth is a suprisingly costly resource, accounting for as much as 20% of MMORPG operating costs (Mulligan & Patrovsky 2003, p. 26). Servers are also expensive, and their upkeep incurs additional cost.

Bandwidth and server load vary with the number of player connections. Though this number varies greatly over the span of a week, sufficient capacity must be allocated to meet peak usage levels, despite the underutilization this produces at other times.

2.2.3 Customer service costs

Players have questions about billing and technical problems, which MMORPG answer with telephone and e-mail support. The novelty and complexity of the MMORPG world also demands a specialized form of customer service in the form of gamemasters or GMs. These personnel address problems that arise within the game itself, helping characters afflicted by bugs, or managing abusive players. Though GMs use character-like personae within the game, their powers extend well beyond that context; they can create items or alter the game world, review logs of character speech and game events, and even ban players from the game. Managing the frustrations of a large player base is costly and difficult, but also necessary to retain players and subscriptions.

Like bandwidth and server load, customer service is a variable cost, though it could vary with total player population as much as connection concurrency. Customer service staff earn lower wages than content developers, but they are employed in greater numbers; popular MMORPG employ dozens of GMs (Mulligan & Patrovsky 2003, p. 236) across three shifts, incurring another significant operating expense for game companies.

2.3 Game wants

Why do people play MMORPG? Why are subscriptions paid, wages forgone? Games appear to be played for their entertainment value, but this cannot explain the paradox of asymmetric trade: the fact that some players pay others to play — in effect — for them.

Trade mediates differences in preferences or endowments. The existence of asymmetric trade implies some variation in these, particularly with respect to the production or disposition of game assets. What preferences might these be? What endowments affect production in the game world?

Economists distinguish consumers’ desire for leisure from their consumption preference, which is ultimately expressed by their willingness to work. MMORPG play looks like leisure, but asymmetric trade blurs this distinction by attaching financial rewards to game play. The leisure and work aspects of MMORPG play must be distinguished if the phenomenon is to be understood.

The reasons for playing are doubtless as varied as the players themselves. When systemizing player motives, two criteria suggest themselves. First, it seems futile for an economic analysis to target phenomena with no obvious economic meaning, so vague concepts like ‘escapism’ will be ignored. Second, since this work addresses MMORPG, the proposed motives should be ‘definitive’ with respect to that genre, reflecting wants that MMORPG are particularly suited to satisfying. So, although some parents use MMORPG as a family activity to be shared with children, this use neither distinguishes MMORPG, nor is it a likely design focus for developers, and it will be disregarded.

With this in mind, four game wants are proposed for MMORPG players: accomplishment, content, power, and fellowship5. As will be seen, two of these relate particularly to the possession of game goods.

2.3.1 Accomplishment wants

A significant but unstated function of most games is to distinguish players from one another, and from those who do not play. They do this by identifying one player or team as the ‘winner’. Most also define subordinate goals (for instance, points to be scored) that allow distinction to be shared somewhat, so that those who participate — win or lose — obtain distinction or satisfaction from play. The completion of these goals (lesser and greater) and the distinction that follows will be described as accomplishment.

Ubiquitous qualities confer no distinction, so accomplishment can also be defined as the purposeful attainment of a scarce outcome. Though they vary greatly in form, all games are alike in one respect: they present players with a goal, and they restrict access to that goal with a challenge of some sort, this arising from physical or mental constraints, chance, or the efforts of opposing players. The more difficult the challenge, the more scarce is the goal or outcome, and intuitively, the greater is the accomplishment. Thus are challenge, scarcity, and accomplishment functionally linked6. Though accomplishment is provided by non-game activities (particularly hobbies and work), games are especially suited to creating it. This is arguably what distinguishes them from other leisure activities.

Like most roleplaying games, MMORPG define no winner per se, but they do provide numerous opportunities for accomplishment. These include small, discrete tasks — quests to finish, mobiles and players to defeat, items to craft or loot — along with more general tasks, such as the improvement of one’s character. Most accomplishment results in the creation of game wealth, in the form of items or character advancement, but this wealth should not be confused with accomplishment itself. Accomplishment describes an achievement; game assets are merely a byproduct or token of that achievement. Thus, though game goods can be transferred between players, accomplishment cannot.

Accomplished players clearly enjoy the distinction that their success confers. Yet accomplishment arises from many activities — why pursue it in MMORPG? Because rewards in the game world, though small, accrue consistently. ‘Real’ life offers no such guarantee. For all the complexity of MMORPG, they are safer, more manageable, and — for many players — more rewarding than the alternatives.

2.3.2 Content wants

All MMORPG are alike in a general sense, but each is different in thousands of small ways: different themes and stories, different art, different game clients, and different rules. These details will be broadly described as content. For purposes of discussion, content will be divided into three categories: aesthetic, play, and technical.

Aesthetic content is basically decorative; it includes visual art, writing, music, and other work that ornaments the game world. It also establishes the narratives that support roleplaying. This type of content is found in many entertainment media, and gamers enjoy it the same way other consumers do.

Play content is the output of game designers; it includes the design of items, mobiles, quests, areas, and the play mechanics that interrelate them. While aesthetic content is consumed passively, play content is explicitly interactive; it is enjoyed by engaging new opponents, learning and executing new strategies, and most generally, by striving within and against the constraints of the game world. Play content should not be confused with accomplishment, however. Though accomplishment is linked to challenge, and though play content is the medium from which challenge is created, a game’s difficulty (and thus its accomplishment value) is independent of its content. In fact, the difficulty of a MMORPG is essentially arbitrary, as will be seen in section 3.1.1. Also, accomplishment accrues only when success is realized, but play content is enjoyed presumably regardless of outcome.

Technical content is the necessary (and ideally hidden) complement to aesthetic and play content. It includes the server and client software, plus other contrivances that animate the work of the game’s artists and designers. It is not customary to describe these technical details as game content, but they are consumed at the same time, and they are too expensive to ignore.

Content is consumed by viewing or interacting with it. Particular quantities of content are associated with specific game states, such as the character’s location, or their class and level. As will be seen in section 3.3.2, this constraint is an essential part of MMORPG design.

2.3.3 Power wants

In many games, players are distinguished by skill or natural ability, qualities that determine not just their chance of winning, but more generally, their ability to act within the constraints of the game. Though skill is a factor in MMORPG, power — a quality inherent to the character rather than the player — is far more important.

Power will be used to describe the character’s ability to change the state of the game world. While state changes take many forms — Ultima Online allows characters to build furniture and grow houseplants — their most common application is combat. Despite its cinematic qualities, MMORPG combat is essentially a quantitative contest. Power is similarly quantitative, deriving from the attributes of the character and their equipment. Though player skill augments power, it is much less than decisive; even the most skilled players are helpless against nominally more powerful opponents7. Also, unlike player skill, power inheres to game assets that are easily exchanged. This allows power to be transferred between players.

Why do players value power? Most players desire a sense of autonomy and control when they play. To this preference MMORPG offer a combination of threats and opportunities.

The most infamous of player archetypes is the griefer, one who enjoys upsetting other players. Though griefing can take many forms, it often manifests as (and is sometimes redressed through) player-killing. Obviously, power is the prevailing dynamic here, both psychologically and practically: it allows griefers to harass more effectively, and it gives their victims the ability to resist. Many games disallow overt PvP combat, but it is usually possible to project force against players indirectly. A classic example is the train, a group of hostile mobiles lured (intentionally or otherwise) toward unsuspecting characters. Those engaged in ‘consensual’ player-killing (combat motivated by friendly competition rather than malice) also have strong incentives to accumulate power.

Other players wish to help their peers, especially newbies, whom they patronize with gifts or magical assistance. Since power allows players to alter the game world — a world they share — almost any manifestation of power can affect other players.

So, whether a player wishes to injure or aid their fellows — or simply protect themselves — their ability to do so is largely commensurate with their power. Power also limits content consumption, as will be seen in section 3.3.2.

2.3.4 Fellowship wants

As players travel the game world, they meet, collaborate, and compete with countless other players. Some of these meetings lead to persistent relationships — friendships, partnerships, rivalries — that can hold great value for the player. The body of these accumulated relationships will be called fellowship. Most fellowship is presumably friendly in nature, but other types can be imagined, and in fact, any persistent relationship that provides value to some player can be usefully described with this term8.

The appeal of fellowship requires no explanation, but why should it be sought in the game world? For all the obstacles MMORPG present to sociality — player anonymity, the awkwardness of computer-mediated communication — they offer useful aids as well. The game provides a useful topic of conversation, and few players can resist comparing strategies or enumerating complaints. Also, the esoteric nature of MMORPG presumably attracts players with similar backgrounds and interests. Though it invites abuse, even anonymity can promote sociality, since it diminishes the cost of adverse social outcomes. Of all the game wants, fellowship has the least to do with game play per se9, but it remains an important part of the play experience.

2.4 Non-game wants and player constraints

Even the most dedicated MMORPG players have real-world wants. Like all economic actors, players face constraints of time and wealth that force them to choose between consumption and leisure, and also between game and non-game leisure.

Consumption correlates with income, yet more time working means less time playing. Economic actors solve problems like this by balancing costs with benefits. In an efficient market, for players who work, the opportunity cost of play time is their wage rate. For those who do not work10, the opportunity cost equals or exceeds the wage they would earn if employed11. MMORPG play thus incurs significant costs for all players. Play can also be viewed as a form of consumption, since it incurs box costs and subscription fees, but these are small relative to play time costs for most players.

As will be seen, asymmetric trade offsets the cost of MMORPG play by increasing the non-game wealth of sellers, and by substituting for the play time of buyers. The magnitude of this trade benefit is determined by the quantity and price of the goods traded, which in turn depend on the aggregate supply of and demand for such goods. Consequently, for those who engage in asymmetric trade, the value of game play — this being the balance of its costs and benefits, financial and otherwise — depends not only on their own preferences and endowments, but on those of their peers. The relationship and interaction of these preferences will be examined in Play Time: Principles of MMORPG Asymmetric Trade.

3 Abundance and scarcity in the game world

Important sources of developer revenue and cost have been identified, and four game wants have been attributed to players. Many theories of player motivation can be imagined, however, some perhaps just as compelling. How does this approach help us understand MMORPG?

By analyzing the economic nature of the four game wants, several defining MMORPG design characteristics can be shown to support the developers’ profit motive. Even design aspects with no obvious economic relevance can be shown to affect profits directly or indirectly. It can also be shown that an intrinsic tension exists between the goals of players and developers, one that is resolved for players by asymmetric trade.

To that end, the specific interaction of these factors — in particular, the way that satisfying game wants incurs cost for one party or another — is examined below.

3.1 Accomplishment scarcity

MMORPG players measure accomplishment with metrics defined by the game itself, such as character levels, items, or money. Could these be the source of accomplishment value? Recall the problem of abundance: developers can instantiate game goods in unlimited quantities; if they did this, would players experience more accomplishment? Clearly they would not, so what is the real source of accomplishment value?

As argued above, players value accomplishment because it distinguishes them from others. It does this by associating successful players with scarce outcomes, this scarcity being maintained by (and synonymous with) challenges inherent to the game. The game wealth generated by MMORPG accomplishment is not implicated here; instead, the substance of accomplishment is challenge itself. To understand accomplishment, it is necessary to understand the nature of MMORPG challenge.

3.1.1 Elitist and egalitarian challenge

Game worlds are not bound by mundane scarcity, so how can success be constrained?

Two methods suggest themselves. One is to favor a few players while denying success to many others; this will be called elitist challenge. While most elitist games distinguish players by skill or physical attributes, any distinction is sufficient to produce elitist challenge, no matter how arbitrary12. Another method is to impose a cost upon game play13; this will be called egalitarian challenge.

Most games, including MMORPG, offer a mixture of elitist and egalitarian challenge. In MMORPG, elitist challenges are often problem-solving exercises, such as the solution of quest puzzles, or the allocation of scarce character resources. Egalitarian challenges include time-consuming tasks like combat14, crafting, and travel. Most agree that elitist challenge, which exercises the player’s ability, is more engaging than egalitarian challenge, which merely exhausts their resources. Yet MMORPG overwhelmingly emphasize egalitarian challenge15 — why is this?

Elitist challenge presents a problem that is fundamentally economic. If players wish to accomplish when they play, then by discriminating between players on the basis of ability, elitist challenge narrows the market of potential subscribers. This claim is supported by looking outside the MMORPG genre. Other, more elitist computer games (particularly action and strategy games) are often played online, but they are seldom implemented as large, persistent multiplayer worlds. While there could be many reasons for this, only a subset of all players would excel in these elitist settings, and the rest would inevitably be frustrated. Instead, online games with elitist challenges typically offer small, transient game sessions, which makes it possible for players to segregate themselves by skill.

The nature of elitism may account for another convention of MMORPG play. To the extent that they exist, elitist challenges can often be bypassed by consulting one of the countless websites devoted to MMORPG play. These sites offer a wealth of information, including data on items and mobiles, quest ‘walkthroughs’, and recommendations for training and outfitting characters. Though generally the work of hobbyists, their content is accurate and extensive; their use can — at the player’s discretion — turn interesting challenges into merely tedious ones. This allows players to avoid elitist challenge if they lack the ability or the taste for it. Furthermore, while game companies often use intellectual property (IP) claims to contest the legality of exogenous trade, they have never made a practice of targeting sites that host game spoilers, even though these manifest more obvious forms of IP infringement. This may be a public relations gesture, since spoilers are popular with players, and exogenous trade is not. It could also be that developers value the flexibility spoilers offer in the face of varied player abilities.

Note that — although accomplishment derives from cost — asymmetric purchase does not itself create accomplishment. While the real-world purchase price of a game item does constrain buyers, the means of overcoming that constraint are extrinsic to the game. In other words, acquiring real-world wealth may produce something like accomplishment for the player, but that accomplishment is experienced in the real world, where the money was earned — not in the game.

3.1.2 Accomplishment and play time

For whatever reason — tradition, economic function, or player preference — MMORPG are fundamentally egalitarian. Such challenge associates successful play with a cost; in MMORPG, the bulk of this cost is time. The accomplishment value of a game task therefore depends on the play time necessary to complete it, with short tasks yielding little accomplishment, and long tasks yielding more. Players measure MMORPG accomplishment in terms of game wealth and power, but — in this context — these are merely tokens for play time, just as money is a token for real-world value. Moreover, accomplishments conferring little or no power often hold great value for players. One example are the ‘titles’ conferred to characters in Ultima Online when they complete difficult tasks.

Since most MMORPG play results in character advancement of some sort, and since there is no shortage of time-sapping challenges for players to undertake, it can be assumed that accomplishment accrues at an essentially steady rate as the game is played. Skilled players may accomplish at a faster pace, but only to the extent that elitist game mechanics are present — mechanics that diminish the accomplishment rate of unskilled players. Nor can developers change the accomplishment earned in a unit of play time, since that quantity is ultimately a manifestation of real-world time scarcity. Only players can choose how much is accomplished and when.

This notion of accomplishment is particularly exemplified by character ‘training’. In games where character skills increase through use, it is common for players to improve stats by repeating a single action hundreds or thousands of times. Some players escape this tedium with scripting tools16, but others manually nurse their characters through countless incremental skill increases, often for hours at a time17. It is hard to see the need for this practice, given the relatively low cost at which skilled characters can be purchased, and it surely has no other entertainment value. Training offers only accomplishment, in its most tedious and egalitarian form.

3.1.3 Play time costs

Who pays for play time, and how much do they pay? Two obvious costs are incurred: the opportunity cost of the time itself, and the cost of bandwidth and server capacity18. By far the greater of these is opportunity cost. In one study, almost 70% of EverQuest (EQ) players reported working full- or part-time, at a mean net wage of just over $20.00 per hour (Castronova 2001). In this and another study, EQ players also reported spending, on average, more than 20 hours per week in-game (Yee 2001, Castronova 2001). These figures hint at the staggering opportunity cost of play time. If the labor market is assumed to be perfectly efficient, and if the demand for real-world MMORPG player labor is perfectly elastic (meaning that a MMORPG player can work any number of hours without lowering their wage rate), the average employed EQ player enjoys some $1600 worth of play time per month.

Bandwidth and server costs accrue to the developer, but they are ultimately paid by players in the form of subscription fees. One industry source estimates these costs to account for almost 25% of MMORPG revenue19 (Mulligan & Patrovsky 2003, p.68). If subscription fees average $15, bandwidth and server load cost roughly $3.75 per month20. This yields a liberal estimate of five cents per hour of play — one quarter of one percent of the time opportunity cost for employed players.

The player’s willingness to pay these impressive costs implies that play time offers great value as well, whether this derives from accomplishment or another play output. Most importantly, relative to the value it offers players, play time is almost trivially inexpensive for developers21.

3.2 Content scarcity

Content is the developer’s most direct contribution to the play experience, and the best means of differentiating their product from other MMORPG22. The great cost of content production has been outlined above; are costs associated with its consumption as well? It might seem that a content-heavy game would use more bandwidth, but the difference is probably small. Most content — 3D models and textures, sound effects, game logic — resides permanently on the server or the client, and is transmitted at most once, when the client is updated. As for player costs, if there is a limit to the amount of content a player can consume in a unit of play time, existing MMORPG (to judge from their highly repetitious nature) have yet to approach it. Therefore, neither developers nor players incur significant cost from content consumption per se23. Only its production incurs cost, and this is borne by the producer24.

Although a given unit of content can be distributed and consumed any number of times, it provides a fixed quantity of value for a given player. Just as a joke loses its impact with each telling, a quantity of content becomes less compelling as the player’s familiarity with it grows. This phenomenon is nicely illustrated by the practice of ‘re-hueing’ objects. Because models and textures are expensive to produce, developers stretch this content by reproducing it in different colors; a single game might feature giant black beetles, giant red beetles, giant green beetles, and so on. These mobiles will have different hit points, different attacks, et cetera, but such differences are largely quantitative, and players quickly tire of this trick.

3.2.1 Content density

If there is no limit to the content that players can consume, how do developers economize on this expensive input? A game’s content is not delivered all at once, the way a book would be; instead, small quantities are parceled out to players as they build their characters and explore the game world. This suggests a useful metric. If quantities of content are measured by their production costs, content density can be defined as the production cost of the novel content experienced in a unit of play time. This value may vary throughout the course of a game, but generally, the game’s overall content density must equal its total content cost divided by the play time necessary to access all its content. By measuring the player’s content consumption per time, this gives an indirect measure of the content benefit from play.

3.3 Power scarcity

Power is the fabric of the MMORPG world, determining the success or failure of most game actions, and largely defining the relationship between players, mobiles, items, and their environment. Just as items are valued largely for the power they confer, mobiles and locations are significant largely for the threat they represent, and for the power that accrues to players who master them. The challenges underlying accomplishment often utilize the mechanisms of power. Even fellowship is affected by the de facto class system that power creates; grouping is feasible only among characters of like power25, and areas that high-level players frequent are often too dangerous for others to visit.

Players measure power in game-nominal terms (character levels, attributes, skills, and items) just as they measure accomplishment, and the problem of abundance applies in the same way. If developers allocated these goods in unlimited quantities, would players benefit? As will be seen, game power can be viewed in PvP (player-versus-player) or PvE (player-versus-environment) terms, each with its own effect on game play, and its own answer to the problem of abundance.

3.3.1 PvP power and griefing

Power was earlier described as the character’s ability to change the state of the game world. Yet power also defines relationships, between players with more power, and players with less; this relative form will be called PvP power. An economic problem is immediately seen. While developers strive to satisfy game wants, any increase in one player’s power must decrease the relative power of one or many others. So, although game goods can be produced in any quantity, PvP power cannot be produced; it can only be allocated. This is the scarcity of PvP power.

There is another potentially zero-sum aspect to PvP power. A person who lacks a car loses the utility they would gain from driving. A player who lacks power loses the utility they would gain from griefing (or helping, if that is their preference) and also becomes the target of griefers. A weak player is also the beneficiary of friendly players, but this can hardly make up for their subservient status. Though players value power individually, it is difficult to say whether they collectively benefit or suffer from PvP power distinctions26.

3.3.2 PvE power and content

Power also defines relationships between characters and elements of their environment. This includes mobiles and other non-PvP threats, plus many non-combat challenges. A crafter who wishes to create special items is limited by their character’s skills. A player who wishes to travel is limited by their character’s movement rate, or their access to teleportation magic. The characters’s ability to transcend these challenges will be called PvE power.

PvE relationships are relative, just as PvP relationship are, but they differ in important ways. First, mobiles do not care about their place within the power hierarchy, and griefers receive no special benefit from targeting them. For this reason, developers can produce PvE power by creating game goods. There is an upper limit to a character’s PvE power (where every challenge in the game is easily overcome) but existing MMORPG prevent even the strongest characters from reaching it.

Second, players’ access to content is determined by the PvE power of their characters. Areas requiring less power can be safely and easily explored, but their content is already familiar27. Areas requiring more power contain new content, but they are too dangerous to visit. At a given character level, only a portion of the game’s content is both accessible and compelling, and this window follows the character’s PvE power in a way that is entirely predetermined by the developer28. So, while PvE power is not innately scarce, it is linked to a real-world good that is both scarce and costly. By rationing PvE power, developers ration content.

3.3.3 Tuition

The acquisition of power (like power itself) is quantitative; it is determined by the rates at which character statistics improve or powerful items are dropped. With this mind, tuition will be defined as the total play time necessary to attain the game’s effective power limit, typically by reaching level or skill caps, and acquiring a set of high-quality equipment. Tuition is constrained only by the developer’s wishes, and by changing a few variables, the same body of content can support a wide range of tuition values. Therefore, setting the tuition implicitly defines the content density of the game. Tuition also suggests an upper limit for the amount of accomplishment in the game29, but it does not change the rate at which accomplishment is produced, since that derives from the cost of play time.

3.4 Fellowship scarcity

Social interaction is a compelling and definitive aspect of MMORPG play. Players spend long hours in the game world working with and against each other, and during this time they accumulate friendships and other relationships that have been collectively described as fellowship. Though not intrinsic to game play the way accomplishment and power are, fellowship is greatly valued by players30. What are the economic characteristics of this game want?

3.4.1 Fellowship and play time

Fellowship is not created on a designer’s whiteboard, neither can it be mass-produced; it develops naturally as players trade, quest together, or share jokes in the town square. Like accomplishment, its production cost is therefore the opportunity cost of the player’s time31.

As player relationships grow in number and depth, they produce additional opportunities for collaboration and socializing that enrich the play experience. So, as fellowship grows, the value of play time grows with it.

3.4.2 Fellowship, power, and content

There is no obvious limit to the amount of fellowship a player can enjoy, and neither the production nor the consumption of fellowship incur significant costs for the developer. It is thus very much in the developer’s interest to promote the emergence of fellowship. This explains the prevalence of grouping — the commonest and most important social structure in MMORPG.

Like other roleplaying games, MMORPG encourage and usually force characters to specialize in their abilities, and grouping helps players exploit these specializations, the same way trade allows real-world actors to gain from comparative production advantages. Though group members must share the loot and experience points they generate, the effective power of each character is significantly increased, which yields faster power growth (i.e. leveling) and increased content density for the players. At the same time, they inevitably share struggles, triumphs, and tragedies that promote fellowship within the group.

So, though it exhausts content more quickly, grouping produces another valuable game asset, one that is tied specifically to the developer’s game world. Players can experience accomplishment in other games, and, if they want more content, they will have to migrate eventually, unless developers match their pace with new expansions. Fellowship, on the other hand, is a particular set of relationships that will not be found in other games32. This is the developer’s endgame: a body of compelling game assets that maintain subscription revenue — perhaps for years — without incurring significant costs.

4 Conclusions

Four sources of MMORPG play value have been identified, each with varying economic characteristics:

  • The value of accomplishment derives from the player’s time, so it is inexpensive for developers and costly for players.
  • The production of content is costly for developers. Its consumption is non-rivalrous, but its value to individual players decreases with familiarity. Developers ration its consumption by associating it with PvE power.
  • PvP power is innately valuable, but it can only be allocated, not produced, and it may create external costs for other players. Developers can produce PvE power at no cost, but it lacks innate worth, and developers use it to ration content consumption. Developers award power in exchange for play time.
  • Fellowship accumulates with play time (like accomplishment) so it is inexpensive for developers. Its production is costly for players, but it adds to the value of future play time.

4.1 The problem of abundance

So, at last, what can be said about the value of characters, items, and other game goods?

Character attributes and items are the medium through which developers allocate power, and the PvE component of power grants access to content. While accomplishment complements the production of game goods, it adds nothing to their value, being neither alienable, nor persistent, as goods are. Nor is fellowship associated with these goods. It seems that players value game goods for the power they confer, and (by extension) as tools for extracting content.

Since the production of game goods costs players time, their gross production cost is the opportunity cost of that time. Play time also generates accomplishment and fellowship, so the net cost of game good production is the cost of the player’s time, less the value of accomplishment and fellowship.

It is now possible to solve the problem of abundance. Accomplishment and fellowship derive from play time, content is the work of developers, PvP power is a zero-sum game, and PvE power has no value of its own. All game value derives ultimately from scarce real-world sources.

Real player value is not created by nominal game wealth. The developer’s ability to create game goods can be likened to a government’s ability to create fiat currency. Though nations can increase money supplies arbitrarily, they have little control over the real value their currencies represent. In like manner, increasing aggregate nominal game wealth can do nothing in the long run to increase player value; it can only prompt offsetting adjustments in players’ valuation of that wealth, and (in keeping with the monetary analogy) provoke outcries from the money holders of the game world — high-level players.

The problem of abundance is actually a misunderstanding about the source of play value. It is unnecessary to claim that constraints create utility in games. Scarcity within the game world is merely the developer’s means of controlling the distribution of scarce real-world assets — and thereby profiting from them.

1 Thanks to David Kennerly and Brask Mumei for their helpful comments.

2 A popular nickname for EverQuest is ‘EverCrack’. In one survey of MMORPG players, more than 40% described themselves as “probably” or “definitely addicted” to play. (Yee 2004)

3 Expansions supplement the basic game, and are released perhaps once or twice a year. Though not strictly necessary to play, expansions provide access to additional content, such as new areas and character classes, and often add useful features to the game client.

4 Supposedly, UO was an unwitting participant in fiat sale long before this service began. It is said that a UO employee (the infamous ‘GM Darwin’) was fired in 1999 for surreptitiously creating and selling game goods on eBay — sales which earned him some $8000. It seems likely that some or all games experience similar problems that are covered up or pass undetected.

5 This articulation of game wants recalls the four player types described by Richard Bartle (a founding developer of MUD1) in his classic Hearts, Clubs, Diamonds, Spades: Players Who Suit MUDs. (Bartle 1996)

Bartle’s player types include achievers, explorers, socializers, and killers. Achievers are concerned with “game-related goals” such as “accumulating and disposing of large quantities of high-value treasure, or cutting a swathe through hordes of mobiles”. Explorers wish to learn about the game world, whether by “mapping its topology” or through “experimentation with its physics”. Socializers desire interaction with other players, “sympathising, joking, entertaining, listening”. Killers enjoy “imposing themselves upon others”, using their game persona to “cause distress to (or, in rare circumstances, to help) other players”.

The present work identifies player wants, rather than play styles. This creates important distinctions.

The pursuit of accomplishment, as described here, is very similar to Bartle’s ‘achievement’, with two exceptions. In Bartle’s words, “To appeal to achievers... one approach might be to introduce an extensive level/class system (so as to provide plenty of opportunity to reward investment of time) and to maximise the size of the world (so there is more for them to achieve).” This implies that game-nominal factors affect real accomplishment, a view explicitly rejected here. Bartle also imputes a competitive motive to achievement, something more closely associated with power in this work.

The correspondence between content consumption and ‘exploration’ is interesting but tenuous. While content-rich games provide ample scope for exploration, the activity Bartle describes differs greatly from content consumption. Explorers undertake “esoteric actions in wild, out-of-the-way places, looking for interesting features (i.e. bugs) and figuring out how things work”; they seek not to experience the game so much as transcend it. The appreciation of content is something every gamer can enjoy, while exploration seems more specialized.

The ‘fellowship’ described here closely matches Bartle’s notion of socializing. This work adds that the quantity of fellowship increases with play time.

‘Killing’ and ‘power’ — though obviously related — are distinct concepts. ‘Killing’ comprises a range of activities, broadly defined as “imposition upon others”. Some of this imposition may be helpful in nature, but most is just what the name implies — PvP combat, if not outright griefing. Power, by contrast, is a tool, not a trade; it is the weapon of killers, and the shield of their would-be victims. Though only some practice killing, these few potentially threaten every player in the game, so power seems more broad in its appeal. Because combat is so intrinsic to MMORPG play, the acquisition and use of power also relate closely to the consumption of content, as will be demonstrated.

6 While it seems obvious that players hold greater appreciation for scarce outcomes, the mechanism by which their perception of scarcity is constructed and shared remains unclear. Presumably it is part of the game lore that every player learns as they explore the MMORPG world.

7 When skilled players do overcome more powerful foes, their strategies are likely to be characterized as ‘exploits’.

8 As with Bartle’s controversial ‘killer’ designation, this produces some painful semantic twists. For example, a griefer who massacres limp swarms of low-level characters is enjoying power, but one who enjoys targeting a specific player is enjoying power and ‘fellowship’.

9 This is particularly demonstrated by the popularity of single-player computer RPG, which offer accomplishment, content, and perhaps power, but certainly not fellowship.

10 For simplicity, this analysis ignores involuntary unemployment. It also assumes that the demand for labor is perfectly elastic with respect to MMORPG players, who (as of yet) represent a small portion of the labor supply.

11 The cost of play time is the value of the activities forgone, and MMORPG play is assumed to be one of several leisure activities competing with work for the player’s time. It is also assumed that leisure offers decreasing marginal benefits to the player, and that the player’s wage is constant for any quantity of work. Excepting the possibility of unemployment, players will not engage in a leisure activity past the point where its marginal value equals their wage. An employed player foregoes work, since the marginal value of other leisure activities has already decreased to their wage rate, and their opportunity cost therefore equals their wage. A player who is not employed may be foregoing work or other leisure, so their opportunity cost is equal to or greater than their hypothetical wage.

12 Why should ‘arbitrary’ distinctions be valued by players? This question is beyond the purview of economics, which takes consumer preferences as given. Games of chance are intrinsically arbitrary, yet those who play them obviously receive satisfaction from winning, even beyond any financial reward. Even ‘skill’ — when it is specific to a particular game — is in some sense an arbitrary distinction.

13 The idea that challenge and accomplishment can derive from cost helps to explain why games of chance so frequently involve gambling. Any game of chance, no matter how long the odds, will yield an abundance of success if played often enough. The financial costs of gambling ensure that success remains relatively scarce.

Though most players find themselves suited (by experience or talent) to particular game genres, some ‘elitist’ qualities can be acquired through ‘egalitarian’ means, such as practice, training, or expensive equipment. This suggests a quantitative measure of elitism in a particular game: the variation in cost, among a group of randomly-chosen players, necessary to attain a fixed level of achievement. Games that show little variation (like games of chance) are more egalitarian; games that show much (like basketball) are elitist.

14 Combat can offer elitist challenges, but (particularly at lower levels) is often predictable and undemanding.

15 This design convention is popularly known as ‘the treadmill’.

16 Developers predictably frown on such ‘macroing’; in many games, it is grounds for banning.

17 To counter the monotony of this process, one player says, “I recommend you keep your Skill List open and shout ‘Woohoo!’ every time you see an increase.” (Drye 2001)

18 Customer service costs might also correlate with play time, but this could not be corroborated.

19 This includes costs for NOC staff, who maintain game servers.

20 Technically, players also pay bandwidth and server costs in the form of ISP fees and upkeep for their personal computers, but these services have many uses besides MMORPG play.

21 If variable costs mostly correlate with play time, why do MMORPG not charge hourly rates for play? These calculations answer that question. For developers, the marginal cost of play time is very low, so if they did charge by the hour, price competition would produce similarly low rates. These would be a mere fraction of the player’s time opportunity cost, so the quantity of play would not change appreciably, and the developer’s total variable cost would not decrease. Their accounting and customer service costs would rise, however, so flat pricing is ultimately more efficient.

22 Because the player’s time opportunity cost is so great, lowering subscription prices is not an effective way to compete with other MMORPG.

23 By dissociating production costs from consumption benefits, the non-rivalry of content severs the connection between development cost and subscription revenue. As a result, the ordinary mechanisms of market competition — which compel firms to price where marginal cost equals marginal value — no longer apply. Since the time demands of MMORPG make it costly for players to consume content from multiple games, competition between MMORPG limits the player’s content access to a fraction of the industry’s total output. Depending on the price elasticity of content supply, it is conceivable that — deadweight loss notwithstanding — monopoly could be more efficient than competition, since it would give each player access to the entire industry’s output.

24 Advances in computer graphics often rely on improvements to the player’s hardware, such as better graphics accelerators, faster CPUs, and more memory. The player’s computer can therefore be seen as an adjunct to the game’s technical content, albeit one for which the player pays. In one survey, 46.6% of players reported having upgraded their computers specifically to play EverQuest (Yee 2001), so this player-owned technical content could be a significant portion of the whole. It has not been considered here, however.

25 High-level players sometimes group with those of lower level, helping them defeat mobs ordinarily out of their reach. This is not like other grouping, however, as the stronger character has little to gain. It is more like charity.

26 Externalities aside, it is possible that power is simply not that interesting to many players. In one study, a group of EverQuest players were presented with seven statements describing the appeal of that game, and asked to indicate whether they agreed with each. The statements “I can explore a fantasy world”, “I get satisfied from achieving goals”, and “I enjoy social interactions” (corresponding arguably with content, accomplishment, and fellowship) generated the most agreement. “I like feeling powerful” produced the second-least agreement. (Yee 2001)

27 Similarly, the power gains obtained by looting such areas will be insignificant to higher-level characters.

28 Since PvE power rations content consumption, any significant transfer of power allows the recipient to increase their content density for a time. These transfers are common in practice, resulting from MMORPG institutions like twinking (the donation of money or powerful items to a lower-level player), power leveling (the practice of rapidly accruing experience, often through the assistance of a higher-level player), and — of course — asymmetric trade.

29 Of course, players need not limit themselves to game-prescribed notions of accomplishment. A classic counterexample is the Ultima Online player who supposedly gathered 10,000 instances of the same shirt in their character’s dwelling. (Simpson 1999)

30 In a survey of EverQuest players, 61.9% described in-game friendships as “comparable” to or “better than” real-world friendships. (Yee 2001)

31 Some costs are also incurred by developers, who implement communication features and play mechanics that promote social interaction. These seem small relative to other content costs, however, and are quite small next to the millions of hours invested by players.

32 As noted earlier, guilds (and presumably smaller groups) sometimes migrate en masse to new games. It must be difficult to develop the consensus for such a move, however, and even a player’s guildmates are only a portion of their fellowship in a particular game.