Wednesday, April 2, 2008

Daily inflation

Most people probably think that whether you make gold in World of Warcraft by farming primals or by doing daily quests doesn't matter. But in a macro-economic sense there is a huge difference between these methods. In the funny Ni Hao video the singer complains how she is paying gold for primal on the auction house, and the gold farmer who put up those primals is selling her "her own" gold right back. If you were wondering why all those gold farmers didn't cause a huge inflation in WoW, the answer is right there: the gold farmers actually weren't farming golds, they were usually farming expensive crafting ingredients like primals. Thus the total amount of gold in the economy wasn't increased by them, they did exactly what the video said, selling players back their own gold in an eternal cycle.

Patch 2.4 introduced new daily quests, and increased the limit of how many you can do to 25 per day. Unlike the Ogri'la and Netherwing daily quests, you don't even need to own a flying mount, or to do a series of group quests to access the new daily quests. Even with lots of other players around competing for the same targets, you can do the 4 daily quests on the isle in half an hour and cash in 40 gold. And as the daily quests are not only easy ways to make gold, but also advance reputation with the Shattered Sun Offensive, and advance the progress of the world event, nearly every WoW player is doing more daily quests now than before. And the effect on the economy is starting to become visible: unlike farming primals, doing daily quests adds more gold to the economy. With more money in circulation, prices for everything go up, and we get inflation.

For example prices for Primal Water on my server went up from under 20 gold to over 30 gold. Of course some prices are also dropping: the mobs you kill for the quests drop motes of mana, so Primal Mana is getting cheaper. And the Shattered Sun Supplies contain high-level green items, so the market is flooded with those. But anything that isn't gained as a side effect of doing the new daily quests is going up in price. This is basic economic theory in action: If you can make 40 gold in half an hour with daily quests, the price of primals is going up until half an hour of farming primals gives you 40 gold worth of primals. The only real currency in an MMORPG is time, and the market adjusts until one hour of time is always worth the same amount of gold.

What is missing in the World of Warcraft economy now is more money sinks. Everything where you pay money to an NPC instead of another player is a money sink, it really removes money from the economy instead of just moving it to another part of it. The biggest existing money sink is mounts, but as The Burning Crusade is getting older, many people already have their epic flying mount, some even several of them. Repair costs are a money sink, but by getting people to play more daily quests and PvP instead of dungeons and raids, Blizzard inadvertedly lowered the amount of money people spend on repair bills. PvP deaths don't affect durability, and few people die while doing a daily quest. Training cost is another money sink, but with nearly everyone already at the level cap, there isn't much training of new abilities and spells going on.

The best sort of money sink would be something which is expensive, desirable, but has no influence whatsoever on gameplay. Pure fluff. First thing I could think of would be armor dyes: I'm sure people would spend hundreds of gold on the ability to change the color of their armor. Another idea would be teleport scrolls, you can now get a teleport scroll to Shattrath by doing a daily quest, so why not sell teleport scrolls to all sorts of places for lots of gold? Blizzard has to add *something* to get all of that new money out of the economy again, or the daily quests will cause a spiral of inflation.

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