This is one of the first sections of my 2009 “Sustainable Virtual Economies and Business Models” paper. The latter is proprietary but I am making public some of the earlier sections that do not introduce new monetization models.
Any discussion about global virtual economics is pointless unless there is an understanding of what motivates the participants. While some participants are content to just chat, most are strongly motivated to achieve in-game as they could probably chat more effectively (and inexpensively) outside of the game. In the real world, the paths to achievement are almost limitless. Most people have some desire for money as this can be traded for something they desire. Some may want a pair of Italian shoes, a fast car, or a loving mate. You might even find someone that gets a thrill from writing 35 page papers on virtual economics!
In virtual worlds the options are somewhat more limited. Creative individuals will always push the envelope and do something weird like making in-game dance videos or using their guild members to spell something with their bodies/ships/horses etc. For everyone else (and probably these individuals also before they got bored) there are two primary methods of achieving and measuring success. One is to gain levels. The other is to gain material wealth. The former is generally a finite goal as there will be a maximum level. The later is an infinite goal as there is no maximum amount of wealth a player can have.
A third way that some games allow achievement is through PvP-oriented tournaments or scoreboards that allow players to compete against their peers using some measure other than level or wealth. This can work if the competition is actually PvP and not PvV [player vs. victim from previous section], and if the tournament environment is varied enough that it does not become too quickly boring. If PvV is allowed as a means of advancement you get veteran players killing off your newer players and generally destroying opportunities for your customer base to expand. This is a recipe for financial disaster. Games that are not designed from the start as PvP games often add “arenas” or such as an afterthought but are too limited in content to maintain player interest for long.
Most virtual worlds currently utilize level as the primary means of advancement. Generally a L60 player with poor equipment will easily defeat a L30 player with the best gear and pvp achievements. This creates a strong incentive for players to race to the maximum level as soon as possible and in doing so they try their best to bypass all the lower level content. It is not unusual for developers to spend much more time creating lower-level content than higher level content as this is the first impression of the game a new customer or potential investor will see.
This pervasively poor game design leads to players only typically using a quarter of the available content, and using that content over and over until they become bored which will not take long if immersion is not intense. This forces developers to race to create an additional quarter of content (relative to the initial content), say from the original 100% content to 125% content. Since customers were only using that last 25% of the content, that new 25% essentially doubles the used content but can be very expensive and time consuming to create for the dev team. There are also less opportunities to beta test this new content and the risk of introducing a game-killing bug is high. If they could find a way to get their customers to utilize the unused early 75% instead, they could quadruple instead of double their content, and do it at little or no additional cost without risking new exploits and bugs. This work will propose some solutions to this dilemma in later sections.
In contrast, games that focus on wealth advancement over level advancement do not have a cap unless the player runs out of things to buy. A good example of this kind of game is Eve Online, where no matter how highly leveled your avatar is, if you are up against someone in a capital ship and you have something substantially smaller, you are going to lose. You don’t get ships by leveling in that game, you have to build or buy them. That game has endured by providing numerous (mostly free) expansions, allowing the use of bigger and bigger ships, and also from reliance on the PvV model as a super money sink. Besides suffering from the pitfalls of the PvV model, this type of economic game is also especially vulnerable to RMT attack. This will be discussed in depth in a later section.