Before I came to the sporder blog, I had just started my own blog about the economics of EVE online. The blog has been discontinued, but I have a couple of relevant posts that are worth sharing with the sporder readers. Below I have posted my post on describing the role of developers in managing virtual economies:
I wanted to take a break from my analysis of EVE online, to take a wider look at the MMO market. Specifically, what kind of incentives drive the design choices of MMO developers. The most obvious thing to point out is that these are profit driven companies. This would normally be the end of a public choice discussion, but for economic actors within virtual worlds the developers face a less simple set of incentives. This article will hopefully clear up what incentives developers face, and why it is unique.
Profit Driven Despots
As I said earlier development companies are profit-maximizers in our world. In terms of creating a product this gives them a lot of potential options. They can make game with a wide appeals, and make money through the quantity of games sold. At the other end of the spectrum they could create a niche product with a loyal fanbase. Whichever business model they choose, they must create a game world that will be appealing enough for people to spend their time and money on it.
Unlike politicians developers are not constrained by the standard limits of reality. A politician can only promise free spaceships for everyone, a developer can deliver. Politicians generally only have the ability to shuffle around resources, and maybe create value in certain circumstances. A developer can create and destroy scarcity on a whim. Developers are not just policy makers they create the reality of the virtual world.
Given this unlimited ability, developers still use it sparingly after initially creating a world. The reason is simple. The current playerbase often has a vested interest in how things are currently working. They have a knowledge of the mechanics, they have assets invested, and the players that stick around are often the best at using those mechanics to their advantage. A change in the conditions of the game can alienate the loyal playerbase, so developers are often careful about changing old game mechanics. They also find it easier to add new features and new areas rather than tweaking old mechanics, which leads to ‘feature creep‘. EVE online has a particularly bad case of feature creep, due in part to a smaller more dedicated fanbase.
As somewhat of a side note I would like to point out: the mobility of the playerbase and the importance of that playerbase to developers leads to what I believe is the best real world example of Tiebout competition.
One of the more difficult aspects of appeasing the whims of a playerbase is that it is not always clear what people want. Every MMO has a forum for people to vent their frustrations with the game, propose elaborate and technically impossible solutions to simple problems, and spew venomous insults at the developers or each other. If you haven’t already figured out the problem with just listening to players from my description then go take a look at the EVE forums. It’s commonly considered one of the more decent player communities among MMO’s, but the threads all follow the basic descriptions I listed above.
A couple of years ago EVE tried a new approach to the problem, a council of elected players to meet with and advise the developers of the desires of the player community. (This council came about due to a controversy in which the developers at CCP were accused of colluding with one of the larger EVE corporations). The council idea has seemed fascinating in theory because it is reminiscent of Robin Hanson’s Futarchy. The council is elected to present problems that the playerbase cares about to the developers. The developers then decide which problems they can feasibly solve, and they determine the methods for solving them. The betting aspect is gone, but it maintains a very useful incentive structure for determining policy changes.
I am going to just end the blog post here. I didn’t fully explore some issues (like the problem of separating the interests of developers from the interests of their game characters), but I’ll save those for a future blog post. The important point to take away is that developers have a great deal of control, but face strict limitations through the need to appease their players.