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The Balancing Act: Currency and Inflation
by Terminus Zaire, Contributor — Category: Editorials
Post #50015
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The Balancing Act will be released prior to the Beta and once the NDA is lifted to discuss issues that will arise if The Elder Scrolls Online is designed with an imbalance in one particular aspect of the game, and how this will ultimately affect the entire game play as a whole. This series will discuss the warning signs of these imbalances, and what Zenimax can do to reverse or minimize the impact of the results of them.


I was planning to wait until we had a better understanding of crafting before beginning any discussion on the economy of TESO, but I’ve decided to start a little early due to the fact that we may get a good look at the systems in less than 2 weeks at PAX East. I’ve always been a fan of “playing the market”, and it’s been difficult for me to wait this long before discussing it as a major topic!


This article will focus primarily on economic theory based not only on the observation of the global economies of many of the most popular MMOs, but also through personal experience of price manipulation and exploitation. The economy is the heart of any MMO, providing players with a means of fiscal interaction with others rather than a basic social one. Constant balancing over long periods of time is required to ensure it stays healthy and that inflation is prevented or at least minimized. A variety of factors control the success and stability of dynamic economies in MMOs, including the design of the auction house and trade systems, a balanced ratio of gold sources and sinks, and control over the global offset and ratio between the number of players and total quantity of gold in existence.

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Many of the early MMOs built their economies around the exchange of items using a traditional barter system rather than gold due to the lack of an official auction house. The economies were composed of crowds of people spamming their desire to buy or sell items in the chat box, or otherwise using an external trade center such as forums. Players had to be more careful with accepting deals because better offers could be present but simply unseen and made it impossible to compare prices with other venders. However, opportunity also opened for merchants that identified desperate players who were willing to pay many times the price of an item to get back to focusing on the game. Economies such as these were full of opportunity, if you had the patience to find it. Professional merchants would spend their time “flipping” items, purchasing them and immediately reselling for a profit to unsuspecting players. This inefficient marketing strategy for obtaining goods ultimately resulted in the invention of the auction house, the most widely accepted trading center design used today.

There are a variety of factors that contribute to the successful design of an auction house, the first being a unified global market with easily accessible information on the history and value of each item over days or weeks at a time. This allows all players to make an accurate judgment of the value of any given item, increasing the chances that it will be sold for a fair and modest price. Another factor is the ability to place both buy AND sell offers in the market, allowing for negotiation between buyers and sellers rather than the buyer simply choosing to make the purchase or refuse, limiting the exchange rate of goods. Finally, the design needs to remain streamlined and simple to ensure that all players understand what they’re looking at, and aren’t confused or overwhelmed with information. This will encourage the entire community to embrace the use of the auction house and help to strengthen the exchange rates of goods.

With a trade system successfully designed and implemented, it’s then up to the players to build the economy through quests, raiding, and ultimately having fun as they train their characters’ skills and combat abilities. While many believe that the most important factor in a balanced economy is the quantity of gold that exists in the entire market, it actually relies more heavily on the rates at which gold enters and leaves the game. Creating content to add more gold into an economy is relatively easy, and can come from the completion of quests or challenges to help players increase their power and strength in the game. It’s much more difficult to design content that players will be interested in investing their money in, because there’s a chance that the community may determine the investment to not be worthwhile to their mastery of the game. Examples of money sinks include potions and supplies, mounts or other services that aid in traveling, or item degradation requiring fees to restore equipment when used over long periods of time. Skyrim had a very effective money sink through the use of skill trainers, which increased in price depending on your skill level. Players who had spent hundreds of hours in Skyrim could have over 50,000 gold, but could spend it very quickly on trainers depending on the level of the skill they wished to train. Gold sinks that increase in price parallel to your skill level are referred to as dynamic money sinks, and are one of the most effective ways to ensure an MMO economy stays balanced.

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In order for Zenimax to determine the status of the economy and how much gold exists in the game, they’re obviously going to need to track it. Without a tracking system, the only way to track imbalances is through community feedback, and at that point it’s too late to fix the problem. Imbalances can take weeks to create, but months or years before the effects begin to wear off. This can include trickle effects where players earn money unintentionally while gathering resources, or with little intentional effort on their part. This is one of the primary causes of inflation in any economy, and can have devastating effects after being left out of check for years. While tracking how money enters the game can also help to identify inflation patterns, it can also be useful in identifying gold farmers by triggering value checks during trades or player interactions. By tracking how often gold or items enter the game, Zenimax can manipulate the economy without direct intervention by changing drop rates and rarity of items. This subtlety results in the illusion of a free enterprise system, but is still limited and controlled by its creators. A system of this nature is referred to as global offset control, manipulating the rate at which gold enters the game through loot drops to maintain a stabilized economy over long periods of time. Rates would never be changed more than a fraction of a percent, but this is still enough to normalize an economy that may be beginning to inflate.

While there are still a variety of balancing techniques utilized by many other games, these are only some of the most common techniques that most (if not all) players would support. Other systems for balancing include a taxation system for large quantities of gold, but some would claim that this is unfair to individuals who are saving for large purchases. Another is player housing, which will provide a fantastic money sink in the future once Zenimax releases it as an add-on. Unfortunately, this also takes a lot of effort on the part of the developers, who may be better off spending their time on the development of other expansion projects. One of my personal concerns regarding The Elder Scrolls Online is going to be a lack of money sinks available at launch, which will cause mass inflation until patched by a future update. Hopefully Zenimax has been focusing on the long term stability of the global economy; if they have, we can expect TESO to be successful for many years to come.
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Comments on The Balancing Act: Currency and Inflation
Post #50814
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(March 15th 2013, 09:51 AM)Terminus Zaire Wrote: There are still SO MANY factors that need to be considered, which is why I was hesitant to even begin writing about the economy in the first place. For example, I really can't even begin to predict what would happen if the different Alliances were allowed to trade with each other. Northern Skyrim probably has more ores and lumber than say Valenwood (where we aren't allowed to cut the trees due to the Green Pact), but should we be allowed to trade with our enemies?

May i suggest a nice topic to make Article about, if i was not so busy with work and school and actually had some writing skill i would do it my self.
Its about "enemy's/monsters" we will encounter in ESO, and also what can they do to keep it interesting and not repetitive, i would hate to kill mobs with same "design" at lvl 10 and then at 50.
Also if you can add geological distribution and how will it effect PvE.
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Post #53300
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something I was actually wondering in what form is the money going to be I mean tiber septim isn't born yet so they cant use septims or "gold" as most people refer to it
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(March 23rd 2013, 05:38 PM)ganach Wrote: something I was actually wondering in what form is the money going to be I mean tiber septim isn't born yet so they cant use septims or "gold" as most people refer to it

That's correct, when looting monsters money was referred to as "gold".
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One of the other possible money sinks they had put forward was the purchase of siege equipment and support for the PvP field. This would pull large amounts of gold out of the system to aid in the attack/defense. Players seeking to be the emperor would drop huge sums as frequently as possible.
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Lack of money sinks will essentially ruin a game for any newcomers (and the game eventually) unless certain steps are taken.

In my opinion there are two easy ways to keep inflation down on needed items:
1. Keep the items in question accessible for the levels who use it.
2. Make NPC merchants or quest rewards give "good enough" items (for things such as weapons or armor) to provide steady competition.

The needed items that tend to become overpriced are crafting materials and weapons/armor. Sometimes potions depending on the circumstances. There's a game in particular that i'll use to support my claim: Perfect World International. Things may have been different on another server than I played on or may have changed, but that economy was simply out of control from what I've seen.

One of the horrible things about the game is that at level 60+, you had a new set of gear (called TT) every 10 levels that you HAD to have the latest of. There was nothing comparative for that level through quests or even crafting. A good number of people wouldn't let you join groups, and sometimes for good reason. This new set of gear could only be made with materials from boss drops in certain dungeons. This normally wouldn't be a problem, but for these dungeons to be completed they had to have teams of players 10-30+ levels higher (with their newest TT equips) than the range that actually needs them. Not exaggerating on that: to get my level 60 gear, we had to kill a boss that could one-shot even the hardiest of classes lower than level 80. With a group of 60s and a tank without a VERY good DPS (the bosses had stupidly large amounts of health), they're looking at a multiple hour run through the dungeon. For alts of a much higher character, this isn't a problem since they can run it themselves for the materials or just buy the items. Though if the character was someone's main they either had to buy the extremely expensive mats, pester their higher leveled friends to run them through (very long) dungeons multiple times, or buy the gear itself.

You can see the loop forming: new player gets to 60, 70, 80, etc -> player can't get needed mats themselves, but older players won't think twice about paying and/or can get them themselves -> higher levels charge vast amounts of currency for mats/gear since they still get sold -> prices slowly but surely raise to stupid heights.

It's at this point the new player is either forced to go into cash shop items to make money, hope they have a nice higher level friend, or just give up on the game because it's no longer any fun.

Here's how the two ways come into play:
1. By keeping the items accessible to characters that need them (in this case, vastly dropping the difficulty of the dungeon to at least being bearable) but still make it somewhat tedious to obtain, people can still profit from selling them yet making it so that players don't just give up in frustration. This also allows for more competition into the market, driving prices down because of the higher supply. Specifically for crafting materials, this can be accomplished by allowing people to level their crafting without the traditional crafting materials but still need them if they want to create an item that's usable/tradeable. This was done in Vanguard. Even MANY years after the game released with the vast majority of the population having one or several very high leveled characters, as a newcomer you can still get mats at an affordable price on the auction house.
2. By giving "good enough" alternative items to complete the content, you're allowing for other options. In my opinion the tiers of goodness should be epic items (meaning rewards from long quests or craftables from rare resources) -> normally crafted items/normal quest rewards. If the best simply becomes vastly overpriced, people will go over to the competition. Hopefully to other crafted items by players that are not too much lower in quality, but the option of going through a quest or two if even that's out of their budget should be a viable option. This will at least slow the rate of inflation considerably. Of course the best will still get sold for a decent amount since there will be people who want the absolute best (and at that point it's a status symbol as well), but it doesn't halt the new player from enjoying the game or completing the content.

I honestly couldn't care too much if high leveled individuals happen to have vast amounts of currency, as long as there are some checks and balances to make sure that the average player can be mostly self-sufficient and flourish.
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