One of the most frustrating times in an MMORPG player's digital life is "grinding" for experience to attain a game's highest levels. This often entails killing hundreds – if not thousands – of enemies over the course of days and weeks to obtain a small advance in the character's level and vital statistics.
But what happens when in-world auction houses like those in World of Warcraft, EVE Online and other games allow time-strapped players to contract out portions of quests to be completed by others in exchange for money?
Pixels and Policy looks at some interesting emerging research on the subject.
Working in the Virtual Salt Mines
There are two main ways to bypass the drudgery and time investment of "grinding" for higher character levels. One involves illicitly (or perhaps legally, if you're playing a game from a South Korean developer) purchasing gold, items, or entire characters from third party vendors. These "real money transactions" are generally frowned upon by developers, and games like World of Warcraft ban players caught engaging in RMT.
But there is a second, more formalized means of contracting out the hard work of leveling a character, and it shows an interesting relation to real-world government contracting. Players can use in-game auction houses to exchange their game currency for virtual items needed to complete quests, thus eliminating the time-intensive need to search for often rare items.
Not only does this speed up leveling for those with the in-game currency to purchase such luxuries, it also creates fascinating market forces for those selling the items and weapons to impatient gamers. Depending on aggregate demand for a certain product, sellers can pull a much larger profit than usual on the items, creating a makeshift arbitrage system with parallels to real-world stock and futures markets.
The Virtual Economy Research Network recently did some work on this fascinating topic, and found that the use of virtual auction houses peaks at times when special quests or limited-time events make the possession of normally common items very valuable. As an example, VERN contributing writer Jennifer Martin looked at how the price of small eggs increased during special events where the eggs were essential quest items.
We came upon an interesting conclusion Martin draws from her research, which could easily be tested in other quest-based subscription virtual worlds:
In general, these are not big-ticket items. While there are profit
margins, they are so small as to likely be of little interest to gold
farmers with large quotas and others looking to make an offline profit.
These activities are therefore more likely to be those of players
looking to make a bit of extra money by picking up items, either from
vendors or killing low level mobs, that are relatively accessible to
Martin has hit upon something very interesting, a potential loophole in the economic coding of expansive games like World of Warcraft. If a player can purchase a common item from a non-player vendor for 5 silver pieces and then successfully sell that item to a human player at the auction house for 10 silver pieces, the player has essentially uncovered an arbitrage opportunity of infinite value, as most common items replenish after a set number of minutes.
This also raises a real-world economic question: If a player can make an unlimited in-world profit on an item such as the "small egg" during a set period of time (the period of a quest that makes the egg a must-have item), what stops the player from turning the mountain of virtual gold into a real-world moneymaking opportunity? Taking the leap from a virtual fortune to a real-world financial gain is not without risks, but as we've seen, the third party virtual goods market is a multi-billion dollar industry.
More importantly, what does this mean for game design? If a handful of players can create outsized in-world fortunes thanks to their knowledge of price differences, is this fair to other players? Should their earnings be considered similar to exploiting an unintended bug in the programming, or would that punish players who did the research and took advantage of an opportunity available to any other player willing to put in the footwork?
The fundamental question of fairness is one that should be addressed quickly but thoughtfully, as every new special event and festival raises the chances for events like Warcraft Egg-mania and the frustration it can stoke in gamers who missed the opportunity for massive profits. We'd love to hear your comments – let us know using the comments link below!