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Guild Wars 2 Economy Review
by Ramin Shokrizade on 04/26/13 03:46:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutraís community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.


Guild Wars 2 Economy Review

Real world economies involves the careful distribution of finite resources to the population to maximize societal productivity. In the real world, resources start off in abundance (especially things like air and water) and become more scarce over time. In order to simplify the math, many economists pretend that things like air and water are infinite, but clearly they are not, and clean air and water can quickly become scarce if these resources are abused on an extraordinary scale.

Virtual economies are upside down from “real” economies, and this causes many conventional economists to come to false conclusions when evaluating these environments. In a virtual world the economy starts with little (if a seed is provided) or no (more typical) resources and all economic currencies increase rapidly over time, approaching infinity if the world is not properly designed with resource sinks that dynamically remove resources from the environment at roughly the rate they are created.

It is also a given that all economic activity involves more than one person. An individual, acting completely alone, has no need for trade. Such a person would be the stuff of legends in the modern age, since even the most intrepid adventurer does not go into the wilderness without gear made through the collective efforts of thousands of other people. Even a casual gardener requires tools that are almost certainly not “home made”. A thousand people can produce one million tools faster than one person can create one tool, so this makes total sense. Complex tools like smart phones are completely impossible to create by one person, and require the collective efforts of millions of people to bring to market.

Guild Wars 2 makes a fascinating case study in virtual economics. As many reviewers have pointed out already, this game does so many things right from a game design angle that it will be the foundation for many MMO's in the future. Non-competitive looting and resource gathering, and rewarding players heavily for exploring and reviving their fellows means that you don't have to win at the expense of other players in this world. Doing this mostly without the need for instances makes this truly remarkable.

In looking at the economy and monetization model, it seems clear that felt strongly that by tapping the in-game economy they could do away with the need for a subscription. It seemed they wanted to tax the currency exchange in a fashion similar to how CCP does it with PLEX in their EVE Online game. They also wanted to sell boosts and convenience items as is done commonly in other F2P MMO's. They even hired a conventional economist late in the development process, making it clear that they knew the condition of their in-game economy would translate directly to real world revenue generation. How well they did, and why, is the subject of this review. This review is not meant to be comprehensive, as that would be too long to publish on Gamasutra and I don't put those kinds of analysis into the public space.


I had some basic familiarity with Guild Wars 2 from beta test participation, but I did not evaluate the economy for GW2 until four months after the game was released. This prevented me from measuring the rate of collapse of the economy like I did with Star Wars: The Old Republic on LinkedIn. There I conducted a one month “economic deathwatch” measuring the devaluation of the game currency daily, and demonstrating that the primary currency lost 97% of its real world value in the first 30 days.

Knowing that craft materials in GW2 are set up in tiers where low level inputs come from low level zones and allow the production of low level items, I made sure to hit all of the low level zones first so as to gather the first tier inputs at a time when presumably they might be useful. I went out of my way to gather resources such as wood and metal so as to have the greatest chance of being able to make something useful for myself through the crafting process.

I used a completely fresh GW2 account, had no prior retail GW2 experience, and received no aid from any source other than a gift of three 15 slot bags from a friend on day 1. These allowed me to go about my studies in less time than would have been required if I was forced to sell or craft inputs frequently as my bags filled.

My test avatar was a Sylvari elementalist. I chose to pursue the craft disciplines of artificing and jewelry. I tried to do many of the events once, but tried not to do too many events as it was quickly evident that the xp resource was flooded in the game as detailed below. I used no boosts at any time.

Low Level Economy

I completed all of the first tier content, meaning all of the beginner zones, with an avatar level of 37 (80 is the cap) and a world map completion of 27%. Note that the beginner zones have missions and enemies up to L15 but all areas on all maps scale your current level to be at most two levels above the mission area and you continue to get good experience points at any level. Also note that craft resource gathering gives you xp as does the actual crafting process, and this contributed to my total level.

At this point in the game I had 18,507 copper coins, which is not a lot of coin when you consider that repairing my junky equipment costs around 300 copper every hour or two, teleporting around costs 30 to 40 (this scales with level), and selling a blue quality L34 armor item only gives 42 copper. Every time you are defeated in battle (which happens fairly often when soloing) you have to pay for a teleport and there will be item damage that will eventually require repairs. I have not bought anything other than harvesting tools. Thus this is probably above average wealth for my level. The developers did an exceptionally good job of keeping the coin economy tight.

Crafting until I had used up all of my gathered resources raised my Jewelry skill to 85 out of 400 max, and my artificer skill to 82 out of 400 max. The items I was able to produce through Jewelry were useful as Jewelry items do not seem to drop from mobs at these levels. Weapon crafting was almost never of any use in this range as I was able to get high quality weapon drops of as high as L33 from mobs under L10 (the drops scale to your true level). The highest weapon I was able to craft in Tier 1 was L20.

If I had “a priori” knowledge of the crafting process, I might have been able to craft a weapon that was briefly useful, but of course on my first run I did not have this knowledge and it is unlikely that most people would have studied the crafting system intensely before even trying the game for the first time. If I had leveled up in a second tier area I would have gathered materials useful for making level appropriate gear in a timely fashion, but likely not had enough Tier 1 materials to level my craft skills to allow Tier 2 crafting by then. Tier two recipes start at the skill level of 75, and I barely crossed this threshold with the resources I accumulated while completing the tier one missions.

Thus there is a scarcity of craft xp that makes craft xp valuable to players. Avatar xp, as you can see by my L37 at the completion of the L15 content, is flooded and thus of almost no value in the economy. If I had engaged in pvp battles, then I would have been even higher level by this time.

Note that at no time did I need or use the auction house on the way to L37, so for me the item economy was nonexistent up to this point. Never did I need or want for any gear since low level critters were giving up finely crafted weapons and armor almost faster than I could sell them.

To give an example of the premium placed on craft xp, let's take a look at the creation of a Healing Green Inscription, an intermediate item in the Tier 1 craft process that can be combined with additional wood to make mediocre L15 weapons. It takes 3 Green Wood Logs to make a Green Wood Dowel, and a Green Wood Dowel and three Tiny Totems to make a Healing Green Inscription. The market prices for all of these items are below:

Healing Green Inscription: 6

Green Wood Dowel: 9

Tiny Totem: 42

Green Wood Log: 13

Note that in making a Green Wood Dowel, 39 copper coin is used to make a 9 copper coin item, for a loss to the player of 30 copper coin. In making a Healing Green Inscription, 135 copper is used to make a 6 copper item, for a loss to the player of 129 copper. You can see that if I tried to buy the craft materials I needed from other players instead of gathering them myself I would be out of coin in minutes and probably still would not have high enough skill to unlock Tier 2 item crafting.

Thus it seems almost certain that the demand for craft items comes from higher level players with excess coin that are trying to buy their way through the craft process since they probably did not focus on it at earlier levels. This makes sense since it is unlikely that such an investment early in the game would have yielded any useful results.

Mid Level Economy

I completed all of the second tier play zones (those with L15 to 25 content) at an avatar level of 64 (out of 80). My world completion percent was 44. Thus the content up to L25 is almost half of the game world, suggesting that content is front end weighted. I completed my main story arc (which is instanced) only to L50. XP flooding seems pretty linear at 2.7 avatar levels per content level. If I had continued with my review I would have hit the level cap at about the same time I finished the game content up to L31.

My craft levels were 151 for artificing and 153 for jewelry, 150 being the threshold for working with tier 3 materials so I seemed on track using my strategy of hitting all of the low level zones before advancing. Since 150/400 (roughly my craft level) is 3/8 (greater than 1/3) and 25/80 (my content level) is 5/16 (less than 1/3), then my craft level is slightly ahead of my content level but way behind my avatar level.

I had 4 gold pieces (40,000 copper) saved at the end of this run and spent 3 gold pieces buying all of the skill books. Thus up to this point money is still tight but never short. I continue to be able to buy a complete green-con outfit, including weapon, for 10 silver (1000 copper) any time I want, and can sell my old gear back to vendor for more than 6 silver. Thus a full gear upgrade is available at any time for about 1% of my wealth.

Note that I did have left over craft materials for the craft paths I did not pursue. If I had sold my unused craft materials I would have had significantly more coin, but since I never was wanting for coin at any time during this review, that last exercise seemed pointless.

End Game Economy

I have identified 3 primary resources, and an item market, in this virtual economy. The three resources are Experience (avatar xp), Craft xp, and Coin (the primary currency). There are a number of additional currencies that cannot be traded between players. I call these prestige currencies, though they act more like resources since they can only be traded to NPC's. What makes them prestigious is that they have to be earned, they cannot be bought or traded. Two examples of prestige currencies in GW2 are Glory (which comes from pvp play) and Karma (which is earned from completing quests). Karma, despite being more rare than copper, has a value in the economy of much less than one copper, making it almost valueless in the economy.

The value of prestige currencies in the end game economy is that they give a reward pathway that has not been compromised by the corrupted primary currency economy. This removes or at least limits the “pay to win” effect on the end game, the intention being to maintain player engagement beyond the first month of play. Many of the items that can be purchased with prestige currencies also require the player to have very high crafting levels. By adding this requirement, has created demand for crafting xp and anything that can provide that. Thus a powerful money sink was added to the economy with this mechanism.

Final Analysis

Experience is flooded, and thus of minimal value in the marketplace. I would anticipate that experience boosts sell poorly here relative to other games since your level is not so critical in the game and leveling up is very easy. Since there is a maximum amount of experience the demand drops to zero as you approach the cap.

Craft xp is scarce, which is good, lending itself to monetization in the form of selling craft boosts. It also makes anything in the item economy that can give Craft xp more valuable.

Coin is scarce, which is good as it makes the primary currency economy tight. This is essential because the game hosts charge about $1.25 per 100 gems, and players can trade gems for coins with each other. The hosts take a cut of all such transactions, which is about 15%. This acts as a money sink on the economy. Since Experience is almost valueless, but coin is extremely valuable, wealth is the primary achievement metric in the game. Being able to purchase this metric makes the game somewhat “pay to win” as the primary game objects are for sale.

With the exception of craft materials, the pre-endgame item economy is broken. As an example, I can buy a L39 coat of green (good, better than blue) quality level for 112 copper coins on the auction house. This is not a rare low sell. As I look at the auction house there are over 1000 items of this type selling at this price. I can sell the same item to a vendor for 111 copper coins. Over 1000 players took the time to sell this item on the auction house at a premium of 1 copper coin over what any npc vendor would pay them. Given that the auction house charges 5%, these players are actually losing at least 4% of the value of their goods by joining the economy. Goods are so badly flooded that it is much cheaper to just sell your equipment and buy new equipment instead of repairing it when it gets damaged.

The item economy is so bad that essentially all items of white, blue, and green quality are junk items. There is a “sell junk” button that lets you sell all items that have no game use. If this button sold all white, blue, and green quality items (which was all the items I encountered up to L64) with one click, this would have been more useful. The only items I encountered as loot that were not junk were those related to craft activity.

Thus the item economy would have been improved if all players automatically got free gear upgrades every 5 or 10 levels and all of those white, blue, and green junk items were just never itemized as loot at all. Any excitement the player feels about loot drops very quickly fades in such an environment, and it all just becomes a pointless loot gathering exercise. In other words, the item economy would have been better if it had been removed.

Thus the pre-endgame item economy in GW2 is one of the worst I have studied in the last 14 years. This acts to further undermine the crafting professions since what is the point of investing heavily in craft skills when you can buy items of similar quality on the auction house for 10% of what it would cost for you to make that item? For the cost of crafting one L20 green con weapon (just the weapon, not the skill to get that craft level) I was able to buy an entire set of green con L35 gear including all armor slots and a two handed weapon.

The only possible exceptions are the crafting of jewelry and food, since these don't seem to be itemized as loot drops. This makes these products valuable to craft. This points to a solution that somehow escaped the design team: If all wearable/consumable items did not drop from loot, but were instead crafted, then both the crafting and looting process would have been improved. This would have also made it much easier to balance the economy.

The usefulness of various prestige currencies later in the game improves the situation a bit for max level characters. The patchwork construction of the economy works, kind of, but never seems to drive player engagement. The strength of the game play keeps players going for a while but every player I interviewed told me that “there just was something missing”. I would suggest that something was effective reward mechanisms.

Since the GW2 business model seems dependent on tapping a sustainable economy for continuous revenue, it seems logical that they would have wanted to build a sustainable economy into their game. They even hired a conventional economist late in the development cycle, implying that they realized that this was important to the product success. Unfortunately, this seems to have been too little, too late.

While the gameplay seems to have benefited from a “how can we do this better than has been done before”, the reward system in the game seems to be at best business as usual.

The hosts have announced that they will be revamping the reward system later this year, so they seem to be aware that they have a problem. I am eager to see what they come up with. 

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Tom Aram
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"The strength of the game play keeps players going for a while but every player I interviewed told me that ďthere just was something missingĒ. I would suggest that something was effective reward mechanisms."

Well as an analyst who didn't hit cap and only actually played the game for the purpose of evaluating and writing about the economy, monetisation strategy and reward mechanisms of the game I find it hard to see how you could have come to any other conclusion. You have a hammer so everything is a nail.

GW2 did some interesting things with its endgame, not everything went as well as it could have but they deserve some credit for trying what they did. Notably, they have no end game power ladder. All top level gold pieces have equivalent stats, and are fairly quickly aquired after you hit cap, ultimately putting everyone on a level playing field in terms of character power. This is absolutely deliberate and not an error on Anets part.

That's not to say they have no progression or reward scheme, the game has a great deal of cosmetic content and opportunities to pickup side-grades allowing your character to perform different roles, as well as very expensive vanity items for the people who live in the game to work towards. Legendary items have excessive look-at-me visuals and require an outlandish amount of time and money to aquire.

Now you could make the argument that character power is always a more enticing carrot and that the game would have done better if the cosmetics had been replaced by progressively higher tiers of gear with more stats on, but as a player instead of an economist i rather doubt that would have helped. The thing is, what GW2's end game seems to lack isn't gear, but things to do with that gear, because by typical MMO standards the game had no end game PvE content worth mentioning.

Anet took a risk by dropping the standard class format for MMOs, with no hard tank/healer/dps roles they were hoping they could present a new kind of group combat. They have small group dungeons done in a traditional theme, minus the tanks and healers, but the general consensus appears to be that it didn't really work out.

The dungeons were the easiest way to grab end game gold gear, and also had unique cosmetic items that could only be aquired inside, so they were properly incentivised, and yet they were quite dead. Small groups of dedicated cash grinders exploited instance resets to farm money out of them while the bulk of the community seemed to just ignore them. Getting random groups for dungeon content was borderline impossible and the content itself was underwhelming if you ever did get to see it.

Lacking entertaining group content is a problem, usually that would be where the social aspect of the game kicks in. Playing together with a group of people is a big draw of the genre, and also where the value of the cosmetic content should kick in. Naturally you need to be playing with other people in order to show them your fancily dressed character. Without any challenging progression content for people to work at, with random grouping being very difficult and with the role-phobic combat being largely a failure, the dungeon content was neglected.

Without the dungeons, PvE was limited to big groups of people camping the event spawns in the high level areas, throwing a few aoe spells in order to tag mobs, and then looting for money. Repeat forever, that's your PvE end game.

It was certainly lacking something.

Tom Aram
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I might have gone a little off-topic with that post given that the blog is about the game's economy, so let me add something else that might be more relevant.

It's very true that the game is overflowing with basic quality armour and weapon drops, they are dropped by everything and are also the primary way of skilling the armour and weaponsmithing crafts. There are far more of these items knocking about than could ever be worn by levelling players, so most of the time these items are vendor trash. Most of the time... except when the market price for crafting material starts to creep upwards.

The abundance of trash gear serves a purpose, and was probably designed with that purpose in mind. That trash can be turned into crafting materials - which are always in demand - via scavenging kits. Scavenging kits are tiered by level and have a fixed price at the vendor, that vendor price is basically responsible for the market price of scavengable crafting goods, it stabilises it and also acts as a situational cash sink that keeps inflation in check.

Whenever demand for crafting goods is high and prices begin to rise, people start scavenging gear instead. Gear is so abundant that it is always available at the lowest possible price set by its vendor sale rate, so this is always an economical option if crafting material prices rise too high. Normally this gear would be vendored, which injects cash into the economy, but if prices rise this scavenging mechanic flips the switch and instead of generating cash by vendoring the gear, players instead spend cash on scavenging kits at the vendor, taking cash out of the economy.

This is one of several well designed mechanics that keeps the total amount of player currency in check, and also stabilises crafting prices.

Ramin Shokrizade
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The strength of the game was in it's rich open world content that could be played at any time even by those who had "outleveled" it. Some of the early events are so much fun that I would have really enjoyed doing them many times over. To have the reward system weighted so heavily away from the best parts of the game had the effect of undermining gameplay. You can claim that various money sinks were well placed, and since the coin scarcity is good I would be hard pressed to disagree. Still it feels contrived, again like it was just so many factors slapped together in a way that did not really go in sync with gameplay.

I can suffer the immersion break every time an insect or animal gives up a set of metal armor when defeated, but if that item just serves the purpose of flooding the environment with items I can then buy salvage kits to break down into smaller pieces, why didn't wood or metal or some organic material fly out of the opponents? How do all these immersion breaks help the game? To sell increased inventory space? I hope this was not the logic.

There also seems to be a confusion of mechanics in how crafting is handled. In games of old the investment in crafting was always much greater than the reward if it was used infrequently. Thus the only way crafters could justify going "all the way" was if they became the hub for the crafting of many other players. This was a powerful social mechanic. By forcing all players to go through this process just to make their own gear takes a powerful social mechanic from previous games in the genre and just turns it into a lonely money sink. The player has to suffer innumerable equity losses, which are discouraging, just so that they don't lose the value of any prestige currencies they accumulate. The player is forced to choose how they will lose instead of just focusing on having fun.

Tom Aram
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"The strength of the game was in it's rich open world content that could be played at any time even by those who had "outleveled" it. Some of the early events are so much fun that I would have really enjoyed doing them many times over. To have the reward system weighted so heavily away from the best parts of the game had the effect of undermining gameplay."

But GW2 does a better job of incentivising that content than any other MMO on the market?

GW2 is not alone in being bottom-heavy with large amounts of low level questing content that is never required to reach cap, this is common as developers tend to create multiple early zones to avoid crowding problems on launch. WoW is literally bursting with low level content that will never be seen by players who start the game now, as you only need to complete around 20% of the quest content to hit cap.

These games make practically no attempt to encourage high level players to go back and complete this content, by contrast GW2 goes out of its way to make that content rewarding even for higher level players. Aside from the downscaling which prevents players one-shotting everything in a lowbie zone, the game also upscales rewards from anything you kill, and any events you complete. If you're a level 80 in a level 30 zone, you get high level karma rewards, level 80 item drops and scaled up cash rewards for anything you do.

The game rewards exploration of low level zones, not just with achievements but with currency. The completion rewards for doing everything in a zone are significant, and exploring/completing all content in the world grants you valuable items used to craft legendary weapons, as well as a unique title and a star next to your name in the game world, visible to other players as a vanity badge. I mentioned that the dungeon content was dead as people didn't seem to care much for it, but i certainly remember seeing plenty of people with stars by their names within a short period after release.

So given that GW2 actually does do a better job of rewarding low level open world content than any other comparable MMO, why would a lack of rewards for that content be the problem when players suggest that "something is missing"? There's no reasonable basis for that, as the most succesful examples in the genre do well without rewarding that content at all. It seems like a more sensible conclusion would be that taking a high level character back to the starting zones and playing through levelling content again in an area with different visuals simply isn't compelling gameplay for a lot of players.

Levelling content is seen by many as a kind of extended tutorial that allows the player to familiarise themselves with the mechanics of the game world and the workings of their character. By slowly introducing the player to new abilities you allow them to explore the class fully, so that by the end of the levelling process the player can comfortably use everything that the class has to offer and feels an attachment to the role.

When they reach that stage of understanding, the natural next step is to provide them with challenging content that tests everything they have learned, giving them an opportunity to fully utilise their class and pushing them to hone their play. There are succesful titles which do this by providing increasingly challenging tiers of content at end game for players to test themselves with - this is what the open world content in GW2 completely fails to do.

Coming back to the same starting zones that you learnt the game in, now armed with a full compliment of skills and talents and an intuitive understanding of how to play your class, makes everything in the zone trivial. It also offers no social element as there's really no reason to group up with people and work together to kill level 10 boars. Infact the content itself is quite anti-social as it results in the community spreading themselves out over an entire game world instead of congregating around higher level challenges.

With nothing to challenge the player in the open world, poor dungeon play due to a failed class experiment and no raiding, players are left with no end game PvE content to test themselves on at all. People have many different reasons for playing MMOs, it's a wide market and games typically try to satisfy as much of the Bartle quotient as they can. By leaving out this type of content which is frankly a staple of the genre at this point, GW2 loses a big chunk of players that aren't satisfied by simply exploring zones and aren't interested in arena PvP.

If WoW is anything to go by, the type of player they fail to accomodate probably accounts for a pretty large chunk of the market, and that is a content and gameplay design issue, not an economics issue.

Tom Aram
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"Tom, I'm afraid you are losing the point of the article here, the author is not bashing your (obviously) favorite game. He has done a professional analysis on the game's economy and is sharing the result."

I am aware that, as the only person bothering to comment on the post, writing a wall of text makes it look like i'm obsessed with the topic. I get that. However, having invested time into the discussion during this slow weekend at work I now feel compelled to see the investment through, such is the strength of the Gamasutra comment section's core loop.

I dropped the game after a short period owing to a lack of end game content, so favourite game it is not, but enough about me. Other than the simple observations of how the game works, the post asserts a couple of things: That the abundance of lower level equipment is a problem, to the point that it deserves the word broken, and that there is a lack of player engagement which is a result of poor player reward schemes.

Those are the points i'm discussing, i've no intention of 'defending' the game although i do think it deserves credit for some ideas that were overlooked.

I made the point that rather than being broken, the item abundance works to control the amount of currency in the economy and the price of crafting goods. The response to that seemed to be that having weapons drop off wolves isn't very immersive, which is a fairly amusing stance given how this entire genre works, and that having the mobs drop crafting materials would be an alternative option.

That idea suggests a poor understanding of how the economy is maintained, the current setup acts as a double whammy money sink removing currency via the vendor cost of salvage kits, and also through the destruction of an item that would otherwise be vendored for currency. Most item drops are not salvaged so this money sink only kicks in when prices for mats increase.

Changing item drops into crafting material drops would remove a key money sink and also flood the market with trading mats, crashing their price. The lack of gear drops wouldn't create excess demand for crafted gear, as the gear drops were naturally lower quality than quest rewards and karma purchases to begin with, so you'd have to redesign various other systems just to fix the player economy again.

Anyway carry on.

Ramin Shokrizade
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Tom, I'm not going to be lured into a discussion of the game design as I stated up front I am well impressed by it. You are only one of many that are going to challenge my challenge of the game's economy because they like the rest of the game.

I stated in my OP that the game would be better served by having NO drops in the early game than this flooding of items that exists now. That is an extreme example of how broken it is in it's current state. That alternative, or the other abysmal alternative I mentioned (having wood fly out of wolves) are both poor design choices. My point was that even these would have been an improvement. They would not need all of these sinks if they were not trying to flood the economy on the front end.

Making drops much less frequent, and potentially much more valuable, would have made the experience more interesting for players, and easier to sink on the other end. Going that extra step and actually having the drops be relevant to the game content would have made for a much better experience.

The bottom line is that while the rest of the game was the result of a willingness to improve upon the designs of its predecessors, the economy was at best mediocre and not innovative.

Taekwan Kim
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Firstly, I want to say that I very much enjoyed reading and considering the various points brought up in the article, and that the following comment is just an attempt to further the conversation, as opposed to any sort of counter argument. I would be genuinely interested in hearing your response to the following proposed perspective (apologies for ridiculous length):

I believe the point Mr. Aram is trying to get across (and I could be totally wrong in this) is that the item economy situation in GW2 is very much a deliberate result stemming from purposeful design. The situation that even higher tiered items are so cheap seems very much in line with ArenaNetís explicitly stated goals of accessibility and horizontal (instead of vertical) progression. Itís a continuation of GW1ís tradition of de-emphasizing loot and focusing the core gameplay on player performance and build optimization (or to put it another way, loot has traditionally not been especially relevant in the GW games).

Some considerations from the perspective of horizontal progression: my understanding is that cheap gearing has been expressly chosen as a method of benefitting both casual and theorycrafting players. In addition to reducing the amount of time it takes to reach top tiered items (for casuals), it allows complete build respec with minimal time loss (for theorycrafters), both of which are what the GW series has deliberately and historically gone for versus artificially enforcing commitment or inflating time costs. Vertical investment still exists (particularly now that Laurels and Ascended gear have been introduced), but for the most part, in GW2 itís entirely optional (this may change once Ascended armor and weapons are introduced, depending on how they are designed). And thatís a consistent theme throughout GW2ís design.

Another sign of this deliberateness is legendary items: the only legendaries are weapons (there are no armor or trinket legendaries), and in terms of damage output, they are more or less equivalent to l80 exotic counterparts. That is to say, these are more cosmetically prestigious than they are functionally so, which again means the overall focus of play can be more about player performance and build optimization than about obtaining loot (unless the player cares about appearances), as again has consistently been the case with the Guild Wars series.

Finally, as Mr. Aram mentioned, from this perspective crafting (and especially the Mystic Forge) basically exist in GW2 simply to be a gold sinkóitís a luxury and a diversion, as opposed to a necessary or particularly useful advancement path. Which is to say, as before, itís mostly optional, and perhaps unexpectedly so for players used to more traditional (vertical style) MMOs.

These conditions might be jarring because they fundamentally and diametrically oppose the traditional approach of heavily favoring vertical investment in MMOs, and I think maybe this might mainly be a question of playstyle preference / design philosophy: accessibility versus exclusivity, horizontal versus vertical progression.

Given that the overall design in GW2 is specifically meant to be player friendly, it seems deflation via flooding here intentionally serves the purpose of player flexibility and agency (granted, it might not be the most elegant solution). One could argue that the core gameplay and build mechanics of GW2 simply arenít deep enough to rely so heavily on horizontal investment (and I would agree). One could also argue that ArenaNet havenít quite managed to balance horizontal motivation against vertical motivation, as they were able to in GW1 (and again, I would agree). After all, the only reason pre-endgame items arenít free (despite essentially being cheap as free) is to maintain an illusion of vertical progression. But Iím not sure that these would necessarily support the thesis that the item economy itself is broken. And while the introduction of Ascended gear basically acknowledges the lack of depth and motivation imbalance, the deliberate restriction of Ascended gear to ďprestige currencyĒ once again points to a commitment to keeping the core experience accessible and cheap.

I think the other thing to consider is how a very similar situation plays out in the absence of such deflation: the Diablo 3 auction house. The designers have already acknowledged that the AH has hurt the game (
ction-houses-really-hurt-game/) and that more needs to be done to make self-obtained gear more viable (
e-auction-house-and-onto-farming-monsters/). One might say that the problems plaguing D3 have been neatly sidestepped by GW2, and in a manner that is consistent with ArenaNetís design philosophy. If players are going to rely on trading for gearing up anyway, does it really improve the experience to reduce item drops (keeping in mind that GW2 also allows real money transactions)?

(A tangent: D3ís systems actually work out perfectly fine in Hardcore mode. Since every player death is a huge resource sink, inflation is kept down by constant removals from circulation. Additionally, as gold is account bound instead of character bound, the fact that the endgame basically becomes gold accumulation manages to work by allowing the player to indirectly save progress and permitting quick reinvestment on player death. Moreover, the appearance of pay to win simply doesnít exist in HC mode, since all gold [purportedly] must be self earned. The end result is that HC D3 is a far more enjoyable experience with real vertical investment than normal mode. But Iím not sure how this solution [of punishing resource sinks to keep down inflation, balanced against infrequent drops] could be applied to GW2ís player friendly, horizontal skewed orientation.)

At any rate, I guess the question is, does the item economy situation in GW2 hurt the player experience, or hurt a certain _playstyle preference_? (These might not be exclusive; it could very well be both.)

(I hope this comment was relevant, and managed to not completely miss your point!)

Ramin Shokrizade
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Mr. Kim, I much appreciated your comments. I predicted the flaws in the D3 RMAH six months before the product was released because I was forced to consider the same issues in building my virtual economic models between 2005 and 2009:

What was attempting to do with their gameplay was very similar to what was done in City of Heroes with the ability to go back and enjoy content even after you had leveled past it. Given that was a division of NCSoft, I assume this was more than coincidence. City of Heroes did very well without an economy for years, because it did not need one. If you are correct about's design goals then they did not need an economy in this game either. Except, of course, that they wanted to find a way to generate revenues without a subscription. Thus they went with a "PLEX-style" economy which was a poor fit, and I argue not well understood by the design team. It added needless complexity and I suspect did not lead to the monetization advantages they were seeking.

The weaknesses in the economy don't break the game, but they just don't add much to it either. I also believe the economy does not do an effective job of driving revenues.

Please realize that if had not clearly put in significant effort into building this economy, I would have not put much effort into evaluating it. At most it would have gotten a "currency deathwatch" like I did with Star Wars: TOR showing their 97% currency value decline in the first 30 days.

Taekwan Kim
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Mr. Shokrizade, thank you for the quick response. Once again, this was a very interesting critique, and definitely a fresh perspective. The idea to eliminate the economy entirely would certainly never have occurred to me, and it seems the devs were also reluctant to go anywhere near that far in the implementation of their professed design philosophy. I believe we are in agreement, then, (or at least, on the same wavelength) in the conclusion that GW2 has something of a diluted or not fully committed focus with respect to it's use of economy (that is, with respect to harnessing vertical investment). I would agree (if indeed this is also your conclusion) that the game in its current state suffers somewhat from core compromises, in the name of accessibility, to both horizontal and vertical progression, which end up hindering both, ultimately limiting the longevity of the game. (Of course, this is coming from someone that's spent 400+ hours in it already, so yeah... I've probably been utterly spoiled by the 2500+ (!!!) hours I got out of GW1.)

In any event, thanks again for the write up. This was very stimulating.

Ramin Shokrizade
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Mr. Kim, thank you for your insights, as you have played the game more than I have.

When I step into a new studio to help them with their economy, one of the first questions I usually ask is "why does this game need an economy?" This usually is followed by a really long pause. The answers I get tell me a lot about the state of development. If the only answer I get is "We don't know, that is why you are here", that's at least better than "Because the game we are copying has one"...

Jason Carter
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I have played GW2 to the cap as well, and was a business student, and while I am most certainly not an experienced economist, you hit the nail on the head. Very good article I had a few points to add as well from a game design perspective.

At least for me, crafting is something that I believe is completely undervalued in most games. Making and crafting things for me is one of the best part about MMOs. Unfortunately the main stream ones don't create good crafting systems it seems.

GW2 was very disappointing in regards to crafting. This article points out all the economic reasons why crafting sucks and is a waste of time (I felt that way even up to level 80), but there is also a lack of purpose with crafting.

I am a big supporter of high difficulty/high reward crafting systems. This is because when you make something after taking a long time to gather the resources and patterns or whatever it is that you need to do, you FEEL like you accomplished something.

I could make 100 leather shoes for 4 copper each, or make 1 item that sells for 400 copper that takes 100 times as long to make (in total). The latter is more satisfying because you feel like that item is actually worth something. The time/gold ratio may be exactly the same but the feeling is different. Now, often times if you increase the difficulty the market won't be flooded so that time/gold ratio is actually better for the 1 item, but this is just a base example.

The other thing I think GW2 did wrong was eliminate resource node competition. Yes it was annoying in say WoW when someone stole your node or people botted out the area, but it made resources more scarce and actually worth something.

Anyway, nice article, I never got into the hardcore endgame stuff, but that uselessness of the economy lasts from level 1 to level 80. It's a shame because GW2 DOES a lot of good things, crafting was not one of them.

John Trauger
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Silly question: Is there an economic used for "junk" items (not white, blue, green, items GW2 classifies as "junk")?

What purpose do they serve?

Ramin Shokrizade
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Usually they are used to sell bigger backpacks/inventories in the item store :) Mathematically, it is like the subscriptions in World of Tanks, but upside down. In WoT if you don't subscribe you run out of coin faster and on lower tier tanks. In a "junk-based" economy you run out of money if you can't collect all the junk.

I personally think junk based economies make for poor play experiences. If I wanted to be a trash man I could make $60,000 a year doing that in real life :) Granted, the olfactory experience is different.

John Trauger
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Based on your answer, I think junk items are a coin-sink. Improved inventory carriage is available as crafting items and at the trading company. Crafting larger carrying inventory items, a crafting layer *must* buy a component that is only available from a game store (and the component gets rather expensive for the really large sizes). Junk, plus cheapo item drops drive sales of this crafting component, pulling money out of circulation.

On a separate note: I noticed myself going through distinct phases in how I handled item drops in GW2.

When I was learning the basics of game mechanics, I simply sold everything to the in-game stores.

Then I started exploring the trading company and found that some items sold for more than the stores paid, so I shifted to selling nearly everything at the trading company.

Then, as I paid closer attention, I tend to sell with a trading company window up same as a seller window, to decide where the stuff best went.

Now that I've added crafting, it's a 3-way decision of sell to the game, sell at the trading company or salvage the item for crafting components.

As common items lose value on the trading company, I find myself doing more and more salvaging.

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The primary purpose for actual "junk" (gray-grade) items are matters of immersion: an enemy which would normally drop 30 copper might instead drop a 30 copper-valued Broken Fang to better represent that wolves seldom carry wallets. That's a non-economic use, however.

At a practical level, it also encourages players to visit towns or other vendors more often in order to clear bag space, bleeding off currency (mostly Karma, but also coin) when doing so. That may not be an intentional use, but it does have nontrivial effects.

Rocco Scandizzo
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Great article. Found it extremely interesting - especially the way you break down the currencies types and how they impact the game. Great read!

Luciano Mollea
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TBH I never found a game where items have levels and drop off mobs in which the pre-endgame gear tier was valuable on the auction house.
While playing you always end up with better gear and I never bothered buying something from the auction house (except when one of my items was too low level for the content I was doing). With all due honesty, GW2 is one of the few games where I outlevelled very quickly my gear, but as the game isn't so item dependent (you may also go into www with white gear and can still be competitive provided you know well your build and/or are with good team mates), it isn't worth looking for the best item at every level.
Yes of course this means that you cannot get some good gold from selling excessive rare loot, but a long as I can play the game, that's fine.

To cut it short, I never bothered about the low-level economy provided that the game allowed me to level on. The economy that's relevant is only the one at the endgame.

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I could have told you this would be the case before the game even hit beta. Why? Because this always happens when you don't have item loss and a crafting system like this.

The only way you could even try to avoid it would be to have no leveling in crafting, so you'd only ever craft what people needed. It's simple supply and demand. Every crafter has to craft multiples of items that won't get used by nearly all characters, and even the characters that do use them will use only one or two.

Ji Hui Lim
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First of all, thank you for the article and a different perspective. However, speaking from somebody with over 1550 hours into the game, I will disagree with some of your analysis.

You surmised that Experience is flooded and has no economic value, while Craft XP is significantly more valuable. The truth is that they are both related. Players who have hit cap and are able to grind out the coin, and eventually decide to start a new character ("alt") will use Crafting as the most time-efficient method to drive their alt to max level. (I don't recall you mentioning it, but gaining Crafting levels will also give Character XP) This results in many new alts getting power-leveled through levels 1-40 or 60-80 entirely through crafting, meaning there is a scarcity of players (discounting bots) gathering crafting materials from the lower-level zones, yet those crafting materials are in high demand as a means for levelling alts. This is why Wool Scraps (Tier 2 Cloth) is worth so much more than Silk Scraps (Tier 5 Cloth; sold at 1 copper above vendor price in the Trading Post).

"Given that the auction house charges 5%"

Speaking of which, selling an item on the Black Lion Trading Post costs the seller 15% of the listed price (a 5% listing fee and 10% sales tax).

"If all wearable/consumable items did not drop from loot, but were instead crafted, then both the crafting and looting process would have been improved. This would have also made it much easier to balance the economy."

Assuming you're referring to the pre-endgame item economy, and discounting the current misuse of crafting to level alts, I don't understand this point. By your own analysis (of which I agree with), Experience is flooded and you yourself were able to reach level 64 while only have ventured through level 31 content. My last alt went through 1-80 within 48 hours (interspersed) of play (measured using the /age chat command), meaning the pre-endgame economy doesn't really matter.

Furthermore, by limiting pre-80 gear upgrades (assuming they matter enough) to only crafting and with access to the Trading Post, you'd essentially double or triple the value of crafting materials. This means you'd have to grind for coin and/or crafting materials to craft gear you would out-level in an hour or two, as opposed to spending less than 5 minutes at the Trading Post to pick up a set of blue/green gear and carrying on with your exploration.

"Junk" item flooding is a deliberate choice on ArenaNet's part, in my opinion. Considering that Quest, Event and Dungeon coin rewards are paltry at best, the main source of income for most players is through selling blue- or green-quality items to NPC vendors. This means the income of the player through a dungeon run or farm session is limited by his or her bag space. Therefore, this allows ArenaNet to be able to sell two convenience items through the Gem Store: additional bag slots and the Merchant Express.

Ramin Shokrizade
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Ji Hui Lim, thank you for your input. Let me see if I understand it all.

I did mention at the very beginning that "Also note that craft resource gathering gives you xp as does the actual crafting process, and this contributed to my total level."

If players are using craft materials to bypass game content, to go straight to level cap, then this further undermines the game design. Let me explain. From my perspective, and perhaps also from some of the discussion in this thread, the best part of the game design is that you have the flexibility to enjoy a wide range of game content, whenever you want, even though most of this content is weighted in low level content areas. If there are motivators, no doubt economic, in the end game that force people to bypass the most fun content so that they can grind the same upper level content over and over, then the game designers have put the cheese on the least entertaining part of their product. This acts to directly undermine their engagement, reducing player motivation and retention.

Thank you for the correction about the sales tax which I did not see. This indicates that players were selling at a 14% loss, not a 4% loss. This is even worse.

As to your suggestion that moving to a closed economy would double or triple the cost of crafting materials, I don't see this. Here is why: right now at least 5 or 10 times as many items are being crafted as could possibly be used, in order to generate craft xp. These items are then salvaged afterwards because their value is unlikely to be recouped on the market. If these could instead be sold at construction value then they would be and there would be a very slight decrease in the supply of materials related to what would have been recouped if the item had been salvaged. This would have raised craft material costs at most 10%, but acted as a much stronger coin since because players would be spending (and losing) ten times as much coin every time they upgraded gear. This would drive coin sells, improving monetization.

I am in agreement that the use of junk items was an attempt to inconvenience players into buying bags or the Merchant Express. I discussed this in my response to John Trauger above.

Tom Aram
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"This indicates that players were selling at a 14% loss, not a 4% loss. This is even worse.

I am in agreement that the use of junk items was an attempt to inconvenience players into buying bags or the Merchant Express. I discussed this in my response to John Trauger above."

People aren't simply ignorantly selling at a loss, and that's not how the Merchant Express works. GW2 allows you to place items on the broker from anywhere in the world, without using an NPC and without the Merchant Express, removing them from your inventory. The people putting items up at vendor price are using the merchant as a way to clear their bags in the field without returning to an NPC vendor. All the Merchant Express does is allow you to collect items you have purchased or money from sales, it isn't required to sell items.

They didn't have to allow broker sales from the field, had they removed that feature they may have sold more cash shop convinience, but they didn't go down that route. That makes the suggestion that gear drops exist to sell bags seem overly cynical and out of touch with the reality of the game. Trash drops were a common feature in MMOs well before selling bag space became A Thing, because inventory management is considered a gameplay element.

You seem to be missing an awful lot of information that might have been relevant to the review, as you simply haven't played much of the game.

Ramin Shokrizade
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Tom, my analysis was not intended to be comprehensive or definitive. Doing so would have required at least another 200 hours. If I had done such a review, I would have kept the results proprietary. In this case I was only attempting to show how many design weaknesses can be caught with a ""low hanging fruit" pass, and what methods can be used to do so. This gives developers a starting point from which to look at their economies, which might be difficult without a framework to approach this.

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Some complications :

Karma and Character XP can be converted to coin at a fairly bad rate, but can also be converted into personal equipment at a very good rate. Orrian Jewelry Boxes, depending on scale and efficiency techniques, provide between 100 and 400 copper per 1000 karma; 50 Skill Points can be used to create a Mystic Weapon currently providing an average of 40,000 copper in market value over the cost of the other base ingredients. ((Actually, because you keep getting skill points experience is most valuable and thus experience boosters make the most sense /at the level cap/, but secondary sources of skill points, alts, and social concerns probably prevent that from being relevant yet for most players.)). Orr karma exotic armor goes at 42,000 karma a piece, compared to the 45,000 copper that the same piece might cost on the auction house. The purpose of these currencies thus seems not prestige, but to [i]intentionally[/i] be a low-value high-availability currency, and the current access to Jugs of Liquid Karma (simply completely daily and monthly achievements brings in 6,000 to 14,000 karma) supports this. All lesser equipment follows this rule, sometimes to an even greater degree -- untradable "green" masterwork equipment can be purchased from karma vendors for less than 1,500 karma a piece, and thus the nature of this necessary equipment is bound only to player completion of renown hearts.

This functions to separate the economy into two distinct categories. The vast majority of things that you're looking at are incredibly low-cost and intentionally so. Players can buy 30 gold through a gem card, but they won't need even half that much to get kitted out in necessities and doing so won't give them an advantage over players that just play the game for a month.

The luxury economy, however, is where ArenaNet's interests apply. This economy revolves around Tier 6 fine ingredients, Globs of Ectoplasm, Crystalline Dust, and Lodestones, and is only very loosely coupled to the value economy (converting lower-rated materials to Globs of Ectoplasm or uprating fine ingredients is a marginal profit and high-time investment activity). Items made with these materials often have identical stats to vastly more accessible gear, but have very different appearances. The Destroyer and Corrupted weapon lines, for example, aren't better than the Pearl or Etched weapons they are based on, but require tens of gold worth of ingredients to create and have become status- and appearance-related Veblen goods as a result, and the same applies to Legendary weapons but only more so.

This isn't entirely cosmetic, but the performance gains are extremely small for the cost, as exemplified by the high-end infusions : a Versatile Malign Infusion provides +5 Power over a Simple Infusion or +1 Power and +5 Agony Resistance over a Malign Infusion, or less than a point of damage per attack. Where the latter two are functional account-bound items that take either at most two Fractal dungeons runs or five days of dailies, respectively, the Versatile Malign Infusion requires ingredients with a market value of 1,200,000 copper.

((Perversely, Crafting is /mostly/ coupled to the luxury market for sales, not the value market, even though Crafting XP comes from the value market. In theory, crafting XP byproducts should be tied tot he luxury market, since they have a useful appearance, but in practice the cost of transmutation stones and low duration while leveling overwhelms that matter.))

Ramin Shokrizade
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J W: I was made aware of these facts two months ago, and had to make a choice between doing a detailed analysis of the end-game economy (which changes every patch) or posting what I had done so far on my review despite knowing it was not comprehensive. I went with the latter as my commercial work has been intense and I don't have an extra 200 hours available to do this just for educational purposes.

There was one more reason: Because the design of the end game economy makes most of these details irrelevant. Trade is the foundation of economics. Trade between players is one of the most powerful "glues" that binds committed players in large scale persistent universes. This was the realization that drove me to develop applied virtual economics in 2005. By requiring players to develop all of the craft skills necessary for the creation of end game gear themselves, this isolates the player. If the player's only need for trade is through an anonymous AH screen on occasion, this further dilutes any social element that may have been present. You don't know where that item came from, who made it, or how they made it.

The effect is to push the player increasingly towards a "Massively Single Player" experience as they advance through the game. It still looks multiplayer, but the model discourages social interaction. Thus, despite the gameplay being the best the industry can offer at the moment, the lack of social cohesion still makes the game get stale over time. This is an effect not seen so much in long running games like World of Warcraft and EVE Online because of the need for social cohesion in those games.

If you have an economic background, and it sounds like you may, there is a good real world example of this. Nations tend to specialize in certain types of goods that they can make cheapest. High tech countries make high tech goods that would be difficult to make in countries with low infrastructure and education levels. Low tech countries can make low tech products like socks and toys much cheaper because their low tech labor inputs are cheaper, as is their infrastructure.

This leads to countries specializing, and it makes it more efficient to trade goods back and forth instead of isolating and trying to make everything in one country. This leads to a higher standard of living for everyone, and also makes relations between countries better. Despite the differences between the USA and China, and their current competition for raw and intellectual resources, their economic interdependence makes a war between them bad for both sides.

While it is certainly simpler to design an economy that functions like a single country, global economies are the way of the future and better model how players like to interact in games. So while I think the GW2 economy may be a noble attempt, it fails to grasp the reason for having an economy in a game in the first place.