Three pillars of game economy
Contents
Introduction
The gaming market, despite the blow after the pandemic, continues to grow steadily. The value of the global gaming market is estimated to reach $189.3 billion in 2024 and $197.1 billion by 2025. [1]. This is a good reason to take a more serious look at how games can make money and how to monetize your game by satisfying the needs of players.
My name is Oleksiy Karpenko. Having worked in game development for over 5 years, developing the economy and balance for projects that have generated more than $150M+ in revenue, I will share with developers how to create an economy for your project so that it earns and thrives. After studying this detailed guide, you will learn how to successfully monetize games, develop strategies and balance for a sustainable economy, and get acquainted with current trends in the gaming industry.
Why should you be involved in the game economy at all?
A properly constructed economy can enliven your game world, make it dynamic, attractive and real. Players will feel a part of this world, and that sense of belonging will keep them coming back again and again.
Let’s dive into the wonderful world of economy and game balance together, break it down into components and understand how to create such an economy that will not only bring you income, but also give players real pleasure.
Chapter 1: The Three Pillars of the Gaming Economy
“We wait for our dinner not from the benevolence of the butcher, the brewer, or the baker, but from the fact that they look after their own interests.”
Adam Smith
Creating a successful game economy is a multi-layered task that requires deep understanding and a thoughtful approach. Professor and PhD Edward Castronova claims that currency stability, rationality of prices and proper allocation of resources are the three pillars that will help you create a sustainable economy [2]. Let’s analyze each of them in more detail.
To illustrate key principles of economic design, we will sometimes use: “Budget Adventure– A fictional game, the developers of which did not care much about the economy and just killed everything at random.
Pillar 1. Currency stability
Your in-game currency is the lifeblood of the economic system. If the blood circulates irregularly, the body cannot function normally. The same thing happens with the game’s economy: an unstable currency leads to chaos and dissatisfaction among players. The stability of the currency means that it should be
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reliable means of exchange
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a convenient unit of account
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an effective way of accumulation.
In Budget Adventure, the currency changes so quickly that players never know how much their loot is worth. One day the sword is worth 100 gold, and the next – 10,000. A PoorPlanner player decides to save up 10,000 gold to buy a legendary sword. After long days of farming, he collected the necessary amount, but at the time of purchase, the price of the sword had skyrocketed to 500,000 gold. Now he runs with a carrot instead of a sword.
Let’s take a real example: in Diablo 2, by the end of the game, gold depreciated so much that players stopped using it and switched to a more stable item – Stone of Jordan. This item completely replaced gold as the primary currency and all game items were valued in Stone of Jordan quantities. [2]
Pillar 2. Rationality of prices
Rational pricing is the basis of players’ trust in your economy. Prices should reflect the real value of items and adjust to changes in supply and demand. Armor should be expensive and cabbage should be cheap.
Another thing that the developers of “Budget Adventure” like to do is to place merchants who sell goods for fixed prices in infinite quantities. This action helps the developers to fix the price, but removes the players from trading in simple goods.
Pillar 3. Correct distribution
Players should receive appropriate rewards for their efforts. If a strong player in your game gets the same rewards as a newcomer, it will cause frustration and user churn. The right distribution of rewards is a balance between effort and reward that keeps players interested and motivated.
Principles of correct distribution:
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All players start under the same conditions
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Players who put in more effort get more rewards.
Now that we have dealt with the basic principles of economic design, let’s move on to the next section – the flow of resources in the game. It is an understanding of how resources move and are distributed between players and systems within a game. How effective and exciting the gameplay will be depends on this.
The second chapter is already here.
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List of literature
[1] Newzoo.com (2024). Games market trends to watch in 2024. [online] Available at: https://newzoo.com/resources/trend-reports/games-market-trends-to-watch-in-2024.
[2] GamesIndustry.biz. (2020). The Core Principles of Building Prosperous Game Economies. [online] Available at: https://www.gamesindustry.biz/the-core-principles-of-building-prosperous-game-economies.