MMO Economics – Inflation v. Market Forces

Ah, anecdotal evidence. The weakest kind, as it were. How easily we resort to developing narratives based on experience rather than on data. Take all of this with a pound of salt. I cannot say how much of this is and isn’t backed up by data because I haven’t gone to the data yet to test it. I do, however, need to process and refine the idea a bit, and this is a great way to do that.

Testing for inflation in FFXIV in particular, and generally any MMO, was my jumping-off point for… all my academic activity. The awesome part of the process is getting to see how all the little pieces finance and economics fit together in a practical application. As practical as MMO economies can be, anyway.

The short version of my thought is that as market pressures go, inflation is the river that carves a canyon. Over long periods of time it is quite powerful, but in a day-to-day or year-to-year sense, largely unimportant. At least in the real world, though the real world has deliberately controlled inflation.

What I’m seeing in FFXIV mirrors this idea a bit. Asking price and quantity available are far more sensitive to patch cycles, population changes, and iLevel tiers (normal supply/demand forces) than they are to any fluctuation in the value of the Gil. Over short periods, things appear to “deflate” as demand appears to slowly drop. In the case of materia, I expect we would see a similar effect measuring from expansion to expansion.

Toward the beginning, there will be a large demand for the new high-grade materia and a nearly non-existent supply. As time goes on, more and more people will complete the content and have excess to sell, so the supply will steadily increase which (should) “deflate” the price. I think comparing it to a newly developed technology would be fair, or even a single iteration of an existing one. Think “new iPhone model.” High demand and high price, but with downward pressure as lines get shorted and used and refurbished units become available.

Assuming this is true, then it seems unlikely that these goods could be used to measure inflation in the most direct sense. Surely all I would see is deflation. Identifying a collection of goods to protect against this natural price drop seems… difficult and/or time consuming. I can think of ways to do it, but they are quite long-term plans, possibly spanning several years or expansions.

I look forward to seeing if and how these observations hold up to numerical scrutiny, and how they compare to other MMOs. I cannot come up with a good reason why the same impact wouldn’t also be true. “Gear technology” as it were, will continue its inevitable march forward and the participants are still human.

Y’all take care, and remember, most things in life are like Steam games. If you wait 6-12 months you can probably get it on sale.

blapril-2020-200Hey, it’s Blapril time! The goal is to simply promote and stimulate the blogging community by encouraging people of all skill levels and backgrounds to post. The official post can be found here and it’s never too late to start.

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