Image of EVE Online gameplay is one of the world’s longest running MMOs. It launched in 2003 and is still going strong, with last estimates in 2014 indicating that approximately log in per month. EVE Online 420,000 unique users What is EVE Online like? EVE is generally described as a ruthless, capitalistic world where people use spaceships to engage in piracy and world domination. New levels and stories are not added by a group of scriptwriters. Instead, it evolves through the actions of the players — their social interactions, alliances and self-made goals. EVE’s creators, Icelandic game company CCP, have taken a unique, libertarian approach towards the universe they have created, in which they prefer to allow gamers to build, fight, forge alliances and interact with each other largely as they wish. Its goal is: “To create virtual worlds that are more meaningful than real life.” CCP CEO Hilmar Petursson at the GameHorizon conference. As a result, EVE is frequently referred to as one of the most in-depth and complex games existing on the market whilst maintaining an enviable retention rate and level of engagement from its player base. Left: EVE’s annual FanFest attended by approximately 1,400 people each year in Iceland. Right: EVE Player gets a tattoo at an annual fanfest. ( ) Source What is a game economy and why is it so important? A game economy is the configuration of the game loops within the game (currencies, time loops, XP, levels, pricing, etc.). Its goal is to structure players’ behaviors and incentives. Nowadays, if a game is to reach commercial success, it needs to have a strong game economy. Why? Because most games are not sold at a fixed upfront cost anymore. Instead, they are typically free for gamers to start playing, then earn revenue from future sales of content, in-game purchases or a subscription to continue within the game. As a result, the key metric for game companies has become: This means that they must How long can we keep a player within our game? continually engage and provide value for their users. Why is this important for blockchain games? Whilst in EVE Online players don’t have true ownership of their items, it is an example of how having a relatively free game economy can produce a highly engaged community of gamers. The primary outcome of integrating blockchain with video games is to enable gamers to . However, owning game items is only valuable in world where players want to be. truly own their virtual items “To have a commercially successful game, you need a good economy. To have a good economy, you need an aspirational loop. To have an effective aspirational loop, you need to know your target market very well.” — , co-founder of Zynga at NIFTY Blockchain & Gaming conference. Tom Bollich EVE Online is an example of a robust game economy that encompasses many different actors who operate fairly autonomously and are constantly transacting in virtual goods and digital currencies. According to a : popular video game commentator “Algorithms don’t drive prices [in EVE]. Player supply and demand does. Players mine, salvage, loot, build and otherwise procure the vast majority of things that you find on the market. …it allows players to turn brains and a little bit of elbow grease into fortunes.” Example of trading interface on EVE’s marketplace. Impact of true ownership in video games If a game economy is not properly set up with the right reward and incentive structures, enabling gamers to truly own their game content can have disastrous effects on the game. I previously wrote about how this occurred in Diablo III: How the Diablo III Auction Houses nearly killed the game . What are the key implications of true ownership? Gamers can now freely buy, sell and exchange their game items. Gamers don’t have to rely solely on ‘looting’ within a game in order to obtain items, power, potions, armor or weapons that they want. Game developers have less control over the channels where their in-game items are being traded. Item prices will be dictated by the market as opposed to set by the game developers. Whilst EVE have true ownership, it has implemented that, if used in games with true ownership, will enhance gamers’ incentives to play: doesn’t three major mechanisms The ‘death mechanic’ Free economy Sovereignty of gamers Let’s delve into each of these and see what games that will enable true ownership can learn from them. 1. The ‘death mechanic’ This is a gameplay mechanism in EVE Online where, when your die, you lose all the weapons, ships and cargo that you were fighting with — no respawns. Unlike typical video games where you tend to own your hard-earned loot into eternity, EVE more closely simulates the real world where goods are subject to loss, depreciation and theft. This has significant implications because gamers tend to and their items differently when there is a likelihood of losing them. use value Space battle in 2014 where approximately $300,000 worth of spaceships were involved. Why is this good for true ownership? One of the characteristics of truly owning something is that you can potentially lose it. In the real world, you can have your assets stolen, accidentally lost or damaged or you can use them up to acquire something else. A way to make true ownership have significance within a game world is to make items that are depreciable. Games can do this by making items have wear and tear based on usage, a set lifespan, or be able to be damaged, lost or stolen. How does this affect gamer behavior? A huge implication of this is that . gamers fight differently In most other games, players build up their loot stash over time with items that they can use over and over. This results in players always using their most powerful gear because even if they’re unsuccessful in a fight, their character can respawn and they still have their items. Whilst most games strive to match players of similar skills to prevent those with more experience and better loot from immediately beating newer players, in highly autonomous worlds like EVE Online where gameplay is player-driven, if players never lost their items, there would be an increasing skills and wealth gap between newer and older players. However, with the death mechanic where gamers can lose their items in an unsuccessful battle, gamers must carefully choose which items they want to fight with, and make sure that is After all, they wouldn’t want to lose their most expensive ship in a minor battle. commensurate with the level of the fight. 2. Free market economy As stated above, in EVE Online, “algorithms don’t set prices, player supply and demand do.” Players face economic realities like scarcity or resources, specialization of labor and supply and demand dynamics. Additionally, players can ‘engage’ or ‘employ’ other gamers to carry out tasks for them in exchange for rewards. This has resulted in a high level of engagement and interaction between gamers. An example of a courier contract in EVE Online for the “transport of tritanium to Jita system”. ( ) Source Why is this good for true ownership? People begin organizing themselves as they would in real world economies. They find ways to produce and trade to build wealth. Additionally, they can utilize non-financial assets, like social status, power within a group or in-game relationships in order to further their own goals. Scarcity of resources and the reliance of gamers on each other for trade and alliances results in the development of a social order where items become valuable because they have signaling power, ie. an expensive skin on a spaceship that indicates the wealth and success of its owner but serves no functional utility. For gamers, these dynamics make the game more interesting. For game developers, gamers’ high investment in the game increases the longevity of it. How does this affect gamer behavior? EVE’s free economy rewards ingenuity and people who can successfully engage in production and trade. As a result, gamers take on different roles according to their skills, whether it be mining for raw materials, crafting ships or transporting items across the galaxies. According to some estimates, around 80% of the items that existed in the world are entirely player generated, crafted and owned. This self sufficient economy is one of the reasons why EVE has attracted some of the most loyal players and has one of the longest-lasting and most highly-engaged user bases out of any MMO. It also fosters teamwork as economic considerations means that it’s often better for players to pool resources together and cooperate in order to achieve these goals. A good example from EVE of where game developers allowed gameplay to develop organically, despite it deviating from their original intentions is the following ( ): Source EVE’s developers originally wanted to limit the rate of gamers’ progress by allowing only a small amount of cargo to be carried in a frigate. As a result, players would have to make long journeys to and from mining regions. Due to the low economic viability of this, “players exploited the vestigial ability to eject a large cargo container into space, loading it up locally, then towing it to its destination. The net effect was a 100-fold increase in the overall mining rate attainable by players.” In response, Petursson, CCP’s CEO, wanted to plug this exploit for fear that it would destroy the game’s economy. However, he quickly realized that this cargo container mining was much more interesting than the system he had helped design. It required players to work together and put their trust in each other to make use of it. Instead, he adopted the view of, “What if we embrace the chaos and hope for the best?” 3. Sovereignty In EVE, large portions of the game universe can be claimed by players. Why is this good for true ownership? First, land in a game is typically a scarce resource. Game developers will create as much as will enable gamers to explore and build, however, they also want players to be in relatively close proximity to each other so that they interact. Second, most game interactions take place on land. As such, owning a piece of the virtual world enables players to invent creative ways on which to profit from this resource. For example, players can charge others for use of the land, impose fees or rent it out. This can lead to a situation where players can earn passive income from the game (see our third pillar ). here Hoard’s Third Pillar: To offer a possible direction to address technological unemployment. An alternative to this (if you believe that we need to rethink existing systems of property rights as they are unnecessarily rent-seeking or unfairly advantages players who ‘got in first’) is that game developers can employ a proposed by economist Arnold Harberger and recently popularized by Eric A. Posner and E. Glen Weyl in , where efficient use of resources is encouraged by tax that discourages unproductive property ownership. form of taxation Radical Markets Further, this also means that in different areas of the universe there can be different laws and governance systems imposed by the individuals or groups who own and control it. For example, in EVE, there are areas with different levels of control displayed by the in-game ‘police’ — gamers understand that in regions with low police monitoring and enforcement, they have more to gain by conducting ‘criminal’ activities (like being pirates), but also more to lose from the criminal actions of others. How does this affect gamer behavior? Ownership, control or, at the very least, being a part of a governing team of a piece of the virtual universe, increases the investment that a player has in the game. If he owns land in the game, he stands to gain from rent or fees that he is able to charge. If part of a governing body, other members of the universe are relying on his participation and decision-making within that world. In the latter case, being part of a governing body creates a new kind of game experience, particularly as it allows gamers to exercise power that they might not be able to in real life — like developing rules, adjudicating disputes and even dealing with corruption. Further, ownership can lead owners to contribute to the upkeep and improvement to the whole ecosystem at large, if only to increase the value of their investment. Additionally, as most virtual worlds are ‘persistent’, meaning that they continue to exist and operate regardless of gamers coming and going, land owners will need to form alliances that will help them to defend their land. This necessitates coordination with other players to help defend it when you are not there. In EVE, wars with other factions over land rights are a major aspect of gameplay — and arguably one of those exciting. This increases the number of reliant relationships that gamers have with others in the game, thus increasing their social and emotional connection to it. Land ownership before and after an alliance war in EVE Online. ( ) Source True ownership is only valuable in a virtual world that gamers want to be in. The set of incentives, rewards, configurations of gameplay and network effects that make it fun and compel other gamers to want to participate in this world. In short, the What creates a virtual world that gamers want to be in? game economy. I’ve outlined above how we can take cues from EVE Online, which has established one of the longest-running and highly-engaged virtual worlds, simply by putting in place mechanisms that foster autonomy, reward innovation and incentivize social collaboration. If game developers want to build blockchain games that adequately take into consideration some of the key features of blockchain and use them to enhance their game in a meaningful way, then they need to think about how they can structure their game’s economy and intelligently create games that gamers want to play. To learn more about game economies, check out: YouTube channel, particularly episodes: ‘ ’ and ‘ !’ Extra Credits MMO Economies — How to Manage Inflation in Virtual Economies MMO Economies — Hyperinflation, Reserve Currencies & You Daniel Cook’s talk at on ‘ ’ GDC Governance in F2P Multiplayer Games (including Tom Bollich, co-founder of Zynga and Jason Jeon from NHN Entertainment) at recent blockchain and gaming conference, , in Hong Kong. Panel discussion with video game industry execs NIFTY Thanks to and my colleagues and for their feedback on concepts in this article. Gabby Dizon Chris Robison Bartek Ochnio

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