How to create a Sustainable Game Economy? - Part-2
This is part-2 in a series of 3 parts. As this is an interesting and complicated concept, I wanted to divide it into different parts for better understanding and of course, for my convenience.
Game Economy is the key factor to consider while developing a game. Well, we talked about theFundamentals of Game economy in Part-1 of this series. Now let’s dig deeper…
The main purposes of Game economy are :
To provide players with opportunities for economic advancement in the game without ruining the fun element.
To create economic loops so that players can progress in the game.
To generate revenue for the Game studio or company.
Balancing all the numerical indicators in the game can help in a better sustainability for the Game economy. We already talked about the Taps, Sinks etc.. in the game’s economy is a resource distribution, acquisition and expenditure system within the Game world. For any game to even attempt these, it should have resources which should help balance all these. They can be :
In-game currencies :
The first requirement for any game economy is to implement in-game currencies that the player can use for different purposes in the game. Generally, there will be two types of in-game currencies in most of the games.
Soft Currencies : Also called “Virtual Currencies”, these are earned by completing levels and battles within the game. As players advance through the game, they receive a steady flow of Soft currency for completing different activities.
Gold from Clash of Clans is considered a Soft currency
Hard Currencies : It’s the game’s most valuable currency. It can be obtained by In-App purchases and sometimes very rarely through gameplay. These provide players with premium gameplay experience so they’re also called as “Premium currency”. With it, they can typically buy whatever they want from the game. Even if they can’t get something directly with it, they can exchange it for other types of currencies or resources.
Gems are the premium currency in Clash of Clans
Players usually start the game with some Hard currency balance and the game shows how it can be useful and why it’s worth buying. This way, the player get a taste of premium gameplay experience and craves more… (Well, some people prefer to grind but that’s another case)
Most F2P (Free-to-play) games tend to implement these Dual-currency mechanism. Most of the highest revenue generating games use this model. Take Clash of Clansfor example where Gold and Elixir will be considered as Soft currency and Gems can be considered as Hard Currency.
Using a Single currency type has a bit of a negative impact on user’s spending flexibility. But know that there are more types of currencies out there like :
Energy Currency -Although Energy cannot be considered as a currency, it plays a key role and some games implements energy currencies as the players require Energy to start a level and it’s valuable so, energy can be considered as a currency sometimes.
Social Currency - These can be used for Social purposes in games like gifting other members, purchasing guild special items etc.. Guild currencies, PvP currencies also come under this type.
Event Currency - These are temporary currencies used to buy limited time resources which can be found only during events.
Invesment & Non-Investment resources :
Investment resources in the in-game economic structure influences the speed at which the player receives the primary value of the game. These kinds of resources should be limited to maintain balance and should not provide long-term value. Otherwise, these are prone to lose their value in the long-term.
Example : Boosters to achieve more resources, Buffs to gain status-effects which can help completing levels easier and efficient can be considered as Investment resources. Although these are in-significant, these provide a kind of value and effects the gameplay and character development.
Various potions and oils in the game Witcher which provides Geralt with temporary boosts
Non-Investment resources do not affect the player’s development. Sometimes even character’s XP can also be considered as a resource like, you can’t buy or earn or earn or unlock certain level or have enough XP. One can’t spend it or buy it but these are essential for the game’s progression.
Example : Skins can be considered as Non-Investment resources. They do not affect the gameplay in anyway rather than like a visual upgrade. But players consider to buy these skins, a lot, just like luxury items
Lots of people buy skins in Fortnite for prestige and fun.
Provide Real value to the In-game economy :
Creating a balanced economy is hard enough, but it becomes even harder when you’re providing real time value (real money) using your Game economy. That’s why it is more complicated to design a sustainable game economy for Blockchain games. Along with all the details we discussed above, Blockchain games needs some extra factors to make it sustainable. Moreover, these games have some downsides like :
Web3 games often don’t provide genuinely high quality and fun gameplay.
Web3 games generally suffer from a high friction onboarding experience.
Many Web3 games are built upon unsustainable economic models.
Lot of gamers fearponzinomicsof Web3 gaming where most people think more about ROI rather than having fun.
Just like traditional games have a Hard currency and Soft currencies, Web3 games have Governance tokens which are used for most purposes like hard currencies but in addition, they’re also used for Governance (community tokens) and for speculation too.
Most people think about Web3 gaming as a way to extract value (ROI/earn money). Like if everyone wants to play your game to earn, then where does the money come from?
OfCourse there will be value providers but in Web3,
Value extractors > Value providers
This sets a bad example to onboard more players as this might not be suitable for a sustainable game economy.
Is Dual token model necessary for Web3 games?
We already know many of the Web3 games use these 2-token models. Unlike traditional games, implementing these 2-token models might not always be sustainable in the case of Web3 games. The common problems might be :
Prone to supply explosions or unlocks or poorly designed vesting schedules for the utility token as players try to extract value and maximize gains.
Exploitation or irregular balance between utility and in-game token could lead to exponential increases in supply, devaluating the utility token.
$AXS and $SLP are the two tokens in Axie Infinity.
Well in any case, some believe in the One Token model, where the token has ample utility in the game and some even go a step further and implement 3-token models under the speculation that it would provide a much better solution and experiences for the players. But this is a topic for another article so let’s just leave it here as it is and jump to our main topic.
NFTs and Ownership :
Ownership is one of the most important aspects of Web3 because it did attract a lot of users and players. You own what you earn. The in-game items, weapons or whatever they are, you can sell them, buy them, trade them, rent them however you wish. These NFTs made it possible in Web3 to own what you earn and do with them as you wish. Some might argue that Web3 might not provide true ownership but as long as you can trade your NFTs as you like, I’d say that it’s somewhat better compared to traditional games.
But why NFTs?
Many traditional games have been successful which has nothing to do with Blockchain by using Free-to-play, In-App purchases and similar methods so, one might even ask that why do we even need NFTs?
Simple, NFTs have the potential to deliver certain desirable features that non-blockchain games simply can’t muster such as Digital ownership and the ability to trade or sell their in-game items or NFTs.
NFTs from the game Guild of Guardians.
NFTs were first launched as immutable tradable assets with verifiable security but recently have been changing with experimental mutable, Soulbound type and with more modifications which may change the way we play games.
With NFTs, when a player moves onto a different game, they can have the option to either sell their items or move them to another game (Interoperability). Either way, the effort or money spent on the game won’t be lost.
Can we have promising gameplay with NFTs?
Blockchain can open a path to profitable gameplay (well, atleast more profitable compared to traditional gaming.) But it is also the reason to attract more money extractors and opportunists rather than true and passionate gamers.
Many of these Blockchain games came up with a pretense of making life-changing money while playing the game. Of course, the investment will also be higher if they have to earn a big lump of money. Now this makes the players think about their ROI rather than purely enjoying the game. Not to say that there are no worthwhile projects out there, but many put the presumption of earning money in front of other elements of Gameplay, which simply isn’t as attractive to gamers as it is to opportunists.
This is why NFTs must be leveraged in a way that doesn’t affect the core purpose of the game itself and promotes a system where earning and gameplay must complement each other. Players must be attracted towards the core gameplay first and only then become enraptured by the endless possibilities of true ownership and revenue generation. Anything other than this will always result in a largely money minded value extracting audience and will ultimately affect the sustainability of the game.
So, I think now you might understand what’s been going on in the economies of Traditional and Blockchain games and understand the importance of sustainable game economies. We’ll see more about how we can tackle most of these problems to build a Sustainable Game economy in the next part.
Well, you did it, you made it to the end! Your support is always appreciated.
You can hit me up on Twitter, I am most active there and post blockchain gaming content. Feel free to reach out and connect via DMs.
Not financial or tax advice. Any personal opinions and specific projects mentioned are purely for educational purposes. This article and its points are by no means a fully comprehensive guide and should be viewed as a supplement to the reader’s individual framework. Feedback is welcomed.
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