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General: The Economics Of Gold-Farming
SBFord
Former Associate EditorMember LegendaryPosts: 33,129
There is always a lot of talk about gold farming in the MMOs we love, mostly in the negative. In the Free Zone today, MMORPG.com columnist Richard Aihoshi takes a look at, as the title says, "The Current Economics Of Gold-Farming". See what Richard discovered after reading an interesting 'scholarly' report on the death of a gold farming company. Be sure to add your thoughts in the comments.
Last week, the blog posted an entry that I found interesting. Entitled "The Financial Life (and Death) of an East European Gold Farm" and written by the professor who heads up the Centre, it presents balance sheet data for a gold farm that sold currency in World of Warcraft. The information is from early last year, not current. We're told that since then, the selling price has declined to the point where it wasn't sufficiently profitable to continue operating. I believe a large majority of this column's readers either regard this as a positive market trend or at least don't really care that it has happened.
Read more of Richard Aihoshi's The Free Zone: The Economics Of Gold-Farming .
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Comments
Without a whole lot of other data it is really impossible to speculate on why the profit margins for gold sellers in WoW dropped that much; nor is it possible to know if it is an "industry" trend or something specific to WoW...which to be blunt makes the whole topic one of pointless gossip rather than analysis.
To my knowledge, CCP/EVE is the only company that publishes the sort of data that you would really need in order to determine how MMO company policies influenced gold sale results...and for obvious reasons most of the gold selling companies aren't going to share their numbers.
My "gut" feeling on the subject is that a combination of company policies, new revenue models and game ageing has made gold selling less attractive as a business. MMO companies have generally gotten better about discouraging gold buying, punishing offenders and offering "legit" work arounds. Similarly more games have gone to item shops and other things that lessen the attractiveness of illicit gold; It's even possible the prevalence of fraud, scams, virus infestations and such related to gold selling has depressed their market.
WoW is also getting rather old...there has to be a lot of money floating around in the game and fewer "new" players trying to get a leg up.
Lastly, you probably cannot discount the global economic problems...I doubt many people were trading off gas money for online gold, but it may be nibbling down the amounts people are willing to spend on gaming.
Really no economics, it's just people gathering and hoarding random amounts of crap. Currency in game honestly has no actual value in real life. It's the accounts that acquire value because people are to lazy to level their own damn characters.
In Game Value: $xxxxxxxxxxxxx.xx
Real Life Value: $0.00
When did you start playing "old school" MMO's. World Of Warcraft?
I will have to respectfully disagree with gold farming being dead. Over in eq2 i see it tons of gold farmers still, and just take a look at how hard the hit rift. I think gold farming is very much still alive.
Now lets talk soe, I think there in a world of hurt, and buy howdy i hate it becasue I play eq2 and despite what I hear that were not going to be affected by the layoffs I dont believe it.
In earlier games the problem came in with gold farmers actively taking content and items away from "honest" players, thereby ruining their game experience, and selling them to "cheaters" who bought their way to win the game. They also completely ruined in game economies by producing far more wealth than should normally be available. Making it difficult for people who didn’t cheat by buying money to be successful or use in game markets.
Now the "farmers" just hack accounts, spam constantly, ruin webpages and steal identities and credit cards to fraud people and companies to sell gold to "cheaters". They've gone from ruining games I enjoyed to actively breaking laws. I couldn't care less if they aren't making enough to feed their mostly likely illegitimate and probably ill-mannered children.
Basically people who buy their way into games from these farmers should be flayed, mounted to a grinding wheel of coarse sandpaper then sprayed with a high-pressure hose shooting out a slurry of glass shards and lemon juice.
As someone who worked in the RMT industry, and doesn't really care about the "power's that be" who don't really want people to speak openly about it (developers, publishers and RMT companies together), I'm perfectly happy to shed some light on why a lot of western "farms" and RMT companies are going out of business.
The problem is three-fold. Firstly, IGE dominate the wholesale market. If you're buying currency from a wholesale supplier you've got about a 50/50 chance that your buying off IGE or a subsidairy of IGE. This means that there is little to no competition in the wholesale arena, at least when it comes to large companies competing with one and other. If you're not buying off IGE, or one of their puppets, you're likely to be buying off several smaller (and wholely unreliable) sellers for individual titles, which is a messy (and - as already mentioned - unreliable) business from the outset.
The second problem is competition from Asia, and the rise of bots. Bots are somewhat of an easily-acquired commoditiy these days. Most, if not all, popular MMOs have underground communities of botters and whilst a lot of these bots don't strictly allow you to use them for commercial purposes, people do anyway (we did with a few botting solutions). Of course the benefit of bots is that if you have a reliable botting solution you aren't going to be paying BTH or BTD rates for workers, so you aren't going to have massive overheads to worry about. That principle applies to cheap labour from Asia, not just China but also countries like the Philipines (which is becoming more of a common place for "farms" to be located); lower taxes + no minimum wage/low minmum wage = low overheads. So if you're trying to set up a legitimate business in Europe or America, using European or American workers and attaching that image as your USP you're putting yourself in a pretty crappy position in terms of competition with companies that runs bots/use cheap Asian labour. That's why MOST western run RMT companies either buy gold from Asia, OR lie to you about using bots (in fact, every single one of the RMT companies I know of and have had dealings with in the west either use botting solutions, buy off companies using botting solutions or act as affiliates for Asian companies)
So those two problems combined mean that there is no real competition at the top end. Right now there are two or three dominant RMT companies operating, OffGamers and IGE being the two most famous and popular. BOTH are Asian companies (although both are owned by Americans), and both use cheap labour, run bots, or buy off thrid parties that do those two things, combined or otherwise. The reality is that when you get to a point where you're going from some guy selling a bit of gold from his back room to make a little extra cash to a guy trying to make a legitimate and lasting enterprise out of the RMT industry, you're putting yourself in a position where you're competing with the established order, and the industry is so advanced now that - unless you have a particular and specific advantage over the established entities - your wasting your time. It would be like someone coming along an trying to make a proprietory desktop operating system to compete with Windows...
The THIRD area is a little bit different, becase the third problem isn't from inside the RMT indsutry, but outside. That problem is the Korean Government. When the Koreans ruled that RMT was a legitimate and taxable business industry last year, it sent shockwaves across the market. Finally it wasn't just a case of implied legitimacy but ACTUAL legitimacy, and the feeling was that if South Korea - a country widely credited with leading the tech revolution - was saying RMT should be legitimate in the eyes of the law, then everyone else would follow suit. And instead of trying to argue with that developers - I'm assuming anyway - seem to have decided that this is probably the case as well; that in the future RMT could well be made a legitimate market area (especially with economics the way it is right now). So what developers like CCP and Blizzard have been doing is devaluing the currency either by making it so that you don't need to go to a third part to buy currency - such as how CCP introduced PLEX - to making it so that players can get a fairly large amount of curreny without much effort - such as how you ca make around 3000 gold a day in WoW doing nothing since Cata launch. In reality developers don't want companies making money off their games not because they think it breaks them - all evidence suggests that it really doesn't have much impact, and any claim that it does is false at best - but quite simply that developers and publishers are greedy (and rightfully so of course); it's THEIR game and THEY made it so THEY should be the only ones allowed to make money off if, and instead of fighting this point in court they ca save a lot of time and effort in the long run by engineering the game in such a way where the sale and purchase of currency is so meaningless in the first place it just doesn't happen.
Of course there are many more problems out there than these three effecting the RMT industry but in my experience these are the three BIG areas of concern for RMT companies. I don't think RMT is wrong, and I don't think it is going to go away, but in reality it is a far more developed and legitimate market than people seem to think, and hopefully I've gone some way to presenting that here.
http://www.themmoquest.com - MMO commentary from an overly angry brit. OFFICIALLY LAUNCHED!
The problem is that it totally got out of hand.
Sure the competition between them makes everything cheaper cause they are so many.
Spamming, botting, and the usual can be avoided or handled in certain measures.
But they flood the in-game markets and ruin any kind or shape of economy taking the game down.
Probably the only way you can do it anymore is the EVEN MORE dishonest, conniving way; which is to hijack accounts and vendor all their stuff.
Because, aside from raids, players can already get good gear in WoW just by doing quests. Unless you know alot of great recipe's, most of the rewards are superior to what you can make, at least from my experience.
As long as there are people with too much money and too little sense, who are so lazy as to cheat at a game to get ahead in it rather than actually be bothered to play it, there will be gold farmers.
(Bold, italic, and underline emphasis is mine. Blue text is entirely mine.) I really only did this because the default formatting of the site made this look like one gigantic hard to read wall of text and I figured players might skip it. This person clearly has insight into the industry as the only two points that seemed apparent to me is:
Clear efforts to destroy the gold farming industry by companies, and rightfully so from a player's perspective. I should be able to enjoy the game based on what I can do in the game. RL conditions shouldn't matter for anything. I hate RMT as much as F2P.
It is unthinkable, but fact, how cheap cheap labor actually gets. To think that not only would a person work an entire day for $7, $10, or $20 but also survive on that? That's astounding! Even in less expensive rural areas of the US, less than $50 a day ($350 a week) can be uncomfortable, and sometimes falling short of making ends meet and asian labor makes do witt 12-15% of that? Whoa.
Spec'ing properly is a gateway drug.
12 Million People have been meter spammed in heroics.
People prioritize. The reason that the gold farm went out of business is that the global economic crisis of 2008 made people realize that eating was worth more to them than fake money.
WoW to an extent has the right model almost nothing in the game has a purchase price were you need to buy gold outside of what the average person can obtain on there own without much pain.
The games that RMT works in is those that were designed with steep cost to obtain items or have purposely designed large money sinks, most people do not have 8-10 hours a day to farm money and it is more the people with less time to play in a game who purchases gold.
Almost every games leveling curve is now so easy that the pay for leveling service business has also gone out of business. It is so easy that even the most causal players can usually max level in a new game or expansion in less that 30-40 days playing a few hours a day so there is no market.
Wrong.
RMT does have an effect in games, "breaking them" as you put it, and I've seen the before, during and after example first hand as proof.
FFXI.
For a few years, SE did very little about the botting/RMT farming that was taking place in the game. Over time, the economy got so out of control that even lower level gear that a brand-new player would expect to get was out of their reach. It turned many people away, saying "I can't afford to get any gear in that game. No way I'm going to keep playing it". I have RL friends who decided to try it out and, if not for me giving them some money to start with (something I'm generally very against as I prefer to show people how to make money rather than just give it to them), even I had to acknowledge that the market was fubar'd and there was little or nothing these new players could do about it. In a word, inflation was kicking the game economy's ass, and anyone who wasn't already ridiculously wealthy was feeling it.
More rare and higher ticket items sky rocketed, increasing in price multiple times over. The RMT farmers had bots set up to camp all the high-tickeet item dropping mobs - Valkurm Emperor, Argus, Leaping Lizzy, etc. etc. A legitimate player had next to no chance of getting claim on them if a RMT was in the vicinity as the bot could "read" the game memory and know that the named mob had spawned, even outside of a normal player's "visible" range. They used speed hacks that allowed them to permanently run faster than a normal player can run without any kind of speed buff, so no normal player had a chance of reaching it before them, unless the player was close enough and saw it soon enough.
In short, the RMT dominated the market on those items, driving them up and up and up to the point where people felt like they couldn't afford or otherwise obtain these items without giving in and buying gil. Of course, the gil came from the same companies botting and monopolizing the items in the first place, and so they were getting players' money, and the gil was going right back into their "inventory" to re-sell again.
I remember seeing items that usually list for 2 million going for easily over 30 million. An item I got, the Jujitsu Gi, cost me 450k when I bought it. When RMT inflation was at its worst, the Gi was at around 3 million as I recall - and that was a minor example.
Then SE stepped in and started taking it seriously.
They changed the drop status of those rare items from the world spawns to rare/ex (basicall bind-on-pickup and non-sellable or tradeable to other players), and placed the non rare/ex versions as possible rewards for BCNMs (instanced arena-type battles against various creatures). Since RMT couldn't monopolize BCNMs and anyone had a chance at getting them, they could no longer be monopolized.
How fast you want to guess the price of those items started to drop?
But SE didn't stop there...
The RMT had also pretty much dominated the fishing market, flooding the AH with moat carp (used for a popular fishing rod quest in the game) and other fish. SE introduced "Goblin Bounty Hunters", a unique type of goblin that's faster and stronger than normal goblins of the same level. They existed only to patrol commonly fished waterways to deal with - you guessed it - RMT-run fishing bots. If a legitimate player was out there fishing, chances are they were at a level that goblins wouldn't bother them in that area. RMT brought level 1 characters out there to fish, making them quick and easy targets for the Bounty Hunters. Almost literally over night all but a tiny number of fishing bots were gone from the game.
How fast you want to guess that the fishing market came back down to normal levels?
Beyond that, SE introduced their "RMT Task Force", which is a team of SE employees who act entirely apart from GMs. Their entire goal is to track RMT and devise ways to catch them in the act. They reported once a month of how many accounts were banned, how much ill-gotten gil was removed from the economy and even provided a break-down of what types of activities were targeted, and how many were banned in each category.
After a few months, prices on items came back down to what they were prior to the inflation. In some cases, like my Jujitsu Gi from earlier, they came down even farther. What I payed 450k for was down around 70k.
Unchecked RMT activity was the reason behind the inflation, and SE dealing with them is the reason behind the economy coming back to normal.
Direct cause and effect example.
So, sorry... I've heard the "RMT has no effect on the game" claim before... and it's BS. It absolutely does.
And don't even get me started on what the companies have moved on to since then - hacking accounts, trying to sneak keyloggers on to people's systems... and other various illegal activities.
Anyone who has the balls to say "RMT is harmless" and supports it these days needs to have their ass kicked out of MMOs for good... or until they wake the hell up and understand what they're supporting.
and the cash shop selling asphalt..." - Mimzel on F2P/Cash Shops
Game companies just need to be more vicious when attacking gold farmers.
An initial investment into expensive lawsuits will save money and trouble in the long run but it should be up to the rich industry leaders (blizz among others) to help the most since they have more money and private legal teams. After all, they do have a valid lawsuit and a good chance to win.
We cannot let these groups get away with ruining our games (ie Silkroad). As players, there's got to be something we can do. I might suggest attacking gold-selling sites with a DDoS, Hacking, or a Virus, but I feel that may be going too far. Until the old men who make the laws catch up to current trends, this frontier will remain like the wild west.
For now just bear with it and in the meantime, frown upon people you know IRL who support these sites and report every gold seller, farmer, and botter you see in-game. Leave the frontier justice to the outlaws.
Hear, hear!
Someone posted this Youtube video on another forum here at mmorpg.com i figure I would just copy and paste it over here.
Its an interview with someone who is a gold seller.
http://www.youtube.com/watch?v=PWvHcoqru7I
Its simple economics. Supply and demand. If a game remains stale. Well... no demand.
Not to mention theres a pretty good info on how these hackers are getting your info.
False.
Currency in games does have a real life value - that value is whatever someone is prepared to pay for it.
You may not agree with the value others place on a good, but that does not make you right and them wrong.
For example: You might not see the value in a Star Wars Figurine made of plastic, or a baseball card, or a belt buckle, or a custom built car or bike, or a house by a river, or a painting by Picasso. But some people do - and are prepared to pay for these things.
What are they actually paying for?
In some cases it is not the thing itself - but the work required to obtain such a thing.
In the case of in game currency - it often represents work. Time spent performing a task. And some people only want the end result. So they are prepared to pay to have someone else do the 'work' for them.
Really that says a lot about some MMOs too. If your game seems more like work than a game then who is at 'fault'?
The interesting thing for me was that the way to eliminate Gold Farmers is to make it uneconomic for them.
Gee... who knew? (Every time I suggested this I was told I was wrong)
Nothing says irony like spelling ideot wrong.
Gold isn't the only currency for sale by a lot of these companies, though. I mean, we slap this 'GOLD FARMER' label on RMT companies and we've been happy with that for a while. But it's more than that.
These companies are willing to farm reputation, honor, arena points, gear, levels, etc.,.. for you (services, so to speak). I'd be interested to see how these companies have shifted focus from gold to these other 'services' and how successful they have been (or haven't been) in doing so.
side note:
I have several co-workers that game. They wouldn't dream of purchasing gold from these RMT companies, but they seem to be quite alright with paying ($100 to level from 1-70) other co-workers to level characters for them (or get arena points/tier gear).
They don't want to support a 3rd world country.. but they do want to purchase 'services'. Kind of an odd spin on the situation from my perspective.
Sadly, you are right. The post about hacked accounts here and the phising mails in my mailbox have increased a lot the last year.
Farming is actually kind of work, maybe not honest but still work. Hacking someones account is faster and you often can get a lot for a comparibly little work.
Maybe people actually are getting smarter as well so fewer buy gold, that also keeps the number of farmers down.
Which is why 'smart' companies - like Turbine - sell XP (and other) boosts in their shops.
They trade on players that want the ultimate in powergaming.
I would not be surprised to find them selling maxed level characters soon (in fact they already do sell 'boosted' toons)
Why you would pay to buypass a 'game' that you supposedly play for fun is beyond me... but I wish I had thought of it first. $$$-)
Nothing says irony like spelling ideot wrong.
I highly highly doubt there will be a new F2P title in the works for some time (esp. a big title) but I wouldn't be surpised if SOE made Planetside Next F2P.
As long as there are no life basement dwellers who have 24 hrs a day to play no families and living of the taxes people like myself pay then there will always be RMT.
Its a 2 way street and I have long said companies should simply cut out the RMT man and offer it directly. I havent used RMT but with getting 2 hrs a day to play my chosen MMO I have been so tempted on occasions when I see those no lifers who my taxes are paying benefit for running round in all the best gear it ****es me right off and the only means I ever have to catch these players in what are usually gear>skill PVP games is to waste every playing moment grinding cash or to take the RMT route or outright quit.
Sadly I always end up quitting.
Before you state "work for what you get" I already do in RL unlike many who play the genre and time is more important to me than money so I cant see any reason why MMO publishers cant just legitimise the process by offering it in their cash shops.
Agree on that.
On ther other side is reason why is so hard for normal players to level mining, herbalism, ... for OWN joy.
But still agree ... it is at least hard work involved and have much less problem with that ... then stealing accounts. That besides all is criminal act and should be perscuted by law (another question is if this is effectively possible).
I really enjoyed this article: The Financial Life (and Death) of an East European Gold Farm
Great to talk about and explain to a friend who's an economist and not a gamer! Personally I find it absurd and amazing at what humans get up to eg absurd that ppl attach value to in-game assets and amazing that ppl are ingenious enough to pay their uni off doing this instead of working as a student at Mcay'D's!
More ID checks will lead on from this and other illicit activities going forward to set up an mmo account I'm guessing.
http://www.gdcvault.com/play/1014633/Classic-Game-Postmortem
Thanks, that was an interesting interview.
Eat me!
Why do you think Immigrants come to the United States? A chinese immigrant can take a $30,000 - $50,000 a year job which is the equivalent to making 276K - 460K in their currency and live like kings and buy an entire Estate for their family in China.
Its amazing that people do not understand economics....