A Balancing Act: Video Games and Economic Realism

We’ve come a long way since the days of 8-bit video game consoles and primitive, blocky video game graphics. Technology has allowed video game companies to create more visually appealing, more engaging, and ever more realistic worlds.

The trend toward increasing realism in video games has led video game companies to hire professionals to develop different features. And those companies aren’t just hiring your run-of-the-mill software engineers and animators — some companies, like Valve, which is responsible for Left 4 Dead and Portal, look to hire professionals like psychologists and economists to help make their products realistic. Other companies, like BeamNG, have also applied physics to game design to encourage realistic car crashes that make the car gaming experience more lifelike.

In particular, the economic systems used within video games have evolved quickly, with many game designs utilizing real economic concepts to generate the player’s interest — and financial investment, too. Patrick Sweeney, a Reed Smith attorney who works within the gaming industry, believes the trend toward creating realistic microeconomies has been fueled, in part, by the shift from single-player games to games that encourage social interaction between multiple players. With an increase in multiplayer opportunities came the advent of in-game bartering, selling, and sharing among players.

Then, of course, real money followed. “The next logical step was to give the consumer the ability to purchase virtual money and virtual items with real money,” said Sweeney. “Facebook credits are a great example of this. They can be used in most Facebook games as that game’s internal currency.”

Even big title games, like Diablo III, give players the opportunity to use real money to improve the gaming experience. Diablo has a gold auction house and a real money auction house, so gamers have a choice: they can either save up their game currency — gold — and buy items, or simply put some real money into their accounts and make use of the real money auction house. Gamers can also flip items between the two auction houses. But to do so, they must pay attention to market trends and determine the value of their items.

Of course, Diablo isn’t the only game that has implemented a viable in-game economy. Parallel Kingdom, a mobile MMORPG created by PerBlue, has a comprehensive in-game economy that utilizes a dual currency system. The game has multiple resources, opportunities for characters to level and advance, skill specializations, and customizable weapons, all of which come together in a system where players can work hard to earn revenue, spend real money, or barter — or, if they so choose, do all three.

As the name implies, Parallel Kingdom is a world that is parallel to our own. It utilizes GPS to allow players to play within their own locations, an interesting way to add some realism to a fantasy game. “You play on Google Maps, and the game overlays features onto Google Maps,” explained Ellie Humphrey, a PerBlue spokesperson. Players also claim — and fight over — the various territories on the map.

But the real location feature of the game only scratches the surface of Parallel Kingdom‘s intricate gaming system. To advance, players need resources. For instance, a player cannot claim territories without flags. But, to construct flags, players need wood and leather. They can “grind” for these items — which means putting time into earning enough to eventually afford or trade for the items — or they can pay real money. That’s where the dual currency system comes into play.

“There are two different currencies,” explained Humphrey, “gold and food. Gold is earned and food is purchased.” However, a player can trade gold for food, which will enable them to acquire the resources necessary for advancing throughout the game. Nevertheless, the gold-to-food ratio is quite high, so earning enough to purchase the valuable gaming items will take time.

“If you don’t want to use your credit card and pay into the game, you don’t have to,” said Humphrey. “But you have to be willing to work and put time and effort into the game so you can ultimately trade for the paid currency.” Only then will you be able to afford the items that will help you claim territories and improve your character.

To keep the game interesting, PerBlue releases new content and items that customize avatars every two weeks. “Those items can only be bought with paid currency or traded between players.” These customizable items cost players 500 food — approximately five real dollars — and are only available for two weeks. Once they are no longer offered, players can only get the items by trading, at which point it’s up to the player to set the price. Players interested in flipping items need to pay attention to the market and the way items are being traded, just like in Diablo. Setting the price too high will prevent them from making sales. But if they price the item too low, they won’t get as much as they could have for the item.

With such a complex economy with multiple levels, PerBlue needs to ensure that the new items and new content they release into the game does not upset the economic balance. “In that regard, we consider ourselves economists,” said Humphrey. “We always need to think about how a new feature, item, or mechanic within the game will impact the economy.” She explained that the game developers put themselves within the mindset of the player to determine how a feature will be used — and in some cases, how it will be abused.

“The challenge is striking a balance between work and reward,” Humphrey said. “If a player doesn’t feel like they put enough work to earn a reward, they’ll get bored easily and they’ll leave.”

And as games become more realistic and offer increasing parallels with real economies, that’s the challenge of the gaming industry as a whole. Too much realism may offer too many difficulties that may deter players from the game. But without realistic features that utilize economics and other real-world concepts, players may not be drawn in enough to stick around. As technology advances, so, too, do game player expectations.

“‘Balancing’ the game experience is very important,” Sweeney said. “This applies to the game play as well as any potential economy within it.”

In today’s gaming environment, being in tune with the player and offering a game that has challenges that require effort, but that are ultimately rewarding, is the key to player investment. And as games before more realistic, that balance will become even more vital for a game’s success.

---