Games & Virtual Worlds Series
Non-Core Mechanics: Economies
Understanding Games: How Video Games & Board Games Work
A game’s internal economy is the system of resources, goods, and services that exists within the game. The internal economy of a game can be used to represent a wide range of elements, including money, resources, equipment, and more.
The internal economy of a game can serve several different purposes. It can be used to create a sense of progression and advancement, as players can earn and spend resources to improve their characters or acquire new items. It can also be used to create challenges and goals for players to pursue, as they may need to acquire specific resources or goods in order to progress through the game.
The internal economy of a game can be managed and balanced in various ways, depending on the needs of the game. It can be based on a fixed set of resources, or it can be more dynamic, with resources and goods being created, destroyed, or traded as players interact with the game world.
Sources & Drains
In a video game’s economy system, sources are elements or processes that add resources or goods to the game’s internal economy, while drains are elements or processes that remove resources or goods from the economy.
Examples of sources in a game’s economy might include:
Gathering resources: In many games, players can gather resources such as wood, stone, or metal from the game world, which can then be used to build structures or create items. This can be a source of resources for the game’s internal economy.
Trading: In some games, players can trade resources or goods with each other or with NPC (non-player character) vendors. This can be a source of resources for the game’s internal economy, as players can acquire new resources or goods through trade.
Loot: In many games, enemies or objects in the game world will drop loot when they are defeated or interacted with. This can be a source of resources or goods for the game’s internal economy, as players can acquire new items or resources by looting.
Examples of drains in a game’s economy might include:
Consuming resources: In many games, players can consume or use resources to perform certain actions or functions. For example, in a survival game, players might need to consume food and water in order to stay alive. This can be a drain on the game’s internal economy, as resources are being removed from the economy when they are consumed.
Upgrading items: In some games, players can use resources or goods to upgrade or improve their equipment or abilities. This can be a drain on the game’s internal economy, as resources are being removed from the economy in order to make the upgrades.
Repairs: In some games, players may need to repair their equipment or structures using resources or goods. This can be a drain on the game’s internal economy, as resources are being removed from the economy in order to make the repairs.
Sources and drains can affect the balance and flow of resources and goods within the game. By adding and removing resources in different ways, developers can create a more dynamic and interactive economy that players can engage with.
Converters & Traders
Converters are elements or processes that transform one type of resource or good into another type, while traders are elements or processes that facilitate the exchange of resources or goods between players or between players and NPC (non-player character) vendors.
Examples of converters in a game’s economy might include:
Crafting: In many games, players can use resources or goods to create new items or equipment through a crafting system. This can be a converter, as it transforms one type of resource or good (such as wood, stone, or metal) into another type (such as a weapon or armor).
Alchemy: In some games, players can use resources or goods to create potions or other consumables through an alchemy system. This can be a converter, as it transforms one type of resource or good (such as herbs, minerals, or reagents) into another type (such as a potion or elixir).
Refining: In some games, players can use resources or goods to refine or process them into more advanced or valuable materials. This can be a converter, as it transforms one type of resource or good (such as raw ore or oil) into another type (such as refined metal or gasoline).
Examples of traders in a game’s economy might include:
NPC vendors: In many games, players can buy and sell resources or goods with NPC vendors. These vendors can act as traders, facilitating the exchange of resources or goods between the player and the game’s internal economy.
Player-to-player trade: In some games, players can trade resources or goods directly with each other. This can be a trader, as it facilitates the exchange of resources or goods between players.
Auction houses: In some games, players can use an auction house system to buy and sell resources or goods with other players. This can be a trader, as it facilitates the exchange of resources or goods between players.
Converters and traders affect the flow and balance of resources and goods within the game. By allowing players to transform and exchange resources and goods in different ways, developers can create a more dynamic and interactive economy for players.
Production Mechanisms
A production mechanism is a system or process that creates new resources or goods within the game. Production mechanisms can be used to generate new resources or goods on a regular basis, or they can be triggered by specific events or actions.
There are many different types of production mechanisms that can be used in a game’s economy. Some examples might include:
Gathering: In many games, players can gather resources from the game world, such as wood, stone, or metal. This can be a production mechanism, as it creates new resources within the game.
Farming: In some games, players can grow crops or raise animals to produce resources or goods. This can be a production mechanism, as it creates new resources or goods within the game.
Crafting: In many games, players can use resources or goods to create new items or equipment through a crafting system. This can be a production mechanism, as it creates new resources or goods within the game.
Quests: In some games, completing quests or missions can reward players with resources or goods. This can be a production mechanism, as it creates new resources or goods within the game.
Tangible & Intangible Resources
Tangible resources are resources that have a physical or material presence within the game, while intangible resources are resources that do not have a physical presence but are still important for gameplay.
Examples of tangible resources might include:
Money: In many games, money is a tangible resource that players can use to buy and sell goods and services. Money is often represented by a currency, such as gold coins or credits, that can be physically collected or spent within the game.
Resources: In many games, players can gather resources such as wood, stone, or metal from the game world. These resources are often represented by physical objects that can be collected and stored by players.
Equipment: In many games, players can acquire and use equipment such as weapons, armor, and tools. These items are often represented by physical objects that can be collected and used by players.
Examples of intangible resources might include:
Experience points: In many games, players can earn experience points by completing tasks or defeating enemies. Experience points are often used to measure a player’s progress and are often used to unlock new abilities or content.
Reputation: In some games, players can build up a reputation with various factions or groups within the game world. This reputation can be used to unlock new quests or items, or to gain access to special areas or content.
Influence: In some games, players can build up influence or social status within the game world. This influence can be used to unlock new items or abilities, or to gain access to special areas or content.
Tangible and intangible resources can affect the progression, advancement, and interactivity of the game.
Feedback Loops, Mutual Dependencies & Deadlocks
Feedback loops are mechanisms that can create a cycle of positive or negative reinforcement in the economy. A positive feedback loop is a cycle where an increase in one element leads to an increase in another element, which in turn leads to further increases in the first element. A negative feedback loop is a cycle where an increase in one element leads to a decrease in another element, which in turn leads to a decrease in the first element.
Examples of feedback loops in a game’s economy might include:
Resource gathering: In many games, players can gather resources from the game world. These resources can be used to create new items or equipment, which can then be used to gather more resources more efficiently. This can create a positive feedback loop, as an increase in resources leads to an increase in the player’s ability to gather more resources, which leads to further increases in resources.
Trading: In some games, players can trade resources or goods with each other or with NPC (non-player character) vendors. As players trade resources or goods, they can create a cycle of exchange that can lead to a positive or negative feedback loop, depending on the balance of supply and demand.
Item upgrades: In some games, players can use resources or goods to upgrade their equipment or abilities. As players upgrade their equipment, they may become more powerful or efficient, which can lead to an increase in resources or goods. This can create a positive feedback loop, as an increase in resources or goods leads to an increase in the player’s ability to upgrade their equipment, which leads to further increases in resources or goods.
Mutual dependencies are relationships between elements in a game’s economy where one element depends on another element in order to function or be used. For example, in a game with a crafting system, certain resources or goods might be needed in order to craft other items. In this case, the resources or goods would be dependent on the items they can be used to craft, and the items would be dependent on the resources or goods needed to craft them.
A deadlock is a situation where elements in the economy become stuck or unable to progress due to a lack of resources or other dependencies. The game provides means that can be used to resolve deadlocks by providing an alternative source of resources or by altering the dependencies between elements in the economy.
Examples of deadlock means in a game’s economy might include:
Cheat codes: In some games, players can use cheat codes to bypass normal gameplay mechanics and acquire resources or items that would normally be unavailable. This can be used as a deadlock means, as it allows players to acquire resources or items that might be needed to resolve a deadlock.
Quest rewards: In some games, players can complete quests or missions in order to acquire resources or items that might be needed to resolve a deadlock. This can be used as a deadlock means, as it provides an alternative source of resources or items that might be needed to progress.
Trade: In some games, players can trade resources or items with each other or with NPC (non-player character) vendors. This can be used as a deadlock means, as it allows players to acquire resources or items that might be needed to resolve a deadlock through trade.
Static & Dynamic Equilibrium
Static equilibrium is a state of balance where the supply and demand of resources or goods remains constant over time. Dynamic equilibrium is a state of balance where the supply and demand of resources or goods is in constant flux, but is still balanced in the long term.
Examples of static equilibrium in a game’s economy might include:
Fixed resource spawns: In some games, resources or items may be placed in fixed locations in the game world, and players must gather them from these locations. If the rate at which players gather resources or items is roughly equal to the rate at which they are replenished, the economy may remain in a state of static equilibrium.
NPC vendors: In many games, NPC (non-player character) vendors can be used to buy and sell resources or items. If the prices of these resources or items remain constant over time, and players are able to buy and sell them at a steady rate, the economy may remain in a state of static equilibrium.
Examples of dynamic equilibrium in a game’s economy might include:
Resource gathering: In many games, players can gather resources from the game world. The rate at which these resources are gathered may vary over time, depending on the availability of resources, the efficiency of the player’s gathering methods, and other factors. However, if the overall rate at which resources are gathered and used remains balanced over time, the economy may remain in a state of dynamic equilibrium.
Trading: In some games, players can trade resources or items with each other or with NPC (non-player character) vendors. The prices of these resources or items may fluctuate based on supply and demand, but if the overall flow of resources and goods remains balanced over time, the economy may remain in a state of dynamic equilibrium.
Micro & Macro Economics in Games
Microeconomics refers to the economic principles and dynamics that apply to individual players or small groups of players, while macroeconomics refers to the economic principles and dynamics that apply to the overall economy of the game.
Examples of microeconomics in video games might include:
Resource gathering: In many games, players can gather resources from the game world. This can be an example of microeconomics, as it involves individual players making decisions about how to allocate their time and resources in order to gather the most valuable resources.
Crafting: In many games, players can use resources or items to create new items or equipment through a crafting system. This can be an example of microeconomics, as it involves individual players making decisions about how to use their resources or items to create the most valuable or useful items.
Trading: In some games, players can trade resources or items with each other or with NPC (non-player character) vendors. This can be an example of microeconomics, as it involves individual players making decisions about what resources or items to trade and at what price.
Examples of macroeconomics in video games might include:
Inflation: In some games, the overall supply of resources or money may increase over time, leading to a decrease in the value of these resources or money. This can be an example of macroeconomics, as it involves the overall balance of supply and demand within the game’s economy.
Market crashes: In some games, the value of certain resources or items may fluctuate wildly, leading to dramatic changes in the overall economy. This can be an example of macroeconomics, as it involves the overall movement of resources and goods within the game’s economy.
Resource scarcity: In some games, the availability of certain resources or items may be limited, leading to competition among players to acquire these resources or items. This can be an example of macroeconomics, as it involves the overall balance of supply and demand within the game’s economy.
Crypto Currencies & NFTs
There have been a number of video games that have integrated non-fungible tokens (NFTs) and cryptocurrency into their gameplay. Some of the earliest examples include:
Axie Infinity (2017): a blockchain-based game where players can collect, breed, and battle fantasy creatures called Axies using Ethereum’s blockchain.
CryptoKitties (2017): a blockchain-based game where players can collect, breed, and trade virtual cats using Ethereum’s blockchain.
Cryptovoxels (2018): a virtual reality game where players can buy, sell, and trade virtual real estate using Ethereum’s blockchain.
CryptoSpaceX (2018): a space-themed strategy game where players can earn, trade, and spend in-game currency called “Space Bucks” using Ethereum’s blockchain.
The use of NFTs and cryptocurrency in video games is a relatively new development, and we can expect to see more games incorporating these technologies in the future.
There are a number of advantages and disadvantages to using cryptocurrency and non-fungible tokens (NFTs) in video game design.
Advantages
Cryptocurrency and NFTs can provide a way for players to own and trade virtual assets in a secure, transparent, and verifiable way. This can create new opportunities for players to monetize their in-game activity and for game developers to generate revenue.
Cryptocurrency and NFTs can create new gameplay mechanics and incentives. For example, a game might allow players to earn cryptocurrency by completing certain tasks, or might use NFTs to represent unique in-game items that can be traded among players.
Cryptocurrency and NFTs can increase the immersion and sense of ownership for players. For example, a player might feel more invested in a virtual world if they own a piece of virtual real estate that is represented by an NFT.
Disadvantages
Cryptocurrency and NFTs can be difficult for some players to understand and use. This can create barriers to entry for some players, and may exclude those who are not familiar with these technologies.
Cryptocurrency and NFTs can create new challenges for game developers in terms of game balance and fairness. For example, a game might need to carefully design its in-game economy to prevent players with more cryptocurrency from having an unfair advantage.
Cryptocurrency and NFTs can be subject to price volatility and other risks. This can create uncertainty for players and developers, and may make it difficult to predict the long-term value of in-game assets.
The use of cryptocurrency and NFTs in video game design can bring new opportunities and challenges. Whether or not to use these technologies will depend on the specific goals and needs of the game and its players.
Controversies
There have been a number of controversies surrounding the use of cryptocurrency and non-fungible tokens (NFTs) in video game design. Here are a few examples:
Some players have criticized the use of cryptocurrency and NFTs in games as promoting gambling or encouraging players to spend large amounts of money in pursuit of virtual items.
There have been instances where players have paid large sums of money for virtual items that are later removed or nerfed by game developers, leading to accusations of unfair treatment and consumer fraud.
Some players have raised concerns about the environmental impact of cryptocurrency and NFT use in games, as the energy consumption associated with cryptocurrency mining and transactions can be significant.
There have been instances where game developers have faced legal challenges related to the use of cryptocurrency and NFTs in their games, such as accusations of violating gambling laws or failing to disclose the risks associated with these technologies.
There have also been instances of players and game developers falling victim to scams or hacks related to cryptocurrency and NFT use in games.
It is important for game developers to carefully consider these issues and to be transparent and fair with their players when incorporating these technologies into their games.
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Bibliography & Further Reading
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- A Theory of Fun for Game Design by Raph Koster
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- Blood, Sweat, and Pixels: The Triumphant, Turbulent Stories Behind How Video Games Are Made Blood, Sweat, and Pixels: The Triumphant, Turbulent Stories Behind How Video Games Are Made by Jason Schreier
- Board Game Design Advice: From the Best in the World vol 1 by Gabe Barrett
- Building Blocks of Tabletop Game Design: an Encyclopedia Of Mechanisms by Geoffrey Engelstein and Isaac Shalev
- Character Development and Storytelling for Games by Lee Sheldon
- Chris Crawford on Game Design by Chris Crawford
- Clockwork Game Design by Keith Burgun
- Elements of Game Design by Robert Zubek
- Fundamentals of Game Design by Ernest Adams
- Fundamentals of Puzzle and Casual Game Design by Ernest Adams
- Game Design Foundations by Brenda Romero
- Game Design Workshop by Tracy Fullerton
- Game Mechanics: Advanced Game Design by Ernest Adams and Joris Dormans
- Game Writing: Narrative Skills for Videogames edited by Chris Bateman
- Games, Design and Play: A detailed approach to iterative game design by Colleen Macklin and John Sharp
- Introduction to Game Systems Design by Dax Gazaway
- Kobold Guide to Board Game Design by Mike Selinker, David Howell, et al
- Kobold’s Guide to Worldbuilding edited by Janna Silverstein
- Level Up! The Guide to Great Video Game Design, 2nd Edition by Scott Rogers
- Narrating Space / Spatializing Narrative: Where Narrative Theory and Geography Meet by Marie-Laure Ryan, Kenneth Foote, et al.
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- Practical Game Design by Adam Kramarzewski and Ennio De Nucci
- Procedural Storytelling in Game Design by Tanya X. Short and Tarn Adams
- Professional Techniques for Video Game Writing by Wendy Despain
- Rules of Play by Salen and Zimmerman
- Storyworlds Across Media: Toward a Media-Conscious Narratology (Frontiers of Narrative) by Marie-Laure Ryan, Jan-Noël Thon, et al
- Tabletop Game Design for Video Game Designers by Ethan Ham
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- The Ultimate Guide to Video Game Writing and Design by Flint Dille & John Zuur Platten
- Unboxed: Board Game Experience and Design by Gordon Calleja
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- Writing for Video Game Genres: From FPS to RPG edited by Wendy Despain
- Writing for Video Games by Steve Ince
- 100 Principles of Game Design by DESPAIN
