A Realm Reborn Column: Crafting and the Economy @MMORPG.com

I wanted to update folks and let them know that Ryahl's most recent FFXIV column at MMORPG.com posted today. It is a discussion of crafting and the economy in FFXIV.

Final Fantasy XIV: A Realm Reborn Column: Crafting and the Economy

The link above is to the article. Additionally, there are two companion pieces that posted last week on EorzeaReborn.com that accompany this piece. They are:

Of Hammers and Scales

Too Similar and Too Many: Gear and Item Saturation in MMOs

Please feel free to respond either here, at MMORPG, or at EorzeaReborn if you have any thoughts or comments. Ryahl is always happy for discussions and thoughts on his POVs.

I think one of the problems that can never really be addressed in an MMO is the resourced called "labor." In game you could say that labor force are crafters, but since it is a part of the game there are a ton of crafters. In the real world the number of "producers" are much more limited compared to the number of consumers. (this is because of the relative time and capital investment necessary to produce goods)For example if 3/10 players are crafters that means that each crafter only has to produce a particular good 3 times to completely saturate the market. This results in a surplus, a surplus results in goods being sold at a loss.

In real life producers would produce less of an item if they could not sell them. They would purchase less raw materials, and then they would cut their employee hours and send less items to the market. Also in real life people are much less willing to take a loss where as in game the price of an object will often drop much further because players will sell products simply to get rid of them rather than to make a profit or break even.

What this ultimately means is that for most crafters, you will lose gil as a crafter. If someone offers an item for sale, if the price is high you will think "I might as well make it myself then." And you will produce it yourself. In the last link when the author talks about scarcity, he is correct. Everything is abundant in game, and players are used to getting things easily because the games and especially end game are gear centric. Sometimes people will immediately judge you as a player based on your gear. This is the social element of economics as it's considered a "social science."

That's a great point. For a crafting economy to work, you need to balance the ratio of crafters (and really crafted items) to the number of adventurers (offset by non-crafted items entering the adventuring economy).

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Originally Posted by katsujin

I think one of the problems that can never really be addressed in an MMO is the resourced called "labor." In game you could say that labor force are crafters, but since it is a part of the game there are a ton of crafters. In the real world the number of "producers" are much more limited compared to the number of consumers. (this is because of the relative time and capital investment necessary to produce goods)For example if 3/10 players are crafters that means that each crafter only has to produce a particular good 3 times to completely saturate the market. This results in a surplus, a surplus results in goods being sold at a loss.

In real life producers would produce less of an item if they could not sell them. They would purchase less raw materials, and then they would cut their employee hours and send less items to the market. Also in real life people are much less willing to take a loss where as in game the price of an object will often drop much further because players will sell products simply to get rid of them rather than to make a profit or break even.

What this ultimately means is that for most crafters, you will lose gil as a crafter. If someone offers an item for sale, if the price is high you will think "I might as well make it myself then." And you will produce it yourself. In the last link when the author talks about scarcity, he is correct. Everything is abundant in game, and players are used to getting things easily because the games and especially end game are gear centric. Sometimes people will immediately judge you as a player based on your gear. This is the social element of economics as it's considered a "social science."

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i been saying this for a while and getting flamed. there no real economy.
other games fixed this problem by making many versions of one thing and mats and the best was SW galaxys.

star wars galaxys each thing you made was different from the last even had its own ID like a finger print and there were different qualitys. and crafters skills really mattered. and equip had a permanent decay till its no good anymore.

FFXIV you have normal equip then +1 and there are no other differences, once again i say the crafting system sucks almost pointless to not have it be a auto craft like WoW. everone can make the same thing which can make selling useless or not be worth anything worth the trouble

I actually liked the original 1.0 system. It would have been great if they had made component levels more accessible.
E.g. A lvl 10 sword shouldn't need a lvl 20 component. But making a lvl 10 sword out of a blade, hilt and handle felt more realistic and to me that was fun.

Due to inventory issues, crafters and gatherers are forced into specialization. This controlled the number of producers in all segments of the market. Eventually each person would find his own niche in the production of a certain set of items.

Unfortunately, the lack of a proper AH caused big problems in the distribution of player created resources, which in turn caused unwarranted ire on the crafting system itself.

Well too late to bitch about it.

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Originally Posted by indira

i been saying this for a while and getting flamed. there no real economy.
other games fixed this problem by making many versions of one thing and mats and the best was SW galaxys.

star wars galaxys each thing you made was different from the last even had its own ID like a finger print and there were different qualitys. and crafters skills really mattered. and equip had a permanent decay till its no good anymore.

FFXIV you have normal equip then +1 and there are no other differences, once again i say the crafting system sucks almost pointless to not have it be a auto craft like WoW. everone can make the same thing which can make selling useless or not be worth anything worth the trouble

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I get where you are coming from, but we're really wondering what the influx of quest reward gear is going to do to the overall game market. As many folks have said (else where as well as here), the majority of gear from 1.0 came from crafters. While a lot of discussion has focused on the "quest games" impact on xp, I don't remember seeing much about itemization and gear effects of the changes.

I think in the lower levels the quest reward gear is to offset the fact that people won't be crafting level 1-10 gear for long, so it loses it's relevance as a craft easily.

Depending on how the spiritbond system changes and how the materia system changes (in 1.0 it wasn't worth worrying about until 50.) this could end up being a pretty minimal change, where wearing quest reward gear is ok, but not the best option.

Also now that once an item has any degree of spirit bond it can't be traded or resold to another player it's not as worrying as before, when once an item was in the game it could change hands hundreds of times before being removed either as a conversion to materia, tossed out, or sold to a vendor.

The one thing, though, that really irks me about this article? The plural for leve is leves... not leve's.

/grammarnazi off

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Originally Posted by katsujin

I think one of the problems that can never really be addressed in an MMO is the resourced called "labor." In game you could say that labor force are crafters, but since it is a part of the game there are a ton of crafters. In the real world the number of "producers" are much more limited compared to the number of consumers. (this is because of the relative time and capital investment necessary to produce goods)For example if 3/10 players are crafters that means that each crafter only has to produce a particular good 3 times to completely saturate the market. This results in a surplus, a surplus results in goods being sold at a loss.

In real life producers would produce less of an item if they could not sell them. They would purchase less raw materials, and then they would cut their employee hours and send less items to the market. Also in real life people are much less willing to take a loss where as in game the price of an object will often drop much further because players will sell products simply to get rid of them rather than to make a profit or break even.

What this ultimately means is that for most crafters, you will lose gil as a crafter. If someone offers an item for sale, if the price is high you will think "I might as well make it myself then." And you will produce it yourself. In the last link when the author talks about scarcity, he is correct. Everything is abundant in game, and players are used to getting things easily because the games and especially end game are gear centric. Sometimes people will immediately judge you as a player based on your gear. This is the social element of economics as it's considered a "social science."

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something that could be solved if crafters were only allowed to have one craft at cap, while other craft skills can only be leveled up to 50% of your maxed craft skill. As the level cap is increase, and as you level up, the secondary and third crafting skills can go up as long as it maintain the 50% once the crafter have reached the cap. The results will be limiting the amount of crafters with many skills and taking out the supply surplus out of the market.

However, the risk is a few will be only able to have certain crafts and could cause the monopolization of certain markets. Just like in the real world.

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Originally Posted by HamHam

something that could be solved if crafters were only allowed to have one craft at cap, while other craft skills can only be leveled up to 50% of your maxed craft skill. As the level cap is increase, and as you level up, the secondary and third crafting skills can go up as long as it maintain the 50% once the crafter have reached the cap. The results will be limiting the amount of crafters with many skills and taking out the supply surplus out of the market.

However, the risk is a few will be only able to have certain crafts and could cause the monopolization of certain markets. Just like in the real world.

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lol If you replace one problem with another I'm not sure if I would call it "solving." But also I don't believe it would solve the problem regardless, it will definitely decrease surplus but it won't fix it. You would essentially be reducing the number of crafters for any particular good by 1/8th but all that really means is that instead of producing 3 goods they have to produce 32 goods in order saturate the market. It's something that is still rather easy to do. Of course in an actual situation there will still be many more of one type of crafter than other crafters for instance more blacksmiths than there are alchemists. Either way the problem still remains, it's too easy to produce more, also crafters often flood the market with certain items just for the sake of leveling.

At the same time real world market would be unacceptable in game. Rich being incredibly rich, having access to resources that the general population can't seem to touch. This actually does somewhat happen with regards to rare items and HNM LS in the past. But as far as true crafting and gathering scarcity most people would not accept that type of system in game. To give you a real world example Tamahagane is only sold to specific manufacturers in japan. A normal person has almost no chance to purchase it. Real world scarcity, not to mention monopolizations, patents, copy rights, resource rights, won't be accepted in game, and probably rightfully so, but that's one of the reasons a "real economy" in game is impossible. (atleast at the moment) And the problem can't be solved.

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Originally Posted by Ferth

The one thing, though, that really irks me about this article? The plural for leve is leves... not leve's.

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See now my deleted post above yours said the same but then I wondered if Ryahl was attempting to use an apostrophe for contraction's sake (as in "o'clock", "Hallowe'en", etc.), ie levequest = leve', hence my deletion.

Though now you pointed it out too, I went and looked it up and levequest -> leve is just a clipped form with no requisite for an apostrophe. So, either way it's wrong, yeah :D

As for the more important matter: the article!

Didn't play GW2, but I like the sound of the AH. Don't quite understand why anonymity is necessary, but that probably comes from only being able to read about it and not experience it first-hand. If ARR were to go this way, I would be very happy.

I think the most important function is the cross-server aspect. I wonder if this wouldn't be implemented in ARR due to the comparative wealth imbalance between old and new servers. If it were, it should be able to prevent (by sheer amount of transactions) that awful price-fixing that occurred in FFXI which was created by malicious manipulation of an item's price history. It should also balance out the welath between old and new servers after a little while...

Without cross-server functionality, which I would think is a more likely scenario, I think the AH needs a full sales history - not just last 10 or 30 etc. This sounds like it could be a lot of data to load up each time you select an item, but if it were done on demand (ie show first 10 by default, expand to re-query the server for a full history), it would reduce some of the load. If only a limited history is used, then players with a lot of capital can more easily manipulate the market through history-fixing, frustrating buyers who don't have a surplus of gil and getting rich in the process (giving them more power over the market).

I'm not too concerned about crafting being problematic in ARR. There was a strong market in 1.0 wherein I would sell through all of my items for sale (low to mid-range stuff) in a day on two retainers. I was buying and camping top-range HQ gear and materia; in a couple of cases having to wait a week for the specific item to come up, but that was no hassle. Yeah, the MW system was weak when it came to price history ignoring materia, or if there were over thirty sales on, or having to search prices for twenty items in separate windows before heading back to the retainer and listing them for sale... But ARR AH will have sorted all that, right?!

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Originally Posted by katsujin

What this ultimately means is that for most crafters, you will lose gil as a crafter.

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I protest this. In the games I've played, I've used online databases and wikis to extensively research recipes and current market prices on the path to levelling up crafting jobs/skills specifically so that I don't lose money. That, for me, is the game - capping out with a lot more money than I started. Ok, arguably I could have gone and killed mobs for all that time I spent in spreadsheets, farmed more money's-worth of drops and bought my way through an inefficient (but quicker) path to the top, but this latter method is less enjoyable for me as it lacks in... elegance...

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Originally Posted by HamHam

something that could be solved if crafters were only allowed to have one craft at cap

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FFXIV is the first game I've played where you can have all crafts at cap. Only capping one (or three) craft(s) on a character in other games just prompted me to make more characters to cap each craft. It actually really prolonged the life of those games for me, but I'm happy that FFXIV is different and allows all on one character so that I don't have to spend extra time repeating content.

My main worry is not the crafting mechanic, nor the auction house, nor the demand (or lack) for crafted gear, but something else: gil buyers. The impact these players have on the economy ruin the crafting/gathering/market 'game' that I and a good few others like to play. I understand that the battle/gear elements of the game are the primary focus of the designers, but I hope some really harsh/strict measures are put into place to deal with the gil buyers.

keeping one craft will not change anything at all, people will just make a mule to cap the other crafts like WoW & FFXI, etc.
issue is there only 2 qualitys and a fake economy. you either have the super cheap things to sell or the one item thats gonna cost too much.
materia kinda off sets it because melding in version 1 was random, but keeping things random is just a pure time sink.
SE need to overhaul the whole crafting system or the AH will always be like it is. or in worse case FFXI if drop equip is better then crafted then you'll have a empty AH.

It's actually not "alot" of data to send, 3bytes of data can store a value of over 16million. So assuming only price that would mean 30 records would equal 90bytes, Considering that 1Mb is over one million bytes. 90bytes is not that much data. There are other things to consider but I don't think adding 30 records of sales history would be difficult or affect system performance.

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Originally Posted by katsujin

It's actually not "alot" of data to send, 3bytes of data can store a value of over 16million. So assuming only price that would mean 30 records would equal 90bytes, Considering that 1Mb is over one million bytes. 90bytes is not that much data. There are other things to consider but I don't think adding 30 records of sales history would be difficult or affect system performance.

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Apologies, I'm misunderstood. I meant that what we have now is 30 and that can be easily manipulated; I was calling for a complete history on re-query (best displayed as in graph-form) so that honest buyers and sellers could see when prices had been artificially inflated. That amount of data being sent out simultaneously from one server to many players would have an impact server-side. I can think of workarounds involving offline data-compilation, but that's getting a bit too deep into the technical side of the issue.

@Mjollnir hahah, your courtesy has been aknowledged my friend. Yes a complete history can be troublesome, after all it is constantly growing. That is a pretty interesting Idea though, graphs and what not. I would like to see that, just purely for the aspect of seeing such a thing. I'm just imagining individual candle stick charts for each item like what is often used by technician style stock traders. I don't know if that would solve the problem at all as far as economy, but i could see where it might help to stabilize prices a bit. Either way, it would be interesting.

First of all, thanks to everyone for reading and commenting.

As to apostrophe-gate, my apologies. Editing is important and bad writing makes it hard to follow the writer's point. In this case, we clearly dropped the ball on one. That's an explanation, not a justification, the "leve's" statement needs to be corrected. If it was at EorzeaReborn, Aela or I would fix it immediately. I'll email Bill and see if we can get a quick edit-fix applied!

I'm pretty sure I have an it's/its disaster near the end of the most recent EorzeaReborn column (thirty days in the sun), but that just came off Google Docs today and I still need a bit of space away from the article before I can edit it sanely. It is hard to edit my own work right after writing (I still "hear" it the way I meant it).

On the Guild Wars 2 auction house. There are a couple of reasons for anonymity. First, it is probably necessary given their cross-server system and size of clientele at play. Second, since they post the quantity demand and value offered (e.g. 10 offers to buy at 24 copper vs. 200 offers to sell at 30 copper), user specific information is drowned out for the sake of data quality. The names in this case are less important than the numbers. You could probably still include user data in a drill-down format, though.

Personally, I like a good auction house. I liked the FFXI blind-model way back when. Given the few AH in the market at the time they made it, the FFXI AH was quite innovative. These days, I prefer the buy/sell variant (e.g. where you can list a buy order as well as a sell order) for simple efficiency sake. It's harder to manipulate the market when both buyers and sellers can enter positions.

I think the real challenge for good crafting is the quest hub. When you have to reward gear via quest, it takes away a market for the crafter/shopkeeper. While I concede the point that low levels tend to be craft barren after a few months, quest hubs run through end-game.

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Originally Posted by Ryahl

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I think the real challenge for good crafting is the quest hub. When you have to reward gear via quest, it takes away a market for the crafter/shopkeeper. While I concede the point that low levels tend to be craft barren after a few months, quest hubs run through end-game.

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While this is true, this is what I was trying to get at with my comments on materia.

One thing we really don't know right now is how long the higher levels will take. {{Whoops, wasn't paying attention. Excerpt deleted.}}

It's entirely possible that a character at level 30 could potentially convert a given slot of armor into materia numerous times before they effectively outgrow it. If there were reason to do so, and if the person were proactive about it they could run through far more pieces of armor than the quest givers supply, which would create demand for crafted armor.

On the other end of that, were lower level materia worth pursuing and melding to gear a crafter could make a piece of armor much more valuable and beneficial to wear than the quest reward pieces.

This is a lot of supposition which depends greatly on how the materia system turns out. But I'd like to hope that since the climb to higher levels will more than likely take significantly longer than it did in 1.0 the need for materia melded gear will go up in those interim levels, giving an effective niche for both high value, high quality melded gear and lower value materia fodder.

There's a lot of concern how gil buyers have a negative impact on the game's economy and rightly so. The surplus of gil only cheapens its value and makes items, gears and consumables very expensive, which hurt the player's power to buy in a consistent basis and as a result hurting the seller’s inventory, creating a stagnant economy.

The exchange of large amounts of gil between players is part of the problem. In RL large amount of money (above 10k) is reported to the IRS. Also, there's a limited amount of money a person can transfer to other ppl per day, there's no limit between accounts that are linked, only outside accounts.

This concept could be implemented in game. Where transfer of large amount of gil between players is limited per day, but there's no limit between your accounts. The account would be linked, so the limit of transfers is carry across accounts, so there's no situation where a player would have a way to have multiple opportunities to have gil transfer multiple times as in comparison with a player with just one account.

This concept could hinder or make it difficult for gil sellers and buyers to flood the market with gil and avoid inflation or slow it down.

This is only one of many methods SE could make gil selling and buying more difficult. I'm not saying this is the only method. Only suggesting this method along with other things SE is already doing to prevent the selling and buying of gil could be used to help combat it.

RMT can't really be fought with inconvenience. They'll find ways to work around it. If you try to build inconvenience in the game it generally affects the playerbase more than the RMT.

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Originally Posted by HamHam

This is only one of many methods SE could make gil selling and buying more difficult. I'm not saying this is the only method. Only suggesting this method along with other things SE is already doing to prevent the selling and buying of gil could be used to help combat it.

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I agree, it's a reasonable idea, if a little work-intensive. I would like to be reassured as to what the plan of action is against the existing armies of Lalafell that undoubtedly capped their gil at Cedarwood in 1.0, but I'm hoping there's an intrinsic solution implemented in ARR to prevent the recurrence.

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Originally Posted by Ferth

RMT can't really be fought with inconvenience. They'll find ways to work around it. If you try to build inconvenience in the game it generally affects the playerbase more than the RMT.

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True enough. From the situation above, a way I could think around it would be for the buyer to be given a reasonably obscure item to list in the AH (where there's would be the only listed) and for the seller to buy it for the agreed amount.

I can't think of a better way than the STFU micro-managing transactions though. I just wish the in-game process was as easy as:
RMT: /shout gil here bro!
Player1: /tell STFU RMT is RMT
Player2: /tell STFU RMT is RMT
<STFU enters RMT name and brings up chat log. IP banhammer>

Of course, much more stuff needs to be done too. I just wonder how high on the list of priorities this is. Perhaps it's just a natural part of an MMORPG economy that crafters just have to account for and move on!

I think in FFXI's lifecycle there was a period where they were completely unprepared for it. I imagine the best wY to combat RMT is to have tracking tools implemented into the game itself so that data can be compiled on suspicious activity easier.

When I was writing this part:

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Originally Posted by HamHam

This concept could be implemented in game. Where transfer of large amount of gil between players is limited per day, but there's no limit between your accounts. The account would be linked, so the limit of transfers is carry across accounts, so there's no situation where a player would have a way to have multiple opportunities to have gil transfer multiple times as in comparison with a player with just one account.

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It was more along the line for RMT, since they are more likely to have multiple accounts and transfer gil to the gil buyer through those accounts. If the account with multiple transfer is limited, then gil sellers would only be able to transfer a limited amount per day. As a result it would make gil very expensive to sell and hence the effect it has on people buying gil. Now, it might not stop the selling of gil, but it will make it very expensive to sell for real money. Which would implement a barrier to sell gil very cheap.

This of course is only to slow down the selling of gil and at least it could keep the game's economy from inflating.

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Originally Posted by Ferth

I think in FFXI's lifecycle there was a period where they were completely unprepared for it. I imagine the best wY to combat RMT is to have tracking tools implemented into the game itself so that data can be compiled on suspicious activity easier.

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Agreed. It's one thing in 1st and 2nd gen MMOs when the idea of RMT and 3rd party transactions was still "new". But in later generations, it amazed me to see developers saying "Oh, we need to develop the tools to track that".

Like... "You mean you didn't prepare for it, knowing the prevalence of RMT in the genre? Really?"

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Originally Posted by Ferth

I think in FFXI's lifecycle there was a period where they were completely unprepared for it. I imagine the best wY to combat RMT is to have tracking tools implemented into the game itself so that data can be compiled on suspicious activity easier.

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tracking the bots is pertty much the only thing you can do, or other programs 3rd party programs . you can snitch on your friends too.

other stuff such as trading gil or items is impossible for a computer program it has no judgement it would cause more pain to legit player who have more then one account and trade stuff between the two. checking countrys IP's can hurt you also if you travel around the world like my self.

i do not trust tracking tools, they may just screw you over trade a buddy alot of gil then boom banned.

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Originally Posted by indira

tracking the bots is pertty much the only thing you can do, or other programs 3rd party programs . you can snitch on your friends too.

other stuff such as trading gil or items is impossible for a computer program it has no judgement it would cause more pain to legit player who have more then one account and trade stuff between the two. checking countrys IP's can hurt you also if you travel around the world like my self.

i do not trust tracking tools, they may just screw you over trade a buddy alot of gil then boom banned.

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It really depends on what info you look at and how you process it. You have multiple accounts, but a trend showing that you only trade small sums between yourself over and over again shouldn't send up a red flag, nor should the occasional loan to a friend. Unless by multiple accounts you mean you have like 10 of them... you might be flagged for interest but further study should show that you probably aren't RMT.

Because in a game like this data is stored on practically everything. It's about knowing what data to look at and how to look at it. Don't get me wrong, it takes a long time to compile accurate data, which is why in FFXI when they realized that RMT was actually a huge problem they really couldn't do much about it for months after they started implementing counter-measures.

Computer programs may not have judgement, but they are pretty good at processing data, and if there is anything that shows up as anomalous a real person could step in and start investigating. The notion that it can't be done is absurd.

To address the amount of gil in circulation you would have to control the amount of gil obtained from quests and and selling items to NPC's. These are essentially the two main ways that gil make their way into circulation. For simplicity sake, take for example if the circulating gil in the economy is 1,000,000. If RMT sells a rare item to a player for 10,000gil and then proceeds to sell the 10,000gil to a gil buying player, the total amount of gil circulating is still 1,000,000 gil. This doesn't cause inflation, in fact the RMT could do that hundreds of times without causing signficant results because the total amount of gil circulating doesn't change. However, if RMT were to sell items to NPC or obtain gil through quests, then they would be able to flood the market with the amount that they obtained and increase the amount of gil in circulation there by causing inflation. Another side of the coin is that if the majority of players make their money through quests and NPC then that would also cause the same inflation with no RMT involved at all. The initial gil circulation has to come from somewhere, so NPC gil and quested gil are necessary to introduce gil and start the cycle, but controlling their output is essentially the only way to address the amount of gil circulating in the economy.

Simply put, if the rate of gil produced (by questing and selling to npc) is greater than the amount of items created by crafting and or acquired from questing, the economy will see inflation. It is the overall quantity of gil in circulation versus the overall number of goods in circulation that govern inflation.