Category Archives: Diablo 3

Don’t listen to “Austrians” about hyperinflation in Diablo 3. Please.

Sooo…looks like the other shoe dropped on Diablo 3’s economy.

I’d written a while back about deflated prices in Diablo 3; about how the auction house reduces everything to money, and about the volume of items meant that there was rampant deflation of the value of goods. Things just weren’t worth much. There was always a flip side to that, though; as the playerbase dropped, as money from play multiplied, and as the players became savvy about which gear was good, there would be bidding wars on said useful gear that devalued gold vs. the cost of goods. Looks like that happened.

But please, PLEASE, Critical Distance readers: before you go running off to read the Mises institute’s analysis of Diablo 3’s economy, keep three things in mind:

1) These guys rant about how hyperinflation is coming thanks to “fiat currency” Real Soon Now all the time. They call Diablo 3 a Virtual Weimar because EVERYTHING is Weimar; either a Weimar that’s happening or a Weimar that’s soon to come. They’ve been predicting post-crisis American hyperinflation for so long now, and been so consistently wrong, that it’s become a bit of a joke. The proof of the pudding is in the eating.

2) Austrians really have no place in modern economics. They’re seen as cranks due to their resistance of economic modelling and quantitative analysis, and this is coming from someone who used MARXIAN stuff. Pay absolutely no attention when they start pretending that they’re representative of modern economic thought. Their “laws of economics” are nothing of the sort, which the piece tacitly admits in avoiding discussion of any economic school outside their own.

3) In-game economies tell us almost nothing about real-world economies, because you don’t have “money sinks” and “faucets” and the rules of ownership of goods are completely, completely different. The extent to which the Mises guys try to pretend that “fiat” (read: floating) currencies are akin to an in-game economy just shows how screwy the whole enterprise is.

Sure, it can work the OTHER way, which is why I wrote the Diablonomics piece in the first place. But if you want to do economic analysis based on in-game economies, then you want to look at something like EVE Online, not Diablo 3.

Sure, by all means, check it out as a bit of a fun curiosity. But for heaven’s sake, don’t attach any authority to it.  Anything that includes the line “virtual gold had gone the way of all flesh and fiat currencies” really, really doesn’t warrant it. “Fiat currencies” are doing just fine, thanks.

Edit: Hah. When I wrote that, I hadn’t really plumbed that gabble at the end of the piece about “free markets” and the evils of “central planners” and the like. Folks, these guys have been going on about that sort of nonsense ever since Obama dared to try to rescue the “free market” from itself by doing a bit of stimulus spending back in 2008. Nobody with any sense believes that regulated markets are some sort of Evil Thing. The only smart ones who advocate that these days are the ones who stand to profit from deregulation.

Even if real-world economies behaved that way, games aren’t supposed to be completely free and open in the first place. Games are systems of rules and restrictions. The economies of games are about those rules and restrictions and the enjoyment that the player gets from operating within that space. The whole reason why Diablo 3’s economy was a miserable failure, and why the PS3/PS4 version of the game won’t have an auction house at all, is because Blizzard forgot that. The game’s enjoyment and engagement economy clashed with its gold-denominated faux-economy, and was destroyed in the conflict.

Blizzard’s success with World of Warcraft has everything to do with that game’s careful balance of time and skill vs. reward and chance. And, yes, that’s an economy, since it skillfully and carefully balances scarce resources against each other. It’s just not the sort of economy that these Mises guys understand in the slightest.

If they understood game economies at all, this article wouldn’t have devolved into reciting doctrinaire cant at the end.

Edit: There’s a far better analysis of what the AH did to Diablo 3 here at Joystiq. Yes, it mirrors my own, but it’s still from someone who understands how games work, instead of reciting Austrian Scripture, zombie-like, at the invocation of the word “economy”.

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Diablo 3 Auction House was “a mistake”. (Guess who WASN’T mistaken?)

So here’s Blizzard talking about the auction house on Joystiq:

[Diablo 3 Director Jay] Wilson said that before Blizzard launched the game, the company had a few assumptions about how the Auction Houses would work: He thought they would help reduce fraud, that they’d provide a wanted service to players, that only a small percentage of players would use it and that the price of items would limit how many were listed and sold.

But he said that once the game went live, Blizzard realized it was completely wrong about those last two points. It turns out that nearly every one of the game’s players (of which there are still about 1 million per day, and about 3 million per month, according to Wilson) made use of either house, and that over 50 percent of players used it regularly. That, said Wilson, made money a much higher motivator than the game’s original motivation to simply kill Diablo, and “damaged item rewards” in the game. While a lot of the buzz around the game attacked the real money Auction House, “gold does much more damage than the other one does,” according to Wilson, because more players use it and prices fluctuate much more.

A “mistake”, you say. “Everybody uses it”, you say. “made money a much higher motivator than killing Diablo”, you say. “Gold does much more damage”, you say.

What’s that phrase?

Oh.

Yeah.

F**KING NAILED IT. 

[D3 is a] CASH economy. In previous RPGs, you’d generally trade time and a little luck for your gear and capabilities. In a game like World of Warcraft, for example, there were stark limits on what you could buy; most high-level gear needed to be earned through gameplay. Not in Diablo 3. Everything can be legitimately bought and sold in Diablo 3, whether on the Auction House or just between players. Absolutely everything.

Gear? Just buy it with gold. Enhancements (gems, in this case?) Gold. Weapons? Gold. It doesn’t matter whether it’s early-game magic gear or end-game legendary weapons dripping with power, all of it can be yours if you have enough gold. And, sure, there’s also the real-money auction house, but that’s only one small part of it. Gold and real money are interconvertible currencies as well; gold in Diablo 3 is a currency as much as any other, albeit one that’s backed by a game-maker instead of a state.

That changes things a lot. It makes the game’s economics ultimately much like the real world’s economics, where the value of things are usually reducible to cash. Your time, your luck, your skill in acquiring gear—it really just determines your gold-earning power…

…Look a little closer, and you’ll see why these things are contributing to the sense of ennui and dissatisfaction that is plaguing the game, and have been plaguing it since the game was launched. It’s why people are complaining that they just don’t find it “fun” like they did Diablo 2—and it might just be why the reviews seem not to capture these issues.

Unseemly to gloat? Maybe. Don’t care.

You all better recognize.

(Yes, yes, h/t to Ben Kuchera, who needs to get over it and unblock me on Twitter already.)

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Diablo and Local Toronto Gaming Stuff

Hey, folks. Just a quick note to say that I kinda want to do more of this sort of thing; writing about local Toronto gaming stuff instead of simply doing broad discussions that everybody else is doing. I’ll flag it with a “Toronto Gaming” category and tag.

Also, really happy with the response to my piece on Diablo and economics over on Nightmare Mode. Being able to contribute to Patricia Hernandez and Tom Auxier’s site has been an honour; they’re both excellent writers that I respect a lot. Only thing I’d add to it is what I said in comments: that the issue with Diablo is that it’s a deflationary economy, at least at lower levels. Gold comes in, Gold goes out, but good gear sticks around indefinitely. That’s going to lead to prices going down as more and more goods are being sold to chase a stable amount of cash.

I’ve heard that it’s different at the high end when you hit Inferno. I had an interesting twitter exchange with Stephen Keller on that. He’d said that Inferno is actually wildly inflationary. I don’t have any experience with that, or at least not a ton. What I’d say in response is that the two problems are linked; the dispiriting nature of acquiring gear at lower levels probably has a lot to do with the lack of people who are getting new gear at the higher end. If people drop out, their gear is going to drop out with them, unless they decide to cash in once-and-for-all with the real-money auction house. The few left over at Inferno aren’t going to be enough to contribute the volume of gear needed for price deflation to happen.

If people were playing through to Inferno, we’d likely be seeing the same thing happen there.

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