Saturday, January 17, 2015

Virtual Economies in Digital Gaming; or, The Future I Did Not See Coming

Good lord has it been a week already?!

It looks like it has! I better write something!

Okay, uh, so you know how sometimes when you're doing something like, say, playing a video game or reading a good book time just seems to slip away from you? Well, psych!, my week hasn't really been like that at all. I've just had the flu since I last posted.

Still have the flu, technically, but I don't feel as bad as I did. I'm not quite back at 100% but I'll get there don't you worry.

Now, I heard you liked video games?

That's cool. I like video games too. I mean, I'm not religious about it or anything (religion, ew!) but they do occupy a good portion of my spare time.

As such I've noticed some things over the years about video games. Well, I've noticed lots of things but this in particular is kind of weird. These days a lot of games are sold digitally, which is to say there is no physical good involved.

If you had gone back in time to 1995 and found ten year old me and told him that in the future he would be buying video games online with no physical media involved he would have been highly suspicious of you.

"How do you retain access to the game or how do you not get screwed by the seller?" would have been some questions he would have asked (I was a very bright ten year old), because after all if you're buying a game digitally you're not really buying the game but a license that says you can download a copy of the game onto your computer or whatever and play it there.

Technically, in purely legalistic terms, this is how it's always worked. When you buy a game on a PlayStation 3 disc you're not actually buying the game. You're buying permission from the game's owners, the companies that made and published the game, to take a copy and play it on your own machine.

Property rights are a very strange beast.

Now let's drop in on twenty year old me ten years ago. Valve, who made the Half-Life series, had just started their own online digital storefront a year earlier in 2004, called Steam. I was pissed off at Valve because the only way to play Half-Life 2 was to install it via Steam.

I did not want Steam. You might even say I was opposed to the very idea of Steam. That's because I was. I saw Steam as just more Digital Rights Management (DRM) bullshit that digital goods companies stick between their products and their end users because they don't want anyone to access their products without paying (otherwise known as piracy).

You have to understand that just a few short years prior the music industry shut down my main source of music, Napster, because peer-to-peer sharing of digital goods online is no good unless the music company can make money off the exchange (the artists, of course, get screwed as well but the artists always get screwed. Just read any typical contract regarding publishing and royalties, it's totally a deal with the devil. Hence the rise of self-publishing in all the creative fields).

Obviously DRM won out in the end, sort of. You can still pirate just about any digital good but due to crackdowns by law enforcement agencies in the last five years it's become a little less simple than it once was. Anyway the point I was trying to make wasn't really about DRM, which I still hate because most companies that use DRM don't know how to use it properly (hint: just provide a service that's as good as the piracy option, it's not about getting shit for free it's about getting shit RIGHT NOW as opposed to later on). The point I was trying to make was how I eventually caved in a year later and installed Steam so I could play Half-Life 2.

Ultimately it was worth it. Half-Life 2 was awesome (still is!) and Steam sat on my desktop for a good while not actually being used. It would be a few more years before I actually started buying things on Steam.

Now, if you had told twenty year old me ten years ago that in ten years time I would be a regular Steam user and do most of my PC gaming via Steam (that wasn't freeware indie stuff, that is) he would have balked and probably said something not so nice to you.

There you have it. I use Steam when once, ten years ago, I swore to never be the type of person to embrace such a scheme. Because "freedom" or something. But it turns out I value convenience and Steam is a pretty convenient way to get digital games. I could still pirate games but the time investment is a bit greater since it's been so long since I pirated digital goods. I'd have to brush up on all the ways people do that shit now that The Law has taken a greater interest in protecting digital industry.

I don't worry about "getting caught" or any of that nonsense. They don't arrest people individually for pirating music, movies or games. The movie and music industries tried that about ten years, arresting a few people for downloading a few songs or movies and throwing the whole book at them. It just made the MPAA and RIAA look like a bunch of out of touch assholes, which they kind of are but that's beside the point.

The point is, industry evolved and the userbase did as well. As I got older I came to value the convenience of having the digital storefront available over having to mess with a physical good. There's still the tradeoffs: all my games are basically subject to a bunch of licensing agreements that could change tomorrow and I could lose access, or my accounts could be hacked and my banking information stolen, etc. The list goes on but that's the absurd reality I find myself in these days.

And beyond that it gets even weirder.

So, Steam hasn't just been Steam. It's been around for about a decade now and in the last few years Valve have made some interesting changes to the whole thing. It's still a digital storefront, more or less, but they've opened it up a great deal for smaller developers. They've also hired an economist and created their own virtual markets.

For instance, Team Fortress 2 is a first person shooter where people run around and shoot each other as colorful characters. They can also customize their characters with little hats. At first when Valve introduced the hats it was just a gimmick. They didn't realize what they had. Eventually they figured out how to position themselves in between people who like making hats and Team Fortress 2 players who are willing to pay real, actual money for those hats. And thus we have people who make real, actual money making virtual goods for an online game.

Look it up if you don't believe me! Team Fortress 2 hats are big business!

In the last year Valve introduced a collectible card game element to Steam. Users with Steam accounts can earn collectible cards by playing Steam games, which they can then turn into special badges once they have a complete set and use those badges to.. do something else, I'm really not sure.

I don't do the whole collectible card badge thing. I guess it levels up your Steam account, or something.

Point is though, you only get so many cards per game. You can never get a complete set just from playing a game on your own. So you have to either trade with other players for the cards you don't have or purchase a "booster pack", which may or may not have the cards you need. Mostly you will just browse the Steam Marketplace and buy the individual cards you need for anywhere between 5 and 20 cents.

But here's the catch, Valve isn't the one putting the cards on the marketplace. It's all player-driven. That's right, players themselves are getting the cards via the games and then selling them to each other for 10 cents or whatever the current going rate is for that particular card. Valve, of course, takes their 2 cents (literally) out of the transaction and everyone's happy.

As of this writing since yesterday I've made 50 cents just from taking a few minutes to list all the virtual goods I had accumulated in my Steam inventory over the past few months in the Steam marketplace. I set the price and someone, at some point, decides to pay it. My goal is to make enough money to be able to buy a cheap Steam game.

Of course, while this is technically real money I can't actually disentangle it from Steam. It's sitting there in my Steam wallet but I have no way to withdraw it into a bank account or anything like that. At least, so far as I know. Once the money goes into Steam it doesn't come out.

But if I'm willing to participate in this absurd song and dance that is the "Steam Economy" and help line Valve's pockets just that much more I can eventually get a free game out of it. As a Steam Peasant I eventually get my due for my "work".

At this point I'm tempted to go off on a tear about all of this weirdness just being a result of the fucked up state of the global economy and how because economic growth as it's currently conceived is predicated on "growth", i.e. quarterly profits increasing, there need to be ever newer and newer ways for companies to keep "growing" and so that's why we see much of the financial activity that drives the "economy" being weird shit like bundling up thousands of peoples debts into a single package, backing it up with treasury bonds and letting banks buy, sell, trade and hedge for or against it.

But I won't bore you with that. Suffice to say it's that condition that leads a company like Valve to do what they're doing now. It's no longer enough for them to be able to just sell you a game online and take their cut out of the middle. In order to keep growing and keep those quarterly profits always up they have to find new ways to monetize their service, and that means monetizing the behavior of their userbase.

The collectible card game aspect of it is just the latest way they're trying to do that. Who knows what it'll be next year!

If you had gone back to 1995 and tried to explain all this to my ten year old self he would probably think you were fucking crazy. You mean that's what the future looks like by the time I'm 30? Yeah, son, it sure does.

I can't wait to see what things are like when I'm 40.

Thanks for reading.

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