Economics – Video Game Style

Today I am going to talk about a couple of video games. If that makes you want to check out now, that is fine, though I am going to tie this into how you can be more successful in your non-gaming life. Still with me? Fantastic!

The two games I am going to talk about are both role playing games. Role playing games (or RPGs) are typically games in which you take on the role of a character and then embark through the world doing quests and helping people. One of the things that typically sets this games apart from things like action games or shooting games is that your characters have stats that can improve over time and more importantly there are crafting abilities where your character can make something. The two games I am going to focus on are World of Warcraft and Skyrim.

Many times in World of Warcraft (or WoW) you will see something like this pop up in the chat window: Leather worker LFW or LF Alchemist. In the first case the character is a leather worker and probably has high level or rare patterns and is willing to use that pattern to make something for someone. In the second, the requester is looking for an alchemist to make them a potion. While both are providing a service that someone else lacks, I see the leatherworker more as a service provider and the alchemist as a goods dealer. I have spoken about those before in this post.

The main reason I see a difference here is the end result of what each player makes. In the case of the leatherworker, they are typically making armor and it is something that the purchaser is going to keep for a while. It is not consumable. So while there is no recurring revenue from it, and most customers will not be repeat, I see it as a service primarily because it is not consumable. Also due to the difficulty in obtaining those patterns, the price can be fairly significant.

Alchemy on the other hand in that game makes potions. Potions are very much consumable and while someone will buy a single piece or armor, they will buy 20 or more potions every night. I see this as a goods dealer because many times there are several potions that give similar benefit, the potions are easier to obtain and make, and the cost is significantly lower.

The economy in Wow is similar to that of real life in that not everyone can do everything. The professions I mentioned above are only two of the dozen or so jobs in WoW. Any of those professions has the possiblity to make a ton of money in the game, through some hard work and persistence. Hmm, where does that sound familar from?

Skyrim –
Next I want to talk about Skyrim. While WoW is a multiplayer game, Skyrim is a single player game. And yet there is still and economy in the game and it can be mastered quite simply. Again there are crafting abilities, but the player can choose to take all of the abilities and be able to make anything. So where is the opportunity in making money? That would be selling to the computer controlled vendors. The trick is to find what is valuable to the vendors and then selling it to them. That should ring bells too.

In Skyrim each of the vendors has between 500 and 1000 gold usually. And it is possible to sell them items and deplete their stores of gold. Fortunately the gold (and everything else in the shop) respawns after about 2 days of game time. So the trick to mastering the Skyrim economy is to sell and take all the gold from this vendor, then travel to a different town and do the same thing, then travel to a different town and do the same thing, etc. It is not difficult, but it does take some effort from the player to accomplish this.

Real World –
I hope digging into those games didn’t dissuade too many of you. My point in digging into those is that the game designers modeled their economies after real economic basis and foundations. In both the models of scarcity are present. And in providing enough value to someone else that they will pay you. To make money in any economy, real or fictional, one must be willing to put in some work, and put that work in consistently. Making money in reality is just as easy as making money in the game. So why do so many people (including myself for a long time) have such trouble making money in real life when they can show that they are economic masters in video games? That is a tough question and I don’t have the answer to that. Is it because they perceive that there is less risk in a game? Because it is easier to put the hustle in when using a controller than it is to get off the couch and put in some hustle? I think putting in some hustle can be as simple as sending out some post cards and answering the phone. We have made tens of thousands of dollars doing just that. Never even have to leave the house. And yet still most people won’t do that.

The premises are the same in economics. Find a point of pain and fix that pain. And make it repeatable. Do that and you will have all the fortunes you wish to have.

Until next time, take some action. Feel the fear and do it anyway.