Maybe it's getting late, but I think i could really use an upvoted tdlr for this...
This isn't Reddit, and that sort of behavior here is actively discouraged.
It all began with a strange email
31–40 of 128 posts
Re: It all began with a strange email
#32Four years ago one of my first startup ideas I pursued was setting up an arbitrage between virtual economies. I believed then (and still believe) that it is a huge chunk of the future. Everything that is tangible now will become software and intangible in the future. That means the virtual economy is set to eclipse the current one. I spoke with some somewhat famous startup-type people; several I met on HN. None of th…
I would argue that the virtual economy is already eclipsing the material economy, just not in the way you think of it. Compare the trends in value creation and employment between U.S. manufacturing and U.S. financial services.
Modern finance is largely computerized or computer-assisted arbitrage based on asymmetric information...the "objects" being traded are virtual. And over the past 20 years it has greatly outpaced manufacturing in job and value growth.
And this does not even consider the growth in product design and software products and services, which are also virtual.
edit: I a word.
Re: It all began with a strange email
#33Which two economies were being merged?
I'm guessing TF2 and Dota 2?
Re: It all began with a strange email
#34Fascinating read, just like many of the other Valve blogs. Though, I do wish this guy could explain why real-world money Steam games in the US are often half the price of those in Australia/Europe.
Advertised prices in $ exclude sales tax, because for most states it isn't levied on digital downloads. However, VAT in EU countries (don't know about Australia) is included in the price. This causes a fairly substantial discrepancy, as VAT can be rather high (in the UK, 20%). Other discrepancies can usually be put down to exchange rate fluctuations, which with the recent financial issues in Europe have been somewhat…
Prices for non-Valve developed and published games are also determined by the individual publishers.
Unfortunately, that means that the real reason is "Because they can".
Re: It all began with a strange email
#35Fascinating read, just like many of the other Valve blogs. Though, I do wish this guy could explain why real-world money Steam games in the US are often half the price of those in Australia/Europe.
Pricing isn't about fairness, it's about maximising surplus for the seller. Businesses aren't a public service, they're in it to make money.
Valve will have pricing analysts that have studied the demand curve and concluded the higher price point may reduce demand but is nonetheless the point where marginal revenue from that geographical segment approaches some notion of marginal cost, thus maximising returns. With such a varied range of content and the ability to vary pricing dynamically through specials and discounts and bundles, they'll have collected a wealth of data about game price elasticity in different market segments.
As anyone who's studied economics 101 would say, it's all about willingness-to-pay and how that translates into price elasticity.
In a similar vein, it is 80% more expensive to prebook an Avis rental car at Melbourne airport (MEL) if you declare US residence vs EU residence. Yes, really, 80% more, try it.
This is explained by expectation, which translates directly into willingness-to-pay: US visitors are so used to renting a car that they don't explore the alternatives. European visitors on the other hand are astounded that there is no rail link into the city, and renting a car is at the bottom of the alternatives list.
In the game distribution world, it's likely that the US has more volume, more alternatives and more domestic competition, hence greater price elasticity, hence more aggressive pricing. Steam has strong differentiation and provides global access to products not otherwise marketed outside the US, and Valve are typical of a leading oligopolist, exploiting this position in their pricing strategy.
Re: It all began with a strange email
#36I guess I would be interested in a truly economics oriented game that modeled nations without it being about wars, raids, guilds, spells etc. Not sure if something like that exists though.
It seems like the game would need some sort of non-utopian conflict-driven backdrop to create enough desire for whatever products for there to be an interesting economy.
Re: It all began with a strange email
#37Earlier quoted context omitted.
Advertised prices in $ exclude sales tax, because for most states it isn't levied on digital downloads. However, VAT in EU countries (don't know about Australia) is included in the price. This causes a fairly substantial discrepancy, as VAT can be rather high (in the UK, 20%). Other discrepancies can usually be put down to exchange rate fluctuations, which with the recent financial issues in Europe have been somewhat…
Regarding Australia, our GST is a flat 10%, and the AUD is near parity with the USD (and has been above parity for most of the last 12 months). The price discrepancy is far greater than it should be if those were the only factors. The Australian Competition and Consumer Commission, an independant regulatory body in Australia that oversees the Trade Practices Act (among other things), is in the process of inquiring in…
The ACCC is pissing in the wind. It's just a matter of geographic price segmentation to maximise revenue. End of story.
Also, end of legal challenge:
* there's no violation of free trade agreements, which are about governments dropping barriers like tariffs and quotas and confer neither rights to individuals nor obligations on businesses, and
* there's no violation of individual rights, because country-of-residence is not a protected class, unlike gender/orientation/skin colour/race/disability.
Re: It all began with a strange email
#38If anyone from valve is listening, would really appreciate it if you added commenting support to your blog, I am looking forward to this series of articles, it is a very interesting and unique space.
Re: It all began with a strange email
#39Earlier quoted context omitted.
> And it totally made sense that hyperinflation would occur since the creation of virtual gold was limitless and effortless The creation of the US dollar is also limitless and effortless.
Only for the Federal Reserve, who has a mandate to manage for a stable economy--so they are careful with their currency creation. If every U.S. citizen could create dollars, we would indeed have hyperinflation.
Even though I had no clue about actual economics at the time, this is what I saw as so screwy in runescape. A lot of the ingame money came from alchemy. A few clever people had figured out that the two of the highest tier bows were easy to produce en masse and so created a market for their components. Since runescape does not have a shard system like WoW or other MMOs, this particular market was huge. RMT (real money traders) came in and automated the gathering of these components. Jagex tried numerous methods of eliminating RMT from the game, including fixing ingame prices to within a certain amount. Not sure what happened then, but I still can't figure out why they didn't simply fix the mechanic at the heart of it.
Re: It all began with a strange email
#40Among virtual economies, EVE Online's economy is the real deal. The EVE game economy is I dare say more developed and complex than nearly any other games' - it has many kinds of input factors and stages of production, and many of the production facilities/resources are player-controlled and their fate determines on political maneuvering, war and sabotage between player corporations (guilds). The price of most items i…
Has anyone here played EVE online? I keep hearing about how intricate and rich it is, but I've never met anyone who played it. Is the complexity interesting? Or is it 'time-sink' complexity in the vein of Diablo 3 -- as in rather mindless optima-seeking?