EVE Online, the space-MMOG produced by the Icelandic company CCP, is known to have an advanced in-game economy with player-driven enterprises. The economy recently gained a bit of notoriety when the biggest-yet in-game banking scam was revealed, reported to be worth around 700 Bn interstellar kredits (ISK) or more than 100 000 USD at current eBay and IGE prices. I had the opportunity to interview CCP’s CEO Hilmar Pétursson and CMO Magnús Bergsson about EVE’s virtual economy and secondary markets at the Nordic Game conference last month. Below is a transcript of selected parts.
To start off, how big is the EVE Online playerbase today?
Hilmar: We have about 150 000 subscribers and recently growing fast. The average number of users online is 18 000, recently peaking at over 30 000. So even though EVE Online still only has a fraction of the subscribers of World of Warcraft, EVE players share the same universe with more than ten times as many people as the inhabitants of your average WoW realm.
What are the user demographics like? Based on what I see in the chat channels, my impression is that the users are a bit older than in your normal fantasy MMORPG?
Magnús: That’s probably right, the average age is about 27 years old. 95% of the users are male and 5% women. Most of them have an education and some kind of a degree. Their average EVE playtime per week is 17 hours.
Let’s start with the in-game economy. Is EVE a closed system where a fixed set of assets circulates, or is it more like an open “faucet/drain” system where inputs and outputs are regulated to maintain balance?
Hilmar: Originally, we tried to develop the game under a closed economy concept: each time you manufacture something, you use up minerals, and when the thing is destroyed, the minerals return to the pool again. We operated under this concept for quite a long time, but it is very difficult to balance this with the influx of newcomers and the rat-packing of the old hammers. At the end of the day we saw now added value in having a closed economy as opposed to controlling the material inputs in a more loosely defined manner.
So you control it just enough to maintain some kind of price stability, or?
Yes, we have defined systems that almost auto-balance it. Resources push out to places where people are not harvesting them, and they usually are not harvesting them because they are hard to get to. And simply the fact that there are so many people compared to the resources tends to create an auto-balancing situation.
So you could say that while the closed economy model is theoretically interesting, in practice it doesn’t deliver added value?
Hilmar: We have all the benefits of a closed economy model, without the hassle of trying to make it work. You probably know how much trouble Ultima Online had with their closed economy, there’s so many downsides to that. [See Simpson, 1999]
Then why is it that you wish to create a realistic economic experience in the first place? Wouldn’t it be easier to have a more limited “trading sub-game” like many other MMOGs?
Hilmar: We are making a virtual world where the players are creating something which is real – to them. For this reason, we definitely want to make the point that the EVE economy is a real economy in the sense that it operates according to real-life economic concepts. This is a very complex marketing message to make: “EVE Online – where everything is real”, when at the same time it obviously isn’t.
My own research focuses on the value of virtual property, questions like what drives teenagers to spend real euros on virtual furniture in Habbo Hotel. What makes EVE’s imaginary battleships so desirable?
Hilmar: The key difference between Habbo Hotel and EVE Online is that Habbo Hotel is not competitive, at least not to the degree that EVE Online is. In Habbo Hotel, you are basically buying stuff to look cool and socialise, whereas in EVE it is the intense competition that creates purchase pressure. People are engaged in war, worry about logistics, margins and time-to-market, and these very realistic considerations drive their purchase patterns in EVE.
One way to conceptualise this would be to talk about use-value and symbolic value. I think that even in EVE, symbolic value accounts for a large part of the purchase behaviour. For example, the other day someone was showing off with his shining new Navy Comet, a ship he said he is probably never going to use in battle.
Magnús: There’s definitely that element too, but I would say it’s very uncommon. It’s not common for people to buy these ships just to show off. Most people are buying them to actually use them.
Hilmar: It’s different in different playgroups, but the core of the market is the competitive players. EVE is a PvP game. But I want to note that this doesn’t simply mean people running around shooting each other like in Counter Strike. People are competing against each other on many levels. For example, huge infrastructures competing in manufacturing efficiency and market actions.
Magnús: Actually, when you talk about symbolic value, I just realised I actually bought a Navy Raven just to show off. I never used it for anything, ever.
Hilmar: And remember the guy who bought the unique silver frigate that was a prize in the Amarr Championships. He paid like four billion ISK for it and never uses it. It just sits in his hangar.
Hehe, I see. And if you think about why people engage in the competitive play, those motivations are also related to status, recognition and so on. I like to think that it all boils down to symbolic value in the end. Moving along, what’s your take on the recent Eve Intergalactic Bank (EIB) heist?
Magnús: In my opinion, taking money from other players like that is really not cool. But it is part of the game – the people that gave EIB their money have nobody to blame but themselves. The good thing is that this has made people more careful, so that future scams are less likely to succeed. Trust is a very scarce commodity in EVE, and extremely valuable.
Have you thought about some mechanisms for increasing trust?
Magnús: In the next release of EVE Online, we are actually introducing a very sophisticated contract system. We are introducing a tool that allows players to create many kinds of contracts, including job contracts.
Will this new contract system make it possible for some enterprising player to create EIB 2, this time with legal safeguards for the investors?
Magnús: Yes, it will be possible, though perhaps not in the exact same form as EIB was organised. I am sure we are going to see the users put their imaginations to work and come up with some very cool new things to use the contract system for.
As I understand, the contracts will be enforced by the game system, so it will be impossible to break them. This is similar to how the NPC police force Concorde maintains unbroken order in the central regions of the EVE universe. But most of the EVE universe is lawless, controlled by player alliances that impose their own rules and enforce them by force when necessary. Is there any room for player enforcement in the new contract system?
Magnús: It really depends on the way you set up the contract, there will be a lot of options for doing that. For example, you might require someone to put money in escrow as a security payment.
But the escrow itself is controlled by the game code?
Magnús: Yes. But I imagine that for example big enough alliances, say three to four thousand people, could have their own insurance companies, complete with insurance inspectors to detect attempted frauds.
Let’s move on to the secondary markets. Dozens of highly skilled characters and billions of ISK are constantly being traded for real money on eBay and other marketplaces. CPP is strongly against this, right?
Hilmar: Right. It’s interesting to note though that very few ships or items are being traded on EVE secondary markets. I think this is a measure of how efficient the in-game commerce is. In some games, players are tempted to use secondary markets just because in-game transacting is so bothersome.
Do you have any estimate on the size of the secondary market around EVE Online?
Magnús: We have absolutely no idea. The real-money transactions are actually very difficult to identify.
IGE has made a big business out of buying and selling in-game currencies, including EVE Online’s ISK. Some have speculated that game operators are colluding with IGE since the trading company seems to be able to do its business without interference. What’s CPP’s relationship with IGE?
Magnús: They actually came to our office once, it was a really odd meeting. They basically wanted us to give their business a stamp of approval. We almost threw them out of the office. There’s just so many things wrong with that.
Can’t you close their accounts then?
Magnús: If we knew which accounts belong to IGE, we could close them as they break the end-user license agreement. But we absolutely don’t know this. In a big economy like EVE, identifying transactions of a few billion ISK is just impossible.
So is it going to be a perpetual war between secondary markets and game operators like CCP? Can you ever beat them?
Magnús: They are going to lose big soon. We are implementing something that we have been thinking about for a year and a half now. We need the players’ support before we can do it, but we know that we’ll get it. It’s a very different approach from what you have seen before.
Some game companies have embraced the real-money trading phenomenon and created new revenue models around it. Are you ever tempted by this?
Magnús: We are of course fully aware of all the different revenue models that people are contemplating. We would never implement any of those for EVE Online, they just don’t fit. On the other hand, CCP is not going to be a one-game company.