Game Economist Cast
What does the new wave of open economies mean for monetization? Will negative externalities overcome cosmetics economies in the long run? What exactly does a game economist do?
Game Economist Cast is a roundtable discussion of the latest developments in mobile, HD, and crypto games through a bunch of people figuring it out using the economic tool kit.
Game Economist Cast
E11: Game Economist's Creed Meets Midwest Web3 Farming
The crew celebrates July 4th with a travel mishap, poor driving, and a lack of Sam Adams. Eric chooses Guile to explain Street Fighters' live service attempt, while Phil demands a blood oath from the crew. Chris is glued to ads and won't let go.
Do you have a beer, Chris? Is that a beer? It's.
Speaker 2:July 4th. It's the 4th of July.
Speaker 1:Oh fuck, can I grab a beer then Are we going to make it this kind of podcast. All right, there you go, hold up.
Speaker 3:I was thinking about the whole birthday of America thing. Really, the birth of America was Jamestown and Plymouth and stuff. The revolution is really more the angsty teenage years where you run away from home.
Speaker 2:All those revolutionaries were like what? 18, 22 years old, yeah, getting drunk in a bar. I mean like fuck those guys. If my Boston trip taught me anything, it's that whole entire country was founded on alcoholism, or at least just drunk college kids.
Speaker 1:Let's start with utility. I don't understand what it even means.
Speaker 2:Everybody has some kind of utils in their head that they're calibrated.
Speaker 1:There's hardly anything that hasn't been used for money. In fact, there may be a fundamental problem in modeling when we want to model.
Speaker 2:Well, i went to the Northeast. I know you're not from the Northeast, but I went to New England North. I hated it. It's horrible. The drivers there are terrible, by the way. You mean the Massels, no, they're too nice. Somebody was making an illegal U-turn and everybody stopped for him. I was like fucking, clip him, put him in the fucking side of the road, like when I finally got back to Chicago.
Speaker 1:I was like good fucking drivers.
Speaker 2:People rip and pass me 95 miles an hour. The thing about Chicago drivers they're aggressive but they're predictable. In Boston, fucking clue what those people are going to do. They might stop in the middle of the road because there's a turtle or something Boston was. I have a lot of comments I could make about the Northeast Wow.
Speaker 1:All right, wow, all right Wow.
Speaker 3:I already missed those damn coastal elites, am I right? No, are you going to launch?
Speaker 1:your insults from your chapel out in the Midwest.
Speaker 2:That's a cornfield Chapel in a cornfield. There you go There were nice parts about it. There were nice parts about it, but I had a lot of beer. I had a lot of IPAs while I was there.
Speaker 1:Game Economist cast, episode 11. Somehow, the regular scheduled program keeps on happening. It is July 4th. Happy birthday to the country that continues to deliver the number one household purchasing power. Parody GDP adjusted by transfers, social transfers. Yes, that's right, ladies and gentlemen, that's the United States of America, rank number one at $62,000 per household. Of course, the first thing that makes your hair stand up when talking about metrics is whenever someone uses a household number. What is a household? Those things vary by country. Showing today by the regular cast and crew Hi, i'm Phil out of Game Economist Consulting. Eric, how are you doing on this beautiful 4th of July?
Speaker 3:Hey, i'm doing all right Superlayered, launching a couple projects, so it's been going to be a sweaty couple of weeks where we look at those launch stats. Chris, how are you.
Speaker 2:I was talking to Revolution, so I thought that was my sufficient introduction. But I'm doing well. I got stranded during the big East Coast fiasco at the airlines the last couple of days So made a nice 1200 mile trip across the beautiful, the beautiful North East of the US through Cleveland, the armpit of America.
Speaker 3:In a car.
Speaker 2:Yes, in a car, in an SUV.
Speaker 3:The most American vehicle.
Speaker 2:And they couldn't give me something with better gas miles for my 1200 mile trip. But yeah, now it's been doing well.
Speaker 1:We have two wonderful topics to talk about today. Eric, you're going to be talking about Sunflower Land, which is a Web 3 real money farming idle game. That's a mouthful On my end. I'm going to be talking about a article that I'll be publishing soon called the game economist Creed. What is it that the game economist actually does? when I was on another podcast, i was asked what exactly a game economists approaches And I realized that it really is all in the approach, not necessarily the things that we might study, similar to game designers or product managers. It's in how we study it, or at least as the argument I'm going to make in the economist Creed. before we get into the articles, let's talk about what we've been playing.
Speaker 3:Got a selection of good things on sale. stranger Chris, what are you been?
Speaker 2:playing. I have been. I've been on the road, so I've been playing hypercasual games. Which kind of feels gross. Which kind of feels gross coming out of my mouth You just got to rub it all over your body, phil and I have been playing a similar game I also downloaded. I don't even know if this one would be considered hypercasual. It's like a. It's a number game. It's kind of that 2048 game where you're just flicking the and you're stacking those things up. I downloaded it because it was in an ad. It's like a mix of Tetris and 2048. So you're like you got the block and you press the button to drop, make the block drop and you're trying to create combined blocks to get bigger blocks. So it's Tetris plus 2048. So it's a puzzle game And I am ashamed to say that I downloaded it because I saw it on an ad and all of the fills in the world are sweating right now.
Speaker 3:Did you enjoy it? Did you have a good time?
Speaker 2:I played it for a little bit. I was on a plane, so I didn't really have much of a choice. It's the only time I play hypercasual games, hostage situations. Exactly Same thing with education games. Right, you get kids into a classroom and guess what? Quizzle is the best game on the planet. Until they get home and they're like Quizzle, i'm going to go play Fortnite. I've also been playing a lot of Fortnite, so the key with hypercasual is to ride the wave.
Speaker 1:So anytime you see an ad in a hypercasual game and my God, are there ads every freaking second in hypercasual the thing you need to do is you just need to look at it as an invitation to learn about a new game, rather than an ad Not something that's interrupting your experience, but an opportunity to find your next quick fix, because these hypercasual games have very short life spans, usually like one mechanic and you're out.
Speaker 2:That's very true, i'd never thought about it like that Emphasize more in the fact that there are now playable ads, which I think is really cool, and they definitely. I'm like, oh, am I just going to like flick this guy or shoot this block?
Speaker 3:I was afraid to touch them because I feel like it's going to link me out to another site Down with the virus.
Speaker 1:Eric, i think this is actually one of the more interesting problems in hypercasual is that when you're trying to serve all these ads, you need to go to multiple ad providers, and so that means integrating different SDKs, and all of those SDKs have different formats for the ad. So, to give you an example, they have different UI placements on how you would close the ad, which is really frustrating as a player. So I definitely think there's a lot of optimization you do just by, like, perhaps, sticking with one SDK, even if you take, like, an ECPM hit, much revenue you can make, but the ad quality has actually gotten better over time. Like you can just download and game within the ad and it won't interrupt your experience. You can go back after the download. You can kick off the download, so to speak, and then you can go back to playing your game where they're just trying to get the install.
Speaker 2:That's super interesting about the different, like the different integrations, because some of the ads I'll have to watch the ad, then I have to watch like some extra screen for five seconds And then the X shows up somewhere and I have to like fucking chase it around.
Speaker 1:It's sometimes a process. There are mediation groups that mediate, then try to figure out like who's going to give you the highest bid for the ad placement at that given time.
Speaker 2:Interesting.
Speaker 1:So you try to rotate and make sure you're maximizing revenue.
Speaker 2:So, speaking of hyper casual and maximizing revenue, i know Phil has been playing an absolutely disgusting hyper casual that the hyper casual is a dual list of hyper casual. You want to talk about that, phil?
Speaker 1:So I have been playing a very charming game called whole and Phil, which you could almost call like an inverse catamari Dimashy.
Speaker 1:So in catamari Dimashy, if you remember that awesome, fantastic Japanese game and when I say Japanese game, a very Japanese game that was created, i think it was mid 2000s where you would roll around a given world and you would collect objects on your ball, and the bigger your ball got, the more objects you could collect, and the more objects you collect, the bigger your ball get, and eventually you are sucking up worlds, starting with, let's say, a thumbnail or perhaps an atom. And so this game works in inverse, where there are objects that you're trying to suck into a whole, a black hole, and if you suck in enough objects, the whole expands. It's a simple mechanic, but it's been off the charts when it comes to downloads. So Bravo to the team over in Homa, which is a French studio, for creating such an interesting mechanic. I'm super excited to see how they'll grow the game and grow the interesting and, i think, wonderful things you can do with that core concept. Give it a try. It's called hole and fill.
Speaker 3:Donut County. dude, Did you know about Donut County? No this whole put items in the hole. hole gets bigger mechanic. Donut County was an indie game made by Ben Esposito, same guy who made Neon White. Yeah, it made some waves a couple of years ago And then there was like holeio and a bunch of other games that copied the mechanic. but yeah, it's super satisfying. Just, hole gets bigger, thing falls in. hole gets bigger, like it just tickles your brain. It feels good in a very catamari like way.
Speaker 2:Just like a game design point of view. I thought was interesting is like the smaller pieces are easier to start out with and they level you up more quickly because they fit in your hole even when it's small, and I absolutely love the small pieces, just like my favorite levels are the ones with a bunch of small pieces. I can go absorb all those. It's like a tootsie roll or it's like a piece of sushi, like this small little thing. And then there are some levels where I was more likely to churn because it starts off with bigger pieces. It's done.
Speaker 2:Give me that I also have the haptic feedback on. so I'm getting these little clicks on my on my hand feel satisfying. I level up quicker. I just thought that was really interesting because I just I feel like every single level should have that small, the small pieces, and then gets to the bigger pieces. I have no idea if you have any thoughts or, i guess, insights on why they have some of those levels that have just the big pieces where it's or at least bigger pieces not quite as quick, not quite as satisfying, takes you a little bit longer to pass those levels because you still only get one point even though you're absorbing one piece every second instead of two, or something like that.
Speaker 1:I guess what I would say is that when you think of difficulty and how difficulty is constructed, it's really a multi-variate equation that depends on a lot of different elements.
Speaker 1:So when you think about like a game that's constructed, the way hole and fill is you're trying to suck up all the objects within a given level in a given time, and so what are the main determinants on how you can suck up those objects and whether or not you'll be successful Like how much time you have left in the level is really important.
Speaker 1:So if you have more time, you'll have more of an opportunity to suck up all the objects. The other thing we can imagine is the size of the objects. So the larger the size of the object, the larger your hole needs to be able to fit the object in there. And there's a bunch of minor things we can think about in terms of you just level design. So you can put a lot of tiny objects right in front of the player and they'd be able to suck those up first and then they go after the big objects. There's a million different ways we can think about how difficulty is optimized. But if you put larger objects, it's actually one way of increasing the difficulty of the level and forcing the player to grind a little bit more and find that optimal strategy.
Speaker 2:It's the perfect model in terms of like super low marginal cost to game design. There are infinitely many ways you can orient those objects. There are a huge number of ways you can change the skin of those objects. You could think of probably 10,000 levels really simple, and so to me it's one of the odd somebody's going to get through all those. A lot of these are about trying to or at least actually so more in.
Speaker 2:Like traditional game design, it's like you want to spread out the experience. You don't want people to finish it immediately. You want to spread out progression. You want to spread out how long does it take somebody to get to the final level? And then also, how do you spread out the grind? You don't want players to immediately get all the best stuff. I'm curious if the design choices are the same for hypercasual. Like you want to juice the game experience as much as possible. Have people in that game. To me it seems like you could have somebody only spend 10 minutes per level and easily keep them retained for a long time because it's so easy to just put out hundreds, if not thousands, of levels.
Speaker 3:Yeah, one thing that stuck out to me and you mentioned the parameters for difficulty fill is that part of this hypercasual design is that you can use ads to boost your power and it reduces the game design burden a lot. Like they don't have to finely tune the difficulty of each level because they can always say, oh, you can just watch more ads to make your hole bigger or give yourself more time or whatever power ups you need to beat the level, so they don't have to worry about play testing the difficulty and tuning and balancing there. So whatever We know it'll be beatable if you watch enough ads And so just crank out more levels. And I thought that was actually a really interesting solution.
Speaker 1:Yeah, it's different than a match three game is There's actually an element of power progression within a given level, since you're collecting coins when you suck up objects and those coins give you an upgrade within only that level. So when you go to a new level, you're back to square one and you have to recollect coins to be able to upgrade your hole, which is a very interesting departure from a traditional match game.
Speaker 3:Plus more excuses to feed ads and more excuses for ads.
Speaker 1:That's, i think, to maybe go back to your question, chris, on like why is the way it is? I think a lot of it is just the reinforcing culture of where hyper casual has been like. They end up making a lot of their money by actually serving their own ad networks, so they'll have advertisements that they run in other games as well to attract users, and so a lot of it is just this game of allocating a user to its highest valued game. Which is ultimately what advertising networks are trying to do Is that you're trying to find the game that the user is going to spend their most amount of money on. You're trying to pair the user with that game, because they're also the people that are willing to bid the highest. That is the natural sorting mechanism that happens in the marketplace And with hyper casual, that sorting mechanism happens so fast And in many ways, people have started to build games with the idea that people are going to churn out very quickly.
Speaker 1:A lot of it is just like throwing things against the wall and seeing what sticks, and with the fall of IDFA, that is changing. They're moving to hybrid casual, which isn't just your rebranding term, it's hey, we actually need to lower people with these really low CPIs, because that, ultimately, is the player action that I would like. If there's any message I've had coming out of hyper casual to everyone, is that the thing that hyper casual proves is that their art style and how they advertise games has been able to draw really low CPI sub one dollar CPI to get people into games, and so that's a very interesting hook And that solves the number one problem that mobile games are having right now, which is trying to lower cost per install and optimize your market budget, and they figured this out. The only thing they need to solve is how to extend LTV, and hybrid casual is a response to that. It's to add mechanics on top of those simple cores.
Speaker 2:It's like this giant network of ads and games that are all trying to bid for spenders. They're trying to bid for high LTV individuals Not in high LTV, i don't care if you churn, get me some ad revenue and then move on to the next games And then hopefully I have within my network. I have one of the many things in this basket that somebody's going to actually spend money on. Eric, what have you been playing?
Speaker 3:I've been playing some sunflower land. We'll talk about that later. It's a web three farming game, but mostly Street Fighter Six. I'm a fighting game guy, mostly smashed the traditional fighters, little newbie at. But yeah, street Fighter Six did a lot of interesting things to focus on accessibility and broad appeal And they definitely learned a lot from some of the launch failures of Street Fighter Five. But yeah, i've been enjoying it. It's kind of the fundamental, the I don't know what the term is blue chip like most famous fighting game And yeah. So some of the interesting things they did. One is there's a full on single player campaign that plays like an open world RPG. We have your character, you meet all the different. You can meet like Chun-Li and Blanca and E Honda And they all teach you their special moves and you level up and have gear And there's a whole story Which was a big criticism of Street Fighter.
Speaker 1:There's a gear system in the single player mode.
Speaker 3:Yeah, i mean, i haven't played it. I don't know if it's gear. There's a level up and stat system. I don't know if there's actually a gear system. So there's vertical progression, yes, but it's confined entirely to the single player RPG, so it's not a destiny or something. And one of the big criticism of Street Fighter Five the previous iteration on launch was there was no single player mode. They did that like live service thing where they only launched online multiplayer and they're like we'll bring you single player later. And people are like this is in a real game, you're asking $60 for this. So yeah, very fleshed out single player mode. That does a great job of tutorializing some of the fighting game mechanics. Will it bring new players into the fighting game genre? Unclear, but notoriously difficult to get people in. But yeah, very fleshed out single player mode.
Speaker 1:Why are they building single player.
Speaker 3:Yeah, no, that's a great question. Personally, I think it's backwards. I think single player isn't going to bring in the multiplayer users. But I think Street Fighter is such a legacy game You get these kind of more casual. Oh, I played Street Fighter on my Super Nintendo back in the day. Let me play this, but I'm not sweating enough for online multiplayer. So the single player gives those dads who, like, aren't actually good at fighting games, something to play but something to pay $70 for.
Speaker 3:Another thought is so fighting games, especially traditional 2D fighters, have had this big problem. Where it's very top heavy, Like the, it's very sweaty and competitive and people have these long, elaborate combos and difficult to execute inputs And they've always had a problem bringing in new players. And one approach has potentially been if you have a more lighthearted single player mode, introduce players to the game. Let them beat up on computers for 10 hours while they've honed their skills before jumping into multiplayer. That might bring them in. I think it's an accessibility play as well as a reason for a casual player to play pay $70 for this.
Speaker 1:Could I think of it as? what a six hour tutorial.
Speaker 3:Yeah, but there's like story and stuff in there too. right, It's like a game in and of itself. I've heard it compared to Yakuza in terms of an open world. You run around a city and you could just get into a fight with anybody Because you instance into the normal 2D combat from the 3D exploration it looks like. Yeah.
Speaker 2:Whoa So.
Speaker 1:I.
Speaker 2:It's not like a Street Fighter game that I actually play.
Speaker 1:Why can't this genre grow? Like I look at fighting games and they basically have been flat for their existence. Very similar to racing games, They basically sell the amount, the same amount every single year. They appeal to the same audience. I can't this genre grow. What is holding them back?
Speaker 3:I think part of it is legacy conventions. It's this whole arcade. They're still using the same button layout from the arcade cabinet days, although the modern controls changes that a bit, which I'll talk about. But and there's a bunch of baggage from those press back to block. No, no other game uses a similar control scheme. Whereas you jump into any shooter, people are pressing WASD to move the mouse, to aim, click to shoot. If you click on the head, it does extra damage. Everyone knows all these conventions And on top of that, people who want a violent game where they can dominate and compete with other people.
Speaker 3:they go to shooters. these days. Back in the day you couldn't have the fidelity. Back when Street Fighter was out, doom was the best shooter out there, whereas nowadays shooters have far surpassed fighting games in terms of technical fidelity and capabilities. And if you think of it as fighting games as a genre, yeah, it's not growing. If you think about it as like violent competition games, like they're getting eaten up by these more modern games. One on one is just less compelling than five on five team fights, that kind of thing.
Speaker 2:So I want to hit you something. Oh, it's just the small observation of mine. Is that the fighter games that have really strong IP Marvel, dragon Ball Z. I find that those least in my circles like people are much more likely to play a Dragon Ball Z fighter game or a Marvel fighter game than they are Street Fighter or Mortal Kombat. I don't know if that's would that help to spread the joy of fighter games, or is that just a single observation of mine?
Speaker 3:No, i think it's definitely true, the IP helps a lot and Smash Brothers is a great example of this. But in Dragon Ball, fighter Z also another thing they did just the art style was amazing. They captured the spirit of Dragon Ball very well in a fighting game. And Marvel was historically very popular. Mvc Infinite, the most recent iteration, was meh. I think Marvel's creatives got too involved and had too much creative control and restricted what the game team was able to build. But it certainly helps.
Speaker 3:But for some, for one reason or another, that all the most popular fighting games these days which I think is guilty your strive and Street Fighter are fighting game first IPs. But up to your point, this whole industry is like box price based. It's interesting When I look at it. It's the closest thing is Call of Duty, where every couple of years a new fighting game will come out. It's $60 or maybe 70 now, and you buy the game, you play it And then another fighting game comes out with slightly different mechanics, new characters, new art, whatever. Someone pays $60. They play that for a while. Right, it's almost like an expansion pack based model And they're constantly coming out.
Speaker 3:It's a very small number of companies who are experts at making these games and churning out games year after year. Yeah, and I think Riot's Project L is trying to bring this to a live service world. They're trying to bring it because, if you think about competitive online games, they fit very well live service. They're games that people play for hours and hours on end, thousands of hours deep Fits great for a live service model. Why hasn't fighting games done live service? Why are they box and expansion based? It's an interesting question, but Riot's going to take their shot at it.
Speaker 1:The most successful live service fighting game looks like it was actually on mobile. It's Marvel Contest of Champions from Kabam. That's over a billion dollar franchise. Probably doesn't beat the box price, to be fair, of all these other games, but it's a live service and none of these are, it seems like.
Speaker 3:Yeah, I might not even call it a fight. Maybe it's the elitist in me, but I'm like that's not a fighting game.
Speaker 1:So Super Smash Brothers, is that a fighting game?
Speaker 3:Yeah, it's like a spin off genre. The term people use is platform fighter And if you want to see a free to play one, brawlhalla might be the most successful one. But yeah, a lot of old FGC diehards FGC stands for fighting game community They look down on Smash as, oh, it's not a real fighting game. They don't have all this. The same fundamentals.
Speaker 3:On the note of accessibility, i think there's two other big things Street Fighters did. So first they had the single player mode, which very expansive. Second was they added this new modern control scheme where, if you remember, quarter circle forward punch is Hadouken and like quarter circle back kick is the spinning bird kick or whatever. Modern controls removes the need for those motion inputs. So when Dengief does this super pile driver? you normally have to spin your joist to kind of full circle and then press punch and he'll grab you into the suplex And modern controls. You just press one button and he grabs you and does it.
Speaker 3:This is definitely an attempt to bring in players who are intimidated by the input barrier And, as someone who plays a lot of dexterity, heavy game, i actually found that it was a huge leg up because I was like, oh, i don't have to think about doing quarter circle forward punch. I can just think what do I want to do And then I just press the button and it removes that sort of mental execution barrier. It really breaks the game in a lot of ways because, like I said with Zengi, if you have to do a full circle on your joystick and press punch, that takes maybe a quarter of a second. So by making it a single button input, you basically removed a quarter of a second of input time to the move. We'll see how it pans out, but I'm hopeful that more fighting games will pick up on this Fighting game. Accessibility has been an issue they've dealt with for a long time And there's been other games that have tried to do similar things, but this is the most comprehensive and ambitious control accessibility change, i think.
Speaker 2:It sounds almost like they've faced the same problem that Monster Hunter faced for a while, which was, like you, really each individual weapon has a very specific set of controls. You have to click the buttons in the correct order, whereas with a first person shooter, like we've been talking about, point and click the head does more damage. So you've got three buttons that you have to really remember what they do And order is not particularly important. So, monster Hunter, as they came out with World, they started to improve the accessibility by just from my personal opinion giving more, improving the hitboxes of the monsters, so you no longer have to have this awkward, weird perfect position that looks like it You've got six feet of clearance but actually are just outside of the hitbox. But also the weapon combinations are not quite as sensitive as they were.
Speaker 2:Many years ago mainly because of improvement in speed and fidelity to the combat system, It sounds. Is that the type of issue you're talking about, where Monster Hunter wasn't very accessible for a while because it was very. You have to sit down with this weapon and probably practice with it for a couple of minutes before you can do anything useful.
Speaker 3:Yeah, like the fun of Monster Hunter is you're hunting a giant monster, right, and what you want to be thinking about is oh, let me stay outside of its range and look for the time to strike. You don't want to be thinking about oh, i got to do this. A, b, x, y, like what's the special button combination I have to do again? That's not the fun part.
Speaker 3:The fun part is hunting the monster And similarly for Street Fighter, the fun part is, oh, trying to bait your opponent and anticipate them and punish them for making mistakes. It's not like remembering the quarter circle forward, quarter circle back inputs.
Speaker 2:I know that's one of the main reasons I'll never play with my friends or really anybody who plays fighter games. Okay, i'm just going to start mashing the buttons, even Super Mario, or even Smash Bros. I'm not going to sit down and try and remember all these different combinations. I can barely do a double jump.
Speaker 1:It's like trying to play Gidara Hero, with actually seeing the stream of notes that you need to hit at the right time, so you just end up smashing all of them and hope you get the timing right.
Speaker 1:So do you think, though, that, from what you've described, that this is not really making? it is making the game more accessible, but it feels like there's two ways to do that. One is to improve the teaching of the game. The first time user experience, maybe the funnel single player looks like it's going. After that, a little bit, familiarize yourself with mechanics, give you moments of winning. Maybe it tries to introduce high levels of difficulty, so you do actually have to work your way up the learning curve and I assume it is a curve. So it seems like that's one thing you can do, and the other seems like you could just literally make the underlying product simpler, and that seems related to the button press idea you were talking about. Is there a path forward that grows this genre? Like I can imagine? there's just a fixed number of people who are interested in a game with this level of skill.
Speaker 3:I think it's tough because they have to satisfy their old, diehard audience, who has a bunch of expectations about what the fighting games means, and the difficulty and the execution and whatnot, while trying to attract a new one And modern controls is their attempt to compromise at that, but I think we'll see how it pans out.
Speaker 3:There's something about that sweaty one-on-one combat where, if you get your beat over and over and you still have the desire to keep playing like that, i think that hardwalls a lot of people And, like I said, the competitive violent game genre category is expanding ever more and I don't know if they're going to be able to pull out players from Fortnite. There is one other big change that they did to improve accessibility, which is improve their net code, which means in the past, these fighting games are very high speed, high reaction time based game, and so internet connection mattered a lot, and so they improve their net code to basically, long story short, it's called rollback, but it's a lot of other games call it interpolation, but basically allows people with crappier internet connections or people who are further apart to play online, and this is huge right Like back in the day people played in arcades or you'd have to go to someone's house to play, and now people are playing online and the number of people this is granted access to is immense. A lot of these old Japanese developers didn't prioritize online play because in Japan the internet connection is so good and everyone lives very close to each other. But in America and Europe and South America this is actually, i think, made the game a lot more accessible, and Street Fighter VIII shit for this.
Speaker 3:Back in COVID, when quarantine hit, all of a sudden everyone moved online and their net code was really bad and everyone migrated from games that had bad internet code to games that had good net code, and so this time they launched with that.
Speaker 1:So is this idea of interpolation to protect what a player is going to do and serve it to the other player? client side.
Speaker 3:Yeah, so basically the game simulates what would happen. So the game server might not or the other player might not. If you press the punch button, it takes time for that punch button to go through the internet and reach the other player And the other player's game will show you standing still. And if you hit the punch, one option is the game can wait for you to press the punch button and then display that. And the game says oh, there's a 50 millisecond delay on all inputs. So we're just going to delay everything by 50 milliseconds and always wait for some of the press. That's called delay based netcode, what rollback or interpolation does says, oh, we're going to play things out in real time. And if we get the signal, hey, this person pressed punch 50 milliseconds ago we rewind the game, simulate out what would have happened if they pressed punch 50 milliseconds ago and then show that on screen. Yeah, might not be the best technical desk description.
Speaker 2:So there's no algorithm in the background actually predicting the motion correct? They're not saying there's a 99% likelihood that they press the A button.
Speaker 3:Yeah, basically, it allows you to rewind time and say, oh, they pressed punch button. We didn't realize they pressed punch one because of the internet.
Speaker 2:So it's almost like an auto-battle. No, i'm just kidding. So the game is operating, the players are in this timeline and the game is in this timeline And it's just using all that data from the game. That's really clever.
Speaker 3:Yeah, and this makes it so that I mentioned those 50 milliseconds of delay. There's no delay anymore, right? All the quote unquote delay is being put into the rollback. So now your online experience at home is just as good as an in-person or arcade experience, and whereas previously that was a barrier to entry. People would say, oh, i don't want to play online because it's not as good as arcade, but then I also don't want to go to the arcade. I just not going to play.
Speaker 1:I wonder about how far can you push that, in terms of how much can you make the delay, because I imagine it expands the window right, like you can. the farther away people are, the more you can interpolate, the more I don't know. Is there any limits to this?
Speaker 3:Yeah, the more rollback you do, people start teleporting around. Imagine a full second of rollback, right, You press jump, but the game doesn't know you press jump And then it's like a second later Oh, he pressed jump a second ago. So you teleport from the ground to in the air because you press jump, right? So if there's too much rollback you get a lot of teleporting.
Speaker 1:So we have two articles to talk about today. Would we like to start with Sunflowerland or the Economist Creed piece?
Speaker 3:Okay, In the spirit of the Fourth of July, out here writing founding documents.
Speaker 1:I have been thinking of, on your suggestion in honor of Fourth of July, what would be a great constitution or creed for game economists, and so I've been thinking about what it is that I actually end up doing. I want to sit down and think about kind of the creed of game economics, and when I thought about this what I realized is that it's not so much the studies, the topics that game economists study, although I do think there's a way that we usually engage with. Economics is a particular way, like we do focus on kind of financial outcomes because they are measurable. So we have kind of a natural bias, but there's nothing about economics itself that forces you into that. So there are like these natural topics we tend towards.
Speaker 1:But if you're to think about really what it is that defines game economics, or what it means to be a game economist, i think a lot of it has to do with not the things that we study, but rather the approach we take, or at least that's what I'm going to argue in this constitution. And so if you take that notion of us having a set of methodology or goals, what actually defines that methodology or goals? So I argue it's a function of a couple different principles. One of them is that we organize ideas with a scientific method. It feels like empiricism is core to the economics approach.
Speaker 1:Being able to falsify things and make explicit theories about how we think cause and effect functions is a core underpinning. A core underlying principle of any scientific approach. And I do think the economic approach is scientific and it is something that integrates well with social sciences. In many cases sets us apart from other social sciences is having a clear process of scientific inquiry. We have this idea of having a hypothesis, having a theory, and going out and trying to falsify it, and we're very good at specifying our hypothesis, sometimes with mathematics, sometimes with not, but we are very good at specifying cause-effect relationships and making those falsifiable. So I would say scientific method very important for game economists.
Speaker 3:The other thing I would argue is that social sciences are not scientific.
Speaker 1:I would say a lot of social sciences are poor at articulating their theories and making them falsifiable. Like that is a common complaint I would have in a lot of other theories. Like I think psychology actually falls into a lot of these issues. When I think we describe a lot of psychological theories, the thing they'll do is just describe what's happening in the brain and increasingly scientific and I guess even what's called scientism They're describing what's going on in the brain in increasingly specific ways. Hey, dopamine is released rather than just something makes you happy, and what they're trying to do is it almost strips away autonomy from the person. But at the end of the day, it's not really a theory that predicts a lot of things. It's basically a descriptive tool And I think a lot of good science should be things that explain and you can explain by predicting.
Speaker 3:I'm down with all that.
Speaker 1:I thought we might see eye to eye on some of this Theory before measurement. I think this is another principle that's really important and is something that economists do really well, but a lot of times we'll see people go out and just say, hey, we're going to run a bunch of different experiments, let's just change the color of buttons, and there really isn't a strong theory. The other thing I want to point out is that even if you're changing the color of buttons, if you're just doing things or just saying, hey, i want to scroll these dials, you still have an implicit theory when you do that. And so when you say, hey, i want to change the color of buttons and find which one maximizes LTV, your theory of measurement is that changing colors of buttons might actually have an effect. You're always making an argument, especially when you think about how you allocate your time, and so that is the theory that you need to put together is like how are you making your choices and what are you choosing to prioritize? And I would say it's better if we make those things explicit rather than implicit, because we can examine them, we can critique them, we can discuss them. So theory before measurement seems to be an important part of the economic approach, at least in games. I would also make two other principles.
Speaker 1:The next one is nearly all ideas are amendable, including this one. Now, i put this in there just so that we could have some flexibility in the Constitution. I would call this more of an outcome out of political science is that constitutions need to be flexible. I think there should be amendments, and so I at least wanted to say that this document could be amended in honor of the US Constitution. It was an important amendment as well as the idea that the document was amendable. And the last thing I'll argue for this Constitution is that the economic tool set is vast and varied and make full use of it. So I've ended up avoiding a lot of specific methodology prescriptions when it comes to economics, because I think there are a lot of different approaches in economics. We have the saltwater school, we have the freshwater school. There are different things that they assume. The economic approach is varied.
Speaker 1:Ultimately, i still take a line on Robin's definition. We're trying to figure out, with limited resources, on limited wants and needs, how do we maximize resources or maximize output given our limited needs and wants? That is the study of how we do that, and I would still argue that there are many different ways to take the next step and figure out how we could be more descriptive with that. Do demand, curve, slope downward? That's something we can reason from a set of underlying assumptions that we choose to make about the world. The economic tool set can apply those very simple principles to a wide variety of things, And we should apply those economic tools to a wide variety of things, whether or not we're thinking about progression, iap pricing, the color of buttons, the text of things.
Speaker 1:There are so many things economics can tell us about and the game economists should try to apply it to every part of the game, not just progression, not just modernization. And I would say just one more that I'm going to throw in there, and I apologize. The piece is always ask what economics can do for games rather than what games can do for economics. So use the economic tool set to make games a more successful, intellectually satisfying, rigorous, exciting medium, rather than thinking about how you can use it And thinking about how you can use games to test and experiment with your economic theories. And that is the toughest thing that I think a lot of people need to swallow. And probably the most radical suggestion is that we are game economists and the game comes first, and that is no accident.
Speaker 3:Amen, brother, alright I don't know.
Speaker 2:But it's John Hancock on that.
Speaker 1:Do we need to make some amendments, or should we strike some things down?
Speaker 2:I think my biggest question for you is like this this the primary goal of a game economist is to make better games using economics. I don't know how you guys feel in your day job, but for me there's a huge difference between the primary game job of a game economist is to use economics to make the company more money, which is the traditional sense of an economist, right, if you think about an economist and most tech outside of video games, their job is to make the company more money using the economic process. So to me, that's. I'm struggling with this. I totally agree with you. The game economist is there to make the game better using economics, but where does the monetization expert? where does the monetization come into the picture? Like, is it fair to say that, oh, by making the game better, you also are making the company money, or am I totally off base by saying that it is within the job of an economist to make the company more money?
Speaker 1:I think that the economist approach assumes that there is a relationship between the long run. So I want to be clear when we say make more money, sometimes that can feel rather short-sighted. Ultimately, the economist is trying to maximize net present We could almost call it profit. So there's the future stream of the dividends that a potential project could get you. So it's not always about what do we do next quarter. It can also be how do we think about things over the long run and how do we maximize the stream of dividends? And I think the primary way in which we maximize that stream of dividends is by making a more engaging game. And yes, sometimes, like the explicitly monetization is a separate item, but other times, like a game economist, can come into a game that doesn't have MTX microtransactions and isn't free to play and can help make that game a better product and make it more profitable, make it more of an engaging game. So I think our scope can does try to answer that question And I think the primary way to do that is we make better games.
Speaker 1:And just to be clear, like I don't want that to be a soft answer, a lot of times when I say make better games, that also means making them higher streams of dividends, making them more profitable. Reddit doesn't realize this, but when we make games more profitable, a lot of the game gets reinvestment, and reinvestment means more content, it means the game expands and it also means the game can do more user acquisition. Like part of what makes games a high GDP product is their ability to grow, and grow to their optimal level. Candy Crush is growing after 10 years. It's finding more people to play their game and it's spreading that level of utility. And that doesn't mean it comes at the expense of current users. But sometimes it's hard for current users like Redditors to realize is that there's a utility for the marginal user that's acquired to the game and games are really good at acquiring that marginal user.
Speaker 2:It makes sense to me. To me, like the economist is in a very weird space in the video game industry, because they toe the line between being a data scientist who I think the job of a data scientist is to make the business money, and a game designer, whose job it is to, yes, make the game good so that the company makes money. But I almost see the game designer as serving the customer and the data scientist as serving the company, and I think economists are typically in some sort of in between space. I think if you ask, like the typical Reddit or hey, does microtransaction make the game better? They'd be like no, especially five years ago. So the answer would be big old no. So that's my. I think that your definition still works, but that's the question that's nagging me in the back of my head And I wonder if we can improve it by addressing that.
Speaker 3:So I think about something Amin said, Mr Amino acid in the discord where?
Speaker 1:game economists over at Activision. Wonderful human being works on Call of Duty.
Speaker 3:He said look, economics isn't a set of values, it's a set of tools and theory, but it's up to the person how they apply it Right. And Phil might say, hey, the goal of economists is game economists to make the game better. To me, i see that as more like normative. This is what we should be doing And I love the J4 Constitution theming, but actually this actually feels a lot more to me like a set of guild values. This is like a Hippocratic oath or look, if you're a doctor, you could be sticking cyanide in people's blood. But as a group we believe that the role our role is to make the game better, as opposed to extract as much money as possible and then burn the whole thing down on the way out. Yeah, i think it's not impossible for economics to make the game worse, but we are choosing that we believe, to make it better.
Speaker 1:So I think that's a very interesting descriptive. So, if this is a normative approach, what do you think is a descriptive? or the positive approach that describes how we operate? What are the things that we actually do?
Speaker 3:So I would say it's using data and the scientific method, having and, in particular, having theater. Can you do economics without the scientific method? You can make claims about economic things without the scientific method. Let's take a step back. What is economics? What are, what is it? I've heard a bunch of different definitions. People say scarce resources, or like preferences and allocation of scarcity. What do you?
Speaker 1:Yeah, so only speak to the meta, so to speak, on what the definition of economics is. But there is one that's generally accepted, and when you look at this definition, the first thing anyone summarizes with is this is the thing that's generally accepted, which is the Lionel Robbins definition, who was an economist at the LSE in the 1920s, who's defined it as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.
Speaker 3:I think it's a super interesting point, because when lay people talk about economics they usually just think money.
Speaker 1:So you can see a ton of already very interesting core concepts in there. Science shows up The study of human behavior, so specifically talking about human beings although I think we can actually use economics to study biology I think that's been one of the things we've learned about quite frequently And scarcity, which is defined as a difference between need and want and alternative uses, which is opportunity cost.
Speaker 3:So I think that's important to add because you mentioned okay, we use scientific method, we use data and we have theory first, right, and that could describe any science discipline, right. But specifically, our theories are about what you just said unlimited needs and wants, limited resources, opportunity costs, and I think that's what forms the fact and that leads to a whole set of tools like demand curves and utility functions and whatever that underlies the theory.
Speaker 1:I'd like to ratify your amendment to the Economist Constitution. Do we have a say on this podcast Here, here?
Speaker 2:To add in the definition.
Speaker 1:To add in the definition of economics, to add in a descriptive definition of what we do.
Speaker 3:Like a specific domain space.
Speaker 2:Yeah, i think it's super important. I think that's probably actually the thesis of the creed.
Speaker 1:And, to be fair, that's broader than the definition I gave about monetization. For instance, economists could study how a user engages with, let's say, a puzzle game and how they choose to ration their time. We could come up with really compelling and I think we do. We come up with a really compelling theories about player behavior. In fact, i actually think we need to do more of that. Normally we think about a human being as a utility maximizer. We haven't explicitly modeled this in many cases in games. What does it mean to be utility maximizer? Let's think about it. The game design definitely is usually a min-max, or we call them. It's someone that tries to maximize output with limited time. That's how I make all my economy models, by the way. I think that assumption, i don't think you can assume anything else, and I think it would follow the empirical evidence.
Speaker 2:I always solve a model with the perfect strategy in mind. How would a genius solve this? One thing I wanted to add to the definition I think a lot of sciences, especially physics and obviously math but math doesn't really count Physics and chemistry utilize a lot of this optimization stuff that is in that definition that you just spoke about, phil Limited resources, alternatives and optimizing your experience. To me, the really key operative word is the phrase is human behavior.
Speaker 2:I think that human desire is really what underlies all of economics. You can talk about scarcity, you can talk about alternatives, you can talk about opportunity costs, all these things all day long, and that is what makes economics. You could look at an economics problem and a physics problem and it would be really tough without context to be able to tell the difference between the two. The important part is the context and the fact that in this one you're actually looking at human desire, and that's why people get pissed off at economists all the time. They have their fancy models and their fancy econometrics and they don't know anything about humans. And it's true because humans don't behave the same exact way that a physics problem works. And that's the whole behavioral economics movement, at least in my view is to try to ameliorate that.
Speaker 1:Oh, i think that's bull.
Speaker 1:No, that's not what Milton Friedman wrote in his famous methodology paper.
Speaker 1:His underlying model was always that if you And he gives a wonderful story right, and the story is the story of a billiards player and he says, look, we can go out and we can make models that describe how a billiards player makes decisions on what the next shot they will make is, and a lot of the model we can build is going to be based on mathematics.
Speaker 1:It'll be based on what is the optimal shot that they could take. Now we know the billiards player is not actually thinking that in their head. We know that They don't have a degree in mathematics, they can't make that, but they act as if they are making this sort of calculation and ultimately this calculation ends up making a good forecast. Now a lot of philosophers of science have radically changed that view and it's outdated, but the end of the day, it is useful. I think that's what people understand is that making these assumptions about people, producers, forecasts which makes the models really useful, and they do have a large degree of accuracy. Economics has been largely accurate when it comes to thinking about things like demand curve sloping downward, and those aren't always a sophisticated outcome. That is something that economics predicts.
Speaker 2:Yeah, to be 100% clear, I started off as a behavioralist and then I ended as a neoclassicalist after my PhD. I love that. To me, i call that phrase that Milton Friedman quote the as if statement, that people operate as if they are optimizing this thing, but they're not really. And I think to really like shit on behavioralists, so that you know that I'm not a behavioralist. I think behavioralists try to take that too far. They try to take that theory too far and they say, oh, you've got this cool fancy optimization, let's throw in a few extra functions or a couple of variables, something like this. That just complicates the model, makes the model more and more specific, thereby being less general, perhaps less heuristically useful, and I think that's why we've seen behavioral really go the psychology route, and the experimental part of that has been taken on by macro economists. Micro economists, labor economists are all working in experiments, not really focusing too much on the behavioral side.
Speaker 1:No, and I couldn't agree with you more. It seems like they've shown that under a very specific set of assumptions, you will produce this type of behavior based on a model that is different than the neoclassical model but is still largely correlated with it. Like prospect, theory only gets weird at certain parameters. It's not weird all the way.
Speaker 3:I love that Milton Friedman anecdote about the billiards player. I'd always interpreted it more of an almost like an evolutionary thing where the giraffe didn't think I need to be taller And so this is the optimal neck to body ratio. Just it evolved that way and the draft behaves that way, and it's easy to model it as what's the optimal neck to body to leg ratio for reaching tall trees, even if the draft wasn't doing that intentionally. And I think a lot of human behavior is similar where, like you, can model it as though there are hyper rational optimizing agents, even if they're not.
Speaker 1:No, i think that makes a lot of sense If you think about it almost as like a natural selection process, like ultimately, this is what's selected towards overtime, this is what's being optimized towards. This is how the branch is growing towards the sunlight, as maybe another analogy.
Speaker 2:That's why I love markets. I think that markets are just a reflection of this natural evolutionary process that we've been seeing for billions of years, but it's just a human Humans have constructed. It's like the next version. You could see markets as an evolution. The strongest wins. You adapt in ways that you don't fully understand why. You're adapting to them in order to win.
Speaker 3:So are we defining game economist, or are we creating a guild with our own set of normative values? or what are we creating here today?
Speaker 1:What do you think a creed is? I think a creed stands somewhere between a Hippocratic oath and a guild, a Hippocratic oath and perhaps a constitution.
Speaker 3:So we're allowed to make things like, i don't know, sharing data is good or something, or like the game economist should improve the game, which aren't necessarily true about an economist, but we are saying we want to be true within our group.
Speaker 1:Yeah, I guess what would you expect the game economist to do is perhaps another way to do it. I think there's part of this which is like what ought we to do and then what should we do? There should be things that fall out of this constitution. Maybe this constitution implies is a section, So this constitution implies that you should be opening with sharing because, like there are I don't know other positive network effects. I don't know, is that fair? We need to go to court? Isn't that? the whole role of courts is to interpret the constitution. That's not to talk about court. I don't know, is that a cop out?
Speaker 3:No, i think the constitution makes those claims that we shouldn't. I don't know due process or whatever right That, like the legal system, doesn't have to behave that way, but we're implementing this rule and forcing people to comply to it, i think we have a destination of game economists here and we have some loose ideas about normative things like make the game better.
Speaker 1:That makes sense to me and I think we should explicitly call out as good game economists normative and positive claims in the constitution.
Speaker 3:Where do I sign?
Speaker 1:I'll be passing around the parchment pretty soon. You can slap your John Hancock on there or you can slap it to NFT signature or blockchain signature.
Speaker 3:That's how we'll do it.
Speaker 1:We'll make a little Dow Came with Conos Unlimited. All right, we're speaking of NFTs and speaking of electronic signatures over the blockchain. Eric, i think you want to talk about Sunflowerland.
Speaker 3:Yeah, sunflowerland. So this is a Web 3 farming game. What does Web 3 game even mean? In this case, it means, i would say, real money farming game. So this is a game similar to Farmville Stardew Valley Cookie Clicker.
Speaker 3:It's one of those idle farming games. You plant crops, they grow, your wealth increases, you plant more crops, but a lot of the items are tokenized, like from everything from the carrots to the axes to the lumber, and your character as well. The farmer is called a bumpkin, is also an NFT, and some of these things are tradable. However, it is not fully on chain, so, like a bunch of this stuff happens in a database for reasons I'll go into later. But yeah, it drew my attention because it's one of the highest active player based games on polygon. For reasons they do things to juice up their stats, but they've got a lot of players. I love watching numbers go up, so for me it was very enticing. Oh, i can optimize my Stardew Valley farm, but maybe I can make a few bucks with it, and so that kind of is what drew me in the real money aspect. But yeah, so you buy seeds, you plant them, they grow, you harvest them, you buy more seeds, you eat the food. You eat the food. To level up, you make your farm bigger all those sort of classic farming game tropes And so the economy is interesting.
Speaker 3:So when you make a farm, one question is, when you make a farming game, if you take Stardew Valley or Farmville and make it real money, how does that change? Because those farming games are all about hyperinflation. They're all about you started planting 10 wheat seeds a day and now you're planting 500 using an automatic farming system and sprinklers and stuff, and so this game has a lot of friction. There's a lot of sinks and a lot of blockers. For example, there's a finite number of seeds. So you start with a game with 200 potato seeds And when you buy all the potato seeds, you run out and you have to spend money to refill the potato seed. Or, as in most of these games, there's an unlimited supply of seeds. There's other restrictions, like you buy an ax, you chop down a tree, your ax breaks, you have to buy another ax right. Or, as in almost all of these other games, you buy an ax, you can chop down an infinite number of trees. So there's a bunch of these things to create sinks, to try to balance the economy.
Speaker 3:Does it work? And not really. It's still very inflationary. There's a lot of these things in there to slow things down.
Speaker 3:The other big sink is you can invest in your character. You can eat food to level up, which might increase your farming abilities, harvest 5% more crops or whatever. And you can invest in your land. You can make your land bigger, have more plots of land, add more buildings, add a chicken coop stuff. Those are all non-transferable things, so those are direct sinks in the economy to try to keep it balanced.
Speaker 3:However, this is still its capital right. You invest in it And in the long term it actually ends up creating more than you invested in it. So I think this game is doomed to hyperinflation, the way almost all farming games are doomed, but they've done a lot of things to slow it down, which I think is interesting. However, if you look at the token right now, it's down 70% from a year ago or whatever. I don't think it's going to turn around dramatically, but at least it won't be as boomerbust as Axe right And Axe. All the capital you invested in those tricked out Axes with the best abilities were fully transferable, as opposed to in this game where you can't send someone else, your plot of land or your chicken coop. So that's the end of the story.
Speaker 2:So what is tradable in this game? What's an NFT and what's not an NFT?
Speaker 3:Yeah, good question. So, the game is on a database, so a bunch of the things are tokenized, like the crops, like carrots and wheat and potatoes, and some of the resources, like lumber, stone gold, are tradable. Your land is not tradable, i think, and your character, your bumpkin, has like clothing and outfits and stuff that are tradable. But I believe the level ups are not tradable, so it's pure cosmetics. But I think if you level up, get like plus 20% farming, if you trade it, i'm pretty sure that goes away.
Speaker 1:So it's literally only cosmetics And some resources. yeah.
Speaker 2:But no resources.
Speaker 1:If the resources are tradable and your theory was correct on that being inflationary, have those resources tended to move downwards in terms of price per unit?
Speaker 3:That's a good question. I haven't checked the prices long term on those, but the in-game currency, sfl, is their token. That thing has gone down in value. So even if the unit price, if one goal, is worth 10 SFL, the value of SFL has gone down a whole bunch. So I would say everything has yeah.
Speaker 1:So what is it that blockchain games don't get about? matching sinks and sources to maintain equilibrium, Like why can't they make prices flexible here too? Why make them fixed at all?
Speaker 3:The prices aren't fixed by the game so much as like by supply and demand. But there is a big restriction, which I mentioned earlier, that the game is on a database, not fully on chain. If I grow a thousand potatoes and I want to go sell them at the NFT marketplace, i have to pay 10 cents it's called block books for them to write it to the blockchain. I also have to pay gas fees, which can be anywhere between one and 30 cents, and a 30% tax on all things I withdraw, so that thousand potatoes becomes 700 potatoes, and then I have to take it to the NFT marketplace and then the NFT marketplace takes something like 10% on everything. So anyway, there's tons of frictions all along the way to actually access the marketplace. So the degree to which there's an alive and liquid marketplace is actually there's tons of frictions, so yeah, So is the marketplace not the primary?
Speaker 2:To me, the whole point of making a game on chain like this would really just be this infinitely lived account. Maybe that's important to people I know people who play Animal Crossing would cry if their account was deleted, So maybe there's something there. But to me the big sell is this open marketplace economy. But I don't understand that in the context of a farming game, Everyone has access to the same exact tools. Everyone has access to the same operation. Like in a farming game, you can become an institution, Like every man is an island. So how does that work here? Do they restrict people in certain ways? Is there a way for them to say you can't do it all? You have to participate in trade? but it sounds like trade is not fun. Participating in the marketplace is difficult and there's a lot of friction.
Speaker 1:It's inverse of Adam Smith's quote that the size of the market is limited by the degree of specialization. Fuck, what is that quote?
Speaker 2:Sounds right. Size of the market is limited.
Speaker 3:More specialized means more trade, and less specialized means less trade.
Speaker 1:The division of labor is limited by the extent of the market, and so I would assume, as the market grows or the number of player grows, specialization can increase. Now, this doesn't really work here, because specialization is endogenous. It's really set up by the designer. There has to be you have to make choices in terms of progression. There has to be like careers.
Speaker 3:I think that Smith quote, the causality is the opposite, which is the bigger the market place is, the more specialization it allows for. Yes, yes, that makes sense, but so in this game there is a little bit of special. But to your answer question why would someone trade? So there's some things you can't access till later. For example, if I want chicken eggs, you can't get that till level nine. So if I'm level three, maybe I'll go to the market and buy some.
Speaker 1:Oh, so you're here on level restrictions.
Speaker 3:Yeah, but you're eating tons of gas fees and marketplace fees along the way, so it's paid a win. Yeah, oh yeah, absolutely, and that's how they got to monetize right.
Speaker 1:So eggs are the Porsche, i can buy my.
Speaker 2:Porsche day one. It's funny that they let you do that, but they don't let you buy progression. Right, i can't buy your account, even though you're a higher level, and real quick comment on that. I think that's really fascinating. Like in WoW, like people are trading accounts all the time, like in a lot of these games, like there's an account, like a gray market. It almost seems like that would have been something that Web3 could have solved, could have helped to solve, but I find a lot of people resistant to that.
Speaker 1:I actually think that some things that that's all Web3 should do is just sell accounts.
Speaker 2:Yeah, but every Web3 designer I meet is we can't have account progression selling.
Speaker 3:Yeah, there's some stuff that's tradable in the marketplace, like buying stuff early. You can juice up your account, like your handicap by the amount of money you have in the game, like it affects how many crops you can buy and plant and sell, and so you can jumpstart that by just buying cash and inserting it into the game. There is some specialization, so you level up and you have a perk tree And so you can say, oh, i want to have 10% more crops, or I want to have 10% more animal crop egg production, right, or I want to chop lumber slightly better, so that specialization could encourage market trading. But the specialization is very weak, it's not super sharp. So, yeah, i think if they wanted to encourage the market, they should lean heavier into that. But yeah, anyway. So account trading I think that from a player experience perspective, it's a lot more intuitive to trade assets and resources than it is to trade your account. Like it's a lot more makes more sense that, like, your chicken eggs are transferable but your skill at farming chickens is not transferable.
Speaker 2:Two years ago, like Web 3, the whole thing was, man, how you spend 50 hours playing that game And then what? You just lose all your stuff. you don't get to get anything for it. You spent $50 on the game and then you lose all your time. It's the whole promise was you get to resell your time. I thought that was a dumb premise. to be honest, It's fair enough, but that was one of the original premises of Web 3 gaming was being able to.
Speaker 1:you know, I don't think that was the promise. I don't think that was the promise, because I actually think the promise was a little bit different when it came to a lot of these Web 3, the Web 3 promissors on Twitter. I think what they promised is that you're going to get paid for your time or you're going to get properly rewarded for your time. There's this underlying assumption that you're being ex-put in some way by putting time into the game and enjoying it. That was some sort of grift that we were doing as entertainment makers was like oh no, we made an engaging project and didn't explicitly pay you. In fact, we expect you to pay us. That was a weird thing. We assumed is that there was something fucked up about that relationship and that Web 3 was going to solve it. But the question is okay, if we're going to pay you to play this game, how are you going to generate revenue for us? And they still have not answered that question in many regards.
Speaker 2:No, i think so. To me, the model that could explain that is like a very The question that model is aren't advertising revenue is so high that we can now, instead of just offering a free-to-play game, we can now pay you to play our game. So we take some of our profits and we spend that on the customers, and that spend is going to, in turn, create this compounding effect and we'll give even more customers because we're also paying them. So then our profit goes up and we're giving a chunk of that to our. I mean, that to me, is theoretically how it would work. I don't think that is attractive to a Web 2 company. It's a Web 3 company.
Speaker 2:To go back to your point, phil, about the promise like getting paid for your time Yeah, i always personally just saw this. We have all this digital content. We have all this digital junk that's stored in old accounts that are no longer active And maybe we can utilize that. Maybe I hop into an old MMORPG In 50 years. I hop into an old MMORPG that was on chain and I can say I'd really love to jumpstart this. I'm going to go to this marketplace. Oh, there's some shit sitting on the marketplace. Okay, i'll grab that, and to me that's where the promise comes.
Speaker 1:I completely agree with you, but I think what you're describing and I think this is why it count selling makes so much sense is that it's a safe state. That's really what you want to buy. You want to buy a safe state and a player making that safe state makes the most sense to me and rewarding them for having spent that amount of time because they actually could have invested resources Right. This is getting return on your Magic the Gathering cards. It's always going to be a negative return. You're getting some level of return and it offers something to the buyer too. And again, now that these are all digital marketplaces, you don't have to let all of those gains go to the person who put the time in. You can tax this. You put a 30% tax on this. These are things we can do for players getting safe states. But ultimately that subsidy helps onboard players if they know they're earning equity Like it is a user acquisition tool.
Speaker 1:Like that is something that you get out of Magic the Gathering packs is. I'm not throwing away $3. If I can trade it, i'm actually getting an expected value that could be $1, which makes me buy more packs than I might otherwise buy, because that makes the effective price in the pack only $2. So I don't know. It seems like buying and selling accounts is actually the cleanest way to do this. I don't buy that. It's not accessible. This is the number one thing that happens on the black market. This is the whole thing that blockchain is supposed to solve is like black market trading, and it's always between accounts, which I guess actually is a technical indication to be honest with you, because you can't trade items, although you can. Then, wow, i take that back.
Speaker 3:Well, I think this begs an interesting question Should there anything be anything in a game that should not be tradable?
Speaker 1:Yes, which is I don't know. I usually argue like everything should not be tradable, i mean generally. I guess we could think about it from power progression. It is weird to have power progression that's tradable. If it is the case that you can buy a level 100 item when you're level one, that actually screws up a lot of things, whereas if you're buying a safe state it actually avoids a lot of those problems Like that. one item can break the whole game. It almost becomes a radical step.
Speaker 3:There's some kind of progression loop, engagement loop that's being broken by the trading.
Speaker 2:It makes sense in a game with a long tail or a long end game. To me it makes sense in a game like that. Why I would want to just buy a level 100 account. Ok, i just want to be in this end game loop and do that grind. But yeah, to me it defeats the purpose in any single player game. Why would I want to trade for items in a single player game? The whole point is to enjoy the ride. Why would I want to buy somebody's super leveled up sword and Elden Ring? That doesn't make any sense.
Speaker 2:I want to build up to that. The whole point of Elden Ring is the progression, and to me I'm struggling to. So I guess farming games are about that end game grind. I've just got this cute little thing that I hop into every single day. I've got my And I'm slowly progressing over time. The problem with that slow progression is, like you said, the inflation is crazy high. So I'm really curious what the end game looks like for Sunflower Land, and I don't know if you have any thoughts on that. What does five years from now look like? Why am I trading in the marketplace? It doesn't sound like there's a lot of reason for me to be trading in the marketplace. What am I doing? Why am I building up And what does inflation look like of their assets?
Speaker 3:Yeah, so end game what I see. So I'm not there, but what I see and the levels go up and up right And the scaling gets harder. So end game is very far away from me. But they've got a live op system where they'll have seasonal events, where there's like at the island of the quarter and there's like this one's Donbreaker Island, and you can go there and you can spend your resources there to do stuff on the island. I have an access to it at all, but and they have these events periodically There's a bunch of cosmetics And what I see in the Discord is people sharing their islands with their rare statues that they've acquired, or they arranged their island in a particular way or they arranged their character. It's very similar to Animal Crossing Endgame, where it's not about resource limitations, it's about customization and expression when playing Dollhouse. So I think that's the end game for the hardcore players.
Speaker 2:So, with that in mind, does asset inflation matter for them Like? the things don't have to have big prices on the marketplace. It doesn't sound like that's even important to them.
Speaker 3:I think the main issue is the statue that they worked super hard to get becomes commonplace in the future and it betrays their trust that this was a rare statue and that this statue makes them special. But it doesn't make them special anymore. But yeah, and I would bet a lot of these players were drawn in by oh, i can play and earn money, even if they never cashed out and ended up spending money net, like the. The fantasy of earning money might have attracted And I'm definitely in that boat where I was like, oh, maybe I'll play and earn money. I end up spending like $10. I know I'm not going to get anything back, or maybe I'll get $2 back, but yeah.
Speaker 1:So you started the piece by talking about that. It's the most popular game, i believe, on Polygon, yeah.
Speaker 3:So let's talk about blockchain stats? Yeah, or did you have a question? Is that what you wanted to bring up?
Speaker 1:I was just going to say OK, then why? We've talked about a lot of the problems with it. There's a lot of other games that offer play to earn. Why has this one been the one that's successful?
Speaker 3:So it is a legacy game. It's been around for a while Earlier incarnation, i believe it was called Sunflower Farm, but they rebooted it. But they do some things to juice their stats. So the stat we're looking at is daily active wallets, which is basically like daily active users, except with wallets. Farming games are very good at this because it's like you plant some crops and you come back in five hours or two days or whatever, and you harvest them and you plant them again, so they're very good at that daily, habitual loop of you play for five minutes a day every day. They also added a daily reward chest which you want to go back login to open up every day, right, so a lot of the classic mobile game daily login incentives.
Speaker 3:However, the game is actually not fully on chain. All the farming that takes place in the game is actually on a database and you have to spend money to write it to the blockchain so that your assets actually update. If I farmed 100 carats, they're not actually in my wallet until I spend about 30 cents to write them to the blockchain, and so a lot of people avoid doing that, and so their daily active walls was actually pretty low until they added this daily reward And this now mentioned this daily login reward. You have to spend about a cent worth of gas fees to claim it, and that involves an on chain transaction, which all these tracking sites like Dune and Dapper 8R say. Oh, there was an active wallet today And if you look at their daily active wallets graph, you can see there's a big step function up at one point when they added these daily login rewards. So they're basically hacking the blockchain stats to make their activity look way higher.
Speaker 1:So do you think it's just any farming loop game that can drive this sort of stat gamemanship by just implementing simple free to play mechanics?
Speaker 3:Yeah, I think a game that encourages you to play for a little bit every day will have high doubt relative to the raw engagement of the game.
Speaker 2:So we had a movement test and what we did to mitigate botting was just had not a fee, basically goes into us, we hold it, we hold like a thousand Atlas while the person's in the game And then once they leave the game they get the thousand Atlas back. So it's just trying to mitigate some of the botting, so it's almost like a license fee like a refundable license fee, like a deposit, almost.
Speaker 1:Yeah, it's a deposit.
Speaker 2:Exactly, that's exactly right. What I was going to ask Eric is like how bottom is this? And because, now that we've got like this real money, incentive botting becomes a problem And I'm curious, do you have any comments on that? Does that push prices down?
Speaker 3:Yeah, botting would definitely be an issue because, like I said, it's a farming game. They have some captures in the game, but they're like weak captures, so I'm pretty sure sophisticated botters can get around them. There's also a bunch of frictions along the way. To create an account you have to buy an NFT. So either you spend $5, you can give them $5 and they'll get mint one for you, or you can buy one from the marketplace for about $2. So that's like the deposit And they say oh, if we detect you botting, we're going to ban you.
Speaker 2:And that's like for long term. We see it as well. Somebody's got to own a ship to be able to play the game. Very much like a Star Citizen model, where you can't be in the game unless you've got a ship. And we know there's a limited quantity of these ships, so by definition we have a limited number of participants. One question I had about the gas fees are Polygon's gas fees really like one cent per transaction? That sounds really high to me.
Speaker 2:Yeah, you're coming from Solana, where it's like a pin. Yeah, it's like a penny of a penny.
Speaker 3:Yeah, it's about half a cent, or it was about a cent. A while ago It was $5 to $10 a transaction right.
Speaker 2:Oh my God, yeah, it's insanely expensive.
Speaker 3:I honestly think they would be better served if they wanted to be fully on chain. They should be on Solana, right, but I'm sure Polygon threw a bunch of money at them And I think they, like I said, they've been around for a couple of years at this point. I think they started on Polygon when fees were much lower. But I think this goes back to the blockchain thing of like. With these nano size transactions of like you planted a carrot and then you harvested a carrot. The value of the carrot is like a thousandth of a penny. It doesn't make sense to write it to the blockchain because the gas fees are a thousand times the value of what you're getting from the carrot. And so it brings the question, the whole idea like why do you even want this game to be on chain if you're just eating gas fees the whole time?
Speaker 2:Yeah, and the solution, at least right now, is the batch transaction. So we actually had this same exact issue in our movement test, where people were getting loot, but the amount of loot that they were extracting from the game I think we did an extraction Like we would do the cash out, like once a week People were paying almost as much in the fee as they were in the resources that were getting from the game, which is no good. Now we obviously made some changes and that was improved greatly. But, yeah, it makes you question is this something? what's the what are you getting from all this for the costs associated with this? And that's why I'm a big fan of marketplaces. I think that on chain, marketplaces make a lot of sense. You're not. That's not something that's happening on a micro every couple of seconds, whereas movements, individual game transactions those are happening hundreds of times every minute sometimes. It's a huge problem that needs to be thought about very seriously And batching transactions is one way to solve it, but that does involve decentralization.
Speaker 3:Yeah, and at that point, like what's the point of being on chain if you're? going to be doing stuff on a database. Oh yeah, i mean everything's. You're supposed to fight this.
Speaker 1:You're supposed to provide the compelling reason. We all just agreed that this is a weird. I need to think of a good fight.
Speaker 3:To end on a positive note. So the game is a very kind of low-fi, indie, low-budget thing. Everything's open source. If you look at the game, it's like very crude pixel art. It's not like good pixel art, like Feds, like bad pixel art, but I actually think that's great. I think Web 3 games should be experimenting. They should be trying different game mechanics, trying different systems. I don't think that people are throwing money at these AAA Web 3 games Make a shooter, make a high fidelity, whatever, because they're like oh, you got to make it fun, so therefore you got to make the graphics good. No, web 3 should be trying weirdo indie stuff until they find a niche, until they find what clicks, and until then they should be doing these very low-budget indie moonshots. And so I'm really glad that this game exists And I want to see more games like this that are cheaply made and experimental, because I don't think Web 3 games will win by trying to compete with established AAA games.
Speaker 1:Yep, that makes a lot of sense to me. Alright, Do we want to call it a wrap? Sure Game? Economist cast episode 11, in the camp We should teach this to our children.
Speaker 3:Economics is major, major, major. Everyone has to major in economics, number one for personal survival.
