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
E15: Video Game Monetary Policy Real Talk
Chris wants to close the loop on game economies, while Eric compares Pikmin to Marx's Labor Theory of Value. Phil thinks Hawked is the next evolution of extraction shooter but doesn't understand why Indiana Jones needs to be involved. The American Time Use Survey is in, and... surprise, the crew plays Magic but can't decide to dust or auction cards.
Now that you mentioned, it's kind of weird we haven't had a Willy Wonka economy management game. That's actually a perfect IP.
Speaker 2:Yeah, I don't know if you want to touch that. He goes to a remote tropical island and finds these Oompa Loompas there and he brings them all home with them to work in his factory. They're short and they have like dark skin.
Speaker 1:Rereconing that in the new film, timothy Chalet held new work.
Speaker 2:But they got Pale Oompa Loompas.
Speaker 1:Uh, no, even better, they got Hugh Grant.
Speaker 2:Hugh Grant is the Oompa Loompas.
Speaker 1:Oh, oh, you dude, you haven't seen the trailer yet.
Speaker 2:No, I have not.
Speaker 1:Oh, you gotta see Hugh Grant as an Oompa Loompah. Let's start with utility. I don't understand what it even means.
Speaker 3: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.
Speaker 2:In fact, there may be a fundamental problem in modeling the Willy Wonka model.
Speaker 1:Game Economist cast episode 15.
Speaker 3:15?
Speaker 1:15?.
Speaker 3:Is that our new?
Speaker 1:theme. Hi, I'm Phil from Game Economist Consulting here on episode 15. I'm joined today by my two other wonderful co-hosts. Eric, how are you?
Speaker 2:Hey, I'm doing alright. I'm Eric with a super layer, head of economy design.
Speaker 1:And I'm also joined by my other usual co-host, chris from Stratlus, head of game economy.
Speaker 2:We have two wonderful topics to talk about today, eric you'll be talking about card games, and especially digital card games, and how they handle trading and crafting. Like some games, for example Paper Magic or Magic Online, uses trading primarily, whereas the more common trend seems to be crafting systems, like you see in Hearthstone, magic Arena and I will be talking about the new release from the Census Bureau on the American Time Use Survey.
Speaker 1:There's been a bunch of publications recently, or at least blogs, that have picked up on the fact that gaming is up. Baby, we are up, we are cooking right now. We are up to almost 1.87 hours per day on average. People are playing games. But there's more hidden in this report that I don't think is getting a lot of attention. And hey, we're at the Game Economist cast. We give a shit about methodology. I also think it's worth taking the time to talk about how the survey is actually conducted. How much should we move our priors based on the strength of this evidence? How strong is the evidence? We're going to break it down, but before we do, let's talk about what we've been playing.
Speaker 2:Got a selection of good things on sale. Stranger, I've been playing a lot as Pikmin 4 with my daughter. I love Pikmin. It's a it's dressed up as a cutesy little game, but it's actually a pretty intense real time strategy game. It's all about time management and resource management, which I love. I'm like oh, how do I optimize production? How do I? Should I be like building bridges or creating more workers or what's the optimal way to do things? And, yeah, the game's great.
Speaker 2:One of the things it does interestingly and it just will turn into a commentary on globalism which is that most RTS games you think of are like Starcraft or Age of Empires, where you're this top down bird's eye view. You're basically omniscient. You can move anywhere on the map at any time and issue commands to any unit to any degree of fidelity at any time. The main limiting factor is just your ability to click quick, which is the stereotype of Starcraft players going. How many actions per minute do they have? You know how they're spazzing out on their keyboards.
Speaker 2:But there's a couple of RTS games like Pikmin, where you control one commander but the commander has to walk around and your ability to issue commands requires being near your troops to tell them to do something, and while at first this is quite limiting you can't tell everyone to do everything at all the times it actually forces a lot more time management and thoughtfulness into where you are at any given moment. Like, for example, let's say you tell some of your Pikmin to build a bridge and the question is okay, how many? I've got 30 Pikmin. How many of them should I tell to build this bridge? If I tell all 30 of them to build it, they'll build it quickly, but then I will have no troops under my command, so I might just run around aimlessly for 30 seconds while it builds. If I and ideally what I want to do is tell, give them just the right number to build the bridge so that I can go off and do something else with the rest of my troops and by the time I come back the bridge is finished. Not too early, because if it's finished too early, that means I committed too many troops to it. And not too late, because if it's finished too late, then I'm wasting time waiting for the bridge to finish.
Speaker 2:So there's a lot of this extra decision making that's imposed with these limitations and, yeah, for me it makes the game much more strategic and less mechanically intensive. But also, I think it's time out globalism that, like in today's modern age with information technology, where you can issue commands all over the world and like you have these giants sprawling international megacorps, your ability to execute everywhere all at once and absorb all that information and act on it is super important and that's why you've got these giant hierarchical organizations, that process and that information to execute commands. And harkening back to an older time, before the telegraph, before the internet, before phones and stuff, yeah, everything was super local and all the decisions had to be made locally. Something about this game taps into that.
Speaker 1:Isn't this an allegory for, like mid-level managers? Isn't that what the main character, who's managing all the Pikmin, is? All the?
Speaker 2:workers. Yeah, he's like a freight guy who like delivers cargo, I guess.
Speaker 1:Did the Pikmin ever revolt? What is the relationship between Pikmin and Ulmar? Are they volunteers?
Speaker 2:Yeah, they volunteer. They're like ants, they're like cute ants. They die all the time, like you'll fight this giant monster and they'll just like squish 30 of them and they die. And you see their little ghost and this little plaintive, sad whale that they make when they die. But you just got to grow more of them and throw more of them at the beast.
Speaker 1:Mark's just rolling in his grave right now, man.
Speaker 2:Yeah, they do this weird thing where they're both super cute but also super disposable.
Speaker 3:I've actually been reading, not not reading, but I've been reading Mark's His. I forget like what's his main piece Labor theory, yes no, that's a good example.
Speaker 2:There you go.
Speaker 3:But it's. It's super frustrating. This is totally on topic. It's super frustrating. Just his misunderstanding of competition. Every single argument is built on the assumption that the underlying market is a monopoly, and it's extremely frustrating. He'll say things like the wage is two and the underlying cost for the to producer is one, and it's where the fuck did you get those numbers from? That's not fair. But sorry, phil, I just had to point out that it's fun to read that, digest it and come to the same conclusions that our classical forefathers have have come to in the last hundred and fifty years. Excuse me, eric, sorry enough with the socialism.
Speaker 2:No I think no, no, it's good. I find Mark's unreadable like I just can't.
Speaker 3:He's like a whiny bitch. Oh sorry he just rambles.
Speaker 2:It's so long like I yeah.
Speaker 1:Well, not only that, but he does a lot of history stuff and I actually think his history stuff is his strongest and that's not saying much. But he's pretty good at being an economic historian. It's just when he gets into the meat and potatoes of how he models things that you're just kind of what the fuck was? Labor theory of value? No, that's a really bizarre way to describe the situation.
Speaker 3:And in his defense. There wasn't a whole lot of like hardcore economic theory going on at the time. A lot of it was just like it was an offshoot of philosophy. You didn't have to write an actual like mathematical equation to show something. But so I do think, like the tools we have now, it's much easier to look back at that and say, oh, what an idiot. Whereas if you didn't have those mathematical tools you might not have been able to. You don't know about necessarily like the competitive equilibrium where marginal cost equals the wage of the worker, or sorry, the wage of the worker equals the marginal benefit to the firm.
Speaker 2:So what no Behind size 2020.
Speaker 1:General equilibrium theory was wasn't that in the 1800s?
Speaker 3:Wall. Who was the first?
Speaker 1:Wall, fuck man. This is so sad right now 1870s.
Speaker 3:Marx was big in the very similar time here. Wall, volris, volris, yeah.
Speaker 1:I didn't want to say Volris, for being wrong.
Speaker 2:I always read it as Volris.
Speaker 1:Yeah.
Speaker 3:Wall-Raisian demand classic. Yeah, no, you're right 34 to 19.
Speaker 1:3834 to 1910. You have Leon Wall rational theory of value. Good for him, yeah. And he did it independently of Joven's and Manger, so bravo to him. Yeah, I don't think we should. We should give Marx any excuses. Okay, henry.
Speaker 2:George of Georgism was like a contemporary and he like infamously, used tons of statistics and data and charts in his writing to make his point. Marx hated them. He was. He called him like a basically a socialist trader. He's you're just working for the capitalist overlords within their system and we have to overthrow them. Yeah, marx was an angry guy. He fought with everybody. He all of his contemporaries.
Speaker 3:Sounds like an angry guy.
Speaker 1:That's exactly where I thought the Pikmin conversation would go. Yeah, sorry, chris, what are you playing?
Speaker 2:But Captain Olomar, 100% capitalist, all of cares about his productivity of his Pikmin.
Speaker 3:They've got a term for it in Japan.
Speaker 2:Japanese they're called Dandori. I don't know if it's a made up term in Pikmin or like an adapted term from Japanese culture, but yeah, like it's all about time management and efficiency of deploying resources.
Speaker 1:He's an Elon Musk figure. He's got the SpaceX thing. Isn't he always wearing like a space yeah?
Speaker 2:Less of a charismatic CEO and more of just an unfortunate pilot.
Speaker 1:But he does manage a lot of people trying to terraform this, as Willy Wonka is probably closer, you know you've got to play this game.
Speaker 2:Now they're his slave labor, but they seem to be willing. Chris, what are you playing?
Speaker 3:I've not been playing Pikmin, I have been playing an economy management game we're internally play testing. So, before I get into internally play testing our game that is going to release at the end of the week and then, phil, I can finally send you somewhere where you can see what the game is, it's going to be browser based, text based, I think, oregon Trail, but with real economic consequences.
Speaker 1:Okay, so a pitch deck.
Speaker 3:I've churned away from I'm not on the BD side of the company, as you can tell I churned away from Brawl Stars. Finally, I just I don't know. I got into this loop where I had leveled up the character that I like up to the maximum level and I kept getting quests where I was forced to use other characters and I was like I don't really want to use these other characters because I like my character that I've leveled up all the fucking way for free and now the matches are getting a little too sweaty for me, a little too twitchy, and I just gave up. So I wanted to just officially put that out there. I've churned away from Brawl Stars without spending a penny, but I definitely sunk a couple good couple dozen hours, if not a hundred hours into it. Still very much playing Fortnite.
Speaker 1:Can I ask you about Brawl Stars Just as a note here, with the problem you're talking about, because this is often a problem in character based games, and we had this problem on Battlefield 2. People end up sticking to one gun in Battlefield and they do it because there is a distribution of kills that a particular gun might get for you, and so you just pick the gun that's at the top of the distribution. There's no diminishing returns, so you're just going to. You might have a garage with a Ferrari and like a Ford F-150 and some other things, but then today you're going to take the Ferrari out. There really isn't. There isn't as much situational difference to win probability as a player might expect.
Speaker 1:But there's another game design solution that I've seen batted around, which is that you could use the character that you're really interested in and you could use that to level up the other characters so you could earn progression towards those other characters. Would that have kept you in the game or are you just not interested? Like the gameplay of the other characters? It's just not interesting to you.
Speaker 3:So from a pure gamification point of view, I do think that if all my quests were focused around my character that I like playing and I was getting rewarded with coins and points and stuff for using that character, I probably would have stuck around. But I kept getting these so I wasn't getting rewarded for my quests because I wasn't using the characters that I needed to get those quests completed and I was also getting a little bit bored with this character. So if I had that gamification where I was, I knew I was still at least progressing my account because near the end a lot of the reason I was jumping in was to just make sure I was earning all my doing all my quests for that day, so that I was still building my account episode. When I do later decide to come back in, I've still got all those rewards and I can use them. Now I'm not doing either of those things Now from the point of view. So that's purely from a gamification. Press button goes, yay, fireworks go off. I feel happy inside for purely I don't know psychological reasons. But then from the progression point of view, do I care about those characters? It's possible that there were characters I didn't unlock that I would have liked more. So obviously, from a data analytics point of view, I just want to try to probably put the characters that are going to make people stick around first and typically games usually will just have the easiest to use characters be the first ones that you interact with, because they're easy to use and you're more likely to stick around. So I don't really know if there's anything that they could have done to keep me to stick around.
Speaker 3:I think if I had monetized, I probably would just feel shittier now because, like I did for Duolingo, I literally I monetized in Duolingo. I spent, I bought the entire year. I bought a year of Duolingo premium and literally two weeks later, for some reason, I just churned out hard and I didn't want to go back and it was more. That was actually because I was sick of committing to their daily quest. I was like I don't want to have to deal with your stupid, this aggressive streak in Duolingo where if you're gone for two days then you have to, or if you're gone for more than a day you have to use a special item that you have a limited number of that will extend your streak.
Speaker 3:I wish I could turn streaks off in Duolingo because I know if I'm gone for three days what's the point of going back. My streak is ruined, my whole entire account. There's going to be sad like birds when I open up the Duolingo app. There's going to be like a sad person crying oh you've left us. It's like it's anti-retention after a certain point, like day one retention, I'm sure, is great. Day three retention, I bet is like 2%, because it's like there's no fucking reason to go back. I think about Duolingo and how shitty I feel that I bought a year worth of Duolingo, probably six months left, and now we've actually bought like a curriculum to learn Polish instead of Duolingo, because you just can't learn a language. We could do a whole podcast episode on that. It's churning out of mobile apps.
Speaker 2:I have a very similar experience to you when I play these mobile apps, where at first I'm like, oh, this game is fun and I focus a lot on the quests because they unlock more gameplay content for me, like more characters, leveling up whatever and then at some point I start just doing it for the quests and then I realize that, oh, I'm only going here to complete my daily quests, but what for? If these quests didn't exist, I wouldn't play this game anymore.
Speaker 3:And then when I churn, I hard churn, and a huge reason that I did churn was something I haven't really talked about yet was the just the matchmaking. We had talked about matchmaking in, specifically in Brawl Stars and how I felt like a lot of the matches were very steamrolly. Either my team would completely steamroll the other team or the other team would completely steamroll us, and I really do think that probably a lot of it does come down to the actual matchmaking itself. You team up two really good people with one bad person and one really good person with two bad people and the two really good people are just going to steam. But actually, eric, you had mentioned some games are just steamrolly.
Speaker 3:They just have mechanics that that lend themselves to one team completely dominating the other, and I found that was the case with Brawl Stars Almost felt too, too random to me. It almost felt, if somebody's in slightly the right position, we're just going to, we're going to grab all these gyms and we're going to go hide and we're going to steamroll. I've seen matches switch, the other team will be dominating us or vice versa, and just one thing will happen the two characters will die and immediately the whole entire board flips instantly. It's like in chess when you commit a blunder, except for it's a lot harder to commit a blunder in chess than it is to have the game flip in Brawl Stars.
Speaker 3:And that was a huge reason why I was like, yeah, just going back to the quest.
Speaker 1:Is that such a bad thing? Cause I don't know if we've had this conversation on the Casper beforehand, but there's been this idea that sometimes the gamification incentives or the extrinsic incentives can crowd out the intrinsic incentives. I usually I find psychologists try to sell us that shit. I think they sell us that shit because it just it feeds into their worldview, like they, that they have a model that can explain this and economists struggle to have a model that can explain this.
Speaker 1:Every time I've looked in this empirical evidence it seems like it's the exception rather than the rule, which is why they hang on to it so tight. Like I remember the babysitting co-op not the Paul Krugman one, but the one about fines that Michael Sandell, who's a Harvard philosopher, talks quite a bit about that when they started to introduce fines rather than a criminal offense, people engaged in more speeding because they saw the fine as just a small tax rather than the moral harm. But I feel like psychologists try to sell us this shit quite a bit. But from what you're describing it sounds like gamification just worked as intended, like the intrinsic incentives ran out but the extrinsic incentives were strong enough to at least get you to a couple more days. That's the marginal value of that particular framework.
Speaker 3:That's certainly fair. I don't know what it's giving them, though. I guess if it's giving them four more days, there is a probability that I convert in that four days, and they're just really hoping for that to happen. So, yeah, I guess like mission accomplished and, honestly, you take a look at this from like a premium game point of view, like a single player. I got a lot of gameplay out of this.
Speaker 1:It's not like a. Didn't you get the initial monetization purchase based off of this, like you bought based on a gamified element? What is the value of buying a dueling go subscription? It's just keeping the streaks going.
Speaker 3:So there's a couple of bonuses. The first one is no ads, so that's like the biggest thing. There's a bunch of other stuff that they try to play up, but you're really just paying for no ads and unlimited hearts. So if you get a question wrong and do a lingo and I've always found this to be and this was we talked about dueling go in one of our first episodes and I wrote a piece on this. I never released it, but this was the thing that always.
Speaker 3:Just confused me was like you have limited hearts as a nonpaying member, so if you run out of hearts, you churn away from the map and you're less likely to come back. And I'm not saying that this is like bad or good, but I think it's awkward. If you do pay, you have unlimited hearts, so you can make as many mistakes as you'd like and you come back tomorrow, make as many mistakes as you'd like. First of all, from a learning point of view, this is like a terrible method of learning. Hey, you got it wrong five times. Go fuck yourself Instead of let's work on this. Making mistakes is about it's almost just as much about learning as getting things right. So there's an awkwardness there with that model with the hearts model in dueling go period. I think they could probably replace it with something else. It's weird.
Speaker 1:They tried to take the match three playbook, which is lives and essentially streaking. But it's not a one-to-one translation. The lives are essentially just quarters. Inserting a quarter into the arcade machine is lives, but it's also based on performance. Which is what I think makes it interesting is that in certain ways, like the shittier you are at learning, the less coins you have to insert into the arcade machine. But the streaking things don't translate because to your point, it's time limited Every 24 hours the streak can expire, rather than it being performance-based.
Speaker 1:Because when I think about streaks, it helps get players into flow states. So when I think about a flow in match three, I'm having all these matches, things are going really well, I'm winning multiple games and there's a build up. There's a build up Like you're getting a payment for your streaks. You're getting a stream of dividends for maintaining a streak, which is additional boosters in each level. But in dueling go they don't have that case. There's no carry forward, there's no propulsion. I keep going to this propulsion with game loop stuff. There's no propulsion. It's nothing is pushing you.
Speaker 3:Because there's no progression, like you don't hit progression in language learning until you're like an intermediate where you're able actually able to converse with people, but for the first thousand hours of learning a language it is there's no progression, it's all decreasing, marginal returns, or at least it feels like it, until you hit a certain point and you can start to basically hit a bunch of combos like you're talking about. But this goes back to a point, a controversial point that I have about learning in general. It's that, especially from an app design point of view, learning is like a task, it's a cost. People are doing it because they know that it's good for them, just like exercise. So this is why people try to gamify exercise. This is why people try to gamify learning. But you can't use the same playbook because people want to play a game like just to play the game. The app is not necessary to the activity. I can't play brawl stars without brawl stars, the app. I can learn a language without dueling go. So it's interesting. Dueling go has an army of data scientists, so I'm not going to sit here and disparage them, but it does feel awkward from the game design point of view to me. But that's not my top. My game is internal play test of Sage Labs, star Atlas, golden Era Labs.
Speaker 3:So what we did was developing games is hard and developing games fully on chain is extra hard. So we have the entire game built out on chain. So we have this economic game, think Yvonne line. It's very much a resource management, crafting and transporting game. So like a logistics game Traveling around the galaxy, picking up resources, finding different things, bringing them back to a central location, crafting that, turning it into something else and doing that loop over and over again until you are able to start to build up a space station civilization. So, rather than wait longer and longer to release a full, my version of this that's interactive, so it's a web based game, and we decided to release a not like fully stripped away UI. We still have UI, but it's basically the testing environment that we use to design the game from the engineering side. So it's how engineers test things. So they say, hey, when I travel from A to B, it's supposed to burn 75 fuels, let's make sure that works. So we have this whole interface that the engineers have developed for testing the game on chain. We decided, okay, let's put a little bit of some spray paint on that, make it a little bit sexier and release it to the public. So that's what we're currently play testing right now. It's satisfying to see the designs finally play out.
Speaker 3:I think that with the Web 3 community, the particular the market we're talking about for Web 3, especially for a game like this South America, southeast Asia, certain parts of South Central Europe we're talking about a pretty small, not sorry. We're talking about a potentially sizable group of people, but not what you think of as a traditional gamer. So I do think it's going to have some product market fit. We'll see, but it'll be very interesting because it is one of the more complex economic systems that will be out there. It's all on chain. It's been fun to see the data happen on chain. So we obviously have a side chain going of Solana. But when you're testing games on chain you don't execute transactions on the main net, solana main net. You execute them on a side net. I forget the technical terms, we call it Atlas net. So basically a testing environment so that if somebody earns fuel it's not actual, the actual SFT fuel, it's some thing that we're just going to delete. So it's been cool. We've been able to digest the data We've been able to see what the data look like when people make take actions.
Speaker 3:We have a bunch of different third party tech going on that makes it a pretty seamless experience. So when you have to sign a transaction, let's say I go mine an asteroid, I just I mine the asteroid. I don't have to sign a transaction because we use Solflare. We integrate with Solflare, which is a Solana wallet that allows you to permissionlessly sign transactions in the Solana network. So if you give permission to a particular website, it won't ask you to click the sign button on your wallet. It'll just automatically sign that transaction. So we've got that integrated.
Speaker 3:We're integrating with another third party called MoonPay. They allow us to make the funding of the wallet seamless, so I can use a credit card fund my wallet with Atlas Sol all the different cryptocurrencies that I'm going to need to play the game. I can hop into the marketplace, buy a few ships and we have ships on the secondary for a couple of dollars, so it's not expensive to start playing. You get in and you start playing. Some of the challenges are the network fees. Even on Solana, creating accounts requires you to pay a rental fee, a rent fee. This rent fee gets paid back to the player when they close the account. But it's not cheap, even on Solana, I think. To just start up a game, to insert a fleet into the game is probably going to be $3 to $4 of rent.
Speaker 1:So free to play entry point.
Speaker 3:It's impossible because of the rent fees, unless the company were to pay those rent fees. Now they're rent, so you do get them back. It's possible. But you're assuming a lot of risk when you take on those transactions because the price of things can go up and down. Now, if you're just buying it, it's all denominated in Sol, so it doesn't matter if the value of Sol goes up or down, it's a fixed price. But, yeah, tons of different technology being tested. It'll be very interesting to see how people take to it.
Speaker 3:I think that the Web3 community I've said this a number of times, but I think the Web3 community is absolutely starving for anything that resembles a game. So I think, while it doesn't have a sexy UI layer, I certainly think that it contests the number one game on Solana right now, which is the Heist, which is essentially a gambling game where you put forth different rarity NFTs to try to get some high payout and you have some probability of actually losing your money. Been very interesting, been fun, getting the hang of the ropes, seeing the calculations come out properly. It's a very tight game. At least for the configurations that I use for the ships. It felt very. It wasn't fast, it wasn't easy.
Speaker 3:So I hope that will give a couple of months before players figure out how to get around the system, because right now there's no probability, there's no randomness, there's no roll the dice, which a lot of games have just this. They have also skill chance. Hey, if I run into this person I might get blown up. I might be better than them, I might beat them. We don't have combat in this release, so we don't have any way of really introducing that level of risk. So that's my number one priority from here on is to introduce some sort of risk so that it's not necessarily solvable. Here's the thing I don't own any Stralis assets.
Speaker 1:You want to go in on Millennium Falcon, Eric? You want to go 50-50? Do some smug runs.
Speaker 2:I want the cheapest ship that's functional. I'm pure utility.
Speaker 3:You can get a ship from 250 right now $250?
Speaker 1:$2.50. Thank God, I'm sorry, I have Web3. I wasn't spending too much time.
Speaker 2:Well, two years ago maybe, Bill.
Speaker 3:Yeah, yeah, no, I mean, there's a lot that I could say All right, you know I'll play your game for 250. Yeah, well, like I said, you got to pay the rent as well $5.50. I've got to come clean. The economy is not closed. There's no closed loop In order to close loop. And when I say there's no closed loop, that star base crafting and that combat that's going to destroy these star bases and you're going to destroy ships, that's not in this game, yet Purely inflationary Dude this is a great book out of Web3.
Speaker 1:This has never ended in a poor final chapter. This is what I love most about Web3, is that they build up all these liabilities, and then the design paradigm in Web3 is what to do with the liabilities you're constantly building off. So you're just moving from crisis to crisis where you're building up different liabilities, and so it's like where's the value? It's those games where they have three hats in front of you and the balls in one of the hats and they keep shifting it around.
Speaker 2:Three card Monty.
Speaker 1:On my end. I've been playing Hocked. If you guys have heard of this, there was a public beta for Hocked. This is a title from MyDot Games, which is an Eastern European publisher. They did Warface, which also did crazy business in Eastern Europe, which was a first person shooter with some pay-to-win elements. They did the War Robots franchise, which most people have not been paying attention to, but Warbots has done Bonkers business on mobile and they have an HD skew which is done fairly well. They have a hit on mobile as well, called Rush Arena, which is a very bizarre evolution of the tower defense genre, and they also have a very interesting game on HD called Conqueror's Blade, which again does really well in Eastern Europe, that they would describe as free-to-play live service dynasty warriors, and they've actually pulled that off, I think successfully, and so this is their next game.
Speaker 1:It's an extraction shooter and I know everyone wants to moan, because I just came from Gamescom and I can tell you there was probably 15 extraction shooters I saw on the show floor. This is the first one that I've seen, with what I would argue is probably going to be the path forward for extraction shooters. There are so many problems with this genre right now, and I thought Call of Duty would preempt or employ the Bush Doctrine and just nuke everyone before they even had a shot by creating something successful that with such a ginormous amount of distribution they can easily parlay it into Warzone. They can get in front of 100 million players almost overnight not only just the PC console version of the game, but also Call of Duty Mobile that they could bring this extraction mode to, and they've certainly done that with Battle Royale. We're seeing a lot of games start to become almost games as a platform. I think Overwatch is doing that with a lot of PvE stuff. That's a topic for another time, but still hawked Very interesting.
Speaker 1:The problem with extraction shooters, or at least some of the challenges with them, is that they're incredibly high stakes. So if you go into a particular round you could spend, let's say, 100 hours worth of gameplay and you could lose it in two seconds, and so they introduce things like insurance, which kind of limit the amount of loss that you can have in any particular round. Of course that reduces some of the stakes, but there have been other really pressing core gameplay problems. So when you go into a particular match, it's not clear what your win condition is so when do I extract F and where is the loot throughout? These kind of like player led questions that I don't think mainstream players want to have to answer. They need to have more direction. They don't want an open world first person shooter with this sort of high stakes. It's a bizarre combo.
Speaker 1:I think Hocked is moving in the right direction in that its core loop is much closer to a battle royale and the wind conditions are much clearer. So you're going to spawn into Hocked. You're going to have some relics that are attached to you. These relics give you certain power ups, and then what your mission is? To go to five different locations on the map and collect these artifacts. And once you've collected these five artifacts and of course there are other teams that are also trying to collect these artifacts, and some of them are guarded by PVE elements After you've either eliminated those teams or eliminated some of those PVE elements, you're getting in round progression like you would in a battle royale.
Speaker 1:That's a much stronger emphasis here. And after you get those five artifacts, you then go to a final extraction location. Other players are aware that you're going to this final extraction location. There's a showdown, but you're able to extract if you make it there after you've obtained these five artifacts and you'll leave with the artifacts and they have power ups that come out of round with you. So one of the power ups might be that you reload, let's say, 20% faster. And of course they have some of the more bizarre things that have become staples and extraction shooters. So there are different vendors and each of the vendors have contracts for you and if you complete certain vendors contracts you can level up that vendor and that vendor might give you access to certain things which give you some sort of vertical progression in the game. But they've simplified the core loop quite a bit. They're taking a lot more of the battle royale playbook and adding more in round progression elements and they're also simplifying the core objective.
Speaker 1:It's not a question of when you need to extract. It's very clear what the win condition is and what you need to do to be successful. The game itself is going to be just a. It's going to fucking bomb because the IP is generic as fuck. It looks kind of like Fortnite meets Indiana Jones. It has this very weird Aztec myth kind of iconography and then it looks fucking awful. And they got these little whips which are what you use to like climb on different object and whip it. There's a pre-canned spots that you can activate the whip. But overall, I think the game design is probably where extraction shooters are going to arrive. If not, if not, that's sooner rather than later.
Speaker 2:Sounds like taking a lot of the edge off of extraction shooters. Like you said, clearer goals, clearer objectives, more in round progression, less like high stakes which, if they want to reach the mainstream they're going to have to do.
Speaker 3:Like the extraction, shooters need to be more like Fortnite than I don't know, daisy Yep I completely agree.
Speaker 1:I think they need to casualize the core loop a little bit. There's more respawning, also in Hocked. Again, it feels more like an evolution of battle royale rather than coming in from this completely new direction. And almost you were just talking about marks and economic development and one of the things that marks was big on was teleological development, which really comes from the Greeks. What is it? Thesis, counter thesis, synthesis, and I think that that was Hegel. Yeah, it was Hegel, it was Hegel, but marks was really big on this. Hegel was before marks. They're both Germans. It was a Greek thing.
Speaker 2:I don't know, I'm not a like a big philosophical historian, but the version I heard was like it was Hegel's thing. And then marks took it and applied it to the material world.
Speaker 1:I think the thesis, counter thesis, synthesis, is from Aristotle. Let's put it this way. The thesis is arena shooters. I think a lot of the thesis is quick response, high kill counts, high death counts like Call of Duty. That was the direction we were trending for a really long time with games like Battlefield. That market still exists but has been pretty much defined. And the counter thesis was really games like Rainbow Six, Siege or the battle royale genre, which stripped away a lot of that kind of activity. There's a lot of work to go in explaining genre evolution. I think we can definitely apply some like economic, historical methodology to this.
Speaker 2:First, it was like it's all about the action, more action, more fighting. And then it was like no, actually you raise the tension by reducing the action, so that any action that happens matters a lot more, but then, like Tarkov, goes way too far One bullet and you lost 100 hours of playtime, and I don't know. Maybe there's something in the middle, the cool question.
Speaker 3:Do you think that Epic is going to take Fortnite into kind of an extraction shooter direction? There's so many different sub-games, they have creator modes. It seems like it would be feasible, but I don't know if it like their whole entire. There's no out of round progression. Any progression that happens out of round is purely cosmetic. I'm curious if it just goes against there. But they seem like they're in a really good position to implement something like this.
Speaker 2:I'm certain there's a dozen creators right now making extraction shooter modes in Fortnite creative. This is actually the problem.
Speaker 1:You can't do that right now in Fortnite creative. The main barrier there's no between session progression and there's no out of round progression that you can build. So if you log into a Fortnite creative mode and even the unreal part of Fortnite creative there's no save state. You're a new player every single time. I'm not sure it's going to be fixed, but no, I think you're wrong, chris. I think like they're going to have to build this for creators are going to have to build this for their individual experiences, and I think it's going to take a lot of technical lift for them to get there. If you play Roblox games right now, they do have this, but that's mostly because a lot of what Roblox has become is games within the game and so you can have a lot of within game progression, and so I don't think technically they're in the place for Fortnite to do that and I don't think they're going to build that in the core Fortnite mode. To me, all the bets are on creative and just tooling up developers.
Speaker 2:Also, I don't think they need their core battle royale mode works. Why rock the boat?
Speaker 1:Let's talk about articles.
Speaker 2:Speaking of the Hegelian dialectic, what are people spending their time on?
Speaker 1:Let's talk about the American Time Use Survey. So there's an article from SuperUse Playlist SuperJuiced. He's a Dutch academic who was the founder of SuperData and now teaches is a great podcast called Unboxed that he does with one of his colleagues at a New York University. He has written a piece that covers the new release of the Census Bureau's Time Use Survey for Americans, which is a survey that is conducted yearly, and one of the big results coming out of this Time Use Survey is that the amount of hours spent in games from 15 to 24 year old men is up, and it's not just up, it's through the roof. So from 2003, the average 15 to 24 year old male spent about a half an hour playing video games per day. In 2022, the average male spends 1.82 hours playing games per day. That is a whopping almost 4x 3.5x increase in amount of time that males are spending on games.
Speaker 1:But not only that. There's more information that I think has been buried in this Time Use Survey that isn't getting a lot of coverage. A couple of people have talked about the increase in games, particularly among young men. I think there's a lot of political economy questions about men being lost these days and what they're spending time on, and games have certainly been a part of that story. So I think there's a political aspect to this coverage.
Speaker 1:But the thing that's been buried is that when you look at the most recent release of the Time Use Survey, the thing that dominates time on average for both men and women across most age ranges is actually watching TV. It also separates men and women by weekdays and weekends. Of course, on the weekends you tend to have more time for leisure activities, so watching TV dominates the sports and leisure category, with men and women spending about 2.5 hours on a weekday watching TV. When it comes to the weekend, on a weekend day, men and women spend about 3 to 4 hours watching TV, and when you compare that to games on a weekday, the average male and the average female are spending about 30 minutes, maybe 20 minutes, playing games. And remember, this is averages, and so the non-playing share of the population is being dragged down quite a bit. They're only spending about 30 minutes per day playing games, while on average they're spending far more time watching TV. And it would be interesting to see this as a time series. Remember when we were looking at super use data, you was looking at specifically men 15 to 24. So I'm sure there's some time series trends there, but still, overall, you're seeing only about 30 minutes on games for men and women on average per weekday, and when that goes to the weekend it's only about 45 minutes. So there's still a ton of room for us to grow.
Speaker 1:It would be interesting to see what happens when you break this down by age, because of course that's the key theory here, but again, this was also the theory for liberals for quite some time, as they look at political maps and they would see how overwhelmingly liberal a lot of the country is, and of course, they would just project that out and assume that level of progressiveness would stay with individuals, and that certainly hasn't been the case, and so I wonder if that's going to be the case with games too, is whether or not we'll see an individual over time, change their consumption pattern. That is the one thing that I think a lot of these surveys really struggle with Is they're taking averages, and they're taking averages from the same type of demographic over time. So they're saying, ok, 15 to 30 year old men, let's check in every single year with this demo and see how they're spending their time, but they're not tracking an individual over time and over their life cycle and seeing how their consumption patterns evolve, and that's a really key part of the puzzle that's missing here. Nonetheless, this is still really interesting stuff and to me just shows that we have a lot more room to grow. But I think the other thing that we're really interested in is because we're all nerds is the methodology that's used for the time use survey, and again it is a survey and I know we're usually skeptical of survey data.
Speaker 1:So what happens is that the American time use survey, run by the Bureau of Labor Statistics, selects households that have completed their eighth and final month of interviews for the current population survey, and the CPS, or the current population survey, is a monthly survey conducted by the US Census Bureau, and what will happen is that the ATAS, or the American Time Use Survey, will conduct these interviews using computer assisted telephone calls.
Speaker 1:Respondents are asked to report activities they did from 4 am on the day before the interview until 4 am on the day of the interview. So it's a very tight time window with which participants are asked to select the activities that they engage in. That to me is really important. But again, it is survey data, it's not shareware that they've installed on your phone or something else to that nature. Respondents are asked to report on activities they did from 4 am on the day before the interview until 4 am on the day of the interview. The interview records the activities, the times the activity started and ended, where the respondent was and who else was present. The activities are then categorized by respondents into more than 400 detail activity categories. Each completed interview is then assigned a weight that reflects its total share of the population. These weights are used in the production of the ATAS estimates. So I assume what they're doing is they're taking your demographics and just waiting how much that demographic is representative of a particular quantity.
Speaker 1:That last bit is doing a lot of work.
Speaker 2:Yeah, it is doing quite a bit Responding to eight monthly surveys, completing all of them, and that's filtering this population down. And then they're responding to a telemarketer call to document what they did, so like you've got a crazy bias sample at that point. And they're doing that, waiting at the end to try to remove the bias. But I don't think who the fuck responds to telemarketers these days.
Speaker 1:See, that's the thing, though. That's why it's the eighth and final month. These are households that are already pre-selected. In some way, they've sown interest in being a part of this. It's not a random call.
Speaker 2:And if I don't have time to respond to surveys, I've got to play video games.
Speaker 1:So I guess the question, though, with that bias is what direction the bias would float then People who are more willing to respond. What does that do to the error bars? Does it have a bias in a particular direction? Because if it's just random, that's great. That's what we look for. Economist metricians are like fuck yeah baby.
Speaker 3:I think Eric just said what direction the bias is. He was like I don't have time for a survey. I got to play video games.
Speaker 2:What we saw from previous things. People who tend to be more pro-social, tend to be more what's the term? Civically oriented, respond to the government like willing to be tracked, willing to help. This survey giver People who still use telephone and probably have a landline. People who probably engage in more passive entertainment, like television, instead of active entertainment, like video games. Probably people who have lived in a stable household and lived in the same residence for a long period of time don't move very often. Yeah, just to name a couple.
Speaker 3:I've worked a ton with data like this, the CPS, the ACS. I've never dived over into the leisure activity I would really like to. I'm curious to see if you can match these individuals. I assume you're able to match the individuals and the ADIS up with the CPS IDs. You can cross-reference those. Talk about this, perhaps the selection bias, but also even attrition.
Speaker 3:You take a look at a longitudinal study. This is where you actually are able to observe a cohort as they move through time, whereas the CPS is a point in time. The age 18 to 24 this year is a completely different cohort than 18 to 24 last year. You're not really able to see how these cohorts are growing over time. In a typical longitudinal study you'll see significant attrition. It makes it really difficult to study those cohorts. The NLSY, the National Longitudinal Study of Youth. So there are two different versions. There's the 1979 version where respondents were in the 16 to 20 years old or something like that in 1979. Then there was also another one in 1997. The results of which it's difficult to compare the two because the time periods are so different, of course. But it's really difficult to work with these types of data because there's so much attrition. If you're trying to look at later life outcomes. It's really difficult because you've only got 50% of your sample left.
Speaker 3:I looked at it interestingly this is why I bring it up. I worked with a longitudinal study looking at lawyers, the attrition of the lawyers. The longitudinal data set was far greater than the national longitudinal youth study in NLSY. The national longitudinal study of youth is not even as large as a five-year study of lawyers. I think it really does come down to this what is the opportunity, cost, of time for these individuals? Most of economics is built on these surveys, especially empirical economics. Labor economics relies on these longitudinal studies, especially the CPS ACS. I don't want to be too critical of these studies. I think they're more useful than they are not and also, without them, a lot of economics.
Speaker 2:You're saying that the lawyers Basically, the busier you are, the less likely you are to respond, the lawyers had.
Speaker 3:I recall correctly, this was the survey called the. It was put out by the American Bar Foundation and it was the. Oh Jesus Christ, this was my dissertation. I forgot what the survey was. But yeah, it was about a five-year survey, five to 10-year survey. At the time there were only three waves and they do the waves every five years.
Speaker 3:So the beginning five-year mark, 10-year mark and by the third wave so this is within 10 years of graduating with their law degree I was at more than 55% retrition. So only 45% of the candidates were still in the pool that was originally selected. So it makes it almost impossible to study outcomes Because you don't know if they have treated out or if they left the profession or what happened. So it's tough because you do have to answer Phil's question with respect to what direction is bias going. You have a bias directional, you have a question of bias direction, but you also have a question of distribution of that bias. So the bias is more heavily weighted in the higher income distributions because people with higher opportunity cost of time are going to treat out, more likely or be less likely to participate in the survey. Now, the ACS and the CPS are not longitudinal studies. So you don't necessarily have attrition problems, but you do have selection bias. I don't know how big of an issue it is. I'm sure somebody's looked at it before.
Speaker 1:Directionally. The numbers seem to make sense and I did pull up the average hour spent per day by age, which to me is the key sub-distribution. And when it comes to watching TV, it's about what we'd expect. Participants who are older tend to watch more TV and the effect is rather dramatic. So if you think about someone who's 15 to 24, they spend about an average of two hours per day, whereas if you're talking about someone who's 65 and older, those boomers are doing 4.47 hours per day. So it's more than double.
Speaker 1:But when it comes to playing games, the trends reverse. So the younger that you are, the more you tend to play games, although there's a very bizarre data point where 45 to 50 year olds apparently spend 0.08 hours per day playing games, and then it actually rises from 55 to 64. And then it rises again from 65 and over. So there's some bizarreness going on there. I wonder if, just like people who read the New York Times, got hooked on Wordle and it's an all seriousness. I do think there's something to that and I also would argue that we were just talking about how the survey was conducted. I'm curious what would happen if someone said they were playing Wordle. How would the interviewer choose to categorize that Because there's a lot of leeway that the interviewer has and how they choose to categorize certain information.
Speaker 3:Because here's the thing it depends on what they say.
Speaker 1:So does the participants say I was playing a game? Do they say they were playing Wordle? Do they say they were playing crosswords?
Speaker 3:I think crosswords, cards, chess these all count as games in this survey.
Speaker 1:But it depends on.
Speaker 2:I was going to say old people at the senior home playing card games.
Speaker 1:I think there's still a little bit of mystery on who says what and what level of specificity they're asked to say things. I think there's probably something to that.
Speaker 2:Well, they said there were 400 categories and my guess is eachor 400 items and each item corresponds to one of these categories is my guess.
Speaker 1:But you'd still have to match up. There's still larger philosophical questions. I guess is one way to put it, on what is a game to crosswords count? Does someone choose to report that they spent time reading the New York Times, or do they choose to say that they played a crossword? And how does the interviewer choose to categorize that information? Do they pry a little bit deeper? Yeah, I spend four hours on the New York Times per day. Okay, you've spent three hours on fucking Sudoku in the New York Times. That's what you were really doing.
Speaker 2:Right, yeah, I see what you're saying. Depending on what the respondent says, it could be either reading for personal interest or playing games.
Speaker 3:Do you guys know the population waiting? So all these surveys come out with a bunch of different waiting options. So they have variables associated with each individual that wait, either by their race, ethnicity or potentially other types of demographics, and there's typically a couple of different options. Do you know if the time use survey automatically integrates one of those waiting procedures or do they have that kind of on the outside? So the charts that we're seeing that the BLS has put out, are those weighted or unweighted? Do we know that? I think they're weighted.
Speaker 1:I'm almost positive that they're weighted.
Speaker 3:Yeah, I mean it would be weird if they presented it unweighted.
Speaker 1:I think the key data point that I wanted to end on here, or at least start the discussion with, is that for 15 to 25 year old, or 15 to 24 year olds, they spend around 1.15 hours per day playing games, and again, that's by and far the large cohort, they're spending the most amount of time playing games and again, as we've been talking about as a time series, that's gone up as well, but still, when you look at the same demographic, they're spending double the amount of time on TV. And so to me, the question has always been and Reed Hastings famously said Fortnite was Netflix's biggest competition and ultimately, that they were all competing for time, because time is the one scarce resource. That is the Lionel Robbins definition of economics no matter what, you're always constrained by time and that's what, that's the most finite piece, and Reed was really concerned that they were going to lose out on this time, and I'm sure he was looking at time surveys like this. And when you look at the growth rate of games, that, to me, is really the key is that games are growing and that TV is potentially not growing or not growing at a faster rate, and so will games ultimately overcome TV. If I was Reed Hastings. I'm sure he was shitting the bed thinking about it and eventually he decided if you can't beat him, join him. The TV was always winning, but at the end of the day, he's fuck it.
Speaker 1:Netflix should make games and, to be honest with you, we've been talking a lot on other podcasts like what is Netflix's strategy in games and, to be honest with you, I don't think it's that complicated. I think they look at time surveys like this. They publicly said they're an entertainment company, they're not a tech company, and so what do you want to do if you're in the business of entertainment? You want to serve how people are already spending their time. You want to serve them content and entertainment plugs into that. And if they're spending more time playing games, great, we'll serve them more games that plug into what they're doing.
Speaker 1:But I would say the other thing that we have over TV is how we monetize that one hour and how we've monetized that marginal amount of time. We think about our poop per hour, which is something that doesn't get a lot of coverage, even within studios. I very rarely see that metric reported or arped out per hour. Any sort of hourly metric games come out on top. We kill it when regards to monetizing time are really effective at monetization.
Speaker 1:And so not only do I think that interactive entertainment is also going to start to get closer and closer to TV, and to me the singularity moment is when that time you survey, when we start to look at those 15 to 25 year olds, they end up playing more games than they are watching TV. That is when we've really crossed the Rubicon. But from what I've seen, it actually seems like we're farther away from that than I think many in the games industry seem to suspect. We've been drinking a lot of our own Kool-Aid work. We're still two to one TV over games, even though we're gaining ground, but it could be another 20 years before we're there.
Speaker 2:I'm curious if TikTok counts as TV. I assume it does.
Speaker 1:They have socializing and communicating as a separate category here.
Speaker 2:Yeah, that's a good point.
Speaker 1:That's a good point. I think we need a methodology breakdown. I wonder if we get someone from the BLS on this podcast.
Speaker 3:I 100% with respect to the CPS, they have a massive occupation and industry breakdown. So when the respondents respond with their occupation or their industry, they have two different categories. You could be a white collar worker for your occupation, but you work in a blue collar industry. So if you work at a caterpillar plant, like one of my buddies, but you're a manager, you're white collar occupation, blue collar industry. Those occupational distinctions have changed dramatically over time and they've had to create these very uncomfortable, horrible to work with crosswalks trying to connect data from 1970s to data in 2020. So I think that the same revolution needs to happen with respect to these activity breakdowns, because the same type of thing is happening.
Speaker 3:Obviously it's not employment, so it's not as easy to observe. I know whether you're employed. I can go ask the government whether you're employed. I can't ask the government what kind of media you're absorbing. But the fact that horseshoes is included in the fucking games category is wrong, because horseshoes and video games are just too different. So I do agree. I think there's a big kind of methodological transformation that needs to happen to bring these metrics into the 21st century.
Speaker 2:Let me close this section on the anecdote. So I ran a similar how do you spend your free time? Study at Riot, not anywhere to the scale of the BLS. But I asked three questions. I asked what other video games do you play? What's our closest competitor, what else do you do in your free time and what constrains your free time? That first question what other video games do you play was super useful because we could tell oh, fortnite got really big. They're cannibalizing our users. The second question was the funniest. It was what else do you do in your free time? And the top responses were watching TV, masturbation and hanging out with friends.
Speaker 1:I want to say masturbation was a strong response. Oh man, the big three, the holy trinity.
Speaker 2:They're not getting anyone saying masturbation on this survey response.
Speaker 3:Does masturbation count as watching TV, or is that relaxing and thinking?
Speaker 2:I would call it if horseshoes and League of Legends are different, then I'm going to say porn and TV are different.
Speaker 1:Can you double count on the survey? You're doing both at once.
Speaker 2:You have more than 24 hours. It's a good question.
Speaker 3:masturbating while playing games Did you have like categorical responses, or did you just let them write?
Speaker 2:in. I was free tax. What are you playing?
Speaker 1:with those hentai games on Steam.
Speaker 2:Chances. I think people would categorize porn games as porn rather than games, but I'm just guessing. But yeah, like you, said, it's a.
Speaker 3:We're talking about porn, and I think this makes me think of shared activities, or at least the opposite of shared activities within a household. Video games are like, especially now, single-player games. You can't in most contexts you can't play I can't play a video game with my spouse simultaneously. Almost every single mainstream video game is solo. Only One of the days of GameCube in 64, we'd have four people plugged into the same console playing with quad split screen.
Speaker 3:That to me I've said this before on the podcast and I stick by it I don't see watching TV and games as substitutes.
Speaker 3:I see them as compliments, or at least more so compliments than substitutes. I'm not going to and maybe I'm wrong there, but I'm not going to play video games for three hours because I want to watch a television program with my wife or I want to watch a movie with my wife and we can't necessarily get that same experience on a video game because we can't play together. So to me that's a huge part of this and I even wonder if the increase that we've seen in males spending time playing video games is partially due to if some of the explanation there, if you were to run a regression, for example some of the explanatory variable is whether or not their spouse plays video games. Friends who play many more video games than I do, and it's partially because their spouse plays video games too, so they're both sitting in the same room playing video games simultaneously maybe different video games, but that I would play a lot more video games if my spouse played more video games.
Speaker 2:Yeah, social gaming. I've been looking at card games. I've been consulting on Skyweaver a little bit, which is a new Web three card game but, and there's an interesting topic of how cards are obtained and monetized and there's two main methods. One is I'm going to call trading. This is what you see traditionally in, like paper magic or Pokemon cards, where you literally trade cards with other people, and is replicated online in some games like Magic Online and Infamously Artifact by Vell.
Speaker 1:Long live artifact.
Speaker 2:And then there's also crafting systems, and these crafting systems seem to be the dominant form in digital games. Hearthstone is the probably the most famous progenitor of this, where, rather than being able to trade cards, you can take the cards, you can dust them, so you basically reduce them to some soft currency, and you can also craft cards by spending soft currency to make specific cards, and there's quite a big price gap between those two, and Magic Arena has taken to the system. It's a little different, they use wild cards, but that's basically their form of craft crafting material, and it seems to be the most popular way to do digital, and so I want to talk a bit about first, why do we have crafting and trading, what are the effects on modernization and engagement, and then also, how does it change the way players play from like a game card meta perspective, which I think is often overlooked, underlook. Is this same as overlook?
Speaker 1:Anyway, I don't think you can underlook something.
Speaker 2:You look under the table. When it's on the table, I don't know. So yeah, so why do you need trading and crafting? So these card games sell the content or cards in booster packs, or I'm just going to call them loot boxes, because that's what they are. You get random card, you pay three dollars, you get a bunch of random cards.
Speaker 2:But players need ways to get specific cards, especially in card games, because the cards are often not substitutes for each other. There might be a specific card that fulfills a specific function and you need it for your deck. So I like to say a lot of gotcha games where you can substitute your five star gotcha role. You can substitute some other character in it mostly does the same thing. So you need to give players a path to obtaining specific cards. And if you only let them open loot boxes, sure, the average price might be reasonable and might be in like the fifties or hundreds, but the median or the 80th percentile price gets like absurdly high, because these are like for newly distribution or for newly buy an hour, and so trading is one way. Obviously you could just pay someone. Someone's got the rare card, you give them 20 bucks for it, or crafting offers a guaranteed path. These are important systems to have to support these card game players to be able to build the specific decks that they want to build, because that is such a core part of the play.
Speaker 2:Now, in paper you cannot stop people from trading. You can't, like soul, bind a magic of paper card to somebody. Trading is the way to go, so that's gonna have their hand forced. But in digital we were given the option of making trading systems like in magic online, or crafting systems like in Hearthstone, and it seems like people have largely chosen crafting, and I think there's for this is for a couple of reasons. One is just on the gameplay side. You can make free to play progression work much better with crafting and account walking content than with trading. If you can trade your content, then you can grind and farm resources and then sell it and you've got the runescape gold farmer problem where it inflates and devalues your cards. And if it's tradable, you also have to be way less generous with what you're giving out.
Speaker 2:It's much easier to onboard players using a free to play, played up use play time to progress system where you give them cards over time, you allow them to build their own decks and because everything is account locked, it's not like they can just sell it off.
Speaker 2:So from the standard free and it fits way cleaner into the free to play progression model in other games like League of Legends. And then on the monetization front, and I think this has been hotly debated in Web 3, but I land pretty hard on one side, which is that when you allow for resale, you're undercutting yourself, and so you have to either take a big chunk on the resale market or have your initial prices, primary sale prices, be much higher, or both. By account locking things, you don't get these resales. And again, magic, I think, is the best example here, where their old product, online use trading, their new product, arena, uses account locked stuff and they don't seem to be looking back, and this is probably the best indicator we have. Obviously, we don't have a clean AB test here, but and generally, most popular card games use crafting system, be it Marvel, snap or Magic Arena, and most trading based card games like Artifact didn't do that well, although, you know, maybe for a game.
Speaker 1:Does? Do you know if the Yu-Gi-Oh? Do you know if the Yu-Gi-Oh dual links are the Pokemon digital version? I don't know about.
Speaker 2:Yu-Gi-Oh, I played the old Pokemon version. Everything was account locked. You just had to buy booster packs and they had a crafting system.
Speaker 1:So it's really a transition from TCG to CG.
Speaker 2:Yeah, the trading card game to collect a gold card game.
Speaker 3:I just wanted to be clever.
Speaker 2:Yeah, I guess that's why to describe it.
Speaker 3:Yeah. So it's important to note that one of the big things that came out of random packs was the entire place play style of unconstructed or limited formats in Magic Gathering, for example. So without those physical packs that people unboxed, those limited formats and limited formats are where you have a random set of packs and you unbox those packs in front of yourself at the tournament in the game, like part of the game is actually building the deck with a randomized set of cards. Now you can do that by pre-constructing random packs. But the bundling of these loot boxes, basically of cards, was actually like it fueled an entire play style. So you had constructed and you had your limited formats, which was super valuable for Magic Gathering back then.
Speaker 3:It was a huge monetization effort as well because or monetization strategy for them as well, because players might be more interested it's almost got that excitement factor. So people like to buy them. But having two completely different game modes was massive. I would say limited. I would say limited is probably a 1.25% of the games that were played. And now it's really easy to solve in digital because you can just fabricate, you can pre-construct those limited packs, those random packs, so the digital format doesn't have to worry about this.
Speaker 2:Yeah, and digital also enables asynchronous drafting. Like Hearthstone's Arena Runs, you can pause at any time or Magic. When they had the AI drafting which I know the hardcore players are all about. No, I got a drafting. It's humans. I got to see what they're picking. But you can definitely make a lot of the fun of limited in digital and remove a lot of those kind of white quirks.
Speaker 1:And you can do both. You can have crafting and you can have marketplaces, if you want, but the crafting essentially just becomes like a price ceiling.
Speaker 2:Yeah, I would think the. So I think the way to think of crafting is actually it's just a fixed price soft currency store where you can. You basically, if it's 80 dust for a common, it's 80 dust for a common, and all the commons are 80 dust, all the rares are 200 dust, all the legendaries are 1000 dust and you have a small chance of opening the card directly when you open packs and then mostly you're buying at a fixed price.
Speaker 1:So if we were to talk about how dust is sourced, though I think that's where things get interesting. If I remember correctly, in Magic of the Gathering Arena you get dust once you've collected all cards. You've collected all the cards in a given set, so a pack has a series of cards that are associated with that pack. It draws from a set, and once I have all the cards in a set, if I open up that N plus one pack, then I tend to get I believe I get crafting currency, and I think Hearthstone is similar, so it's almost as if the more money I've spent I don't know if I'm correct in that it's a little bit different.
Speaker 2:Okay, why don't you explain the arena system, chris?
Speaker 3:So for arena, if you get more than so, you can only ever have four of a kind in a single deck in Magic of the Gathering. So any, especially in arena, in a digital format, you don't need to have four different sets of four different. If you've got two decks that use four of this card, you don't have to have eight of them, you just use those four. So every additional card you go over, the fourth, one gets turned into gems and gems are used to play into the different competitive formats of the game.
Speaker 3:So Limited is a super popular version of play in Magic of the Gathering arena, and as a reward for playing Limited you get packs, and these packs are they're not as big as regular packs in physical magic I think there are five cards in a pack in MTGA and so people will. They'll unlock those packs. Those packs will potentially give them more gems because they've already got a four of kind on that particular card, and then they'll also have some probability of getting a wild card, and the wild cards can be redeemed for any card of the specific rarity. So a mythic wild card is the most valuable card you could possibly pull because it's one of anything.
Speaker 1:So I don't know. So it's not exactly a fixed price. It's still a variable price based on loot box opening. There's an expected price.
Speaker 2:I would say so. In Magic, the price is one wild card and there's, and then plus, like you said, the there's a chance you open it and if you get more than four of a kind, you get the gems which get you access to more wild card potentially.
Speaker 3:I think somebody said Somebody did an analysis. I could be totally wrong and I wish I actually. Spotify has comments, so if you know the answer to this, put it in the comments. But I think the cost of a pack in MTGA is lower If you think about the per part, per card pack, because you can buy packs. You can buy like you could spend $100 and buy, I don't know, it's 90 packs or something. So I think I'm almost certain. At least last time I played it was $1 per pack, so it's like $1 per five cards. So it's actually cheaper than physical magic, and a lot of that is because you don't actually have the ability to resell these things, or at least that's, they would never come out and publicly say that. But that's part of the reason, which I think is interesting.
Speaker 2:Hearthstone has an even simpler model and I think it's copied by more games which is Any card can be dusted. There's a dust value and a craft value and, for example, for a common in Hearthstone, I think you can dust it for five dust and you can spend 20 to craft it Something like that and every pack. So you can think of opening a booster pack as having an expected dust value. Let's say the expected dust value is like 50 dust and it's basically every time you spend a dollar you're just getting 50 dust that you can spend in the store. However, they give it to you as cards. So there's a question okay, why give it to you as cards? One, it's more exciting. Two is there's a small chance you get the specific card you want. So there's that loot box to get lucky high. And then, third, it also creates an endowment bias where people are less likely to dust cards, even bad cards, because they got it as a card which can increase the spend depth, and so you've talked about the gameplay implications.
Speaker 1:And just to remind me so is it the case that when we compare an open marketplace versus a crafting system, that the open marketplace will tend to have a more diverse meta because there's so much more variation in price, because it's subject to demand, whereas a crafting system will tend to have a more uniform distribution of cards in a particular deck because the prices are also uniform and so people can converge on quote the optimal solution more frictionlessly?
Speaker 2:That's right. There's no sort of price mechanism to balance out the supply and demand, like in a given magic set, for example. There might be one mythic that's way better than the rest or is in use, is used in way more decks than rest. I think of a card, when I was playing a little bit, called Glory Bringer. It's like a 4-4 dragon that could be put in any deck that was running red, it was aggro, it was control, it was midrange, it was running Glory Bringer, and so this card is an extremely high demand and so the market price was extremely high.
Speaker 2:However, in MTGA, the cost is one wild card, rather than having a fixed supply. There was a fixed price and this was the best mythic I could get for my one wild card. So I'm going to get this every time until I have four of to use in all my decks or whatever. And, yeah, there's no longer that trade off of. Oh, the deck I want to build is very expensive, but if I use these cheaper cards that I think are the market is undervaluing, I might be able to come up with a new deck, a new type of strategy that utilizes cheaper cards and still is effective Without the price mechanism. It just yeah, it removes that innovation. How strong is that innovation? It's probably mild, to be honest, but it is something that was lost along the way.
Speaker 1:So here's what I would challenge both of you, with both of the Web3 industry folk. You have recent card games moving to more of these controllable progression systems, and I think that's also another piece of this is just control. Like marketplaces are an outcome of just physical good. There's going to be buying and trading of physical goods. It's very hard to place a lot of restrictive property rights on those. So it's almost unintentional that there is a match at the gathering trading market and Wizards of the Coast has never acknowledged it, which is the ironic part. They never really acknowledged that this is an actual thing. That happens. It happens outside of their purview and, as you mentioned, chris, you have to compete with the secondary market. You're competing with your own goods. Isn't this a pretty damning conclusion for Web3 that, like marketplaces, are a taxier rather than a subsidy? The only benefit seems to be the gameplay stuff, potentially the gameplay stuff of having more diverse decks. But again, the reason they're more diverse decks is because cards are more inaccessible. This seems like a pretty damning conclusion for Web3.
Speaker 3:I mean, I will say I think that at least it's a lesson in that there's a very sophisticated and thought out reason why Magic the Gathering, or, sorry, wizards of the Coast doesn't try to monetize on secondary sales and they also don't allow people to just poof physical cards out of nowhere. You'll notice that the monetization strategy changed dramatically when they went from an environment where you can earn cards in the gameplay system so in MTGA, from when they were, you have to the gate is that you have to purchase a deck of cards. So to me there's a lesson to be learned there. Look at what Watsi is doing and look at them because they're the most successful card game of all time and try to maybe, or sorry, magic gathering Okay, sorry, watsi Words is at the coast, wotc.
Speaker 1:I wasn't in with the cool kids Watsi, it's a magic, the gathering thing.
Speaker 3:You wouldn't understand, phil. You don't listen to enough MTG podcasts.
Speaker 2:Before D&D at the time.
Speaker 1:Dude, I've done. I do trust me, man. I paid my dues. Wizards of the coast knows Just open up, open up my account transaction history. But all that to say.
Speaker 3:I think there's a big friction in web three right now on okay, do we monetize at the entry or do we monetize in the marketplace? Do we have to charge people an entry fee through a ship, buy a ship for 20 bucks and then you can play the game, or do we monetize on the secondary market? I do think you have to make a decision there. I think that if, in terms of primary monetization strategy, if you're trying to make a billion dollars off of a marketplace when there's already a fixed cost of entering the market, there's just there's a, there's a. There's a problem there. Likewise, basic Okay. This is basically why I don't think like the secondary monetization strategies is going to play out, especially with the news about open sea. I think it was just eliminated transaction revenue, royalty fees, I'll say I I pretty strongly agree with you, phil.
Speaker 2:I think that in general, the non-tradable soulbound cards work a lot better in digital. One huge reason, as Chris mentioned, was the free to play engagement progression issue. How do you get people on board to this game and the expectations are just different. People expect to pay money in a paper game. They don't expect to pay money in a digital game.
Speaker 2:The other is that, like in paper trading, there's a ton of capital depreciation and there's massive marketplace frictions and I think people hugely underestimate those in Web three. A high marketplace fee in Web three is 10%, but if I wanted to sell a bunch of my random cards and from my trunk, I'm probably paying way more than 10% in terms of the cost of finding them, packaging them, shipping them, finding a dealer. That person pays shipping fees. They take a tax on top and pay me probably made a close to 20, 30% fees on that, not to mention the capital depreciation of the cards that get destroyed or lost. The quality mint condition versus like heavily used, degrading the value of the cards, reducing the stock, thus promoting more primary sales by Wizards of the coast or Watsi.
Speaker 1:Watsi.
Speaker 2:Yatsi, but I do think there's actually. There is an interesting thought experiment, though, that I wanted to call out, which is that, essentially, do you do fixed price or fixed quantity based sales, and, like I said, crafting systems are essentially fixed price and these trading systems are like fixed quantity. And under what situation could a fixed quantity sale method work better?
Speaker 1:So the example, is going to end with that shit man, that can of worms. Fuck dude, that's some real meat, that's some. There's some meat in there, cause the answer is none. You use the Taylor rule and you correlate it with some sort of metric. You crazy, you crazy. Deflationary web three people. What is that?
Speaker 1:Tell me about that this is the thing that always has driven me nuts about any web. Three thing is that when you're thinking about, like choosing supply or choosing price, whatever you're choosing is like your scarcity mechanic. Like you want that to be correlated with some relative idea of demand. Like you don't want to set that in a vacuum. If the Federal Reserve just came out and said, hey, look at, there's a fixed amount of US dollars and we don't care about any changes in productivity or GDP growth or any of those things, that's a recipe for a deflationary economy. Like you want the money supply to grow in a court to maintain that stable price level. And again, it may not be the goal that you want a stable price level, but you may want to get more people into the game. And so if you fix price or fucking around with quantity in a card game, that means there are going to be less people who are able to play because there's just less goods in circulation. So Skylanders came out and said fuck it, we're only going to do 10,000 cards ever, you know.
Speaker 1:Think about what is the deck size? Let's say the deck size is like 10. Let's take 10,000 divided by 10. That's the max number of decks, which means there's an effective, fixed number of players who can play the game. You'd want to correlate, like how many of these packs you're releasing or how many cards you're releasing, with just some metric that moves something dynamic. This is how the Federal Reserve keeps interest, or keeps tries to keep prices stable at their monitoring of the economy. And if we're getting more productive, you need to produce more US dollars to keep the price level stable, and Web 3 just doesn't seem to get that, which is why I think so much of Web 3, including the tokenomics and the money supply stuff is so fucked up with this fixed quantity stuff.
Speaker 2:Well, hold on, magic does this, they print off. They're done printing.
Speaker 1:Champions of Coming Out? Not true. Not true Because what they can do is they can ship more packs to stores. They also can do reprints, and they can, which they frequently do.
Speaker 2:They can ship more packs to stores, but they don't print more packs Once, like if you take an old set like Miradin, they're done. Making Miradin cards? Yes, they might.
Speaker 1:That's true, but in the context of that set being released, if they find out that, like the Lord of the Ring set was a really hot seller, they'll sell more packs within that set being sold. It's true that they're not going to bring back. Actually, I think they did bring back Miradin. They did reprint them.
Speaker 2:No, they made a new set.
Speaker 1:They made a new set and they reprinted those cards Not all of them, but I'm saying that there is some notion of producing more cards that they are able to set demand. They're able to set demand, let's say, one period out and if you are in crypto, you most likely are signing a blood contract for some sort of fixed quantity before the project's even started and you have any idea what demand is. You should have some sort of discretionary power to reassess what you want to do with supply at some sort of period would be my argument.
Speaker 2:So Wizards, he does that. I am totally down with that. I think you can do fixed quantities for sets and you just print more sets, like I'm not saying fixed quantity of cards, period, never going to make any more cards ever. I'm saying like okay for this for set two. These are the cards. Is this many of them? If we want to increase the supply, let's say there's a certain utility card that's very popular. We'll just do a functional reprint in a future set, like I'm done with that.
Speaker 2:But yeah, I guess maybe it's more of the short-term policy of okay, in this next period, are we going to sell this card for a dollar a pop, or are we going to print 100,000 of these cards and then let the market buy them as to choose.
Speaker 3:Phil, I think it's pretty easy to solve the problem with Web3. It's just like you can have a new mint, you can have a new season, you can have a new version, just like Wattsy does with, or like Magic does with different packs or different sets and different blocks. They can churn through new content. The only issue with that and I think why it appears to be a problem is because of the core tenant by which most Web3 players play oh, I'm going to buy this asset and it's going to hold its value over time, and it's going to become even more valuable over time, which is completely goes in the face of what we're talking about. If you want to have a healthy game economy where you're growing with your player base, oh, we're going to release more. We're going to mint 20,000 this season instead of 10,000, because now we have more players. That's not good for those speculators. Unfortunately, web3 is riddled with speculators.
Speaker 1:Again. I think the Federal Reserve gives us some answers here. I totally agree with you on super high level is the more discretionary policy you give yourself, or more discretionary operating room you give yourself, the less price stability there might be in the long run, because, if I know, there's only going to be 10,000 of this particular card and you're not going to do a lot of substitutes. There's a lot of things you can do to guarantee some level of uniqueness of a particular asset ahead of time. That makes a lot of sense to me and I can understand that there's some sort of trade-offs. But if you don't give yourself enough discretionary policy, it makes it very hard to operate. You can't react to changes to supply and demand, and God knows that we can't get this shit right. As economists we can barely predict GDP growth one quarter out, and now we have to design an entire fucking economy like three years before the product has even shipped. And now we're going to have a blood oath with ourselves on how many ships we're going to make.
Speaker 3:Fuck, what's interesting? I will say what's interesting, at least in Star Atlas, is we've definitely gotten into a more. We've gotten into almost a social contract with our players that, like we will make this work with those original promises. I think that there's certainly a whole slew of issues that comes with creating a white paper, having a bunch of promises that are very hard to keep, but now it's almost like the players just the value is the trust in the developer, almost like the studio that's developing it. I trust that they're going to make it make sense and we try to do that, and we try to do that with transparency and by making good decisions that make people happy.
Speaker 1:I just wonder if the game I think to me it's again going. This is really what I wanted to say when I said going back to the Federal Reserve stuff. But it's really about like setting expectations and announcing expectations and having expectations that when you do make a change or you do reprint something, that there is some sense of an expectation that this is going to happen, which you can observe by prices being stable. When you make changes, like they know you're going to do a reprint of these things. They know when things become unbalanced, your card is going to be banned, so the demand for it is going to be dropped. So it's about being predictable. That helps keep prices stable and people from not getting pissed off.
Speaker 3:Now the Federal Reserve is able to do that because they have an established economy that's existed for several hundred years.
Speaker 1:But sure, but they govern something. When you're in Web 3, when you're in game design, you control it Like we control every single part of it. They can only govern. Remember they don't set interest rates. They govern interest rates which we've effectively said one to one, but they can only push curves around. We can literally create them. Yeah, all right, cool beans, let's talk soon. Sweet Peace Talk soon Peace, see you guys.
