Episode Transcript
<cite>Chris:</cite>
<time>0:00</time>
<p>I, I used to have a ton of swords, but it was all like mal ninja shit. It's just terrible quality. I still have a few because they're like Lord of the Rings and I love Lord of the Rings. I've kept those ones. I am considering in the new house, having a nice display for naci, which is like one of the big swords in the Lord of the Rings. But no, no plans to acquire any new swords,</p>
<cite>Phil:</cite>
<time>0:19</time>
<p>This is a weird thing we share. Yeah.</p>
<cite>Eric:</cite>
<time>0:21</time>
<p>I just wanna say I don't own any swords. My wife owns three swords. They're all wooden Japanese swords cuz she's really into historical Japanese culture. Not weeb she's not anime stuff, but like his, like to Tommy mats and sushi and stuff. I have butterfly knives, which is pretty mal ninjak. Do you have any kins? Yeah. No, shes no kins, but yeah, I've got several$500 butterfly knives</p>
<cite>Chris:</cite>
<time>0:40</time>
<p>what do you use those</p>
<cite>Eric:</cite>
<time>0:42</time>
<p>Butterfly tricks, you can do that over your thumb and stuff. Yeah I guess one of my hobbies is like a lot of dexterity toys, so I think you bring that</p>
<cite>Phil:</cite>
<time>0:48</time>
<p>here. I would've loved to see that. I thought I brought a yo-yo. You wanna see some yo-yo tricks there? Oh</p>
<cite>Eric:</cite>
<time>0:52</time>
<p>definitely.</p>
<cite>Phil:</cite>
<time>1:10</time>
<p>It's episode seven.</p>
<cite>Eric:</cite>
<time>1:11</time>
<p>It's the mail bag episode.</p>
<cite>Phil:</cite>
<time>1:13</time>
<p>We have been hyping this up since day one. It's here. People have sent in messages. We are gonna read them off. Eric and I, Philip Black, out of Game Economist Consulting are in the same room for the first time ever. We're real people. We're using all of our ad revenue to bring us together somewhere in downtown Los Angeles. I'm here before G D C and Eric was kind enough to drive up in his what are you driving, Eric? Tesla.</p>
<cite>Eric:</cite>
<time>1:40</time>
<p>I feel like self-conscious about it.</p>
<cite>Phil:</cite>
<time>1:42</time>
<p>Do you follow you on Musk on Twitter?</p>
<cite>Eric:</cite>
<time>1:43</time>
<p>Yeah. he says stuff sometimes. I dunno, So at my daycare, over half the cars in the parking lot are Teslas. It's crazy to me. Like it of shows how much you have to make to raise kids in Southern California, but, Anyway. That's a tangent. Like SUVs, Teslas some have the, the doors that go up like this and some have the normal doors that go out like this. Oh. Often over half the cars of the parents are Teslas in that parking lot are how the</p>
<cite>Phil:</cite>
<time>2:05</time>
<p>doors order, how the Tesla, like community ranks one of yeah. Don't go over that.</p>
<cite>Eric:</cite>
<time>2:11</time>
<p>That Silicone Valley clip where like the Russ Hanman is like, I had a son want a car where the go doors go up like this, where they go like this. I don't want a car that goes like this. Cause like I'm moving my hands. But if you know the scene, you don't what</p>
<cite>Phil:</cite>
<time>2:21</time>
<p>no, I know exactly those doors and how they</p>
<cite>Eric:</cite>
<time>2:23</time>
<p>open. No, it's definitely a style thing. It's being different for the sake of signaling that your car's more expensive.</p>
<cite>Phil:</cite>
<time>2:29</time>
<p>I'm surprised more people haven't cashed in on shit like that. It feels like a high quality signal to send that you could increase s msrp p by quite a bit at relatively low cost. Although there it might be like in a garage.</p>
<cite>Chris:</cite>
<time>2:42</time>
<p>I. I've watched like a documentary that talked about how expensive making the wings go up is compared to go out. I could be wrong, but I think the cost might be a little bit higher than you think. Cause you need some serious hydraulics to make that happen. But this isn't a mechanical podcast, I'll stop talking about.</p>
<cite>Phil:</cite>
<time>2:58</time>
<p>Chris, how are you? You're not with us right now. That's not Purdue</p>
<cite>Chris:</cite>
<time>3:01</time>
<p>no I am in my new house but we're also still living in Indianapolis full-time. So we're doing work on the weekends and my internet was not installed when it was supposed to be. So I am running my whole rig on iPhone iPhone something or other iPhone 10 or something like that. So it's been a, it's been a. Hectic weekend and not in a good way. And I'm jealous of you two.</p>
<cite>Phil:</cite>
<time>3:24</time>
<p>We have questions. We're gonna try to read them off vaguely in chronological order. Thank you so much for people who sent in mail. We're only gonna read the first name out of respect for privacy that you actually sent in a question to protect your identity. We are not gonna do anything else today. We're just gonna talk about mail. This is gonna be, this is why I love mail cast episodes. This is like your freebie. You don't do any prep as a host.</p>
<cite>Chris:</cite>
<time>3:46</time>
<p>Yep,</p>
<cite>Phil:</cite>
<time>3:47</time>
<p>You wanna dive right in, talk about it, talk about our questions. Yeah, let's do it. All right. This is a message from Yakka. He sent in two mails. He wants to know a little bit about each of our backgrounds. We know that Chris's parents believe that Pokemon is the creation of the devil, but what else is there? Chris, I think you gotta take that one.</p>
<cite>Chris:</cite>
<time>4:07</time>
<p>What more do you need to know? I feel like I've spilled the beans.. I won't go into my childhood cuz I've already gone into my childhood. I did my undergrad in at UW Osco. So up north. And then right after that I dove right into a PhD program at Purdue. While I was there I mostly researched labor economics topics information economics. Did a little bit of experimental work. Took a bunch of experimental classes. So I've always been into the empirical and computational side of economics. Never really got into macro that heavily.</p>
<cite>Phil:</cite>
<time>4:36</time>
<p>No one</p>
<cite>Eric:</cite>
<time>4:36</time>
<p>has</p>
<cite>Chris:</cite>
<time>4:37</time>
<p>no nobody actually knows anything about macro except for Macroeconomists. But no, none. Nobody knows how to talk to them. They're just, they're awkward and weird. See, it's like very scary to talk to a macro economist. If I focused on labor for a long time in my PhD, and then eventually I think in my third year some. Startup, c e o of a video game company emailed me and was like, Hey, do you want be our game economist? I was like, okay. Because the reason he reached out to me is I wrote like an eon online paper in my undergrad and it was a terrible paper, but like most people who are not like tr classically trained economists, don't know what a good paper is from a bad one. So he was like, oh, this is this is cool, and it's about Yvonne line. So I started working there in a consulting capacity, ended up consulting for a couple of other projects, and then finally that kind of culminated into like a major startup experience as a founder of a company based out of Scotland and That company was the The goal was to become a, like an all all inclusive kind of game economy tool to you think unreal engine, but for game economics. And if you don't, if that doesn't make any sense, then that explains why the company never went anywhere</p>
<cite>Phil:</cite>
<time>5:47</time>
<p>Yeah, I was actually struggling to imagine that in my head.</p>
<cite>Chris:</cite>
<time>5:49</time>
<p>So yeah, after that took some time to, to find a job in the games industry. And then, and that's when I started working at Star Atlas. So for the most part the rest I've only been at Star Atlas I think for nine months. So after that I took some time to, to gather myself. Started started sneak peeking around the games industry to get like a proper job, not a consulting job. And so that's when I landed at Star Atlas and I've been there ever since. We started the game Economist cast gosh, probably six months ago now. Something like that.</p>
<cite>Phil:</cite>
<time>6:16</time>
<p>Wow. We're really hitting that one month per episode. We totally planned to do at the beginning.</p>
<cite>Chris:</cite>
<time>6:20</time>
<p>and yeah. Yeah. And it's nice, it's a wonderful industry to be in. I've. In the span of three years, I've met just so many different people. Like it's been a very inviting, friendly industry.</p>
<cite>Phil:</cite>
<time>6:30</time>
<p>is this better than academia</p>
<cite>Chris:</cite>
<time>6:32</time>
<p>So obviously academia has a whole bunch of downsides, and I think that we've probably addressed those. If we haven't, we'll probably address them in the future. But I think I like industry, especially in game economics because it's a pretty vague role I've found. Like even people who are in more established companies have told me yeah, I was a bit of a jack of all trades. I was, sometimes I was in the data science department, sometimes I was helping run an ab test. Sometimes those data management. So a diverse role at least in my experience, and that gives you that spice that academia gives people. The reason a lot of academics are in academia is because it gives'em flexibility. They can come in, they can not come in, they can research what they want, et cetera, et cetera. However, anybody it's at a, a top 100 university knows it's exhausting. And typically you're not spending time in academia working on your own research interest. You spend about 10% of your time doing that and 90% of your time doing other administrative work. So I, I would say I like it. I like industry a lot more. It really fit the bill for me. I find that I like to talk to people. I like to communicate with people. I like to work on projects together. still try to write academic papers. I'm trying to, my goal is to, in the next five years, get out three academic papers. We'll see. I've got one that I just need to start sending off the pro. The problem is my first paper that I wrote that's like journal, journal publishable is is like a hardcore labor economics topic. So it's gonna be a very weird kind of switch as I transition from that pretty hardcore labor topic labor market discrimination and wages to like video game companies competing for player viewership It's gonna be</p>
<cite>Phil:</cite>
<time>8:06</time>
<p>play to earn, man. What are you talking about? This is, this looks like your holy matrimony of topics.</p>
<cite>Chris:</cite>
<time>8:10</time>
<p>Exactly and that's where my research interest is heading. But it's just it's gonna be a very weird ladder getting there. One, one step above the other is just like every ladder rung is a different topic. So yeah, I love industry.</p>
<cite>Phil:</cite>
<time>8:24</time>
<p>Eric,</p>
<cite>Chris:</cite>
<time>8:25</time>
<p>Do you.</p>
<cite>Phil:</cite>
<time>8:25</time>
<p>yourself?</p>
<cite>Eric:</cite>
<time>8:25</time>
<p>Yeah, where to start? I grew up in Ann Arbor, Michigan. You know where the University of Michigan is? My parents. Broke ass Chinese grad school immigrants. I grew up there a lot of other first generation Chinese kids there. Played a lot of video games, especially Nintendo games, Mario Pokemon Smash Bros. Yeah, I went to school at U Chicago played a lot of Smash Bros there. I really got into the competitive scene there. That game is very dear to my heart.</p>
<cite>Phil:</cite>
<time>8:46</time>
<p>How</p>
<cite>Eric:</cite>
<time>8:46</time>
<p>do I sum it up? It's it's competitive, right? It's imagine people who are like, athletes have a similar experience, but also it's totally grassroots. I'm the one running the community organizing tournaments, finding kids from other schools to come over and play, everyone's friends and rivals at the same time. And you get into fights and then you realize that you were just being jealous or salty or whatever. Anyway it's a. Traveling to turn and stuff. a very dear experience in my heart. But anyway, that was the fun side of college. A lot of Smash Pros. I studied, math and economics there. To be honest, when I was in school I always thought of myself as a math guy and I just got the econ degree cuz it was a few extra classes. But the econ has turned out to be way more valuable after entering the private sector. Cuz it, like you don't really have to do abstract algebra at work, but if you draw some supply and demand curve sometimes people are like, oh my god. Like it makes so much sense But yeah, I've been working out, was working at Riot Games, they make League of Legends for about seven years. I could did everything on League of Legends, monetization, like overall game health tracking, how many players do we have in Brazil and Korea and like whose spending is going up and down. Game balance, new game mode discovery, social systems like player toxicity. How do we detect toxic players? How do we ban them? How do we like, deal with false positives? That kind of stuff., I was there for seven years, got itchy left, went to Flexport, which does global cargo shipping.</p>
<cite>Phil:</cite>
<time>9:57</time>
<p>I was meant to ask you about that. Yeah. This like weird period in your resume,</p>
<cite>Eric:</cite>
<time>10:01</time>
<p>it was more of just like a look I just wanna try something else. I love my time at Riot, to Chris's point, like I think games industry, especially a successful live service game where they have lots of money coming in and you don't have to crunch is pretty enjoyable to work in. The people are great and the culture's great, it's the kind of thing where I would only been in one sector for seven years, one company for seven years. Let me try, oh, like international cargo shipping sounds really big brain and big perspective. It was interesting, but I don't know, it's like a. Boomer company, boomer industry. I don't wanna get too much into it, but a lot of emailing spreadsheets back and forth. And then I got recruited to Super Layer that does web three stuff, consumer apps like, like crypto, Twitter, crypto only fans, et cetera. But yeah, we don't directly do games,</p>
<cite>Phil:</cite>
<time>10:38</time>
<p>but it's a lot of, we lot of gaming pedigree though, right? Yeah. Yeah. The</p>
<cite>Eric:</cite>
<time>10:41</time>
<p>founder was the founder of Kabam big, mobile game company. There's a lot of things translate between, the game systems design of how many, how fast do users earn experience points, and what can they cash it in for to web three economy stuff. Yeah, I guess that's me in a nutshell. I live in SoCal. If you're ever in Irvine, feel free to hit me up. I know I did</p>
<cite>Phil:</cite>
<time>10:58</time>
<p>I'm gonna, I'm gonna pass on this one only for time interest. People know enough about me. Game Economist consulting.com. all right here. Here's another one from Yakup as well. There's a second part to this question.</p>
<cite>Eric:</cite>
<time>11:09</time>
<p>I think we covered that stuff. What is your</p>
<cite>Phil:</cite>
<time>11:10</time>
<p>most influential video game growing up? Do you wanna pass on this one? I talked about Smash man. Dude your love for smash is unbelievable. I can see it's connected to the community though. Like the broader Yeah. I mean</p>
<cite>Eric:</cite>
<time>11:19</time>
<p>It's hard to describe without it's hard to communicate without being in it, it's like a, it's ex Imagine talking to someone who's never played video games about like how much video games mean to you,</p>
<cite>Phil:</cite>
<time>11:27</time>
<p>Yeah,</p>
<cite>Chris:</cite>
<time>11:28</time>
<p>Do you think it's similar to like competitive sports? A lot of people like doing traveling sports, like soccer or something like that. Or football</p>
<cite>Eric:</cite>
<time>11:37</time>
<p>It's like that. But there's also a big grassroots element where it's not this big industrial thing where you've got coaches and infrastructure and tournaments, like it's all grassroots. You're going to someone's basement and playing, like Smash Brothers for six hours and they let you crash on their couch. The next morning you guys all go out, for breakfast together. It's very communal. I could go to any city and just be like, Hey, I'm a smasher. I'm in town. It can someone house me? And usually somebody would step up like, wow. Yeah. It's a very strong kind of grassroots</p>
<cite>Phil:</cite>
<time>12:03</time>
<p>community. What, how do you get social norms like that? There's this</p>
<cite>Eric:</cite>
<time>12:06</time>
<p>thing that you love very deeply and you other people who love it are rare. And so when you find someone who loves it, you're like very willing to help</p>
<cite>Phil:</cite>
<time>12:15</time>
<p>them out. We have an email from Ben. He's working on an market-based game. That's interesting. It is called Emoji Swap. I'd love to get your thoughts on it. Ben, you're about to get some free consulting. Eric has taken a look at your game.</p>
<cite>Eric:</cite>
<time>12:28</time>
<p>This is just hot takes from the app store page, but it looks like it's an arcade game where there's a lot of like hyper casual games, like floppy bird style games and there's emoji cosmetics that are tradable NFTs, and I guess that's of the core of it. I think the choice to use emojis is really clever. There's a lot of people have sentiment attached to them. They, everyone has their favorite emojis or ones that they don't use, and that kind of creates a natural, heterogeneous demand, which is cool. And encourages trading. Super auto pets and their favorite game of this podcast. Did also used emojis. Saved a ton on having to create art assets and just, use free animal emojis for all their art. No, I think that's neat. I imagine that the casual games don't retain very well, so it's probably gonna be a content treadmill there. And I not super sure what the long term revenue plan is, but yeah, I dunno. I emoji is cool.</p>
<cite>Phil:</cite>
<time>13:13</time>
<p>Fred writes in and asks What are some actual new models where play earn, can work?</p>
<cite>Chris:</cite>
<time>13:18</time>
<p>I feel like over the last three years, at least in like web three gaming, the, like PR preeminent or, most prominent monetization strategy, is shifting all the time. But the more I think about it, the more, I think it's very similar to a cosmetics model for free to play where you have this option to play this thing for free, but you also have a whole bunch of these co purely cosmetic, no gameplay value assets. You can spend like$2 on$20 on,$200 on whatever the cosmetic is. That monetization strategy really only works when you have a really large player base. And of talked about this actually within our Discord chat a couple of weeks. And that's because cosmetics have this, really video games in general have this really high fixed cost but really small marginal cost. Especially now in the age of, digital copies, you don't even have to produce a physical copy. So you think about cosmetics, they work, if you can sell them on scale because it costs, let's say it costs you like$50,000 to produce some sort of new character for your game. You've gotta sell quite a number of those for that to start, being profitable a profitable venture. And the more players you have, the more profitable that is. So to me I think of a really viable web three monetization strategy and a similar way, like high traffic, high popularity, lots of players, marketplace, and then a small marketplace fee. I think there's also something to be said for items that you can resell on a secondary market after purchasing them from the firm. But I haven't quite figured out how that works. So I buy this thing for$10 from the company, I do something with it. It's now for one reason or another it's worth$12. Let's just say it's a better version of the one I bought for$10. There, that's a pretty popular one where, oh, now you can sell your item for$12 and make$2. I don't know if I buy that. The opportunity cost of improving the a, for example, a character, it has to be really high in order for you to go on the marketplace and actually buy that thing for$2 more, then you could just buy it from the company and then build it up. And, at the end of the day, like that's more so just the wow economy, but opened up. And I don't think that set paribus. Is that like profit i is that mo is that, profit improving for the firm compared to just the original monetization strategy? Because every time somebody gets charged some sort of fee or something like that they're, that's cutting out of their original willingness to pay. So if I had to spend$10 on this original item, but now if I wanna buy something in the marketplace and it's gonna cost me epsilon more, I'm just gonna take that epsilon and I'm gonna, I'm just gonna substitute it. So instead of spending Epsilon over here, I'm gonna spend it over there. So I don't know that I feel like those are two really popular monetization strategies I hear about. So that last one, this kind of Epsilon story where, you're basically just taking money and putting it somewhere else. I don't know if that's really like an improvement for the firm. But this high traffic, like free nft free to an enter, but then like millions of transactions happening on the marketplace like Eve style, maybe that's viable. but maybe not because maybe you know really depends. And I wish somebody would do the calculation like, what do we need? How many players do we need? How many transactions do we need for this to be a viable monetization strategy? And there are like a million other ones. I imagine, Eric, you had mentioned a couple of episodes ago that super layer was like considering a, a new, unique monetization strategy. I'm curious if you're able or willing to talk about that.</p>
<cite>Eric:</cite>
<time>16:47</time>
<p>I think it's pretty simple. But yeah, play to earn, I think let's start with play to earn, right? What does that mean? I'm gonna define in the most general terms, which is somebody is earning from playing. The question is, okay, where is that money coming from? Obviously you can pay users as long as you make enough revenue, but like, why are you paying users? So the answer is either the activity they're doing has some kind of positive externality, or there's you're failing to reach, clear the market without any price mechanism, right? If they, if you don't pay anybody, they're not gonna get to the level of production you want. And so one great example of this is user-generated content, Roblox, Minecraft, et cetera. By paying creators of successful mods, you get higher quality mods and more mods to market, right? The super life stuff is this very simple model. It's just like a lot of'em are ad funded. So for example, a lot of mobile games will pay people for installs or pay for every user you get to like level five. And rather than just advertising and blasting ads and trying to get players to level five, we're gonna say, okay, we are gonna add$5. We'll pass, we'll give you$3 if you reach level five in this game. Yeah. So that's, play to earn, right? Simple enough. Or, advertising, just video ads, get a couple pennies every time you watch an ad.</p>
<cite>Chris:</cite>
<time>17:49</time>
<p>It's like the Troia universe model, right?</p>
<cite>Eric:</cite>
<time>17:51</time>
<p>that's the mmo, the U S D pinned mmo, right?</p>
<cite>Chris:</cite>
<time>17:54</time>
<p>Yeah, so they have some trade-in value for all of their assets. So if you did make it, you could trade it in. But they had, obviously a complicated probability model that said only 2% of players are gonna actually craft this thing.</p>
<cite>Eric:</cite>
<time>18:06</time>
<p>The other version of Plato Earn I wanted to bring up, and this is gets brought up a lot, is in MMOs where in any game where you have peer-to-peer trading, there will be somebody who is doing labor for somebody else, right? MMOs are the classic example of this. You get gold farmers who sell their gold, but even in other games, like in Magic, the Gathering online, for example, there's, Brazilian grinders who basically just play drafts all day and they can net profit if they win enough and they sell the cards, they earn for profit, right? As long as you have, peer-to-peer transactions, then somebody has something that someone else wants, and it's possible to make money as a worker in this industry. Yeah. Is this beneficial for the game? I don't know. That's a much harder question to ask, but can players play and earn? Yeah, definitely. As long as there's something they have someone else wants,</p>
<cite>Chris:</cite>
<time>18:52</time>
<p>I always think of it as like a wealth transfer. So you take somebody from somebody with a really high opportunity cost is willing to, obviously pay for this thing that took a lot of hours because their opportunity, cost of time is much higher. So it's of like a wealth transfer from somebody, presumably somebody wealthier who has a higher opportunity cost to somebody who has a lower opportunity cost who's likely less wealthy. And I think that's a big thing, is you're not gonna be in the west. Maybe this is a hot take, but you're not gonna be in the west making$20 an hour in a video game unless you're like a really good content creator playing Roblox or something like that. Where you're like creating this content. But then that's just a stars market where you have like this user generated content that's super valuable, like YouTube, like Twitch. And people are paying to watch you essentially. But I think that's a little different. I don't view that as play to earn.</p>
<cite>Eric:</cite>
<time>19:40</time>
<p>You're an entertainer and you sell attention in advertisements, not, game assets. So one thing I wanna bring up is it's not always beneficial for this to happen, So There are systems that could be beneficial. So imagine you had a toxicity system in your game where if players were positively behaved, you rewarded them and if they were be negatively behaving, you would penalize them and find them, That's internalizing the externality or whatever that might benefit your system. But in this magic, the gathering farming situation, you've got all these like top level Brazilian players who are just grinding arena constantly or grinding the draft constantly. And they might be degrading the experience for other players who are just getting totally stomped by these like hardcore professionals who are just, sucking all the oxygen out of the air. And in that case, these people are earning but also negatively impacting the rest of your player base. Yeah, just cuz somebody's earning doesn't mean it's necessarily good for your game health.</p>
<cite>Chris:</cite>
<time>20:29</time>
<p>I had never thought about that ex negative externality argument. That's really interesting. But with matchmaking, it's not an issue, right?</p>
<cite>Eric:</cite>
<time>20:36</time>
<p>I think they don't have matchmaking in the draft, which is why it's possible for them to, systemically they do magic online. They do</p>
<cite>Phil:</cite>
<time>20:41</time>
<p>arena. Yeah. I could be totally wrong. I'm a</p>
<cite>Chris:</cite>
<time>20:43</time>
<p>even for draft though.</p>
<cite>Phil:</cite>
<time>20:44</time>
<p>Yeah. Even for draft, which is exactly in online or arena in arena, I don't know about online. It makes sense because it solves exactly your point. The matchmaking brings equilibrium back down to 50%. So what they do is they do seasonal resets. So essentially what you have when you start a season so you basically get a positive rebate And declines over the course of a season until you reach the red</p>
<cite>Eric:</cite>
<time>21:05</time>
<p>that's true. So the thing in arena, there's no peer-to-peer transactions. That's true. So even if you're That's true. Positive value. That's true. It's all locked into the</p>
<cite>Phil:</cite>
<time>21:11</time>
<p>game. Yeah. It's still just goods. Yeah, it's, there's no way to earn external</p>
<cite>Chris:</cite>
<time>21:14</time>
<p>I talked to a guy from Wizards once. He was like a, he was like a business development person from Wizards of the Coast for Magic The Gathering. And I was like, don't you think this like whole play to earn like web three thing? I think this was a dice last year. I was like, this is like perfect for wizards, like matches the gathering. You've got all these players constantly doing all this stuff, getting these super rare cards. You've got the perfect system for like NFTs. You've got all this scarcity running around. And he's He was like, yeah, maybe. We're not allowed to acknowledge secondary prices. That would, it breaks down the model, right? Like they're, a lot of their business model relies on, especially probably from a legal standpoint, but a lot of it relies on the prices not having, not being floating. Like it's a card, it's a card pack, it's a loot box with a price tag, and a bunch of contents in it. And I think the second they were to acknowledge that market, in, for example, like a play to earn setting that breaks down. They can't do that. Like they could never do that.</p>
<cite>Phil:</cite>
<time>22:09</time>
<p>they do have that in maif gathering online, like it technically is a sanction marketplace, but it's such a, it fits in such a weird place into wizards. Like it's become a bizarre product cuz the UX is so bad. Like how you click shit is so bad. It's notorious for being shipped. But they do have a secondary marketplace. If you</p>
<cite>Chris:</cite>
<time>22:24</time>
<p>I know.</p>
<cite>Phil:</cite>
<time>22:25</time>
<p>you'll find listings.</p>
<cite>Chris:</cite>
<time>22:27</time>
<p>I so that was I never played online. I'll be completely, when I played I only played physical until Arena came out.</p>
<cite>Phil:</cite>
<time>22:33</time>
<p>I didn't know you played magic by the way.</p>
<cite>Chris:</cite>
<time>22:34</time>
<p>I started playing my freshman year of college, so I've been playing for 10 years. I love magic. It has a super soft place in my heart. I feel overwhelmed with the rate at which they released new sets, and I know that they made a pretty major change in like 2020, maybe 2019, maybe even earlier than that. But they made a major change where it was like the cycles were happening even faster. And that's when I really turned out. I was like, you know what? I can't keep up with this. I'm already spending like hundreds of dollars on this and I'm a poor college student. So that's when I got into Arena. That's right. When Arena came out, I was like, oh, sweet. I can use my skill to earn this whole entire deck of cards. And now I've got this like mythic level, professional level, deck. And all I did was, all I did was play the game. But, yeah. I. I didn't play online that much, so I'm not familiar with the marketplace. I know that the marketplace sorry, online cards have prices, but are those purchased within the app? Do they have a built-in marketplace?</p>
<cite>Phil:</cite>
<time>23:28</time>
<p>oh man. I don't</p>
<cite>Eric:</cite>
<time>23:31</time>
<p>know. So there must be everything I'm saying is secondhand from David Nova shoutouts to David who plays used to play a lot of magic online, but they have a currency called tickets, which I believe these tickets are used to enter the drafts and people will trade cards for ticket prices. And they're actual marketplace is really bad. And so there's all these trading bots that like will essentially collect big inventories of cards and you have to chat with them to determine which card to trade for and how many tickets to send for it. And these bots are all run by third parties. They're not run by wizards themselves. And it's super jank, but yeah, that's how they clear the market.</p>
<cite>Phil:</cite>
<time>24:05</time>
<p>So it's all of the currency is backed by an arena run. Exactly. It's available for one arena, right? Yeah. Which is, I think pegged at a dollar. And it satisfies all the other properties we know about money. It's a store of value, it's a unit of accounting. It's a medium of exchange. isn't there another one?</p>
<cite>Chris:</cite>
<time>24:20</time>
<p>Medium of exchange?</p>
<cite>Eric:</cite>
<time>24:21</time>
<p>Unit of value store. Yeah, I think that's, those are the three,</p>
<cite>Phil:</cite>
<time>24:24</time>
<p>right? I think there's a fourth one. Yeah.</p>
<cite>Chris:</cite>
<time>24:25</time>
<p>is there a fourth one? I feel like it changes who you ask. But there's you, have you guys seen like our fi mtg finance, like there, there's a whole market. It's incredible that match the gathering cards, hold their value better than some currencies. That's incredible. And it really does. I think it's an interesting argument for crypto. It's an interesting argument for NFTs. I personally don't like to view cryptocurrencies, especially with respect to the games industry as like these, as like monetary devices. I don't actually see them as currencies. But you. those people grew up playing these super, super ingrained games like Smash Bros and like Magic Gathering. They're like, this thing has serious value. I'm gonna, I'm gonna make it like, I'm gonna make it into an actual financial instrument. And it's curious to see if that pays off, if that plays out.</p>
<cite>Phil:</cite>
<time>25:10</time>
<p>There is a spicy additional question here from Yakka about the rings of power, I'm not gonna read the other things. You were,</p>
<cite>Eric:</cite>
<time>25:18</time>
<p>Chris, you wanna take the rings? You missed your Lord of the Rings.</p>
<cite>Chris:</cite>
<time>25:20</time>
<p>So does he just ask if it's good? Is that like the question?</p>
<cite>Phil:</cite>
<time>25:24</time>
<p>Yakup asks, was Rings of power series for Amazon. Good emotionally charged? Answers are encouraged.</p>
<cite>Eric:</cite>
<time>25:33</time>
<p>Or do you wanna do this restaurant question? Oh yeah, I think that's, that one's more fun. All right,</p>
<cite>Phil:</cite>
<time>25:36</time>
<p>so he says, in the Lord of the Rings, the two towers an er, kai. Proudly proclaim. Oh, Okay. Yeah. Come on. She didn't know A native speaker. Meets back on the menu. Boys. Does this mean that you're Kai or Society has restaurants? What you got for us, Chris</p>
<cite>Chris:</cite>
<time>25:55</time>
<p>We know they, they do not. So they're a pretty primitive race. They're relatively new. So they're like new to middle earth. Not the oldest race. They're the youngest race in the in middle earth. Actually they might be older than men, I can't remember. Which I guess in that case, my like, theory crafting doesn't make any sense, but I can almost assure you they didn't, they mostly ate oh man. All of my great lore is just slipping my brain, and it's because I haven't read the Ciarelli in over a year, so my apologies, yaku. But no, I don't think as a novice lord of the Ring Scholar or middle earth scholar, I should say, ton scholar, I do not believe that the Uru Kai or the, OR race in general had restaurants. That'd be my guess.</p>
<cite>Eric:</cite>
<time>26:40</time>
<p>so my wife watches a lot of YouTube videos of Lord of the Rings lore, and she agreed with you. We argued with her about this. She was like, yeah they're basically slave soldiers and so they're either soldiers or there's escaped or ORs who are like basically roaming refugees who are just like nomads. And so her contention was they do not have restaurants. And that, back on the menu is a facetious reference to Alvin in Human Society. My contention is that even if they're in these soldier camps, someone's gotta be feeding these soldiers, right? There's gotta be some kind of like canteen, like cafeteria situation going on. And depending on how you stretch the definition of restaurant, like maybe that's a restaurant her counterargument was they probably don't have menus. they probably don't get to choose what they eat. And so there's no menu to select from?</p>
<cite>Phil:</cite>
<time>27:20</time>
<p>Yeah.</p>
<cite>Chris:</cite>
<time>27:20</time>
<p>So that's not a restaurant though. That's like a mess hall.</p>
<cite>Eric:</cite>
<time>27:23</time>
<p>Yeah. Is a mess hall a restaurant? I don't</p>
<cite>Chris:</cite>
<time>27:25</time>
<p>Would you call a prison camp like a restaurant like, oh, get a restaurant? No.</p>
<cite>Eric:</cite>
<time>27:30</time>
<p>if they can choose? He doesn't say restaurant, he says back on the menu. So as long as you can choose from a menu of what food you want to eat.</p>
<cite>Phil:</cite>
<time>27:37</time>
<p>No, I don't think they can do that either. Yeah. You can't</p>
<cite>Chris:</cite>
<time>27:40</time>
<p>So now we need to figure out do, did they have like paper menu? Do the orks have paper and books?</p>
<cite>Eric:</cite>
<time>27:47</time>
<p>You don't need paper to make a menu. It could be a, oral menu.</p>
<cite>Chris:</cite>
<time>27:50</time>
<p>Oh, really? I guess that's true. Or maybe a rock or some stuff in some dirt. You write in the mud with a piece of stick,</p>
<cite>Phil:</cite>
<time>27:58</time>
<p>I'm really glad we could clarify this. This must be a really exciting community to be a part of.</p>
<cite>Eric:</cite>
<time>28:04</time>
<p>All right. Next question.</p>
<cite>Phil:</cite>
<time>28:05</time>
<p>Next question. All right. We have one from Martin Manuel Gonzalez. He is an aspiring game economist. Keep at it, man. We're all just winging it. There's, there are no qualifications..I'm currently studying market economics of some valve games like Csco and Team Fortress Two Valve always tries to introduce market mechanisms into their games for these elements. Help improve the longevity of the game and bring new ways of interaction between players. I agree with that. His question is, do you think these market economies can be brought to mobile games? Do you know of any case this has been done in games with auction houses or player to player trading, which would be your playbook for sustaining inflation? I couldn't think of a mobile game that has a market to market</p>
<cite>Chris:</cite>
<time>28:53</time>
<p>Doesn't, Yvon companion app that you can access the market in,</p>
<cite>Phil:</cite>
<time>28:57</time>
<p>You can do it for fifa. FIFA has a companion app. But I can't think of a native game to mobile that has trading if you get to discount crypto on this one. But, unless it's an mmo, I couldn't think of a single game that has this, a single</p>
<cite>Eric:</cite>
<time>29:09</time>
<p>product. Yeah, I can't think of one besides like Robinhood.</p>
<cite>Chris:</cite>
<time>29:14</time>
<p>What? Oh, I don't. Is that a game? Is that a game?</p>
<cite>Phil:</cite>
<time>29:18</time>
<p>It is if he tried Chris if he tried hard enough.</p>
<cite>Chris:</cite>
<time>29:20</time>
<p>I was like, I've never heard of that game.</p>
<cite>Eric:</cite>
<time>29:22</time>
<p>so that was kind of ingest, but you know, I think it's worth thinking about what did Robinhood do to successfully bring markets, stock markets to the mobile phone, they had to slim down the UI massively. It's like there's way less complex, way less information and everything's very streamlined and there's a lot juice and like happy noises whenever you buy stuff. I think those are the kinds of things you need to adapt markets to, to work on mobile. And so yeah, they'd have to be hugely simplified and yeah.</p>
<cite>Chris:</cite>
<time>29:48</time>
<p>Manuel he said he had been working on like a bunch of the csco markets. I'm curious, I wanna hear what he's discovered. So re reach out and let us know, if you found anything cool. What your findings are. I think this is like a super understudied topic. Eric, you wrote an incredible piece about Csco and I, it was relatively, it was like short, sweet beautiful paper that just here's some really cool features of this video game market and real money. It was just eye-opening, I think.</p>
<cite>Phil:</cite>
<time>30:13</time>
<p>Second part of the question, talking about playbook for sustaining inflation. I think Eric's been on the right topic. We have actually talked about this, Eric, but I think you've been mentioning these two words in conjunction with one another, which is my playbook when I work with clients, which is capital depreciation. And I think that really has been in the name of the game for Web three economies because you have all of these players producing assets. If you just have players that continue to produce assets and the assets don't dec degrade in any way, so when you think about a T. You get like a Taylor Swift t-shirt. There is a declining number of Taylor Swift t-shirts in the world, assuming they held back production of them or they didn't sell anymore. And the reason for that is cuz the t-shirt degrades over time. It faces natural elements, people wash it, it gets destroyed. There are a lot of things that are naturally circulating out supply of these t-shirts, but when you have a digital asset, none of that is really the case. Now you can make it the case, it's digital games, a digital world to make up world. But how do you start to do that? How do you start to circulate goods outside of the economy? How do you decrease the net supply of goods? Again, if you hold all those constant and you just increase the supply of digital foot price, the equilibrium price is going to decline. So you have to think about, again, going to our game economist tool bag sinks and sources, and making sure that there's some level of balance between both of them and being able to do that in a player to player or tradable marketplace where items can also persist. So one of the ways in which you have deflation in some economies is that players just leave the game. That's one thing that can happen, but in a player to player marketplace, they're likely to also liquidate their goods when they leave because there's a financial incentive to do so when I left the Magic, the Gathering physical card game, I sold all my things and I knew that there was gonna be money behind that. There's actually quite a bit of money behind my actually gathering cards. This is just a shout out to all the parental units out there that think that their kid's card collection isn't gonna be worth anything. One day. You're wrong, It was</p>
<cite>Chris:</cite>
<time>32:13</time>
<p>Yeah, suck it.</p>
<cite>Phil:</cite>
<time>32:14</time>
<p>Yeah, absolutely.</p>
<cite>Eric:</cite>
<time>32:15</time>
<p>So buy some sleeves, protect those cards. Buy,</p>
<cite>Phil:</cite>
<time>32:18</time>
<p>buy the sleeves. But I think it's a question of like, how can you think about capital depreciation? And I certainly work with clients to develop more specific things, but I would frame the problem like that.</p>
<cite>Eric:</cite>
<time>32:28</time>
<p>No, I totally agree. And from what I've seen, there's kind of two common ways to depreciate those assets. One is just hy, power creep, right? Hyperinflation, whatever you wanna call it, where, the best sword from last year was plus a thousand attack, but the next best sword from next year is plus 2000 attack and all the enemies got stronger, right? RPGs do this all the time where they just keep a padding, endgame content, add more levels, add harder</p>
<cite>Phil:</cite>
<time>32:50</time>
<p>boxes, and add</p>
<cite>Eric:</cite>
<time>32:51</time>
<p>better loot to come along with that. And that, devalues everything that came before. Another way to do it, and this is a lot rarer, is durability. Like in breath of the wild, where if you use items too many times they break. This, I think, is pretty effective at achieving the goal and also has a bunch of positive gameplay effects like, Forcing variety of play styles and stuff like that. But players hate it. Players hate it when their stuff breaks and they have to get new stuff. It makes them averse to using it in the first place. The stereotype of the finals fantasy r PPG player who by the end of the game has like 5,000 ether that they never, bothered to use because they're like, oh, I might have to save this for the next boss. Yeah, people hate spending those consumables. Yeah. See us go. Great example again. Originally did this with their gun skins where they have different conditions, factory new, lightly used, and the, it gets more worn and worn. And originally the design was for the paint job to degrade as you used it. More players hated it, so they just made it static and fixed. But yeah yeah, durability achieves this effect, but players usually hate it. So you have to be careful when</p>
<cite>Phil:</cite>
<time>33:50</time>
<p>you. So he goes on to say, A few weeks ago I was reading some articles by Edward Castronova, of course, the famous game economist, academic game economist, still out there publishing. One of the conclusions reached by Castronova is that virtual world would become an alternative life to real life for many people having consequences in the real world. 20 years after these articles, MMOs, despite having a large player base, have not become what Edward isn't. In fact, social networks have occupied that place. What do you think are the reasons why MMOs have not managed to become hyper populated virtual worlds? Is there room for innovation in the design of MMO economies? I think this is a super interesting question. Yeah,</p>
<cite>Eric:</cite>
<time>34:33</time>
<p>I think maybe Chris m o guy wanna take the first stab at it. I got some hot opinions too</p>
<cite>Chris:</cite>
<time>34:37</time>
<p>I know, I feel like all of us have a lot of thi thoughts on this so the first thing I would say is I think the question is loaded. I don't think Ted was wrong. So the first time he started saying that was in the late nineties. And you guys correct me if I'm wrong, but I think that was before even that was like you're talking about very primitive messaging platforms. You didn't even have what was before Facebook? Oh my gosh. Geez. It had music stuff, MySpace like that. That's pretty much.</p>
<cite>Phil:</cite>
<time>35:02</time>
<p>to your shift spec Aim</p>
<cite>Chris:</cite>
<time>35:05</time>
<p>You're talking to pre MySpace and I think a lot of people would argue that in a way, Facebook and, all these social media apps are games and I think that there's an argument to be made that they are multi massive, massively multi-player online role playing games. I don't know, especially in the case of Twitter or Instagram for crying out loud when you're like this op totally. Your Instagram personality is nothing like your real personality sometimes. So I don't know if I'd go so as far as to say he was wrong or this didn't come to light. I also think compared to the late nineties, people are spending a lot of their time in video games. Yeah, so let's just take like the social media out of the argument. Even though I would argue that social media do, does count as like an mmo and people are spending a ton of time in it. But like video games I know me and my friends I'm not a as in, I'm not on as much as they are, but I have friends who are, they're on with their friends two to three hours a night, like talking every single day. If that's not, if that's not. A substitute for the social time that you would typically have before, like pre-video games, pre MMOs? I don't know what is, so I do think that the question is like maybe misguided, where oh, why isn't this happened? I think it did. I think you look at how much revenue video games generate, how many people are spending their time playing video games, whether it's on mobile or it's, a full big giant MMO on your computer. I think it really has happened. I think that Ted was right. I think he was he is, he was always ahead of his time. Yeah, like we're not walking around in full VR headsets having virtual girlfriends and stuff like that. Not, but I don't think that's what Ted had in mind. I think he was like, people are gonna spend time in these virtual spaces. And I think that's mostly true. I think at least one six of the world's population spends a vast majority of their time, or at least a vast Time of their day in in video games.</p>
<cite>Eric:</cite>
<time>36:47</time>
<p>Yeah, I totally agree with you on the social media is this virtual world point, I think with all the metaverse hype obviously the original envision of the Metaverse is vr, but I think that's just the sci-fi equivalent of flying cars where it's it's not the flying cars that's important. It's that there's this digital space where you're social.</p>
<cite>Chris:</cite>
<time>37:04</time>
<p>Yeah.</p>
<cite>Eric:</cite>
<time>37:04</time>
<p>So I totally agree there. I guess to add to the point, like why is it not MMOs and why did it become, I'm on Twitter and Facebook and Discord and Fortnite and World Warcraft, right? Why is it split across multiple things? I think, early on things a, as technology gets more developed, things generally get more specialized. You look at your kitchen and how many more kitchen gadgets do you have now than from 50 years ago? And I think back in the day, there was just, you were playing EverQuest or whatever, and there was a crappy chat system and a crappy action game, and a crappy social game and a crap, like it was an all in one package of a bunch of crappy things. And now, Twitter has optimized the social part, discord has optimized the voice chat part. The, like different elements of that got specialized and optimized by different products. And so that's why it's not one all in one box. M o</p>
<cite>Phil:</cite>
<time>37:48</time>
<p>I've got hot takes for you guys. Yeah. I think this, the premise of this question is wrong. I think MMOs have become hyper populated worlds. And I'm not talking about social networks, although I agree with you guys. in a broad sense that the more time I spend in an environment, the more I care about my status in that environment. So you think about what's Reddit done's Reddit has done with karma and with cosmetics. You think about the Twitter blue check mark, which of course has been a source of a lot of controversy, a lot of Instagram things. So like the more time you spend in virtual worlds, the more time I think you're gonna care about your status in that world B. But to the point of the question, when we talk about MMOs and we talk about the social media companies and the Metaverse, to me it always comes down to that shared 3D space. That's what people I think really wanna talk about is that I'm in 3d, I'm this real-time environment. Why hasn't that taken off more than it has? And to me it's just a question of convenience. Like it's very hard for me to integrate that type of experience into my life and how I live it. And it's just been slow. It's been slow, but it's been growing. It's still been growing. People are still spending, I would argue, more times in virtual shared 3D spaces. And the best evidence for this is Roblox. Roblox is a shared 3D space. Now it can be at a little funky, there is a front end UI where you're selecting what game you wanna log into, but there is shared chat services and you do have an avatar that's shared between all of your different experiences. And I don't think people have truly grappled with how popular Roblox is amongst its target demo, which is people generally under the age of 13, we're talking about spending, four or five hours a day on the platform. And so when I think about that famous Bill Gates quote where a platform is when the people on the platform generate more revenue than the platform itself, he said something of this nature, I think about a true metaverse or a true. social network, that's a key part of our lives as taking more of our time than this, the single greatest category. Like we're spending more time on these devices than we are, you gotta count away sleeping, take eight hours out of that, what share of the time are our experiences in virtual worlds taking? I think we're well on the way for them, starting to take up more than 50% of our waking hours, which to me is a Rubicon. And when you cross that Rubicon, I think that you'll see more and more status symbols and more and more virtual world features that mirror the real world appearing there. So</p>
<cite>Eric:</cite>
<time>40:08</time>
<p>there's one specific criteria you had in there, which was 3D world. Yes. And one thing I want to question is is 3D really important? Because I think. if the important part is immersion in engagement, and people, you don't need that fidelity of graphics to immerse people. Think about how angry people get in YouTube comment sections or in Twitter threads. Think about how immersed people get in Dungeon and Dragons campaigns. I don't think 3D graphics is a critical part. Yeah, I</p>
<cite>Phil:</cite>
<time>40:31</time>
<p>agree. I would only say that I think Metaverse advocates usually have that implicit assumption built in, cuz they always refer to Horizon Worlds, the Facebook product. The Warcraft, all these things are metaverses because they have that 3D component. That's what they think this is going to be like. And there's a lot of reasons why that's stupid. I think</p>
<cite>Eric:</cite>
<time>40:50</time>
<p>it's flying cars. It's flying cars all over again. Yeah. Like we have planes. They do the same thing. We have Twitter like, it, it achieves and discord,</p>
<cite>Phil:</cite>
<time>40:58</time>
<p>right? Yeah.</p>
<cite>Chris:</cite>
<time>40:59</time>
<p>Now the, they also ask like, how, what is the next generation of MMO look like? How do we make MMOs better? And, I personally, to piggyback off what you guys were just saying, I don't think we need better graphics. I don't think we need more, high fidelity environments and three-dimensional worlds to explore what we need is. I just we don't need better games. We need more better games. We need more good games. I don't think there's oh, the, this is a more incredible experience because it's motion controlled or because there's a haptic feedback or big, because of all this weird technology, I think it's just, there are just going to be more MMOs. I don't think that there's like a qualitative thing that we need to do in order to get people to play more people to play MMOs, if that makes sense. Cause it sounds like there, the question was like, how do we make a better game so that more people play MMOs? But I think we're already there and I think we're just gonna get more and more games and Sure. Sometimes that'll fit somebody's niche and so it might bring somebody who wasn't otherwise a, an m m O player. But yeah, I'm curious if you guys think there's, like anything missing to, to me, like I just wanna see better games. I no longer care about graphics. We have hit we have hit the inflection point. Like I, it's not important we're at the top of the curve. Pull the graphics back a little bit and give me perform.</p>
<cite>Eric:</cite>
<time>42:14</time>
<p>think that segues next to, well into his next question.</p>
<cite>Phil:</cite>
<time>42:17</time>
<p>What examples of innovative or unique approaches to game economies have you seen in recent years? Or maybe they're this third one actually. Oh. What emerging trends in the video game industry do you think will have the largest impact on game economies in the coming years? I would say in terms of unique or innovative approaches, it's very much driven by what are the problems and what's trying to be solved. So there is a meta and game economy design. I firmly believe that. Now there are different ways in which this manifests, but I think one of the problems that we've been trying to solve with game economies, and I think fundamentally the problem that a game economy does try to solve is how you ration goods and how you give goods to players. One of the things that you start to realize when you're building these live service games is that content is constant an issue. People constantly want more content. So you're thinking about what is the content of your game? It's not just like digital assets, it's also what you're going in and consuming. So like in magic, the gathering you're going in, you're consuming the problem solving puzzles that your players present. given the decks they have, and you're trying to solve that puzzle using your own deck, and you're thinking about, okay, how can I acquire these cards? Okay, so you're trying to solve, even as a player, all these different problems that like these game economies are giving to you. You have this content problem. So you've been thinking about literally, how can I not just power creep players, as you were mentioning Eric, because that's sometimes appropriate for some games. It's sometimes more challenging to do that in other games once you might have horizontal progression. So if you like FIFA Ultimate Team, it is a wildly successful, almost free to play business inside of a paid product. And one of the reasons so successful is that they reset every year. They just literally release a new game and you have a new economy and you have new progressions. So you don't have to keep making more and more powerful players. You can just reset players and to, to a more fundamental level. And. The question is okay, how could I do more resets that don't piss people off? Cuz they also care about the LTV of their assets. I wanna make sure that I'm gonna have consistent return on my good. When I buy a digital asset, I want it to generate a stream of dividend payments or benefits to me. And so a model that I've seen people start to play around with, although I don't know a bunch of games that are doing this right now I've talked to a couple different people that are doing this, is that what you'll be doing is making a purchase in a particular game. And over the course of a season, you'll be making more and more purchases and at the end of the season, they will refund you the money that you spent, but they'll take away the digital assets again. And so when that new season starts, you can spend again. So in sense, essentially what you're doing is that you're investing in the game and the assets you buy with those dollars are essentially neutral and you can continue to reselect. So as your investment rises, you're still getting a wider and wider selection of goods.</p>
<cite>Eric:</cite>
<time>44:55</time>
<p>So if I understand properly, let's say you put in$50 here one. Yep. And then new game comes out, you get$50 to store credit basically all your assets are taken away. You can spend that$50 again. But chances are, if you spend it all, you're probably gonna spend more. And the hope is that you spend$80 and then more.</p>
<cite>Phil:</cite>
<time>45:09</time>
<p>Okay. There are new problems with this, but I do think it's an interesting or innovative approach to like content recycling.</p>
<cite>Chris:</cite>
<time>45:15</time>
<p>So it's like the promise of one of the promises of crypto was like, oh, you can you can take your, you can keep it in this environment and you can just keep recycling it over and over again. So is this this is like a solution that doesn't require like a complicated blockchain technology or like crypto? I, it sounds like it to me.</p>
<cite>Phil:</cite>
<time>45:32</time>
<p>Yeah, I think that's fair. There, there are a million problems. We could talk about this model too. I still need to justify the f it's anti capital depreciation. Yeah. It's it's like explicitly.</p>
<cite>Chris:</cite>
<time>45:40</time>
<p>Yep.</p>
<cite>Eric:</cite>
<time>45:41</time>
<p>I take this question. I've, okay, so what examples of innovative or unique approaches to gain economies have you seen in recent years? So this probably isn't the target type of game for this audience, but I've been playing this indie game called Moonlighter. It's a single player game where it's a roguelike, where you go into this dungeon, you, so you're a shopkeeper who moons lights as an adventurer, right? So you run this shop, you go into these dungeons, you get a bunch of stuff to sell in your shop. And so that's two part game loop. You go into the dungeon, you fight monsters, get stuff, you go to your shop, you sell it to people. So it's like a pretty standard rogue light R ppg except that when you liquidate what you got in the dungeon, you have to do it through the shop. People come in and you have to look at their facial reactions to see if they like if they think you set the price too high or too low, sometimes they'll set price super low on the super valuable object and you're like, oh dang, I missed out. So they added a bunch of friction to the selling the loot component. Which, I think I made this point earlier, but like in a previous episode, but, I think a lot of the interesting stuff about markets is not when you make them as efficient and liquid and fast as possible, but when you add these kind of friction, so the player has to go there and evaluate oh, what, how, what types of items are in demand and should I sell those and which ones are not? And I should hold onto those for later. I've only got four slots in my store, so like what items should I put in those four slots? Yeah think that was really interesting kind of two-part economy. And I think we're seeing a lot of Roguelike games that, the classic ones like Slayless Fire or binding of Isaac are all just run the dungeon over and over. And this is adding the second component of improving your power for the dungeon runs, but mediated through another mechanism. I think Cult the Lamb is another great example of this, where there's the roguelike part and then there's the whole like cult town building part. But yeah, moon letter, fun game.</p>
<cite>Chris:</cite>
<time>47:21</time>
<p>What's funny is you just mentioned like a single player game and they were like oh, what's the best econ like markets, you think multiplayer. And I'm gonna recommend like a game that's also not m o. But and it's not really, it's not really a game per se. But, you could play any board game, like a lot of board games have really cool marketplaces. And a lot of board games have really cool. I think if you want unique cool marketplaces. It's you just struck this in me when you mentioned it doesn't necessarily have to be a really well efficiently lubricated market to be to be like a good, fun, fun game. And a lot of board games do this. I'm try, I'm trying to think. I was playing a board game the other day couple weeks ago with some friends, and I think it's not, it's tough. It's competition. You have to buy your assets. So somebody's gonna fight me on whether this is a, this is an actual market but it's called photosynthesis and it's about basically vying for space in a forest from the sun. So you gotta absorb suns raised to get your light points that you use to purchase your sh your bigger trees and all this stuff. It's a gorgeous game, but I, it</p>
<cite>Phil:</cite>
<time>48:20</time>
<p>I just wanna say</p>
<cite>Eric:</cite>
<time>48:21</time>
<p>I love this game. It's got the most beautiful game pieces I've ever seen. My, my wife calls it tree chess</p>
<cite>Chris:</cite>
<time>48:26</time>
<p>If you haven't looked it up, you should look it up. Any listeners. But so I was playing and I was just being decimated because I couldn't, I was too small. I had little trees. I was getting covered by big trees, and all I could think was like, wow, it feels like I am like a small business in New York City and I just can't get a leg up. And there's these big banks that are just killing me. It was insane. And there are hundreds of video board games with amazing markets. But I just think it's funny, like we've now mentioned okay, a single player game and then a play a game that you can play with three or four people, So I don't know if we have any like scape Go play Roone scape, I dunno. For a</p>
<cite>Eric:</cite>
<time>48:59</time>
<p>But I think to that point though like a lot of the innovation you're gonna see in lower Fidelity games or indie games, single player games, board games, right? And maybe in the future we'll see someone take these into an m O. But yeah, if you wanna find innovation, you look at the grunge underground stuff. Yeah.</p>
<cite>Chris:</cite>
<time>49:15</time>
<p>Because it's risky and it's, there's less money on the table for them to take risks or a number of different reasons.</p>
<cite>Eric:</cite>
<time>49:22</time>
<p>All right, let's</p>
<cite>Phil:</cite>
<time>49:22</time>
<p>do one more. This is also from menu. How do you see the role of game economists evolving over time and what new skills and knowledge will be required to be successful in this field?</p>
<cite>Chris:</cite>
<time>49:35</time>
<p>Whoa.</p>
<cite>Phil:</cite>
<time>49:36</time>
<p>This is a good one to end on.</p>
<cite>Chris:</cite>
<time>49:38</time>
<p>Yeah. He wants to go first.</p>
<cite>Phil:</cite>
<time>49:41</time>
<p>I'll pass.</p>
<cite>Chris:</cite>
<time>49:42</time>
<p>Let's go by industry veteran status so that I get to go</p>
<cite>Phil:</cite>
<time>49:45</time>
<p>Oh God. So how have the role of game economists evolving over time? So I would say there are very few game economists. If I were just to pull a number outta my ass, I would say there are people with the title game. Economists are probably less than 30 in industry. And I just to be clear, I'm drawing a pretty sharp line between game economy designer and game economist with kind of that traditional economics training being a huge differentiator. So I would say that's, I, that's one way to think about this. I would say the other thing I've started to see more of is that economists can also, more traditional economists can definitely fill data science slots. That's the one way to get involved in this industry and that's of how I've seen the role of a gain economist certainly. because remember, you start as an economist, then I think you pick up the game piece. It's much easier to go that way than the other way. It's much easier to go from I think having the math and the empirical things that I think you need to have down to be successful, economist and then learning about the game piece much easier. Funnel. So I would say I've seen some people that have been traditional tech roles get into the industry starting with data science. I've seen a lot of people from Roblox certainly doing that. Steve McBride, who used to run a lot of Amazon's economics has headed up Roblox division and they aren't gonna be just working on game design stuff. In fact, I'm sure that's a smaller part of their mandate. They're working on a lot of very traditional microeconomic problems like marketplaces, currency exchanges, platform economics, things that you would expect them to do. Probably some causal inference. But when we start to think about how the role of this game economist will change over time, I expect us to. have to think more concretely about the design aspects, ironically enough. And that to me is when you start to really unlock the value of a game, economist, is when you can successfully combine the principles of economics and all of the things that we know about how people respond to incentives, the role of institutions we know we were talking about. Even when you think about something like. Smurfing, which you've done, Eric, you've done work on anti cheat stuff. There's a large literature of economics that you can draw in to help craft effective policy for that. But for that to happen game, economists or economists need to get more involved in the games. Like they need to understand how the actual games work. They need to understand the individual institution that each game creates with its incentives and disincentives. And I think if economists can do that, they're gonna be able to get more and more involved in the design of these games. And that to me is where you unlock a lot more value for this. And this is to me, where I think you can see more game economists being hired, but honestly like it's crypto that's gonna, that's gonna also be the huge accelerator for us. Like I've gotten more calls from crypto companies than anyone else because when they see floating prices, they think economists, we need help with a real economist. So if we were to think about what's gonna happen going forward, it's the design stuff, it's the open market price stuff. If that persists, game economists are gonna grow, if that goes away. I actually think we're gonna stagnate as a field. Actually, Crito is a complimentary good to us right now.</p>
<cite>Chris:</cite>
<time>52:44</time>
<p>Interesting. I really like the point about crypto accelerating this. What do you think, Phil? 30, 40, 50% of the jobs that are like out there right now in game economy are crypto,</p>
<cite>Eric:</cite>
<time>52:55</time>
<p>Totally.</p>
<cite>Phil:</cite>
<time>52:55</time>
<p>Absolutely.</p>
<cite>Chris:</cite>
<time>52:56</time>
<p>It's like it and it's like you said, it's because the, all of a sudden, I, people have said this before, like the stakes are higher, hey, they're actually floating prices and like people's pocketbooks are on the line. So we need somebody who knows what they're doing. And I think that's where like somebody with a PhD in economics or a master's or bachelor, like anybody with like technical skills, they can, they, they need to learn about video game design, flow design. How do you make a good game that flows together? How do I keep somebody's attention where, where's the optimal place to put this I don't know, buy button. That's all a massive that, that's been. that's been game economy design up until this point. And now it's oh, how do we create like a monetary, system for this macro economy. It's completely completely blown the lid off of the industry in my opinion. And I'm curious where it's gonna settle.</p>
<cite>Eric:</cite>
<time>53:43</time>
<p>I mean for me I didn't even know Game Economist was a real role that existed. I remember someone asked me when I was fresh at Riot oh, what's your kind of dream job? What do you wanna end up? And I was like, oh, I wanna do what you know, they're doing over at Valve with their like, TF two economy, you need a PhD and you're like, need a bunch of engineering skills. That's like way outta my reach. I just worked my way up as a data analyst. I think obviously data is a huge component of what we do. Both internal data and external data. Any kind of data skills and the programming skills involved with processing that data was really important. And Yeah, I don't know. I stumbled into this role. At Riot, they don't have economists. It was just data analysts and data scientists and yeah, I think a lot more mobile game or MMOs probably are thinking more, a lot of times the job title will just be data scientists, but in reality, economic thinking can be very valuable.</p>
<cite>Phil:</cite>
<time>54:26</time>
<p>I would say also, if you wanna do this, a path you can take that I have pushed almost all my organizations and with success is to say that you want to become a game economist to, whoever's the head of data science, whoever's the head of design, whoever the head of product management, they are open to ideas like this. But prove it when you do analysis and whatever firm that you're working at, if you're in an empirical role, like doing a game economy analysis, show that this way of thinking is powerful enough to have its own. it's completely within your power. And if you really do believe this tool set can provide insight and help make companies profitable, and I certainly do, it can also help understanding, I don't want to ignore that piece either. I think that's been some of my biggest successes, is helping just describe the problems that individuals are facing and how economic thinking can also help solve those problems. Just help frame them even. You can end up in a really great place. A lot of this shit is made up anyways.</p>
<cite>Chris:</cite>
<time>55:19</time>
<p>It's literal. It's all made up.</p>
<cite>Phil:</cite>
<time>55:21</time>
<p>I think that's it guys.</p>
