What Is Game Economy Inflation?

Most games today feature virtual economies, and like any other economy, in-game ones have to deal with economic factors such as inflation. If handled the right way, inflation can benefit a game, though it can also be disastrous if in-game currencies become so devalued that certain in-game mechanics cease to work. This piece seeks to provide you with a deep understanding of game economy inflation, its primary causes, and what solutions exist.

Understanding Inflation

Inflation is closely associated with fiat currency economies, where the amount of money in circulation begins to rise, prompting a rise in the value of goods and services and an overall decrease in the currency’s value. Even in games, too much currency may lead to inflation, which will devalue the currency.

Examples of In-Game Inflation:

There are many examples of in-game inflation where hyperinflation has reduced a game’s currency to the point of uselessness. A few famous ones include the Asheron’s call, where the in-game currency became too excessive to a point where it offered little utility. Thus, players created their own secondary barter-based economy centered around shards, which were used to craft essential late-game items. Another good example is Gaia Online, where gold generators led to hyperinflation of the gold currency. This led to a massive increase in the cost of goods. To address the issue, the game developers took a drastic step by offering to donate $250 to charity every time a player threw away 15 trillion gold.

How to Spot In-Game Inflation Risks?

Game economies are likely to suffer inflation compared to real ones, since the latter relies on the government and central bank to control supply. However, within virtual games, it is possible for players to produce in-game currencies by killing enemies, selling items, or completing challenges. When this happens, the total amount of currency in the game increases, leading to the devaluation of the total currency. Over time, players will discover easier ways to “farm” the game currency, which accelerates the issue. If left unchecked, this can lead to hyperinflation, making the in-game currency useless. Having constant control over the currency’s value is critical. A pinch point is an economic term that refers to a point where demand for a resource is maximized due to customer concern about the supply.

Does Inflation Have Any Benefits?

So far, inflation has been portrayed as a bad thing; but depending on the design of your game, it can have some benefits. For example, if your game has a natural endpoint, you can increase both the amount of currency in circulation and the amount of currency needed for progression in relation to each other. This often fits into the RPG leveling up system where the player can access increasingly large or rare loot, giving them a sense of growth, while the corresponding increase in the cost of high-level items keeps the currency from devaluing. The other benefit of inflation is it helps solve the “latecomer’s disadvantage”. Imagine a player attracted by a long-running game due to some exciting additions to the game but is put off by the amount of time needed to get to that point. By incorporating controlled inflation in the game, new players get access to larger amounts of currency which allows them to progress through the earlier stages faster, thus keeping them interested and invested in the game.

The Problem of Incorporating Inflation in a Game.

Even though inflation might seem like an easy fix to in-game problems like the “latecomer disadvantage”, it is not without issues. Creating a balanced economy is one of the harder aspects of game design, and adding inflation increases the difficulty level. Not only will you need to manage the inflation level constantly, but any new additions to the game also need to work with the current economy and the theoretical future economy accounting for inflation.

Strategies to Mitigate Impact of Inflation:

Designing inflation out of your game is not easy. In the face of an inherently unstable in-game economy or player ingenuity, you might have to develop ways to remove resources from your game to counteract inflation. There are a few ways to achieve this goal:

Incremental Mechanics

As the player progresses through the game, they can build increasingly generous taps (sources of revenue) that give them the feeling of accomplishment, but the cost to build the next level of tap also scales, creating a new sink (ways to spend currency).

PVP Staking/Gambling

This is an excellent way to remove currency from the game. What makes virtual economies vulnerable to inflation is the ease of creating currencies within the game. Fortunately, the reverse is true. Once the resources are out of the player’s hands, they simply cease to exist, which makes removing them relatively easy. As with any gambling mechanic, the house needs to win; therefore, if a greater percentage of players lose than win, the resources are constantly being drawn out as long as the rewards are not additional resources but something different like rare gear.

Seasonal Resets of Content

Though this is somewhat controversial and works for some games, it is an effective way to combat inflation. It is common in games that feature seasons and leagues where hard resets put everyone back on a level playing field, and this normally accompanies the release of new content.

New Currency Crafting

Introducing a new premium currency is another viable way to combat inflation, especially in MMOs. The logic is that the premium currency can be bought with in-game currency and used to access rewards that cannot be bought with in-game currency or traded for items with real-world value.