Most students of economics mistake concepts like “maximizing utility” and “marginal cost” as clinical, dose-response calculations.  They are not.  They are examples of the absurd heuristics we use to hide how completely pointless and self deceptive our ability to value something is.  We can create value out of nothing and invest it with nothing less than our identity or the worth of a nation.

At no point in my career has this been clearer than when I helped design game economies for video games.

My brief (and completely lackluster) encounter with this industry started in the summer of 2011 when a High School friend of mine who taught economics at Stanford and I were B.S.ing about an emerging business model called “freemium” games and concluded that this would be the perfect petri dish for experimenting with consumer behavior in controlled economies.  In freemium games a person could download a casual game onto a mobile device and play for free but soon after starting, players were offered the “opportunity” to make “In App” purchases to enhance their game play.

I made a few inquiries and later that year I was approached by a company in Redmond Washington to help design economies in their portfolio of freemium games.

To get me oriented in the world of game design they sent me Game Design Documents from some of their most successful titles and deconstructions of their competitor’s games.  These read like Cliff Notes of a Cirque du Soleil performance.  It described with great precision the colors, fonts, layout of the screen, action and concept but there was very little describing the intended consequences of engagement.  I was left very impressed but not at all sure about what.

I finally got a clue about a month later when a game producer gave me a copy of Mihaly Csikszentmihalyi’s book “Flow”, with a quickly scribbled sticky note “The Bible of Game design” stuck to it.  In it, the author describes the psychology of flow and how the value of play becomes “autotelic” or and end-in-itself when a person is in the zone, so to speak.  This was not the source of value I was expecting and certainly not the source of value taught in economics courses.

It was while reading this explication of play that I began my first deconstruction of game economies with a newly released title called Clash of Clans.  I created 14 different players (using several thousands of the company’s dollars) and tried several different game-play techniques in order to map:

  1. The pricing and points structure
  2. The rate of flow of both the hard and soft currencies in the game
  3. Networks and interactions of clans.
  4. Subgame deconstructions
  5. Subgame portfolio analysis

In 2012 I followed this up with deconstructions of two other new releases: Rage of Bahamut (A card collecting game) and CSR Racer (a Drag Racing game).

At the same time I was doing this, I was also building my own ludography of games that were being released into the excessively hot and competitive market of iPhone freemium games in 2012 and 2013.

The sequence of events that were my introduction to the gaming world is important.  In games this is called on-boarding and it turns out to be one of the most important phases for determining a game’s success or failure.

So many of us kids that went to the Freemium “Rave” came away with scars and embarrassments that never fully healed.  Some of them were funny.  There were the producers with what I called the GDC swagger.  GDC is an annual cabal of conspirators in the game industry where everyone went to show off.  There were two indicators that you were looking at a producer.  The first was that a number of groupies were following them like a plague of gnats.  They were almost theatrical caricatures of 21st century geek-chic as they managed to Volks-strut down an Isle while pontificating to no one in particular.  The second was that they would, at arbitrary moments, make an exaggerated point and wink of recognition at random people along the way who would just look confused and mouth “Who the hell was that?”

Some of the scars were more serious.  Using the as-yet-untapped resources of following a person’s every move and gesture on an iPhone and then asking us Analysts “What information can we take from this to create an addiction…Without the addict realizing it?”.

Suddenly Mihaly Csikszentmihalyi was Walter White from Breaking Bad and I was one of his doomed business partners.

This get rich quick scheme has pretty much run its course and is ripe for some deconstruction.  While many of those who know how to Volks-strut will undoubtedly spin this much better than I can, mine will demonstrate just how twisted economic thinking can be.  I am going to attempt to model my deconstruction in the same way I would any game.  It begins with the players…not the game.

 

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