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title: Why Game Economics is Important for Gamers and Developers

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# Why Game Economics is Important for Gamers and Developers
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<p>What is game economy, and why should gamers care about it? Game economics affect the gaming experience in so many ways that gamers and developers need to consider them when playing games and designing new ones. In this article, we’re going to talk about what game economy is, how it affects gamers, and how developers can take advantage of game economics to build better games and better communities around them. What Is Game Economy? Game economy refers to the way that resources are distributed among different players within a game’s ecosystem.</p>
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<h2><strong>Understanding the Game Economy</strong></h2>
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<p>Knowing the game economy is important because it can tell you whether or not a game will be profitable. It's also important to know because it can tell you what kind of game mechanics are in place and how they relate to one another. Understanding the market forces will help you decide if a particular game is worth your time, effort, and money.</p>
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<p>There are four factors that drive a game's economy. These are: in-game value, item drops, gold sinks, and pay-to-win (P2W). In-game value is just what it sounds like: how much an item in a game is worth relative to everything else. Item drops tell us how often items will appear randomly as loot in game play.&nbsp;</p>
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<p>This can give you an idea of whether or not a player will have enough high level equipment to continue advancing at their own pace. Gold sinks tell us how often these high level items can be bought with real life money so you don't have to sink hours into gameplay without any kind of reward.</p>
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<p>&nbsp;Understanding game economies can help us make informed decisions about whether a game is worth our time or not. When we look at games with thriving economies, we see that they're providing fun gameplay experiences.&nbsp;</p>
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<p>When we look at games with failing economies, we see players leaving in droves. Knowing how to tell if a game economy works can make all the difference between a positive gaming experience and an empty wallet.</p>
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<h3><strong>The Definition of a Real World Market</strong></h3>
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<p>A game economy is a system of virtual currency that can be earned, traded, or exchanged in order to buy and sell goods or services within a game. These economies are created by developers to enhance gameplay while also providing an opportunity to generate profit. Some games feature the use of real world money which can then be exchanged into virtual currency in the game.</p>
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<p>In recent years, these economies have grown more complex as they have begun to include features such as crafting systems and player-made content markets.</p>
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<p>This has led to game economies becoming a real world market, where goods are exchanged for real currency. The same strategies that can be applied to real world markets can be applied to these virtual markets. One way of doing so is through arbitrage, which involves taking advantage of price differences in two different economies in order to make a profit. Another technique that has proven successful in real world markets, such as forex (currency exchange) markets, includes connecting two systems together using APIs in order to further create opportunities.</p>
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<p>Virtual economies are a fast-growing sector of modern gaming, with millions of dollars in revenue generated each year. In 2016 alone, virtual goods sales across all game genres totalled $43 billion. This figure was up by $1 billion compared to 2015, showing that despite concerns about saturation in some sectors, virtual economies continue to be a profitable business model that can support huge games such as Fortnite: Battle Royale.</p>
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<h3><strong>In-Game Economies are Similar to Real World Markets</strong></h3>
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<p>An in-game economy is one of the many things that make a game immersive. The most successful economies are ones where players have a variety of ways to earn money, can spend it on different items, and can do so without running out. It's important to remember that developers also have an interest in maintaining this balance: they want players to spend money while playing their games so they can continue making them.</p>
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<p>That being said, there are some notable differences between in-game economies and real world markets. In games, many aspects of an economy are created by a team of developers instead of being based on supply and demand, such as character personalities or item rarity. A lack of regulation also means that players don’t have to worry about their money holding its value over time like they would if using cash in their everyday life. However, with enough player participation an in-game economy can become just as interesting as your local bank!</p>
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<p>Many games feature some form of virtual currency that players can purchase to use in-game. Using real world money to purchase these items allows developers to create economies that are completely separate from any laws or regulations surrounding financial activity. It also provides players with a sense of safety, as many online games require their users to register a credit card number during registration. This makes it possible for them to make purchases without ever actually transferring any money directly from their own bank account, which would place all financial risk onto the player.</p>
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<h3><strong>Quantifying In-game Economies with Data</strong></h3>
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<p>The game economy refers to the in-game resource management system that governs the flow of resources in a game. This includes currency, items, gear, points, or anything else that can be traded within the game. A well-managed game economy can give players access to a variety of items without breaking the game balance. It also offers developers an opportunity to monetize their games. Releasing limited edition items in a cosmetic update or using DLCs are two examples of how developers use microtransactions from in-game economies to make more money.</p>
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<p>In-game economies are also good business tools because they let players experience more value with their games. If a player pays in real cash to get an item, but he can only use it in his game, he won’t get as much value out of it as if that item was available both within and outside of his gaming context. As such, players are encouraged to buy items from games rather than directly from developers. After all, why spend $10 on one in-game item when you could spend $2 on two items you can use outside of gaming? The latter will get you more value per dollar spent on your money.</p>
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<h3><strong>Understanding In-Game Monetization</strong></h3>
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<p>In-game monetization refers to the various methods of making money from a video game. It can be anything from the sale of in-game items to microtransactions, DLCs or subscriptions.&nbsp;</p>
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<p>The benefits of in-game monetization are clear: they are an effective way to generate revenue while building a community around your product.</p>
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<p>For developers, in-game monetization often represents an easy way to earn money without having to resort to traditional advertising or intrusive measures. For gamers, in-game purchasing offers a fun way of customizing their experience.</p>
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<p>&nbsp;In-game monetization has already proven itself as a strong business model with several game developers now relying on it to generate revenue. However, not all video games are equally good at making money through in-game purchases. So how do you design a game that can earn money? And how much money can it make? Here's what you need to know.</p>
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<h3><strong>A Unified Approach to in-game economies</strong></h3>
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<p>Game economies are a complex subject, but understanding the benefits of a unified approach can help make game development less stressful. Ultimately, it’s all about giving gamers what they want and keeping them engaged.</p>
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<p>It’s been more than a decade since Second Life first introduced in-game economies to gamers, with some of its users making millions selling digital goods in a completely player-run system. Since then, several games have followed suit to varying degrees of success. Today, game economies are bigger than ever. According to Business Insider , they’re now worth an estimated $90 billion annually worldwide.&nbsp;</p>
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<p>This massive growth can be largely attributed to multiplayer online games (MOGs). Games like League of Legends , World of Warcraft and Dota 2 each offer hundreds or even thousands of items players can buy using real money or in-game gold earned through gameplay—and they’ve got many players hooked on these systems just like they are on gambling addiction .</p>
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<h2><strong>Final Thoughts</strong><strong></strong></h2>
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<p>As games grow in popularity, their economies are becoming increasingly profitable. This trend shows no signs of slowing down, especially since publishers have started to realise what many gamers already know: successfully managing a game economy can increase engagement and make gameplay more enjoyable. It’s worth remembering, however, that there is no one-size-fits-all solution when it comes to designing in <strong><a href="https://step.app/" target="_blank" rel="noreferrer noopener">game economics</a></strong>. Each game will present unique challenges; players may need different motivations to play or spend money within your virtual world.</p>
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