Video Game Currency Exchange! An exercise in fundamentals

The Lobby
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Alright, so heres the deal: There’s a new game that just came out called APB (All Points Bulletin). It’s an MMO (massively mutliplayer online) game made by some of the creators of the Grand Theft Auto series, and in the same vein it shares many of the same characteristics.

In this game there are two currencies in practice: APB Dollars, and RTW Points.

RTW Points are used to buy in-game time and they may also be used to buy practically anything in-game that APB Dollars can be used to buy. This includes being able to buy APB Dollars with RTW Points.

RTW Points are only introduced into the economy with real money. It works like this: When you buy the game for 49.99 USD, you get 50 hours of gameplay and 100 free RTW points. Whenever those 50 hours are up, you must purchase RTW points and exchange those RTW points for more hours. The game is not even out yet, but under certain conditions based on whether or not you pre-ordered the game and whether or not you purchased a previous game, some players are allowed to play the game 3 days early. This was two days ago. The game releases tomorrow.

This game, like most new MMOs, has an in-game auction house system. Here are the exchange rates:

Official Conversion Rates:
200 Points = 4.99 USD
400 Points = 9.99 USD
600 Points = 14.99 USD
1400 Points = 34.99 USD
2600 Points = 64.99 USD

200 Points = £3.99 incl. VAT
400 Points = £7.99 incl. VAT
600 Points = £11.99 incl. VAT
1400 Points = £27.99 incl. VAT
2600 Points = £51.99 incl. VAT

Market Based In-Game Rates (A few notes about this after the screenshot):

As you can see, the in-game APB Dollars -> RTW Points conversion is all over the place. This is because the market is determined by a playerbase who has absolutely no idea what the conversion rate should be with no completed transactions on which to base their prices on. Again, none of these transactions have taken place because no one has purchased any RTW Points and the 100 you are given for purchasing the game has not been considered because there are not many transactions being made with RTW points yet – they won’t need to until the game becomes a couple weeks old and people start running out of their game time.

Just with my knowledge of MMO economies and me playing the game for 10 hours so far, I am venturing a pure guess that the true conversion rate will be around ~350 APB Dollars = 1 RTW Point. This is based on the fact that after 10 hours of playing, I have made 100,000 APB Dollars without trying, the fact that RTW points will primarily be purchased after 50 hours of playtime, and the fact that the rate at which you make money in-game increases the more you play/the better you get.

The full process would look like this:

  1. I purchase as many RTW Points as I am willing to buy, likely 5200 RTW Points for $129.98 USD.
  2. I would then immediately attempt to liquidate the RTW Points at various rates by directly trading RTW Points for in-game APB Dollars. (There would be a huge and established market for this because people would rather spend in-game money for their monthly fee than give up their mom’s debit-card info)
  3. After I wait about 1 month when the in-game population is at it’s greatest and the economy is at full saturation, I would then sell APB Dollars for RTW Points. (The market for these will not be as big, but it should still be viable. If it is not, then I can do a variation of step 4)
  4. I then take my profit of RTW Points and advertise in-game for selling RTW Points for real money that would be paid to my paypal account. The market for this would be made by me, but very reliable because I would be the only one offering to undercut the game company’s rates. This step WILL get me banned from the game once I am caught.

The last piece of the puzzle is where most of the profits come in:
In addition of the fact that more people = more money being created in-game = inflation (i’ve seen this a million times in many MMOs, not to mention any high-school economics class), but also the most important part…

In order to unlock certain aspects of the game that allow you to customize your character, you have to spend time leveling up a certain ability. You are also awarded APB Dollars for leveling up this ability. Additionally, there is a soon-to-be widely used exploit that allows you to go AFK from your computer and completely level this ability overnight. Even in the likely event that they fix it, this will still have a very profound impact in the short-term on the developing in-game economy and it results in every person using this being given ~30,000 APB Dollars on the first day. Tens of thousands of players have already done this. This exploit only serves to accelerate the inflation–the inflation is inevitable.

In order to protect myself from losing profits when I am banned, I would have to store the purchased RTW points on a second account, and transfer them (possibly through artificially complicated means, think money laundering) to the account that is used to sell.) This is widely practiced in the World of Warcraft gold-selling operations.

The basic idea is that 2 days ago, buying an AK-74 in-game cost ~5000 APB dollars. Right now it costs ~20,000 APBdollars. I am betting by the time the population is multiplied by 4 when the game is officially released tomorrow, buying a basic gun in game will be around 50,000 APB dollars. (It won’t be too much more than that because of the increased supply).

My Forex sense is tingling and I’m tempted to do this if for no other reason than to have a story to tell to my favorite econ professor next semester :smiley:

I thought this subject may make for some interesting discussion.
Thoughts/Advice/Guffaws/Encouragement/Warnings?

edit
By the way, for those of you who are interested in making serious money, in about ~10 years or so when the hardware industry goes the way of the airline industry and stagnates based on the exhaustion of Moore’s Law, it is predicted that we’ll see some extremely badass and immensely popular video games. When this happens, you’ll likely start seeing real trading being done between in-game money and real money on a scale that makes business ventures with lolSecond Life money and World of Warcraft money look like lemonaid stands. They’ll be some insane opportunities for those who understand fundamentals and are capable of applying it to in-game worlds. You can already see this happening with people buying/selling WoW gold based on in-game events such as new arena seasons and patches.

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Cool story bro.

4

I’ll stick with Forex, your game sounds complicated…:wink: Now come up with a version of Modern Warfare 2 that gives me money for my performance and I would be all over that!

1 Like
5

Im amazed there’s a game about currencies and its MMO but I’m wondering I never heard of this, is there a demo about this game, to try it first :slight_smile:

6

This is very interesting. I’d be interested in hearing your take on EVE and it’s real money trade. You can trade time cards for real money AND you can ever LOSE them if you die by a player killer. I don’t play Eve anymore, but that piqued my interest after I read about it.

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I love video games and I think it’s cool that they’ve learned how to monetize games in this way, but I just can’t see shelling out money consistently on a game. I mean, my daughter plays games on my iPad sometimes and they literally let you do one thing and then want money to unlock the rest, it’s like $12 for a few online coloring pages, ridiculous.
I remember when you could go to Walmart and get a brand new PS2 game for 20. I get that games and consoles are more advanced, but it’s crazy how quickly it adds up. $30 in Fortnite might get you one outfit. I just think the money should go farther.