Clueless Intervention Part II
Picking up where I left off in the previous blog post, I will now try to explain why I said that CCP is stupid for meddling in the mechanics of the game without first gaining a more thorough understanding of the effects of their changes.
Before I go into the hows and wherefores of CCP’s perceived stupidity, I would like to explain the unique structures that exist in EVE’s economic sandbox.
In most other MMOGs there is often a centralised market created for convenience of the playerbase. Take World of Warcraft: most of the market trading goes on in the Auction Houses in the various cities where people come to trade on the market. This form of market is obviously similar to a real-world market that was purpose-erected in a particular place and people are told “this is where you go to trade”. These are built by the local authority (in WoW’s case, Blizzard) and players have no choice but to use it. Other games have similar structures and ‘enforced’ market hubs.
Not so in EVE.
The current system
Broadly speaking, there are 2 somewhat disparate market spheres: Empire and 0.0 (lowsec).
Empire is the name given to the unconquerable NPC space that is in the centre of the EVE map. It is where new players start and where a lot of the population of EVE remain. It is safe there. There are police NPCs (CONCORD) who will warp in and kill you if you aggress another player in a system that is rated higher than 0.4 security. It is where the low-end ores are mined by players looking to get a quick buck by selling the products of their labour on the markets.
The markets in Empire are concentrated in a system called Jita. It came to be the current hub for market activity after a reshuffle of the jumpgate destinations around another system called Yulai, the previous market hub. Coupled with the fact that Jita is in Caldari space (Caldari being one of the four races in EVE along with the Amarr, Gallente and Minmatar) and that a large proportion of players are Caldari, along with its position, ease of access and abundance of mission agents, made it the prime position for the new market hub.
Borrowing from the GoonFleet wiki:
Market hubs are centralized player-run markets. They generally have the baseline price for products, with prices getting higher and higher the further you are away from a market hub – reaching their peak in 0.0 space. More importantly, they have a far broader range of available products available than most areas of space.
As you can see, this particular hub sprang up much like some towns in England became natural market centres in the past due to their location and connections whether by road, rail or sea.
In this article, then, when I refer to the “Empire Price” of an item, I am referring to the price in Jita.
0.0 or lowsec is lawless space where anything goes and the laws are whatever the occupying alliance makes them. Think of the Wild West in Gold Rush times. Only permanent. Territorial shifts, changes in the balance of power and influence are commonplace. Markets in 0.0 tend to be more spread out between stations and outposts but are also far more specialised. Whereas in Jita, virtually the entire range of products in the EVE universe is available for trade, whether you are looking for a Cruise Missile Launcher or Long-Limb Roes, chances are it will be in Jita 4-4 (station). In a 0.0 market, the commodities available are restricted to what is commonly used, such as battleship hulls, heavy weaponry, electronic warfare modules and other warlike equipment.
Prices in 0.0 markets can also be significantly higher than Jita prices due to scarcity and the costs of producing them in 0.0 space.
Basic supply -v- demand economics. As supply decreases, prices rise.
0.0 markets also have far fewer “hub” systems like Jita. The market hubs tend to be near the frontlines in any given conflict. In the real world, this would be suicide, but in EVE this is the most profitable placement for any market as players will purchase ships and modules and ammunition to use in the fighting and they are more likely to buy your goods if they are near the combat zone as they can get into the fight quicker. This leads to market locations shifting between systems periodically as the tides of war ebb and flow.
Here you have a problem. Since production is dependent on minerals and as I said in my previous post, it makes no sense to mine the low-end ores in lowsec. The benefits are just not worth the cost in time and risk to your operation. Conversely, the same is true for Jita. You **cannot **mine any of the high-end ores in Empire, so they must be imported from 0.0.
There is interdependence therefore. Jita’s markets need the high-end minerals from 0.0 and 0.0 needs the low-end minerals from Jita. This is how it has been since players began to colonise 0.0 space. Major alliances rely on this system to supply them with the minerals they require to fuel their production of combat gear, ships and anything in between.
The technique currently used for importation minerals in bulk was covered in the previous article so I will not expand on that. The basic principle goes along these lines:
[minerals] -> used to produce a large number of a particular module at source -> modules moved to destination -> modules refined back into minerals -> minerals used or sold.
CCP Takes Notice
CCP, for whatever bizarre reason, have deemed this process detrimental to the game’s markets and are moving to correct it. However, the issue here is not correcting flawed gameplay or an inherently flawed market. It is interference without understanding the effects that changes they implement will have upon the economy of EVE.
Let me elaborate. As I mentioned, there are 2 distinct but overlapping market spheres: Empire and 0.0. As I also mentioned, the prices in the 0.0 markets are higher due to the importation costs, time spent and the monopolistic/oligopolistic tendency of the major market players, whereas in Jita, there is near-perfect competition. This whole structure has been built on top of the supposedly “flawed” gameplay and has existed quite happily with no market abnormalities since the game’s inception in 2003. Changing it at this point could yield disastrous consequences in terms of price fluctuations as well as interfering with the supply and demand mechanics that have been in place for years.
The likely basis for CCP’s decision
I won’t cross-post this gargantuan essay in here, merely use snippets of it to illustrate points, however feel free to read it.
The introduction goes over some historical data about how the mineral market has behaved over the past few years and it says largely what you would expect – both the weekly volume and value of mineral sales on the market has risen steadily since 2003 with a sudden rise in the rate of increase around mid-2005. This coincides with the introduction of Mining Barges to the game, which upped the amount of minerals mined quite significantly if you take into account the number of players who could fly these
These graphs show just that. However, I would like to draw your attention to an interesting set of statements that the author makes in this article:
The first graph shows how trade with minerals increased slowly for the first years but after mid-year 2005 the value of trade increased exponentially.
After midyear 2006 the increase in traded volume is at a slower pace than previously but the total volume still **doubles **from midyear 2006 until mid year 2007.
The author is clearly wrong in both instances. This suggests that he does not know quite what he is talking about and is overstating matters, which in itself is a minor error, but it does throw doubt on the reliability of the statements and hypotheses he proceeds to make later on.
After more statistics similar to this, covering price changes and increases of *trade value per capita*(which is largely irrelevant because most of the EVE populace does not, as a rule, engage in much serious mineral trading), the article points out that Tritanium is the biggest-selling mineral by volume, but occupies roughly 20-25% in terms of the value of those sales. Note that these statistics are purely for the low-end minerals.
Both tritanium and pyerite have increased in value over the past twelve month signaling an increased demand for these low-end minerals. We have not been able to pinpoint why this increase seems to be occurring. The current hypothesis is that increased demand for capital type ships and the rise in warfare over the past few months has increased demand for low-end minerals (they are needed in huge quantities for production of capital ships) at the same time that corps and alliances have been withholding minerals from the market for their own production. It would be interesting to hear the community’s hypotheses concerning the increasing low-end mineral demand.
This passage demonstrates how little this “developer” knows about CCP’s own game and what goes on. And I am afraid that this ignorance stretches to other areas of the game such as combat, POS warfare and the like. However, in this instance it frightens me that the people who make changes to the mechanics of the game have very little clue how the mineral markets operate.
I say this because judging from these statistics, it looks like the report was based on Jita prices and Empire prices in general as 0.0 prices are somewhat different.
The price of tritanium and pyerite seem to be following the same pattern though the price increase is much higher for pyerite. Tritanium rose from around 2 ISK per unit up to 2.8 ISK in late December 2006, dropping off slowly and leveling just above 2 ISK per unit. Pyerite increased sharply from 4 ISK per unit to nearly 9 ISK at the end of the first quarter in 2007 but has since dropped in price, trading at 7 ISK at end of June and is currently trading around 6.5 – 6.8 ISK per unit.
The price increase, and then slow drop in prices, seems to coincide with an increase in production of capital ships throughout the first two quarters of 2007. What might have triggered this production increase could be increased warfare, and/or the price reduction in zydrine allowing for cheaper production of capital ships. This has however not been confirmed with current data but will be looked at more closely in the next Econ Dev Blog in September.
Reading the last bold section, I am astounded at how the author has managed to miss the conflict that has been raging for the better part of 6 months all around 0.0. He also managed to miss the supercapital nerf that took place during the last 6 months which I mentioned briefly in the first instalment of this article.
Also, note that the colours on the graph are the same. The bottom line represents Tritanium while the top one represents Pyerite. Amazingly misleading for someone who doesn’t know the typical price for a unit of trit vs a unit of pye.
The article postulates that the prices across different regions are converging as a result of improved information and the like. He forgets to mention that all the regions in this graph are Empire regions and prices are bound to be very similar by the very nature of the Empire markets.
The author does attempt a comparison between different regions of the game and the mineral prices within them and here is the result.
The issue is, that once again, the developers are clueless as to what goes on in 0.0 space. Domain, Citadel and Forge are ALL empire systems. Naturally, this does not give an accurate depiction of what goes on in 0.0. The only one left is Wicked Creek. This is an area of space that is sparsely populated and has very little large-scale activity and is a terrible place to take a sample. It is also conveniently close to Empire, meaning you can fly there within a few jumps. Perfect for the lazy reporter who can claim that he went to 0.0 and took a sample representing all of 0.0. He could NOT be more wrong.
The real data
Here is a graph of the Tenerifis tritanium market over the last year.
And here is one for Detorid
As you can see from these two graphs alone, the pretty pictures that are painted by the graphs earlier MUST be representations of the Jita markets, because of the sheer volume of trade and competition driving prices down, any such fluctuations in price simply would NOT occur.
The article in principle is a fantastic idea that enlightens people as to the nature of the markets in EVE. However, it is HUGELY skewed towards representing Empire markets and neglects to show the huge difference between Empire, which is a cozy little world and 0.0 which is a lawless wasteland where the markets are much more dynamic.
Based on the data presented by people like this, CCP is deciding to nerf mineral compression. The ruling logic being that too much tritanium is flooding into Empire, causing prices to change. This could not be further from the truth. I cannot comprehend anyone who would WILLINGLY import Trit into Empire. Trit is **EXPORTED **from Empire, hence the demand for it. High-end minerals are imported to Empire from 0.0 space on a daily basis to be bought up by various parties, quite often capital ship producers who do their work in Empire.
This differs enormously to the picture that CCP paints of freak fluctuations in the tritanium markets being caused by players importing tritanium or other lowend minerals to the market hubs from Great Wildlands to sell.
I pray that CCP realise their error and leave well enough alone. You cannot trust the data presented in that article to base any kind of serious gameplay mechanic changes on. Ever.
Please, CCP, WAKE UP!