Guild Wars 2:  How I made effortless Gold in Guild Wars 2 by Making Markets

Alright its been a while since my last post. I've been playing a lot of GW2 and I really like it. The art in the game is amazing (I don't mind load screens!) and the economy is pretty vibrant / fun.

One of the first things I noticed about the markets was that there were numerous opportunities to speculate to make gold.  Although there are easier ways to just 'farm' gold, the following was a great exercise in combining my professional knowledge of markets and leverage it into a competitive advantage in a game. The following is a description of how I was making 2 gold a day with very little effort.

I was making the market in 12 slot cotton bags for a week.

What do I mean by 'making a market'?  I was consistently and simultaneously buying and selling at the best prices in the market.  That means I was the highest bids and lowest offers.

Why 12 slot cotton bags? 

I looked around the marketplace for a while, looking for items with a wide 'spread' (the distance between the highest buy and lowest seller in % terms)  AKA (Sell_price-Buy_price)/Buy_price.  12 slot cotton bags ATM is 8 silver wide! (12am cst http://www.gw2spidy.com/item/9411)

This is a hypothetical profit of 40% for 2 transactions!  Unheard of in trading (although last night I found out a tick in Nikkei futures is $125 - why would anyone trade that???).  Anyways, also using http://tpcalc.com/ to gauge my transactions costs, profit comes down drastically to 13.6% in today's market.

How much can I make in this market today?

I was buying 10 bags at a time without a problem. The turnover on 10 bags was usually about 1 hour. Right now thats about 40 silver / hour for doing absolutely nothing.

What are the risks?

1. Building up an inventory. The second you buy a bag, you really want to sell it. The risk of owning 40 bags and listing them @ 28 while sellers move the market lower to say 24 is pretty big. You will lose big from transaction costs if you have to continually re-list your bags.

2. 'Pushing the market' - Assume the market was in equilibrium before you came in. There was a 'natural' spread between buyers and sellers with a normal sum of transactions per day.  Now that you are participating in the market, with a lot of volume in order to make a good profit, you will naturally 'tighten' the market. You need to be aware of your own effect on the market and adjust your buying / selling size and frequency in order to maintain the natural relationship between buyers and sellers.  AKA don't be obvious.

Go try it for yourself! Comment below with your successes and failures!

Daiblo 3: Measuring Liquidity

• In finance we use a few basic metrics to understand a products liquidity.
• Average Daily Volume
• How much traded that day
• Bid Ask Spread difference
• The 'cost' of immediately purchasing or selling
• Market order Depth
• How many people are willing to buy or sell at the bid and ask
• Volume Elasticity of Price
• % change in price due to a % change in volume traded
• I would love for someone to critique this metric 
• I used to to understand low volume trading times (non-peak hours)

 

• What are Diablo's versions of these metrics? The AH has seemed to the low end user (sub legendary / set sellers) to have completely dried up.
• Average Daily Volume (D3) over time I bet has dropped to a relative stand still
• Gold traded in mm
• Lvl 60+ items
• Rare / Leg / Set
• Distribution of prices
• Bid ask spread diff
• This doesn't really exist (maybe simulated in gem / commodity market)
• Market order Depth
• Can be viewed as the different prices for a legendary of same caliber
• This is probably increased on the sellers side as supply is growing 
• Not visible information on the buyers side
• Volume Elasticity of price
• The other day Gold popped 20 cents (roughly 30% !!) 
• I would imagine this was done on relatively low volume

Diablo 3: Price Discrimination and the Real Money AH

Hey I just posted this on reddit: http://www.reddit.com/r/Diablo/comments/10ci9n/intentional_price_discrimination_discussion/

New Games and Economies (Scatter brainish - about to go to bed)

• Torchlight 2
• Releasing tomorrow!! - most of my game time will be focused on this for near future
• Have high hopes for the general design of the game
• Sticking with tech tree
• I believe this is fundamental flaw with Diablo 3 (no tech tree)
• Might touch on this later

• Reminder: Develop post about Game Economies
• Single player versus Multi-player
• D3 specifically
• Introduce and investigate that D3's economy isn't only suffering from inflation but Item Value Depreciation
• Highest tier items -> inflation
• mid and low tier -> Extreme depreciation
• Gems -> Seemed steady until recently i thought I saw them drop. 
• Think about how game acts as a permanent seller (jeweler / blacksmith) and how that will effect prices until market is saturated. After saturation point prices will plummet. 

• Diablo 3 Update
• In response to reddit and bnet forums discussing if and why the economy 'dry's up' before a patch
• This is a very common thing in markets.
• The lack of information, and then perceived volatility from non-info, drives users away from making decisions
• Maybe the rational is some sort of 'perceived deflation' 
• Immediately before the information is released 
• People pull their bids and offers (where they will buy or sell the stock / future etc)
• Then huge amounts of volatility occur
• I usually use the metaphor of throwing a big rock into a pond to describe the 'waves' that happen after these events
• Personal belief that its impossible to predict the amplitude and wavelength, but they're easily recognizable after the fact. Also they decay like in nature, just not with any law.
• So definitely wait to make any purchase.
• 
  
• Also WHERE CAN I GET TIME SERIES OF DAILY GEM PRICES? Please leave a comment if you have a source.

Slingo and other Casuals

• Most casuals use this potential energy type of model in order to limit users / monetize gameplay.
• Some stress energy more than others
• Energy is less important in Slingo than in Sim City Social for example (just a hunch)
• Less important in terms of % of revenue collected by users buying energy

• I would be interested in knowing what the expected loss in daily revenue would be by giving users each say 10 energy for games like Slingo compared with Sim City Social.
• Is there a standard measurement for this idea? 
• I think this is incredibly important to understand in order to provide the right amount of free energy for possibly daily focused advertisements.
• Give users 5 energy for visiting this other site for example, or trying a different game.
• Well great, you got them to use another game. More money right?!
• Maybe not, maybe the cost of dishing out 5 energy just outweighed the profit of the ad.

No one really reads these, yet! :), but if anyone has some insight on this I would love to hear about it. Gotta get back to work!

Diablo 3: Player Analysis (wip)

Most posts that I am going to be gamestorming about focus around user retention and monetization. Here is one that I thought about at work for a few minutes while discussing another game with a colleague: Halo 3.

• Diablo 3 needs to develop an online, introspective player analysis similar to that of Bungie's.
• Example of Bungie's display at bottom
• Easily display core kill, death, financial descriptive statistics to the user.
• Kill
• Elites per minute
• Pack per minute
• Experience per minute
• Break down by Act / Zone 
• Death
• Deaths per Act / Zone
• Deaths by Affix
• List Affixes
• Count deaths (percentage as well)
• Charting with events (will add an edited Bloomberg example when i get to work tomorrow)

• For the first week of September 50% of your deaths came from physical
• You saw this stat, and purchased a new item that increased you res to physical by 60.
• The second week of September 30% of your deaths came from physical
• Here is a financial example (just imagine the lines are deaths per hour. They could be colored differently by Act)
• 
  
• Financial
• Gold pick up rates
• Item rates
• We get the idea
• Why focus on this player analysis?

• User Retention translates to monetizatoin
• Why will users be retained?
• Analysis will be made available which will lead to introspective and critical analysis 
• The key KPIs I would bet are
•  average RMAH transactions per player is probably their (AH team) main focus.
• average value of RMAH transactions
• These should be separated by item / commodity / gold as there might not be parity 
• More user's playing for longer means increases in total RMT(real money transactions) per day as there should be more players
• A smarter player means increase in avg RMT
• Plus this seems pretty short term -  3 month project for 3 to 4 people?
• PM, 2 analysts with both SQL focused and one HTML focused, and a web designer.

Slingo: Browser Solutions

• Chrome is having trouble with flash.
• Video ads failing to load / other Flash issues?
• Have engineers solve the issue?
• Just get users to switch to Firefox?
• In game incentives to switch?
• Deals with Firefox?
• What are the benefits of being browser neutral?

Will edit later, got to go for now...