Tag Archives: Deflation

Titanium Dropping in Price

The WoWenomics team was discussing Titanium Ore recently and all team members agreed that the prices are down from their peak just a few weeks ago. Whereas typical prices for a stack of ore were reported as being in the area of 350 gold or more, we searched ten auction houses across five servers last night and found stacks available for buyouts at sub-300 levels on seven of the ten auction houses. We cannot say definitively how much prices are dropping since we have not been statistically recording the prices across servers but, anecdotally at least, it would appear that the ore, and goods and services related to the ore, are currently on the decline.

The reasons for the drop in price of Titanium are probably a combination of:

  • Increased supply– Titanium Ore has been so profitable for so many weeks that many more players are jumping into the farming for resale market, causing a certain amount of over-supply.
  • Decreased demand– As epic gem prices drop and stabilize perhaps Jewelcrafters are finding high ore prices intolerable.

In fact, one interesting correlation that we noted in our research was that of the seven servers that showed lower ore prices, every single one showed decreased epic gem prices. Prices for uncut gems on these servers were typically within the area of 140-150 gold. It may be that epic gem prices can be used as an early indicator of the direction of Titanium Ore. If you are in the ore market, either buying or selling, you might want to also look into the prices of epic gems to determine your optimal pricing and/or farming strategy before you set out on your daily quest for profits.

It is impossible to say if the observed decline in Titanium prices is here to stay of if this is just part of the cyclic nature of the WoW economy but, for the time being at least, we are rating Titanium Ore as a sell.

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Analysis of Flask Prices

We don’t normally break out individual server prices- preferring instead to look for and study trends identified by producing an average across servers. Examining an average allows us to normalize single-server anomalies. This is important as a server’s economy is a fragile thing and can be manipulated significantly by a single person (even, sometimes, unintentionally). Our averages correct for this imperfection by producing a composite index and, ideally, a trend. However, given the recent conversations on the reliability of averages on both this site and others, we decided, this time, to give the data a second look by breaking out the individual server reports. What we found was most interesting…

Recently, we tested the prices of the four most popular Northrend flasks. To be perfectly honest, after a brief two-week study we found the initial results to be fairly unremarkable. Outside of the normal slow deflationary movement and slight weekday vs. weekend cycle that we’ve observed and reported on previously (and this time to an even lesser degree) it would seem that there was really not much to report.

Here’s the data for a one of the flasks, the Flask of Stoneblood:

2 Week High: 29.345 on Saturday, May 25, 2009
2 Week Low: 24.1625 on Monday, June 1, 2009

Flask of Stoneblood- 2 weeks- 4 srvr avg

Fairly unremarkable right? However, upon closer inspection we find a few interesting observations. By taking away the four-server average function and looking at the flask’s performance on individual servers we start to see some fascinating patterns in price ranges . Take a look at the data yourself. Our observations follow.

Flask of Stoneblood- 2 weeks- 4 srvr unique

Our Observations:

  • Not all servers followed the weekend = higher prices cycle. One server completely bucked this trend by showing lower prices on the weekends and higher ones on weekdays.
  • As we observed with another recent analysis, prices were slightly higher on most servers (3 out of 4 this time) on the Alliance side than those of their opposing faction, the Horde. Of note, these were 4 different servers from the last set we saw the same phenomenon. Does it cost more to play Alliance? Does faction have an effect on prices?
  • The higher the price point, the wider the amount of variance in the prices. This makes sense, however, when we look at the variance in terms of percentages instead of hard amounts where the data reveals itself to be consistent.
  • Price points were consistent on servers on both faction sides. If a server had higher prices on the Alliance side, prices were also higher on the Horde side of that same server. This was observed in every single test and has been observed before. There is, seemingly, some correlation between prices on both sides of the fence for each server which is probably evidence of ample cross-faction sales.
  • There was certainly ample evidence, across both factions of all four servers that a persistent up and down pricing cycle exists. This should provide some trading opportunities for the astute trader.

We do our best to not speculate or draw opinionated conclusions of our tested data. We prefer to leave that part of the process to you, our readers. It should also be said that we ran similar tests on the other three flasks and are continuing our analysis internally, amongst our team members. We intend to report additional data on flasks in the coming weeks provided there is ample interest from the WoWenomics community.

A note on our testing methods:

As always, we use our unique formula for Going Rate as our measured price point as this allows for us to assess only realistic prices. Four servers were tested in this round. This means that we actually ran tests on 8 unique auction houses as both factions are tested and then compiled into a single, reported server average. Tests were run for 15 days, Monday, 18 May 09 to Monday, 1 June 09. The servers we used were selected for population and reported auction house activity factional equivalence. Tests were run at the same time of day, once daily in this case, for 15 consecutive days. Additional information on our testing methods can be found on our other Market Data Reports.

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Analysis of the Post-3.1 Economy

We’ve now had two weeks to assess the impact of patch 3.1 on the WoW economy. The general consensus has been that, while there were a few areas of opportunity, the Northrend economy overall is in a state of continued decline. We are certainly no fans of assumption here at WoWenomics so we chose a few items, specifically those items we based our own pre-patch predictions upon, to track with standard financial analytics. It is this analysis we share with you now.

When looking at the statistics below you may notice that there are three weeks of listed tests. The purpose of conducing three weeks of testing was to establish a baseline in the week prior to the release of the patch. Bear in mind that the day the patch was released to the (US) public was Tuesday, April 14th. The data listed below reflects the week of prices leading up to this date and the two-week period following.

Items we Predicted Would Rise in Value

Borean Man O’ War

3 week high: 40.84 on Sunday, April 19, 2009
3 week low: 18.51 on Monday, April 27, 2009
3 week average price: 23.22

after-3-1_1-borean-man-o-war

Of all the items we predicted an increase in price for, Borean Man O’ War saw the biggest increase in value in terms of percentage increase. This was particularly true if you invested when we initially recommended a buy on this item.

Eternal Earth

3 week high: 7.16 on Saturday, April 25, 2009
3 week low: 4.68 on Wednesday, April 8, 2009
3 week average price: 5.53

after-3-1_1-eternal-earth2

While we initially recommended investing in this item prior to 3.1 we amended our recommendation based on data that was released shortly before the patch was released. Yet, Eternal Earth still managed to increase in value over our testing period. Not a huge increase mind you, but an increase nonetheless. Interestingly, all three of the eternals we tested showed a spike in value on all servers in the days immediately following the release of the patch.

Eternal Fire

3 week high: 28.64 on Wednesday, April 16, 2009
3 week low: 18.97 on Wednesday, April 8, 2009
3 week average price: 21.95

after-3-1_1-eternal-fire

Prices for Eternal Fire have remained mostly stable showing only a modest increase over the three-week examination period.

Eternal Shadow

3 week high: 6.89 on Thursday, April 16, 2009
3 week low: 3.94 on Wednesday, April 8, 2009
3 week average price: 5.19

after-3-1_1-eternal-shadow

Interestingly, all tracked eternals showed their lowest prices on the same date. As the price increased from both the date of our prediction and the week prior to the patch date, we consider this prediction a success.

Gems

Initially gems did not show much promise for profit following 3.1. Recently however, the gem market seems to be showing promise. This reflects the fact that players are now attaining more new gear through both Ulduar and Arena Season 6.

Glyphs

The profits to be made in the initial days following the release of 3.1 were meaningful and well documented. Our resident inscription expert remarks only that “things have cooled” significantly since then.

High-end Cloth- Moonshroud

3 week high: 96.45 on Wednesday, April 8, 2009
3 week low: 81.82 on Tuesday, April 28, 2009
3 week average price: 88.97

after-3-1_1-moonshroud1

We chose to track Moonshroud for several reasons; the most prevalent being that we feel it has the highest potential for increase. That said, the price of Moonshroud has thus far not increased outside of specific price spikes described in our summary below. Further, the decline in price is representative of the decline of the other two types of high-end tailoring cloth. In fact, were you to lay the charts for all three cloth types over one another you’d find that they decline at an almost impossible to differentiate rate although the price points are different.

Icy Dragonscale

We chose not to track Icy Dragonscale statistically due to the fact that it experienced a very modest increase in price. In fact, the only remarkable thing about this leatherworking item, in our opinion, is just how unremarkable the price changes were. The prices of the dragonscales have remained at almost the exact same levels for the past three weeks indicating that, perhaps, the market had ‘bottomed out’ previously and this item has achieved some level of price stability.

Mana Regeneration Items

We did not track a specific item to represent mana regeneration as we feel there are simply too many options available to the player to enhance mana regeneration. We do note, however, that we’ve seen a modest increase in the going rate of +MP5 food and gems.

Popular Enchantments and Enchanting Materials

As we noted recently, we’re doing a brisk and healthy business in already-enchanted vellums. Beyond that, we are seeing server price spikes in specific enchanting materials but nothing consistent. If you’re in the enchanting mats business you’ll have to frequently check the AH so as to determine when best to buy and sell.

Relic of Ulduar

These reputation turn-in items have not yet shown a significant increase in price. They have performed instead in similar manner as the Icy Dragonscale listed above. The only interesting thing about these relics is that it is the single item that seems to have found a consistent price that is very close to being the same on all servers (the Icy Dragonscale, by contrast, is consistently in the same price range day after day but that price point varies from server to server). The Relic of Ulduar price is about 2 gold per item across every server tested. Prices for the past three weeks have varied by less than 5 silver from this standard on any given day and, remarkably, this remains the same price level whether the items are sold in stacks or as singles.

Titansteel Bars

3 week high: 102.39 on Tuesday, April 7, 2009
3 week low: 77.82 on Tuesday, April 28, 2009
3 week average price: 92.66

after-3-1_1-titansteel-bar2

Titansteel Bars have been the biggest loser so far in our pre-3.1 assessment. Prices have continued downwards in steady decline for the past three weeks outside of occasional price spikes unique to each server.

WoTLK Flasks

Flask prices have not been specifically tracked as they are a different beast entirely. The two-for-one flask split further complicated the issue. That said, we made a huge amount of gold off of flasks with the release of patch 3.1 and will, perhaps, explore the potential for flasks in a future post. Suffice it to say, for now anyway, that flasks are one of the best items to apply the bid/ask strategy to as it can prove very profitable.

WoTLK Herbs

There was no significant increase in herb prices outside of the occasional herb spike. We theorize that the majority of the scribes and alchemists intending to profit from patch 3.1 bought their herbs earlier rather than later. Herb prices have remained, for the most part, consistent throughout the patch.

Items we Predicted Would Fall in Value

BoE Valor Bracers

The decline in price that we predicted for these bracers is difficult to quantify as there is no simple way to track all the various bracers available and the items are typically sold ad-hoc rather than pre-bought and resold on the AH. Anecdotal evidence, however, supports our initial prediction for decline in that the messages observed in /trade chat by all WoWenomics team members clearly shows the asking price for the bracers to be dropping.

Dragonfin Angelfish

3 week high: 60.81 on Friday, April 17, 2009
3 week low: 44.16 on Sunday, April 26, 2009
3 week average price: 53.82

after-3-1_1-dragonfin-angelfish

This item is in slight decline although it is not for the reasons listed in our initial assessment. Rather, the decline here is caused by over fishing. We’ve provided a more in-depth analysis of the post-3.1 fish market here.

Frozen Orbs

3 week high: 92.75 on Sunday, April 12, 2009
3 week low: 70.16 on Sunday, April 26, 2009
3 week average price: 88.23

after-3-1_1-frozen-orb

Frozen Orbs continue to decline in value although it is difficult to differentiate whether this is due to the deflationary effect or because of the reasons mentioned in our initial hypothesis.

Mycah’s Botanical Bag

3 week high: 284.77 on Friday, April 10, 2009
3 week low: 159.18 on Monday, April 27, 2009
3 week average price: 225.16

after-3-1_1-mycahs-botanical-bag

This item has declined significantly since the release of patch 3.1. There is a steep drop in price a few days after the release that we attribute to the introduction of the new and improved herbing bag to the general WoW market.

In Summary

It should be said right off the bat that it is much easier to predict a decline in the price of an item in WoW than it is to predict a gain in value. This is mostly due to the previously established deflationary effect occurring within the overall game economy. Unfortunately you can’t short WoW items. So, while we did end up being entirely accurate in our predictions for declining value, this alone is not much to be proud of.

As far as our predictions for price increases go, we still reason that some of these increases may still occur as the new crafting patterns drop from Ulduar but, the fact is, the demand spike for materials will be small and short-lived. We’ve already seen examples of this on all of our test servers actually. Situations occurred on all four servers wherein the prices of a certain item like Ebonweave spiked significantly in a single test but prices were almost always normalized by the next test approximately12 hours later. These price spikes were not shown in the results above because they occurred at different times for each server and were thus normalized when combined with the statistics of other servers. What this does tell us, however, is that there is still opportunity for an individual to profit by timing their sales of specific high-end items with the spikes that occur on their own servers. Whether or not you’re interested or capable of watching your server’s economy that closely is, of course, a different story. We do advise that you check frequently, or otherwise liquidate strategically. We do not advise holding items for the long term as that strategy is counterintuitive to the overall WoWenomics game.

We will be continuing our testing and tracking of the prices of the above listed items (and a few others) over the next few weeks as we continue our analysis. If there is enough interest in these types of posts, we’ll put something together and share our results with you.

A Few Notes on Our Testing Methods

It should be noted that all of the listed prices are in the ‘Fair Price’ format, a price measurement scheme that is explained on our Terms page in detail. The listed value of items is the fair price of the items as listed in the Auction houses of four servers. The prices that we show are the average of the listed prices on all four servers. Prices were measured at two points during the day and on both horde and alliance sides. Thus, the final listed ‘Fair Price’ that we tracked and shared is the average of both day and night prices over four servers on both the horde and alliance sides. Prices were measured at the same time daily on each server for the sake of consistency. A fifth server was also tested but not factored into the above listed prices as a control test for our results.

On the day that patch 3.1 was released to US servers, April 14th, data was not recorded due to server stability issues. Therefore, the data listed for April 14th is an average of the day prior and following day’s data. Similarly, on Tuesdays following the patch, servers were unavailable for AM testing times so only evening data is listed. We don’t feel either of these averaged scores significantly affected the outcome of our tests and only mention it now in the interests of full disclosure and transparency.

On a personal note I’d like to send a big thanks out to the WoWenomics team members for measuring and recording their data and returning it in a clear and timely fashion.

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The Loot Council- Was Patch 3.1 Good or Bad For the Economy?

The Loot Council is regular column highlighting interesting and informative posts from around the WoW finance blogosphere.

There’s been a lot of negativity this week in the world of WoW finance. Many of our peers are talking about how the market after 3.1 did not perform as expected and are now revising their predictions and talking about losses on stockpiled materials.

Tobold kicked things off by writing about the effects of economic speculation on prices. He makes some excellent points and the discussion continues in the comments.

Our friends at Just My Two Copper point out that the big increases in price that were expected are simply not going to happen this time around.

We like the approach over at Warcraft Econ, where the talk about adapting to the situation creatively. They were also one of the earliest to note that the post-3.1 market is not behaving as expected.

Dominate Your Server takes this mentality a step further and issues a call for patience. We have to agree and, on that note, think that calling 3.1 predictions a failure after the patch has been out for only one week is jumping the gun a bit.

Not to be overlooked, Gevlon over at the Greedy Goblin has his own strategy for continuing profits. Given his recent achievement of hitting the in-game gold cap, it is certainly advice to be considered. Big congratulations Gevlon!!! Nice work.

Note that the above blogs are not listed in any particular order outside of the way the team brainstormed them. Please let us know if there are any sites that you feel we should feature and we will do so in a future edition of The Loot Council.

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Post-3.1 Quick Observations

Just a few quick observations to assist your weekend trading. The following events are notable to us because we’ve seen these changes on five different servers, which tells us that these are consistent WoWenomic trends, not just single server anomalies.

  • Eternal Life prices have taken off. All servers show at least a 100% increase in going rate from the weeks prior to patch 3.1. If you have a stock of these it may be time to sell although many of us feel the price can still move a bit higher.
  • The continuing decline in the fish business due to massive over-fishing has now spread to the Guru’s Elixir market. We advise, for you turtle hunters, to follow our guidance in our initial post on the matter and target Borean Man O’ War pools or Dragonfin Angelfish pools.
  • The Book of Glyph Mastery continues to lose value as we predicted it would in our feature on the item a week ago. We’ve actually been studying the loss in value quite closely and will share our results after we complete our testing cycle in a few more days.
  • Our flask business is very strong. All five servers show prices above half of what flasks were selling for pre-3.1 (the common expectation was that flasks would be half the old price since they split 2 for 1). In related news, four out of five servers showed an increase in price for Frost Lotus. None showed a significant increase in Northrend herb prices however.
  • Prices for Saronite Ore are at the lowest levels we’ve seen since the launch of WotLK on every server we checked- on both Horde and Alliance sides.
  • Our enchanted vellum business increasingly shows impressive returns. The high-end, end-game enchants are solid winners as are several low-level enchants as twinks fight to stay relevant. Blank vellum prices have, however, gone down significantly but this only helps our enchanting business.
  • We are seeing occasional spikes, at different times on varying servers, in demand for high-end cloth and Titansteel bars. Prices will spike and then return to a lower level as more players try to get in on the action. We assume the price spikes are related to the drops of patterns from Ulduar. We further expect that prices of these materials will continue to spike, and possibly increase overall, as the guilds progress further into the instance.

We’ve got an in-depth post-3.1 analysis coming soon. Be sure to stay tuned to find out exactly how markets have behaved since the release of this patch.

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The Loot Council- Easter Bunny Bonus Edition

The Loot Council is regular column highlighting interesting and informative posts from around the WoW finance blogosphere.

This week there is so much good content out there, and since this is a holiday weekend, we’ve decided to give you a little gift and include two posts each from several of our favorite bloggers.

This being Easter weekend we’d like to start you off with a few links to some of our favorite WoW Easter eggs. For those that don’t know, an Easter egg (in relation to media) is a hidden reference, bug or in-joke that might otherwise be overlooked and is, almost by definition, undocumented. There are tons of them in WoW and our favorite lists of them are from Blizzplanet and WoWWiki. We haven’t found a comprehensive list of ALL the known WoW Easter eggs yet however. So if you see a good one, be sure to let us know.

On the subject of official WoW stuff and eggs, it is worth noting that Blizzard has re-added the Noblegarden event to the April events calendar with the specific date ‘TBA’. Although they will obviously miss implementation prior to Easter, it looks like you will still get your chance to hunt Easter Noblegarden eggs in WoW. We speculate that, as it is being tested on the PTR and has been added to the calendar, the event will be included in the meta-achievement so get ready for some more seasonal quests if you’re gunning for an awesome new ride.

If you read Greedy Goblin at all you quickly learn that Gevlon is not one to suffer fools. In this regard, he’s actually quite similar to many real world financial professionals we’ve known over the years. That’s why the mere thought of him having a dialog with a certain future world leader made us laugh out loud. Once you’ve given that a look you’d be remiss not to check out Gev’s take on Deflation, somewhat in response to our own conversation on the subject with Tobold.

Speaking of Tobold, he’s got an interesting post up on the recently announced current WoW subscriber numbers and how that differs from his experience. Another good recent one from him is his take on the Emblem of Valor controversy. If you are in the EoV bracers market, you may wish to check it out.

Not to be left behind, Markco’s got a pretty good financial assessment of his expected impact of 3.1 and Ulduar on the value of those EoV bracers post-patch. While visiting Just My Two Copper, don’t miss his most recent post on effective use of Auctioneer. He’s got extensive information on how to use this vital tool, all of it relevant to WoW finance, and his recap post is a great jump off point if you haven’t read his info before.

On the subject of 3.1 changes we get some interesting information on the impending addition of daily fishing quests from both El’s Anglin’ and Kaliope. If you’re a fisherman (fishertroll?), or plan to be in the near future, you should certainly give them a look.

Did somebody say fishing? Dominate Your Server has listed their favorite Dragonfin Angelfish fishin’ hole. Ours is actually the Dragonspine Tributary as there’s a lot less fighting involved which we feel speeds up our own efficiency. We tested both areas, however, and found the rate of Dragonfin accumulation to be about the same, even with the fighting (which, of course, offers the potential for further cash).

That’s it for this week’s Loot Council. Thanks for tuning in and Happy Easter (and Passover) everyone!

Note that the above blogs are not listed in any particular order outside of the way the team brainstormed them. Please let us know if there are any sites that you feel we should feature and we will do so in a future edition of The Loot Council.

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WoW Deflation- A Conversation with Tobold

So we had a brief correspondence with Tobold and he asked a very good question concerning WoW deflation, a topic near and dear to our hearts. We put together our best attempt at tackling this huge subject and, on his suggestion, will share that answer with you now.

He initially asked, well…it’s a great question so let’s just leave it in his words:

“One economic subject I’m particularly interested in is deflation, because it is very visible on all WoW servers since WotLK came out, and somehow counterintuitive if you consider that making gold has become easier. If we are all swimming in gold, why is there no inflation? I’ve seen various explanations, but every blog has a different theory. Care to share yours?”

Which provoked the following response* from the WoWenomic team:

Hi Tobold,

First off, great to hear from you! Deflation is an excellent subject and something we’ve covered before in several ways. One of our first posts dealing with deflation was our Northrend Economic Assessment- Part One. The point of that post was not necessarily to explain why deflation occurs but rather to prove that it is, indeed, occurring.

The other aspect of deflation that we frequently see in all MMO’s is the concept of MUDflation. When we first started turning our Wall Street eye upon WoW’s economy we uncovered this phenomenon so frequently that we actually added the term to our Terms page. We’ve mentioned it frequently in several posts and will continue to do so as we consider it a fundamental part of the WoW economy.

To answer your question more directly, in response to what is our theory as to the cause of deflation we would argue that it is several factors at work:

1) The concept of MUDflation is at work within WoW. As mentioned above, we’ve got a brief explanation of this on our Terms page but it is explained in much more detail over at Wikipedia.

2) We’ve all become a bit more keen and aware of the gold-making metagame. If you’ve made it to level 80, and been around the Azerothian block a bit as many of us have at this point, you probably have a few preferred methods of generating gold that you didn’t back in the ‘old-school’ days. Sure, it is easy to jump to the conclusion that more gold-making means more inflation as opposed to deflation, but when you consider that most of the methods that players have discovered for generating wealth involve selling items to one another, it is easy to see why items across the board are losing value: more items for sale means lower prices. Put another way, supply continues to increase at a rate faster than the rate at which demand is increasing. This is, in fact, quite close to the textbook definition of deflation.

3) Similar to our current real-world global economic crises, item prices were inflated to begin with. When WotLK came out, everything was overpriced. Now, we hate to use the term overpriced because the ‘real value’ of an item is whatever someone will pay for it (a phenomenon covered briefly in our second ever post). It will come as no surprise to any veteran WoW player that prices are inflated at the beginning of any new content patch or expansion but it still bears mentioning in terms of explaining the ‘why’ and ‘how’ of deflation. Since items were vastly overpriced to begin with, prices are not actually deflating now- Prices are simply normalizing.

4) Effective gold sinks- Blizzard is learning about the economy just like us. They have, for the first time since the game was launched, started including much more effective gold sinks. Initially there were virtually no developer-generated gold sinks in the initial game outside of those created by other players. The only developer made gold sinks- let’s call them PVE gold sinks- in the initial game were training, repair costs, auction house fees, flights, water/food and the big one at the time: level 60 mount training. Sure, there were many player crafted (or PVP) gold sinks but nothing stands out as a high cost, must-have item in terms of PVE sinks. Towards the end of the life cycle of the initial game Blizzard introduced a means by which you could upgrade your dungeon tier gear by turning in certain expensive items to an NPC in capitol cities and subsequently completing dungeon runs in the first versions of ‘hard mode’ (e.g. the infamous ‘Baron 45’ runs). This represents a turning point for Blizzard in several regards. First, it was arguably the very moment that the concept of ‘hard’ or ‘heroic’ mode was born. And secondly, with the turn-in requirement part of the tier upgrade quests, it represents the first time that Blizzard realized that they needed to continually add and/or upgrade gold sinks to manage inflation. The big gold sink built into the release of the first expansion pack, The Burning Crusade, exemplifies this maturity. This gold sink was so huge and significant that I’m sure I don’t have to explain what it is but I’ll do so anyway: Epic flight for roughly 5,000 gold. This was a major turning point for Blizzard and it was a fairly effective way of removing gold from players and returning it to the game (a PVE gold sink by definition). Effective as it was, Blizzard later learned that one, single, humongous gold sink would not be enough to continually fight inflation (the point of PVE gold sinks) by the end of the life-cycle of the first expansion. This is why, late into the expansion pack, we saw the introduction of a many purchasable mounts from several different factions.

At the very end of the cycle we see our first evidence of Blizzard’s current gold sink strategy: the NPC Haris Pilton. This marked another corner turned for Blizzard in that they moved away from their previous model of having only used mounts for PVE gold sinks. That is, they introduced novelty items to players that cost a significant amount of gold aside from mounts. We can see evidence of this new strategy in the current expansion pack where we have rings, spell icon cosmetic upgrades (for mages), additional stable slots for hunters, expanded bank tabs, expensive BoP items that can be bought from reputation vendors, and, of course, even more very expensive mounts. Note here that even the motorcycle could be considered a PVE gold sink in that the bulk of the cost of the materials is generated from the mats that must be bought from a vendor, not another player.

One might even argue that by making secondary skills such as fishing and cooking much more enticing to players (easier, faster and more rewarding) Blizzard has created yet another effective PVE gold sink in the form of training costs for skills that were previously not considered ‘required’ by the average WoW player.

5) Lastly, and similar to item number two above, there are more and more of us leveling through the content (and doing it faster than ever before) further increasing supply. Many hardcore players are now leveling, or have already leveled, an alt to level 80. Granted these players will need some gear and may purchase some of it from other players, they are also leveling their alt’s skills and thus producing more than they are consuming (the introduction of vellums for enchanters stands out as one example). Here again, supply is simply increasing faster than demand is increasing.

In summary, the reasons that we are seeing deflation despite the fact that more and more players are gaining in-game wealth are several:

-Supply is growing at a pace faster than demand across the board.
-The Mudflation phenomenon is at play.
-The prices to which we are comparing were inflated to begin with and thus are now normalizing.
-Effective economy management on the part of the developers- Blizzard has introduced more, and more effective, gold sinks.

I’d like to add that, on a personal note, I think that this only speaks to the brilliance of Blizzard’s game design methodology. They have found several effective ways to stabilize the WoW economy without the player feeling like they’ve been cheated. Other MMOs have introduced ridiculously priced items with the possibility to then lose these items (see EVE Online) or even in-game casinos (in which we all know the house always wins).

I apologize for the overwhelming length of this response but you’ve asked a big question and our team felt it deserved a big answer. That said, we could go on and on when talking finance (WoW or otherwise) and invite further dialog with you should you wish.

Thanks again for giving us a look.

Kind regards,

Jederus and the WoWenomics Team

So what are your thoughts? Why are prices on a slow but steady decline? Do your agree with our assessment or do you have your own theories?

*Note: our posted response has been edited slightly for length and clarity.

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