The Wild World of EVE Online’s Economy#

So, you saw that video URL: https://www.youtube.com/watch?v=lte3JOnyXlo. That was a look at a virtual spaceship inside the game EVE Online. There are tons of these ships floating around in the game – I mean, tens of thousands. But that specific one? It’s special. Know why? Because it costs about as much as a second-hand Toyota.

Why, you ask? Well, we’ll get to that. But the answer can actually teach us a good bit about what’s going on with our economy in the real world.

Now, this video is actually the fourth and final part of a little series I did on EVE Online. Honestly, I only planned to do one video on it. But the more I dug in and started learning, the more players started reaching out. They kept telling me about these absolutely crazy business deals and economic systems happening right inside this virtual universe.

But I promised myself I wasn’t going to just become a channel that geeks out about video games all the time. So, in this video, I’m going to cover three smaller topics. That way, I feel like I’ve hit everything without dragging it out too much.

These mini-topics we’ll look at are:

• Taking a look at the self-imposed recession the game is dealing with right now.
• How this game seems to be messing with our usual ideas about the market for collectors items.
• And finally, what might happen to this video game if it ever let players trade their in-game stuff for real money (a big thanks for that suggestion, Saint Michael).

So, let’s dive in with “How Money Works” and see just how this game keeps on surprising everyone – gamers, economists, and even wannabe YouTubers like me.

Topic 1: The Self-Imposed Recession (The Age of Scarcity)#

A few years back, the universe in EVE Online had a problem. A big problem, for a game anyway: Abundance.

I’m talking about:

• An abundance of materials.
• An abundance of fuel.
• An abundance of high-paying income sources.
• And an abundance of safe space to go harvest all these materials, fuels, and space money (the game’s currency is called ISK, by the way).

Now, in the real world, that sounds like a fantastic problem to have, right? But in a video game, it causes some issues.

The biggest one? It’s just plain boring.

Think about playing a game like GTA 5 with those ‘god mode’ hacks turned on. You might have fun punching a few fighter jets out of the sky for a bit, but you’re gonna get bored pretty fast. And that’s exactly what was happening – people WERE getting bored.

The biggest player groups in EVE Online were basically just playing a game of “build as much as we possibly can.” Their goal was to get so huge it would be almost impossible for any smaller group to ever catch up. Since it’s a video game and materials naturally respawn over time, this mindset fit perfectly.

But here’s the kicker: Abundance doesn’t drive conflict.

Imagine if every country on Earth had raw materials that reappeared every 24 hours. There would be way less fighting in the world. Take it to the extreme: a world with absolutely no resource limits. Theoretically, there would be no good reason to fight. Again, sounds amazing for the real world, and hopefully we’ll get to a post-scarcity society someday. But in a video game, even one as dynamic as EVE Online, that’s the last thing you want.

So, the developers introduced something they called the Age of Scarcity.

If you play EVE, you know all about this. For those who don’t, the people who make the game (that’s CCP Games, not to be confused with “that” which wasn’t defined but hey, sticking to the text!) basically made materials a whole lot harder to find. On top of that, they simultaneously increased the amount of materials needed to build things like spaceships and the gear you put on them (called modules).

Let’s look at the costs:

• A Titan (that’s the biggest and most powerful ship in the game) used to cost around 40 billion ISK to build. That was roughly equivalent to about $1,000 USD (give or take).
• Today, building a Titan from scratch would cost you around 250 billion ISK. That’s more than $5,000 in real-world American dollars!

These huge ships used to be the backbone of the largest player empires. But suddenly, those organizations are much less likely to risk taking them into battle because, once lost, they are now VERY expensive to replace.

This price jump didn’t just hit the big stuff either. It goes all the way down to the more common ships that players use every single day. Even the most basic combat ships in the game have doubled in price.

Here’s the ironic part: this change, meant to encourage conflict, is actually suppressing the conflict the developers wanted.

Yeah, the big empires will still need to fight over the shrinking pool of resources. I’m sure that’ll lead to some amazing headlines about epic battles with thousands of players. But… the average player might just decide that earning ISK has become too difficult, especially since they now need twice as much of it just to get out there and fly a ship around and maybe blow up.

In economics, this whole situation has a name: stagflation. And it’s really, really bad. When prices go up while people’s income goes down, their quality of life drops fast. And that seems to be what’s happening here.

Since the Age of Scarcity started, CCP Games has seen a noticeable drop in active players. Believe it or not, living through serious economic decline isn’t much fun, even when it involves virtual spaceships.

It’s pretty unusual to see an economy voluntarily put itself through stagflation. But, for what it’s worth, some of the biggest conflicts in the REAL world have happened right after periods of stagflation. So, maybe the game developers are onto something here after all…

Topic 2: Alliance Tournament Ships (Rarity vs. Utility)#

Most ships in EVE Online are designed so you can build lots of them. You can theoretically mass-produce them. Even those huge Titans I mentioned? Until recently, they were being churned out on assembly lines all over the galaxy in huge numbers.

But there are some ships in this game that are different. These are the Alliance Tournament Ships.

See, the game developers used to hold an annual in-game competition called the Alliance Tournament (or AT for short). This was a contest to really test the skills of the best players to see who was the top dog at… well, shooting the other guy in the face.

The prize for winning or even placing high in this competition was a selection of specific ships. The key thing about these ships? They were limited in number, normally only 50 of each kind were ever given out. It’s kind of like if the Olympics gave out spaceships instead of gold medals.

Anyway, once these ships are handed out, that’s it. There are no more. If one gets destroyed, then suddenly only 49 of that type are left in existence. That specific ship is never coming back. And the player who lost it? They either have to buy one of the remaining ones or simply never fly that ship again.

Naturally, because they are so rare and have this notable history, these ships become collectors items. And yep, they get expensive.

BUT! Here’s where it gets interesting. Most of these AT ships are also REALLY good to actually use in the game itself. For people who don’t play, imagine being able to use a Formula One race car on your local go-kart track.

Here’s the thing: their price actually depends a lot more on how good they are in the game rather than just how rare they are. You might have some of these ships where only about a dozen are still around in active circulation, but if they don’t have stats that make them competitive in battles, their price might not be as sky-high as you’d expect based on rarity alone.

Normally, with high-end status goods like this in the real world, performance doesn’t really matter all that much. A Rolex watch objectively keeps worse time than the phone in your pocket, right? People pay for the prestige of the item. They buy it because it’s rare, and it’s a way to impress your friends.

That’s typically seen as a supply-side thing – there’s a limited supply, so only the people willing to pay the most get them. But this dynamic in EVE, where usability heavily influences the price of a rare item, shows that the demand side (how much people want to use it) might be a bigger factor than many people realize when studying these sort of bizarre markets.

Topic 3: What If You Could Sell Spaceships for Real Money?#

After hearing all that, you might still be thinking: who in their right mind actually uses something so incredibly valuable in a video game, when it could be lost just because your internet connection hiccups? Surely, that takes a special kind of person, right?

Well, anyway, this one… this one is mine. And I’m very proud of it.

Okay, not really! But a huge thank you to the anonymous viewer who actually let me borrow it just so I could get that footage for the video. I honestly don’t know why they did it. Scams are totally allowed in this game, so I easily could have just kept it, and they would have been out a roughly $10,000 spaceship.

Anyway, this crazy person who owned the ship explained that if they were given the chance to sell this ship for real money, they would probably take it.

But here’s the catch: the game currently does not allow the direct sale of in-game assets for real money.

The closest the game has ever come to letting this happen is through charity giveaways. The most famous one involved the YouTuber Scott Manley. He paid the equivalent of $30,000 for one of these rare ships in a charity auction using the game’s in-game currency, ISK.

Kelon Darklight, the player who sold the ship to him, then used that massive pile of ISK to buy PLEX. PLEX is an in-game item that can be used to pay for game time (so you can play for free) or for other in-game services, like customizing your ships.

Okay, so… Anyway, Kelon then took this enormous amount of PLEX and gave it to CCP Games (the developers). In turn, CCP then paid out the equivalent real-world value of that PLEX to a charity. It’s a heartwarming story, for sure.

BUT what if that PLEX could be given to CCP, and they would give YOU the money directly, instead of sending it off to a charity?

In an interview, the founder and CEO of CCP Games said that this is something they might consider one day.

But here’s the thing: the game has been around for nearly 20 years now. Some players have been playing for a seriously long time and have built up some truly huge fortunes in ISK and assets.

Opening the doors to let players convert those fortunes into something that could buy a house or a car, instead of just more internet spaceships, is going to cause some problems in the short term.

Mostly, everybody would probably try to sell off everything they own at once. This would cause the price of in-game assets to fall sharply. At the same time, the price of PLEX (which would be needed to make this exchange happen) would absolutely skyrocket.

What this means is that most players wouldn’t actually be able to get the true market value for their internet spaceships. They’d likely end up only selling them for “pennies on the dollar.”

However, it would be good for the people who actually pay real money to subscribe or buy PLEX to enjoy the game. So, it’s really not as crazy an idea as some people might think.

In the short run, it would probably be chaotic. But in the long term, it might genuinely add a level of stability to the virtual economy and make all those headlines you see about million-dollar spaceship battles all the more relevant because players would have actual, real money on the line.

Now, if you’re wondering who actually pays for those massive battles these days, you should go check out my other videos on the financial system of EVE Online. And if you have another video game you’d like me to dig into for a video, please leave a comment below so you can keep on learning how money works.