What is Video Game Economy Design?

The discipline of game economy design is a type of systems design under video game design that specializes in the strategic and meticulous process of creating, balancing, and managing the in-game systems that govern the flow of resources, currencies, rewards, and player interactions related to economic aspects within a video game.

For example, if you’ve ever:

• Pickpocketed gold off of an unsuspecting enemy
• Spent gems on a cosmetic skin
• Spent a talent point
• Traded a cow for three magic beans
• Built a bathroom so your favorite Sim can reset their bladder meter

…then you’ve interacted with intentionally designed game economies!

Whether you’re paying real money, spending fake gold or bartering with another player, game economies are one of the foundations of long-term investment and growth in video games.

We’ll start by talking about the big-picture goals of game economies, then describe the core concepts of game economy design for those interested in learning more about this kind of work.

The goals of game economy design

The fundamental pillar of game economy design is motivation.

• Why are players here?
• What do they want to do?
• How does my economy design help them accomplish those goals?

Without well-established, clear goals for the player, everything else will fall apart. An economy on its own will achieve nothing without a fundamental driver of desire.

Goal 1: Motivate players

But why do we have gold, tokens, gems, currency… whatever we want to call it?

It’s because we want players to be able to track their progress towards a given goal. If you show them how these resources are innately connected to their objectives, they’ll be motivated to interact with your economy.

Goal 2: Guide player progression

Once a player is bought in, each milestone—a boss kill, an enemy defeated, a chest looted or a cooperative mission completed—grants some amount of progress towards their goal.

Using a currency allows you to tune the rate of this progress. A 50 gold sword is easier to get than a 100 gold sword. A shirt that costs 50 cloth and 10 amethysts will encourage players to craft cloth and go mining.

Ideally, each resource and currency represents a unique set of actions and decisions within the gameplay. Need fins? Slay fish. Need hammers? Slay dwarves. Need rubies? Search deep underground.

Good game economy design balances these incentives to encourage fun gameplay choices and set the game’s difficulty to an appropriate level.

Game economy design example

Now let’s take a look at a first hand example of how game economy is designed.

Adding a resource

When we were working on Ori & The Will of the Wisps, rebuilding the home base originally cost Spirit Light, the gold/money equivalent within the game.

Here is an examples of a player collecting Spirit Light:

However, the rewards from other systems—upgrading shards, buying more powerful skills and so on—competed too strongly with upgrading the village, which was mostly a narrative and cosmetic goal.

We solved this by introducing Gorlek Ore, a unique collectable that could only be used to upgrade the town.

Even though the player got Gorlek Ore the same way as Spirit Light (exploring, parkouring and fighting through the world), the fact that Gorlek Ore could only be spent on town upgrades ensured that players invested in both upgrading the town and Ori’s combat skills in parallel.

Help players progress in the most fun way

In a nutshell, separate in-game currencies in Ori encouraged diverse spending habits, which supported the basic game values of exploration and growth.

If everything cost Spirit Light, this would motivate players to play in less enjoyable ways. The game content would be identical, but this one change in economy design would make player choices frustrating instead of fun.

Game development is a gentle process of guiding the player through the game world so that the optimal way to play is also the most diverse and enjoyable way to play.

A strong game economy empowers this.

Relationship between game economy design and monetization 

Many Western players have a hate-hate relationship with monetization. This is especially true for free-to-play and mobile games, after a lot of early forays into this space earned a negative reputation for their “pay to win” business models.

However, (almost) everyone agrees that game devs deserve to eat, and that depends on their players’ willingness to spend real money on the product.

While personalization and monetization tend to be their own teams in larger game studios, game economy design plays a key role in balancing both free and paid experiences within the same game.

For example, on the League of Legends team, we knew players felt strongly that it would be unfair to be able to buy more powerful champions by spending real money.

However, few to no players felt upset that people could pay to get access to the same champions sooner.

Our game’s revenues and popularity relied on two separate economic systems built by the Sottosanti brothers, one for cash purchases and one for earning new champions through play.

This created just enough delayed gratification that players who really wanted a champion now would buy it, while others could eventually unlock the characters they wanted.

In a word, successful games manage to support multiple forms of spending habits, while avoiding excessive amounts of frustration.

Encourage player interaction

While real-world money tends to draw everyone’s attention, the truly epic task in game economy design is supporting player interactions and healthy trading.

If you’ve played a real-time MMO, such as WoW, FFIV or Ultima Online, you know just how deeply ingrained trading is in these cultures. We’ve all seen videos of the player who earns 10,000,000 gil without ever actually playing the game.

Virtual economies like this only succeed if there’s meaningful player-to-player interaction. At a fundamental level, players will only trade if it’s the best way to obtain the things they want.

If every character has access to every item, and trading doesn’t help them get what they want faster, players won’t trade.

But be careful not to repeat the mistake of the Diablo 3 Auction House, which was so successful it made the rest of the game just about farming gold as quickly as possible.

In-game currency systems 

There are many different currency systems in video games. One of my favorite examples is Runes from Elden Ring, which serve as both money and experience.

But we can start by breaking them into two major groups.

Group 1: Hard currency

A stand-in for actual money, hard currency exists to avoid making a legal record of every separate in-game transaction.

By instead having a single purchase for 2000 gems, game studios reduce bookkeeping and processing time dramatically. Each future transaction with those gems is a quick, easy process inside the game company’s ecosystem.

Hard currency philosophy varies from company to company. Some only allow you to buy cosmetics, others allow you to speed up progress, and still others sell you exclusive assets that give you an advantage over non-paying players.

📝 A note on “pay to win”: I spoke briefly about pay-to-win before. It’s not my favorite model, but like all games, it’s about mutual buy-in from the customer and the company.

Generally, Western audiences push back hard if the maximum possible power can only be reached by paying actual money.

However, they are usually far more forgiving for catch-up mechanisms, such as ‘pay for a not quite max level character’ in Warcraft, or for granting extra rewards for the same time played.

This kind of “buying progress” can help friends play together. If someone spends a lot of time playing for free, it seems fine to me to allow their friend with less time to pay a small amount to keep up with them.

Ask yourself where your own limits are, and why various game developers would make different choices.

It’s fine to have your own rules and expectations for the games you engage in, and to disagree with companies that don’t meet those rules.

Note that a game economy designer rarely gets to decide which business model their company picks. Often, the goals are set by someone else, and the designer advises on the best way to meet them.

Group 2: Soft currency

Almost every other currency out there is a soft currency. Gold, resources, even PvP tokens and battle pass progression are just different forms of soft currency.

We can sort these into two categories:

• Capped: has a given limit for how much you can hold at one time
• Uncapped: no limit (or a limit so high no one hits it)

Capped currencies prevent hoarding. You have to spend it, or waste any new resources you get.

Uncapped currencies are either designed so hoarding won’t cause issues, or are carefully throttled so you can’t generate them too quickly.

Regulating these incomes and expenditures is the primary job of an economy designer. They’re often called ‘Taps’ and ‘Sinks’ (or Faucets and Drains; one adds resources and the other removes them).

A game’s economy is ruined when the game economy designers fail to carefully control how much you can generate or provide too little ways to spend it. Without a cap, endless grinding can lead to limitless supply.

Other currencies

Before we move into the details of how game designers regulate a game economy, I want to list some of the most common ways these resources are designed. These are especially prominent in mobile games.

This list is courtesy of Javier Barnes at Deconstructor of Fun, so be sure to check out his extended write-up.

The key element of this model though is that each of these is linked to a unique behavior type. Successful game economy design uses different resources to encourage players to act in a variety of different ways, without overwhelming them with too many options.

1. Hard Currency (see above)
2. Soft Currency (see above)
3. Medium Currency (capped, soft, limited usage)
4. Energy (replenishes over time, often purchasable)
5. Feature Currency (linked to a specific section of the game)
6. Social Currency (awarded for interacting with other players or bringing friends)
7. Guild Currency (a shared pool generated by members and spent by the leaders)
8. Event Currency (linked to a time-limited event)
9. Dust Currency (linked to destroying in-game items)
10. VIP Currency / Whale Currency (linked to in-game purchases)
11. Informal Currency (something the player community has decided to trade with)

Knowing where and why to apply all these different approaches is something developed with the expertise of many years. Definitely check out Javier’s article to learn more about them!

How does an in-game economy work

Let’s take a look at the basic features of a game economy.

Builders and spenders (taps and sinks)

Game economy design is built of two very simple elements: builders, which generate a resource, and spenders, which consume the resource.

(And before you object, a trade is just a one-time, zero-sum pairing of a builder and a spender.)

When you play a survival game, you can collect items, pick up gold from defeated enemies, harvest resource nodes, and gain experience. These are all builders, generating resources for later use.

When you finally reach town, you can spend gold to buy items, spend experience to level up, and spend resources to craft items.

A pure spender would provide absolutely nothing in return, but players don’t like to interact with spenders that drain resources for no benefit.

It’s very important to keep builders and spenders in sync with each other. If your builders provide too little, players won’t be able to buy anything. If your builders provide too much, excess resources will make purchase decisions less meaningful and affect game balance.

In general, you want there to be more to spend (pour down the sink) than comes into the system (out the tap). This ensures the game never spills over onto the floor and ruins mom’s favorite carpet.

Example ‘builders:’

• Loot from enemies or chests
• Harvestable ore or herb nodes
• Quest rewards
• Achievement rewards
• Putting real money into the in-game shop
• Gaining a talent point when you level up

Examples ‘spenders:’

• In-game merchants
• XP loss or gold loss on death
• Crafting systems
• Items
• Buildings
• Locked doors
• Talent trees

Player trading

So once the game exists and you have builders and spenders… why would players trade at all? The recent surge of failed digital ownership games has put the spotlight on this fundamental problem:

It is not enough to merely create something for others to buy it.

At a fundamental level, a well-balanced game economy demands more than just things that some players make for others to sell. There must be an ongoing demand for the creations.

This became apparent to me as early as the very first crafting system in World of Warcraft. Modeled after real-world apprenticeships, the system forced players to mass produce low-level items to increase their skill and unlock the next tier.

Unfortunately, this meant the game was pointlessly flooded with items that had no value. So Eric Dodds, an unsung genius of game design, introduced disenchanting—essentially the ability to destroy these junk items. The resulting dust could then be used to enchant another item.

And since players would replace these items over and over again, there would be many opportunities for enchanters to use their skills. By adding enchanters, who both consumed the excess items and interacted with other players to improve their items, they created the beginning of a cycle.

Creating demand: Player trading only works when there is demand. I know this seems basic, but bear with me. There is a limited number of players, a limited number of slots and a limited number of relevant upgrades for those slots.

It doesn’t matter how well-designed or convenient your trading system is if there are twenty times more items than players and slots. There is simply never going to be an ongoing demand for those items.

However, at the end of the game, when the number of people who can craft particularly rare things is incredibly small… and the resources to produce it are limited… then the demand for the crafted item is greater.

But what is it that creates demand? It is not enough for an item to be usable—instead it must be compelling and helpful towards your goals.

If there’s no sharp power spike, no enormous jump in value, then few will overcome the resistance in obtaining an upgrade.

So if you want an economy based on player trading, you need an economy where players are often missing something they want, that someone else has and is willing to trade away.

Later WoW expansions in particular violated this rule by making every slot and every stat allocation available almost everywhere. Crafting’s value plummeted, and the team had to rebalance the system.

In-game store

In-game stores are incredibly delicate! Overly generous or overly restrictive pricing policies can ruin a whole game.

A game economy designer must have a careful, well-balanced approach when developing sinks for their in-game currencies.

One common strategy for in-app purchases is to limit how much a player can buy at a single time. This reduces the chance for exploitation by scammers, and also prevents high spend players from consuming all of the content too quickly.

This can then be balanced out with limited-time offers to obtain hard currency at a better rate, and/or a virtual goods shop that cycles through a variety of options over time.

These cycles of scarcity encourage players who were on the fence to make purchases right away. They also encourage repeated engagement with the system, rather than a one-time binge that often leaves players stinging and sour.

Members of the marketing and game systems teams often work with the designer to develop these cycling merchandise calendars. This helps pace out the rate at which new content is seen by players right after a content release.

Miscellaneous resources

Gold and gems are one part of the economy, but there are plenty of other resources that players can collect over the course of the game. How does a designer decide whether to let you hoard 10,000 potatoes in Skyrim? How does weapon storage limits affect gameplay?

As with the rest of economy design, these systems are designed to push players into different behaviors.

There was a great amount of outcry around the breaking weapons in Breath of the Wild and Tears of the Kingdom by Nintendo. Players clearly don’t like the idea of their items breaking, so why is it designed this way?

Anyone who has worked with open world design and large-scale economy design can quickly see that most item drops would become meaningless without breakage.

Without a spender, Link would only use a small number of the best weapons he’s found so far. Gone would be the improvisation, on-the-fly adaptation and willingness to throw your weapons to get a damage boost.

On the other hand, building/survival games such as Valheim and Minecraft allow near-infinite resource-gathering potential, since the goal of many of those resources is to be transformed into creative expression.

By comparison, character-relevant investments are dramatically fewer in opportunity, just due to the limited number of ways to upgrade a character that a video game team can support.

How to balance different in-game resources

We’ve looked at how individual resources work, but a game economy designer often needs to design many resource systems and understand how they work all together.

In general, games partitions resources in three different ways:

1. Activity Type
2. Difficulty Level
3. Capped / Uncapped

How exactly this works depends heavily on the type of game you’re creating. I’ll give a short overview of each one to help you understand why game developers make the decisions they do.

1. Activity type

Activity type is about the kind of gameplay the resource is connected to—what do enemies drop, what do you spend to craft, and so on.

This is about leading players to a fun gameplay pattern, as we’ve already covered with the example of resource types in Ori. If the optimal way to gain resources is to fight enemies, many players will ignore your crafting system and quests, no matter how well made they are.

2. Difficulty level

For example, an MMO might add a different “wood” resource to each new zone or expansion. This separates them by difficulty level to ensure that players are obtaining the wood by playing the correct difficulty of content for the crafting reward provided.

On the other hand, Minecraft lets you harvest any kind of wood at any time. Wood types are irrelevant to crafting progression, so there’s no need to separate them by difficulty.

The wood types are only different cosmetically, but in a sandbox game about self-expression, that’s enough incentive to encourage players to seek out different biomes.

3. Capped or uncapped

Uncapped resources can be hoarded without limit. This sounds risky, but again, it depends completely on context.

For example, it might be perfectly fine to have an uncapped builder with a heavily capped spender for a holiday event. Players will be happy to be able to afford all the limited-time resources, and any excess resources will vanish at the event’s end anyway.

Similarly, single-player games can function just fine with uncapped resources, since players don’t need to be balanced relative to each other.

If someone wants to amass 900 potions before the final boss battle, there’s no harm done—as long as the game doesn’t incentivize it so much that players feel forced into a boring grind.

The big picture

Game economy designers need to be able to see the interdependencies and flow between all the various kinds of resources.

As you’re designing your own game economy, keep these lessons in mind:

• Understand what you’re motivating players to do
• Think about the three ways to distinguish resources (activity type, difficulty, capping)
• Be wary in your designs, and in general favor erosive exchanges that drain resources out of the economy

How to design a game economies that works well

I’ve hinted at a lot of this during the above section, but let’s spell it out clearly:

Most players will never think about the nature of the economy itself. If you do your job well, there will be a tension between immediate gratification and planning for the future.

In order for this to exist, your game needs to meet several conditions:

• The player must be able to learn how the system works
• There must be challenges the player cannot overcome immediately
• Obtaining what they desire must give the player a feeling or concrete measure of progress

Break any of these rules and players will disregard your systems, disengage, or blame your economy for a frustrating experience.

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Meaningful player decisions

For every given resource, is there a clear tension between the ways they can use that resource? Legend of Zelda lets you consume apples now for a very small heal or cook them later for a much larger healing effect.

This very simple tension created a currency system just for apples, and it works!

The addition of an upper limit on the number of cooked meals also created a form of tension on the system. In the early game, food is scarce, and a recipe that mixes butter and apple is worthless when the ingredients are hard to acquire.

However, when you eventually have a lot of food and different meal types, you want the best food possible to survive as long as possible in the field.

Just these two concepts stack on top of each other to create a dynamic, meaningful and significant crafting system where the players can define for themselves the style of play that works for them.

Player engagement over time

Remember that ennui is a very real force. Over time, players will get bored if they do the same things over and over. It is natural for players to churn out or move on.

It is only when the game’s design creates a varied path of experiences, with alternating periods of challenge and comfort, that players stick with the experience.

Game economies work exactly the same way. Players advance, earn money, make purchases, begin to starve, seek out more wealth and advancement, then repeat.

Conclusion

There’s a lot that goes into game economy design, but at the heart is a deep love and understanding for the desire and pursuits of the players.

Game economies support and empower players to achieve what they want, while also creating well-balanced experiences that challenge them and support cooperation with others.

If you have any questions or thoughts, feel free to share them in the comments section below.