Thursday, June 30, 2011

2.0

Bonus points to those who gets the reference in the title.

So undoubtedly if you talk to me regularly, I would have linked you to this post on Sankaku. If you didn't, now you know.

So seeing Japan's ever-determined quest to eliminate the need of the female gender, some people have invariably asked the question "Why?"

How could something like this

Shown: Inferior Good

ever match up to this?

Shown: Normal Good

Actually, the answer is older than you think.

In the 80's, Japan was an economic superpower. You'd be surprised at how quickly economies develop when there's no need to spend on defense and the world's biggest power trying their ass off to prop you up.

However, it's not easy being someone else's bitch.

When the 70's Stagflation hit due to OPEC raising their prices (In OPEC's defense, they were pretty much being exploited for all they're worth, and probably will just get discarded like a used whore when their oil runs dry.) Suddenly, Americans aren't so keen to have their little pawn be so economically significant.

So what do you dor you bitches got out of line? Slap them!

Americans quietly sent an ultimatum to Japan, and, Japan being Japan, they quickly accepted.

The result was the Plaza Accord. Because of this "agreement", the value of the yen doubled overnight.

Sounds like a good thing for Japan, right? Money in your pocket just doubled in value.

Not. So. Much.

See, unless you have over seven digits in your bank account in dollars, odds are, you're living on your wages.

But, unless the place you're working at is completely domestic (which, in an international-trade-driven country like japan, is almost impossible), all other things equal, your place's nominal revenue will go down (up to half of what it was before).

No problem, right? Just pay employees less.

Well, according to the currently prevailing macroeconomic theory, Keynesian Economics, it's an impossibility.

Nominal aggregate wages are downwards inflexible. In other words, in general, you cannot pay people less for what they made before on paper.

Sure, inflation will invariably erode the purchasing power of wages/salaries, but generally, if you pay them 100k/yr now, they won't accept 90k/yr later, and certainly not 50k/yr, even if the purchasing power stayed the same.

Why is this the case? To put it in simple terms, obligations.

What is the central financial system of a country? Its banks.

How do banks make money? With lending.

In other words, for any stable, modern financial system to function, it must be driven by debt.

If this sounds like a bad idea to you, think about this:

Economic growth requires new businesses. New businesses require liquid capital to start. Most people's wealth are not liquid capital. They have it in stocks or other things that "make your money work for you". However, No vendor will sell you equipment for MS shares, nor will people work for you for any part of your portfolio. Banks enable this conversion of wealth into liquid capital, so you can start new businesses.

Similarly, credit card agencies exist to facilitate stability without having to resort to savings. (They also exist to make money, but this is the reason why most people use them instead of a debit card). Why is savings bad? This is due to the multiplier effect. For example, you have five guys, A B C D E. You give A 500 dollars, and A gives it all to B for B to render 500 dollar's worth of goods and services to A (not like that, you fucking perverts). B in turn gives it all to C for 500 dollar's worth of goods and services, and so on until E. The total amount of goods and services generated by these people is $2500 (assuming A also did 500 dollar's worth of goods and services to you), or 5 times the amount of capital existing in this system ($500). Assuming there's more people, these $500 dollars can go on to generate infinite amounts of value.

There's an old story. A and B bought a keg in town together, splits it into two smaller kegs, and decides to sell it back in their village. However, they were hit by snow on the way back, and both were freezing. A found $5 in his pocket, and asks B to sell him a mug of beer for $5, B agrees, and A drinks it to warm himself (Warning, Mythbusters proved that alcohol doesn't actually save you from hypothermia, but in fact makes it worse, so don't try this at home). B decides that since now the $5 is his, he can buy a mug from A too. And so when they reached home, they were drunk silly, and were surprised to discover that their entire keg only sold for $5. This is the multiplier effect at work. As long as there's no saving, any amount of money can generate value equal to all the resources available in the system.

Saving, therefore, reduces this potential for money to generate money. Let's say that A B C D and E all saves $100 of their income. Now A pays B $400, B pays C $300, C pays D $200, D pays E $100. E saves it all. So the total amount of value generates is only $1500, a full $1000 less than what would have been generated without saving.

This is why banks run the "make your money work for you" investment schemes. This is why credit card agencies would happily give you free money that you can pay back later. Savings detract from consumption, which detracts from profits from companies, which results in the economy shrinking, which is VERY, VERY bad.

Back to the original point. Because the economy is debt-driven, people are in debt. Debt does not adjust for inflation or deflation. It is nominal. Lenders make money by keeping the interest rate above the inflation rate, but they're sure as hell not going to give you back interest if inflation becomes negative.

So, what does this mean? Deflation is very, very bad for debtors. They now have to pay back much more purchasing power than they had to before. This is why US farmers were so distressed during the deflating Gilded Age, because their crops are subject to supply and demand, which meant that deflation resulted in lowered nominal income (Even if their crop output remained the same), which meant that they would have to bear a much heavier burden of debt.

Ironically, with contracted workers, the situation is reversed. Businesses have to pay them their contracted salary unless they have acted against company conduct. For wage workers, a decreased salary also will result in people quitting (which, in a country with a high saving rate like Japan, is often affordable for a length of time for which they can find new work). However, because companies, like the US farmers before, saw their revenue whittled down by deflation, they cannot in fact hire more.

So, unemployment, which leads to economic shrinkage, which leads to defaulted loans, which results in mass chaos. People in the US now probably are feeling it now.

Because nominal wages are not downward flexible, however, the corollary is that prices are not downwards flexible. There's no reason to assume people would pay less than they would have before, since their nominal wages didn't go down. Thus, despite being in a depression for the past 30 years, Japan still charges more for goods than the rest of the world.

What does this mean?

It means that, due to increased unemployment, the people who can afford to lead lives according to previous standards have dropped significantly.

This, however, is not a fact any business or government official wants to acknowledge to the common people.

Why? If a company erode people in their faith of making ends meet, why would they purchase that company's products and services? If a government official acknowledges that the country is in deep shit and they can't do anything, who would vote for him?

So despite such economic troubles, Japan still remains consumerist, which also results in prices not decreasing.

Now we get to the gender issue. Why do women in Japan seemingly demand ridiculous salaries from their husbands?

Connecting from the above, because they're being lied to.

They're led to believe that their ridiculous image of how life should work is normal for Japan. They think that as the 3rd largest economic power (not counting the EU as one entity), they're entitled to eating out more than once a month and more than one vacation a year. They're also inclined to believe that as tradition dictates, they don't have to work.

(Aside: Equality Advocacy groups never advocate for increased related responsibility to go with increased powers for the group they're advocating. Also, Japan being tradition-bound shouldn't come as a surprise to anyone who knows anything, even superfluously, about that country).

So this means that the men they look for, are in fact men who are capable of scraping together enough for their ridiculous lifestyle, and whatever he might need to subsist.

Some have no qualms, btw, about letting her husband live barely better than a slave.

Wives managing money might come as news to Westerners, but this is anything but new in Asia. The Chinese novel Dream of A Red Mansion, written in the Qing Dynasty, described a large aristocratic family of over 400 people (including servants), being managed by one woman, the wife of the son of the patriarch. In Ancient Asia, the man's day job will almost never give him time to manage finances, which has became a deep-seated tradition.

I'm not saying this is women's fault, btw. It's not their fault that they're being raised in such ridiculous conditions. As the Chinese proverb goes: Those in cinnabar are red, and those in ink are black.

But let's look at it from the Guys' perspective. To get a woman, they need to:

Make $80k a year (I doubt, as a UC Berkeley prospect-graduate, that even I can even make this much right out of school).
Give it all to them.
And get an allowance of $10 a day.

I don't know about you, but I don't think any amount of sex is worth this, especially, as noted here, that sex is not even a guarantee. Any country with feminists in it will never give a man free reign over sex. This isn't news.

So, we come to another economic rule.

When demand of a normal good (women) decreases, demand of an inferior good (autoerotic toys, pron, virtual women) increases.

Economically, an increased demand means increased investment, which is why these things are being developed.

What about women, you say?

Next In the News: Development of a ATM-Sybian Fusion is complete.

Who said science was useless?

Tuesday, June 28, 2011

Business Strategies

Alternative Title

Some people have asked if this is an Eden Eternal flame blog.

I don't particularly hate EE. I don't like MMO's in general, so you can expect me to rant about other games I've touched in Aeria's arsenal, and games in general. I might even rant about shit that has nothing to do with games.

No, you can't have my IGN.

Today, I'm going to address something else I've seen in the GFO forums, specifically, the threat EE poses to GFO.

The threat EE poses to GFO is not developer oversight. It's intentional and a well-known consequence of the f2p model.

To understand this, we must first look at the revenue generator.

In F2P, the formula looks something like this:

Revenue = integrate (accounts * spender rate * (1 + novelty + necessity + competition) * satisfaction * average item price * dt) from 0 to infinity.

What does this mean?

Spender rate:

In all F2P games, you will never reach 100% paying base. So already, you need to attract an account count larger than a similar p2p operation.

However, on the other hand, since playing is free, the attraction of accounts is higher than P2P, this is important later.

Novelty:

Novelty is the additional value an item presents for being new. Humans, through some sort of weird psychology, places value on having something first. This is part of the premium that applies to all items.

Necessity:
Some items are the virtual equivalence of gas. Items such as repair hammers are in constant demand. This is also part of your revenue.

Competition:
Some items have intrinsic value just because it drives some kind of competition. Things like fortification, pots, and whatnot will often give players an edge in PvP.

Satisfaction:
This is a difference between P2P and F2P. In F2P, there is the option to stop spending and continue to play. In P2P, stopping means you lose access to your account, and all progress you've made on that account that you perceive to be yours and valuable will be gone. This alone compels people to stay playing. In F2P, there is no such thing. People can stop spending, or even take long breaks, without worrying about the loss of their character or items, (for the most part). Thus, lower satisfaction will signficantly lower revenue.

Now, here's the problem with this formula, they're not independent variables.

The change of accounts more or less directly varies with satisfaction. Players satisfied with the game will invite their family and friends. People dissatisfied will not only leave, they often take their friends and family with them. The more satisfied, the more zealous they will be in recruiting, and vice versa.

So d(accounts)/dt = c1 * satisfaction where c1 is some constant. Integrating both sides.

Accounts = c1 * (int (satisfaction dt). Let's stop here for a second.

The spender rate directly varies with satisfaction. The more satisfied, the more people will spend. However, they're less likely to convince other people to spend or not spend, hence this is a direct relationship.

Spender rate = c2 * satisfaction

Now we have item price. Item price varies inversely with satisfaction. This shouldn't be difficult to understand. More expensive things = less happy people.

Item price = c3 / satisfaction

So now we have the formula

Revenue = int( (1 + novelty + necessity + competition) * c1 * c2 * c3 [ int(satisfaction dt) * satisfaction * 1/ satisfaction)]  dt)

Removing the constants (we're only interested in the trend here, not the actual values).

Revenue = int [novelty * int (satisfaction dt) dt]

Novelty is always going to go downwards. This is obvious.

Necessity, by definition, is constant, and thus removed.

Competition is directly related to novelty, because only new content, new changes, and whatnot will generate new competition. As competitive people get more and more ahead, they'll be more and more entrenched, making newer people less inclined to compete due to having access to a lot less resources.

Lastly, we have the relationship between novelty and satisfaction.

Novelty and satisfaction are directly related in a fundamental level, because novelty, or freshness, ultimately keeps interest in the game high.

So, novelty = c4 * competitiveness = c5 * satisfaction.

Stripping out the constants, we have

Revenue = int [novelty * (int (novelty dt) dt]

We already know that novelty is more or less decreasing constantly, so novelty is some first-order polynomial of t, or novi (initial novelty) - c1 * t. Since in calculus, constants are factored out, we take it to be novelty =  c1(novi/c1 - t), since both novi and c1 are constants, we represent it as nov.

Revenue = int [ (-t + nov) * int (-t + novdt)dt]

Revenue = int [((-t + nov) * (-1/2t^2 + novt + c )dt] c = 0, there's no accounts at t = 0.
Revenue = int (1/2t^3 - 3/2novt^2 +nov^2t)dt

Derivative of revenue = 1/2t^3 -3/2novt^2 + nov^2t = 1/2t (t^2-3nov+2nov^2) = 1/2t (t - nov) (t - 2nov), which has a zero at 0, nov and 2nov. We discard 2nov, however, because novelty = nov - t, and 2nov, novelty would be negative, which makes no sense.

Take second derivative of revenue.

Revenue''(t) = 3/2t^2 - 3novt + nov^2

At nov, t = 1.5nov^2 - 3nov^2 + nov2 = -0.5 nov2, which is assuredly negative. By the second derivative law, there exists a maximum at t = nov.

At that point in time, the game would have reached its maximum revenue potential. In other words, there's no more money to be made from it. It is inevitable that F2P games, as a novelty-based, novelty-driven model, die.

Some people at this point might think "What about longevity?"

If a F2P game has novelty, it has implied longevity. QED.

Now, you might ask, "isn't P2P also novelty-driven?"

Yes.

The P2P model is as such:

Revenue = accounts * fee. Fee is constant

So Revenue = int(accounts dt)

Accounts, as we know, is int (satisfaction dt), which is int (novelty dt)

So Revenue = double integral of novelty * d^2t.

Having said that. Developers who want to delay this inevitable death will inject novelty into the game. This is why developers make patches and new content.This, however, is where developers diverge.

P2P has two features F2P doesn't have. P2P's account numbers is much less sensitive to change than F2P. The monthly fee precludes frequent player influxes, and the time-money investment per p2p player is much greater, making player exoduses much less likely. Thus, fluctuations in P2P's revenue is a lot smaller than F2P's, which is often very volatile.

In other words, developers have a lot longer to prepare game patches, which inject novelty into the game, than F2P. Developers also have practically no tools to generate bursts of revenue. In other words, they'll be working on the long-term aspect of the game constantly.

F2P on the other hand, is the opposite. Player influxes and exoduses are much more common, which means content must be frequent to keep the players engaged. The existence of the item mall is also prime material for direct revenue stimulation, which is why costume recolors are so frequently done. This is all done at the expense of long-term aspects, because those content are much less likely to generate revenue, as by the time you're done developing it, impatient players may have already left and are never coming back.

This instability makes developers (especially the likes of EF/x-legend) turn to another form of novelty. They make clones of their older games and release them frequently. A new game provides several advantages:

1. It is the largest form of novelty you can offer to players for the least amount of effort. I will quote Joel on Software again: To the layman, the UI and appearances constitute of 90% of their impression on the program, but to the programmer, that's usually only 1-5% of the work. As game death happens at t = nov, the higher the initial novelty, the longer it will live.

2. It double-charges the players, as the money they have spent on the older game is now worthless. Few games offer character movement, and even fewer offer refunds. They are of course completely not obligated to do either, as you're paying for a service rendered. To a player, however, to reach what they reached in the earlier game, they need to invest their time and money again.

3. Similar to the first two points, it keeps the developer fresh. For some reason, even though starting from scratch is the most economically disadvantageous thing to do for many things, humanity seems to prefer that "squeaky-clean, brand new" feel, which they believe is worth sacrificing old code for. This even happens in computing development, as Joel on Software notes here.

4. It keeps the developer in the spotlight. Announcements for a new game invariably will be carried by game news sites, but patches won't. By making new games instead of patches, they stay in the public eye, and are much more likely to attract players.

By doing this, they're getting the maximum bang for their buck (developer hours).

You, the player, however, just get screwed.

This is why they don't care about Grand Fantasia players migrating to Eden. This is why they keep making clones year after year, and don't believe for a second that other companies don't also do this.

After all, it only costs 4 mana.

Excuse Me, Waiter, Their Food is Better Than Mine.

While that stupid client is downloading, I figured I might as well do something to kill the time.

So there's been some controversy about the recent "outing" of the Veninfang solo runs.

If you haven't been following the EE forums, here's the gist. One class (Bard), can basically run circles in that dungeon with a huge mob train following, while the bard just DoT's the mobs dead for massive amounts of exp.

No, that wasn't the controversy.

The controversy was the employment of a "glitch" in the game by people who did it, by hitting move right as a spell finishes, all ending lag is canceled.

Funnily, in any self-respecting fighting game community, the discovery of something like this would immediately be hailed as revolutionary in gameplay.

Not in MMO's, apparently. Apparently, this is unfair.

Apparently, if someone else can do something, even if it was as simple as simply hitting a button at the right timing, is too much for some people to comprehend, and they'd complain as though the game wronged them. As though the existence of something that differentiates people of differing skill levels is fundamentally discriminating.

In their defense, it is picky. If you happen to be "motor-skills impaired" as the current politically correct bullshit says, you clearly deserve extra attention and service, and the way to do that is by restricting everyone else so they have to play on the same "motor-skills impaired" level. How dare other people play better than you! How dare they have better equipment! How dare they leave you behind! Even though there's nothing positive that can be said of you, you still deserve to be on top along with everyone else!

And the sad part? Some people agree with them.

This is, quite frankly, retarded.

Oh I'm sorry, I meant "brain-skills impaired"

Their points, so far, are as thus.

1. You don't want to alienate the playerbase who can't do it.

The sad part is, even if it was seriously a difficult thing to pull off that offered advantages to a tiny select group of players, it still doesn't make sense to remove it.

Why? Said group of players will be the game's most genuinely dedicated players. Those are the people who'd go to great lengths to make their chars a little better, to get that extra edge in PvP, to achieve the particularly difficult challenges the game might offer.

In other words, these people will buy the biggest volume of AP.

The people who can't do it and complain about it are the group that's least likely to spend AP.

Why? What they're essentially demanding is a handout. They want other players' capabilities removed so they could compete without spending any effort. If they wouldn't even expend any effort on the game, what makes you think they'll buy AP? They're going to be the same people who demand CS items in events, and free AP. Pleasing them is counterproductive to making money.

2. If you send out the message "Tricks are potentially bannable." You're going to discourage people from trying to play the game, which will decrease revenue.

In a game such as EE, testing generates revenue. People who do their builds, people who try to solo things, etc. will often have to pay out of their own pockets for the success of testing. For example, every time somebody tests a build, that's a potential 499 AP into Aeria's pocket for a reset KP. People who make gear and whatnot will often expend a ton of AP for it, even if they end up not using it. The potential to better their characters compels them to take the risk.

If you make it bannable, not only will they stop testing (what's the point? you find something, they ban it), they'll also be less encouraged to play, because they're essentially in a minefield.

3. You also send out the message "we don't actually have a game here, just give us money."

If you disallow tactics that require skill. As skill-deprived as the MMO genre already is, we're still all pretending that there's a game under all that AP wrap. However, by placing emphasis on the non-allowing of skill-based tricks, you are telling your players that you're not interested in running a game here, and nobody enjoys competing in spending money.

4. You will also decrease the chances of actual problems being caught in the future as well as actually exacerbating the skill gap.

Right now, people are willing to communicate about things like this, because they've found a shiny new trick that makes them look awesome. However, if this becomes bannable, then who's gonna share it with the community again? You will not create a fair game for anyone. In fact, without people sharing what they find, you will have all the knowledge of said tricks being limited to a few testers and their circle of friends. In other words, instead of sharing it with the community so everybody could potentially benefit, now only they benefit. Unless you specifically watch them (which, you don't have the manpower to). You in fact will never be able find out about other "glitches" that may arise.

A similar thing happens on the TW server. They never talk about anything of this sort, because they know that as soon as they talk, it'll get removed. The end result is, those who know will still know and have an advantage, and those that don't never will.

And the sad part is. Despite all this, they're probably gonna make it bannable.

Or better yet, charge AP for it.