Eric Seufert joins to dissect AI hype, marginal ROAS, Jeremy Bentham's legacy, and managing a multi-million-dollar marketing budget that falls empirically short. WE discuss:
Forget the endless autopsies on why Web3 gaming flatlined, @Chris gets past the clichés and gets into the real pathology: a misdiagnosis of what “play-to-earn” was ever good for.
Sub to Eric and Chris' Substack here:
00:00 Introduction and Free Trials in Drug Dealing
00:28 Economics of Drug Dealing
02:11 Personal Experiences and Data Collection
03:24 Car Dealerships and Market Monopolies
04:57 Gaming Industry Insights: Clash Royale
19:08 Battlefield 6: Gameplay and Strategy
27:11 Rollerblading Adventures
28:36 Rollerblading Economics
30:16 Web3 Gaming Struggles
34:54 Understanding Play-to-Earn Mechanics
43:42 The Market for Lemons
52:24 Conflicting Data on Gen Z Spending
56:51 The Importance of Reliable Economic Data
01:05:43 Conclusion and Future Topics
Eric covers the economy and the system’s design of Ukraine’s Drone squadron. What does economy balancing look like in the face of war? Phil can’t stop gushing about Heroes of History, but there's one economy design piece holding it up. The crew descends into a John Maynard Keynes debate as a 4* or 5* character. Chris covers the economic impact of the UK’s new obligation for internet providers, potentially transforming UGC as we know it.
https://ericguan.substack.com/p/ukraine-gamified-drone-warfare
Yat Siu, Co-founder and Executive Chairman of Animoca Brands, steps cast to defend Web3 against @Eric and @Phil’s vigorous skepticism. @Chris just want to know why gamers don’t get it. Is Web2 fundamentally incapable of grasping the promise of open markets? What is and should be promised to token holders?
We discuss:
Pokémon's patent of spherical objects throwing of cartoon creatures threatens Palword's lifeblood, while Tim Sweeney has lifted, at least a percentage point, in total gaming GDP with its injunction success.
How does Apple's rent-seeking rate change in the face of this ruling? Should Apple lower its rate to 15%, like it did in subscriptions? Remember, it faced competition primarily from "webstores" too. We premier a new segment: SOLVE that for EQUILIBRIUM.
We discuss the marginal *monetization* effects and debate the benefits of personalization opportunities (hint: there are none) with webstores.
@Chris is intrigued by Joost's piece on rising game costs, while AI's effects on the industry are measured in the Solow model. @Phil insists rising game costs mean rising revenue and stable margins, while Eric has his own doubts.
Eric's on IP Laws: https://substack.com/home/post/p-161276950
Joost's On Gaming Costs: https://superjoost.substack.com/p/gamings-billion-dollar-gamble
What is the GDP-maximizing set of copyright protections? 10 years? 5 years? None at all? Chris, Eric, and I debate the relevance of patents and copyright protections and the gains to network effects of knowledge. Does the "gentlemen's agreement" to avoid patent protections on game design help or hurt the industry?
Chris talks about Monster Hunter's lineage and woeful service, while Eric introduces a novel use of AI in game design. Phil believes the Gini coefficient is underutilized for measuring live-ops-driven revenue.
Phillip & Eric navigate the strangely subdued landscape of GDC 2025, pondering if there really is such a thing as a free lunch. Chris dials in, wondering if his absence is secretly the key to Eric's roundtable success.
They dissect the talks, the conference economics, the rise of mobile's respectability, and a guest in economy designer, Charlie Hsu.
In this episode:
The best tech firm experimentation seems to offer thousands of button color experiments. Dr.Runge has a better approach, which changes at every game development stage. We debate gaming's broken relationship with science, the proper experimentation framework, and how much you'd bet on yourself to complete Cousera assignments.
Read Dr.Runge's new paper NOW!
Showlinks:
Julian Runge
Gaming Companies Run Thousands of Experiments a Year
Game Data Pros
How to use games to build relationships with your customers
Pokémon TCG Pocket is one of a handful of games to implement P2P trading on mobile. Yet it sucks. On purpose. As @Eric explains, their game economy needs high sinks to combat hourly sourcing of card packs. Without the nearly 80% trading tax, prices would tend toward $0. However, that's secondary to a UX that is so gimped it makes Friend Codes look seamless by comparison.
We deconstruct Matthew Ball's new State of Gaming report slide by slide (or at least curated slides.) @Chris thinks we're failing to keep pace with inflation, putting the industry at risk, while @Phil wants to know why TikTok is winning at the margin. Is gaming becoming LESS compelling relative to social media?
Loot boxes have all the markings of a moral panic. Dr.McCaffrey reviewed the emerging literature, and like the research on video game violence, it's destined for methodological malfunction.
We discuss why everything isn't a loot box, the apathetic interest of economists in games, what George R.R. Martin's economic equilibrium teaches us, and how to get more people interested in economics.
Follow Dr.McCaffrey on Twitter [1], see him on video games [2], and read his loot box and A Song of Fire and Ice papers here [3].
Is game balance bullshit?
The crew goes toe-to-toe debating Sirland’s Don't Use Math in Balancing Games. Chris emerges from his Roblox hibernation, Eric tells us Street Fighter is more accessible than platform fighters, and Phil goes bonanza for All in Hole.
Anti-cheat economics, web3 property rights, Deirdre McCloskey, institutional incentives, Halo UGC, and the if single player games have a natural advantage outside the West. Oh my.
Dr.Jason Arentz finally guest stars, and he's bringing the econ juice, finally striking a 50/50 web3 split on the case.
Zynga Car Price Experiment: https://www.gamesindustry.biz/zynga-apologizes-for-random-dlc-pricing-experiment
Economist Dr.Peter G. Klein joins the cast to discuss Why Managers Matter: The Perils of the Bossless Company. We debate Valve's organizational structure, the evidence for manager economic impact, and Sweden's success.
Read more about Dr.Klein here and find his book below:
https://hankamer.baylor.edu/person/peter-g-klein-0
https://www.amazon.com/Why-Managers-Matter-Bossless-Company/dp/1541751043/
15:37 Why Managers Matter
22:29 CEOs
35:22 Valve
Phil and Chris return from Asia, and it's gachupon from here in-out. Eric talks vertical progression in single player games, while Chris actually agree on the future of web 2.5. The economics of unions weigh heavily: within or between professions?
The crew finally makes it to THE KING PAPER; Eric and Chris make surprising revalation.
Quantity discounts on a virtual good: The results of a massive pricing experiment at King Digital Entertainment
Eric develops an economic model to explore or exploit game development decisions, while Phil wants a block-grant style gate process to align incentives. Chris is back at Marvel Snap, and boogies with some new social casino mechanics.
The team reviews a new Call of Duty matchmaking paper with some surprising and revealing data...
Can a stick of butter keep you sober during high-stakes diplomatic meetings? Eric is sure to tell us. Chris provides a compelling theory for the death of mods, while Phil undergoes a Supercell detox after analyzing Squad Buster's launch. The crew gets back in touch with their microeconomic selves and looks at one of the most interesting explanations for the gender pay gap.
Play to earn hits Steam, and the crew is here to dissect the phenomenon. Why now, and why bananas?
Phil is back into the economics of social casinos, while Chris develops a progression model for Darts. Eric and Phil debate the externalities of bots, while Chris solves for equilibrium.
The crew convenes to square off on....what counts as a store of value? Is Match3 the best game economy of all time? Is progression a wage rate? Will Chris buy digital Gloomhaven? Was Eric among the five people who watched Ghostbusters: Frozen Empire? Will Phil get the crew on a regular posting schedule? E27 IS HERE!
Phil gets Eric pilled into a trio of roguelikes, where we prime the pump for Squad Buster's eventual shake-up of the genre. Chris ran another NFT sale and lived to tell about it. We Snap our fingers for Eric's take on Snap's doubling cube mechanic. Should all ranked systems use it? Should the bet limit expand to infinity? We conclude with a discussion of Eurovision's political economy.
https://ericguan.substack.com/
https://chriseconomics.substack.com/
Dr. Sam Rosen of Temple University finally unleashes the Veblen Goods model for which every Game Economist yearns. We discuss:
Dr.Rosen's paper, co-authored with Dr.Anthony Lee Zhang & Sebeom Oh, is out now!
