Greedy Goblin

Tuesday, August 14, 2012

Minimal wage and PLEX price

How much an average EVE player makes? This is a question that we don't have direct data for. All results are anecdotal (mine included). This question is important to answer to plan our own place in the EVE economy.

The one solid point we have is PLEX. It's sold around 480M on the EVE market and you can buy it in the item shop for about $15. About 100K PLEX sold a month and there are about 400K accounts, so its a pretty high volume item to have an equilibrium price. We can assume that one buys PLEX for real money if he can make more real money an hour than by grinding in EVE.

Players use to say that "I easily make $15 an hour so for me it's much better than even the best station trading". However they make a mistake here. Most people in the World don't make $15 an hour. Before you'd answer "who cares" or go into some thinking about the average salary of an average EVE player, let me tell you that it's totally irrelevant. It doesn't matter how much an American phone tech support operator wants to earn, as the phone tech support is outsourced to India exactly for the lower salaries. The transportable products are generated at the countries where the salaries are lowest. So if ISK farming is profitable for a Russian, he simply make wannabe American ISK farmers unemployed.

There are lot of Eastern Europeans and Russians in the game. In these countries game costs are significant factor. Lot of players play on hacked WoW servers because they can't afford a WoW subscription. Now if there is an MMO which can be played fully for free (not a "you can log in for free but must pay $ for every useful item"), it would be clearly popular among the often unemployed or simply poor young adults, income-less children, adult unemployed, housewives, disabled people, pensioners and so on.

The minimal wage in these countries is around $4000/year. If we assume 40 hours/week, 48 workweeks a year, we get $2/hour. This is the salary you can get an employee to do hard labor in Eastern Europe. Students work for less in the summer, especially if we consider taxes.

So a PLEX is $15. 1 hour work worth $2, so earning 1 PLEX is 7.5 hours. 1 PLEX is about 0.48B, so the average income of a person is below 60M/hour.

Where can be mistakes in this calculation? One obvious is that generating ISK in EVE can be a fun activity, so people do it even if it's not profitable. But wait, such players are ready to "work" for less than 60M/hour. One can claim that EVE PvE (that makes the ISK) is so bad that people rather pay real money to skip it, or those who can't afford to pay it simply don't play EVE. The fact that vast majority of the EVE players are in highsec (where PvP is very limited) disproves that.

One can assume that for cultural reasons Eastern Europeans and Russians don't really play EVE, so the few of them simply can't generate enough ISK, so the Western players are not outplaced from ISK farming. So 200M/hour is the average which is around the US minimal wage. However if it would be true, the few playing Russians would be extremely rich (in terms of ISK) as their farming activity would be richly rewarded. So Russian alliances would be the supercap monsters, but actually the mostly American CFC-HB has the supercap power. Also, if you could get about $4-6 by playing EVE an hour, RMT would be all over the place and illicit ISK sellers. The main reason of limited RMT in EVE is that non-bot ISK farming is unprofitable, even if we consider Eastern European, Indian or Chinese workforce. The truth is the ISK farming is so unprofitable as real world work that no man (only bots) do that.

We are out of counter-arguments and have to face that the income of an average player is pretty low, probably around 40M/hour. This allow people with lot of $ to amass relatively large ingame wealth by converting PLEX as their real life earning power is much-much higher than their ingame.

Tuesday morning report: 141.1B (3.5 spent on main accounts, 2.4 spent on Logi/Carrier, 2.2 on Ragnarok, 1.6 on Rorqual, 1.4 on Nyx, 1.8 on Avatar, 2.6 received as gift)


Anonymous said...

RMT is actually quite profitable, otherwise there wouldnt be so many sides doing it.

also, the average eve player is older than "young adult".

Anonymous said...

Some additional thoughts:

It may be true for historical reasons in Eastern Europe, but I doubt that people in $4k per annum countries get 40hr/week or 4 weeks off per yr.

You also did not take into account that nobody is going to work on EVE grinding, even if it is above their minimum wage, if they can make even more grinding in another game. A farmer with ISK has a much harder time converting that into RL currency than a game with more players since EVE is so much smaller. I.e., if the niche EVE market pays the farmer 5% of the end-user price of the ISK but 20% of the end-user price of the much more profitable WoW gold, that affects what game the people want to grind for.

WoW has stated that an increasing majority of the against-the-TOS gold comes from hacked accounts, not farming. CCP won't even implement authenticators. So if are making ISK to sell to shady sites, then your main competition (who set the price) used to be bots but are now probably hackers. A new Adobe Flash or IE exploit means more hacked accounts which means more ISK supply which lowers the price. Another poor person doing ISK/hr calculations has much less impact. I see how much ISK/hour the latest botting software can generate and how many hacked EVE accounts can be stolen per day to be more important to determining the price of ISK.
Things like this can drive the price as well.
If this guy really did that and 2-3 billion people live on $2.50 a day then this is appraching the NPV of many people's lifetime earnings.

Anonymous said...

Err, historically CFC was considered the supercap-poor block. It is only recently that they have started fielding them.

DRF Russians, on the other hand, regularly fielded rather large numbers of supercaps during the Northern War.

Cathfaern said...

Anonymus @ 14.18 08:58:
In Hungary the minimal monthly wage for a 40 hr/week job (with 4 week off per year) is 60000 Ft which is about $265.68 monthly ($3100/year). And at more east (Romania, Bulgaria, etc.) its lower than this.

Anonymous said...

There is one logical flaw in your reasoning - you seem to put an "equal" sign between 1 hour or work and 1 hour of game.

These are not interchangeable quantities. Most of the workers don't have the possibility to convert working hours into playing hours and the other way around. If you have a 40h work week, you can't work 3-4 more hours just to make more moneys - and you can't work 3-4 less hours just to play more.

You could argue that for a ISK seller that might not be true. However, even if we ignore the fact that the average player won't do RMT, there is still an upper limit to the number of hours available for play (not even bots can be online more than 24h/day).

A more realistic estimation would be ISK/month, in my opinion (since 1 PLEX = 1 month of gameplay). You can go to ISK/h only if you have some data about how many hours the average player spends in game per month.

Anti said...

i think more important is that earning anything more than you can spend is practically useless except to an RMTer.

and if you engage in RMT there are risks involved. so the true value must be modified by a risk factor.

assume a 50% chance of being caught for RMT. if you make 200m ISK per hour then your real earning power is only 100m per hour.

the question of course raised by this is; can we estimate the risk of CCPs enforcement processes by looking at Gevlons analysis? if 40m is a true estimate that the market puts on an hour, and null sec alliance will work for 181m per hour in faction war (level 4 cash in) then is the risk factor of RMT 80%?

Gevlon said...

@Anti: more ISK always has utility as you can gift it to friends. You can get your real life friends in the game for free.

Anonymous said...

The marginal benefit of an additional work to pay for EvE is not neccessarily the same the average benefit per hour.

I might have a salaried job with no-paid overtime and earn approximately $4 an hour. I can't turn any free hours that I have into money at that $4/hour and a part-time job for those hours is unlikely, therefore working EvE at $2/hour might be a viable option.

You have also ignored the many people that can't value their own time. The "I farmed it myself so it was free" crowd isn't insignificant.

Anonymous said...

My main problem is with the hypothesis : "We can assume that one buys PLEX for real money if he can make more real money an hour than by grinding in EVE."

First question : can you gain real money while playing EVE ? (legally first, then are Gold seller current in the game ?)If yes to the first question thinking in hourly wage is correct.

If not you cannot compare hourly wage and gaming. You will never be able to produce any money with this game so you will ever make more money by working than by playing EVE.

I should have missed something.

Anonymous said...

@dobablo : Of course this is free ! To be more precise this is free if you enjoy the game.
You spoke about "value their own time". But if you want to be payed to play this game, I do not understand why you play. In fact, if you enjoy the game, you should be ready to pay for it.

Maybe you separate two things :"working" in game (boring playing) to earn enough PLEX to play the game.

In this comparison, you can effectively compare your own hourly wage to your revenue.

I start to see Gevlon point : if people does not gain at least 60M/hour they would be stupid to do this : it would be more efficient to work more than to "work" in game. For US, if you do not earn at least 200M/hour, it is stupid to try to buy PLEX with ISK -real-life working is more efficient.

Anonymous said...

One thing though : most people cannot choose to work extra hours. Or even when they can, they cannot work more than let's say 6 aditional hours per week.

So no matter how hard you want you have a cap to your income.Whereas you can play EVE a lot. At the end, even if i make something like 50$/hour i certainly don't want to pay for PLEX if i can find a enjoyable way to avoid to.

Eaten by a Grue said...

I am not sure the data supports your conclusion. Being generous and assuming no player buys a PLEX from the shop to fund his own playtime, but rather to sell on the open market, all this tells us, roughly, is that 25% of the players (the real money rich) are using real money to fund the playtime of the real money poor.

Why are you drawing the connection between minimum wages and ISK per hour? Once a player is able to purchase enough PLEX to keep playing, the motivation to keep earning can drop precipitously.

You cannot directly equate the ISK price of a PLEX with the real money purchase price of the PLEX. This conversion only works one way, as to convert ISK or PLEX into real money requires the black market RMT, and there is a severe discounting there. So while the first 480M ISK earned can be directly equated to $15 (this is a real money savings), the next 480M ISK are only worth a fraction of $15, and its main value is what can be done with it in-game, which may or may not be enough of a motivator to grind the stuff out.

beancounter Jaynara said...

It might be valuable to back out the trial accounts from calculations, though this may be a negligible amount, or otherwise find a way to back out the accounts that are below the average subscription length to account for people earning isk just to learn the game versus supporting themselves in it long term.

Some good points are made here by the OP and in comments. Keep in mind that one factor I don't see mentioned is eve CAN be a lower stress work environment or fun, like you said, which may counter raw numbers to an extent.

Also, maybe factor in the differing costs of adequate computers and internet (and electricity) relative to these incomes.

I'm sure if I was in one of these countries and had the choice of hard labor or Eve, which I would choose to pay for my subscription....