Diablo 3: The economy in numbers

It may perhaps come as no surprise to regular readers of this blog that I've been thinking about numbers.

In particular I've been thinking about this comment of Loque's:
"Now... for what concerns the "making money in D3" I don't really think it will happen for 99.9% of the players."

Why 99.9? Why not 80% or 99.99999% Can we attempt to figure it out?

Here goes


The virtual currency market is currently estimated at over $2 billion dollars annually and predicted grow to $5 billion by 2011. (Source)

Older but more trustworthy data states:

"  Figures

While reliable figures for gold farming are hard to come by,^[11] there are some estimates of the market for in-game currency.
In 2005 The New York Times stated that there were over 100,000 professional, full-time gold farmers in China alone.^[5] And in 2006 sales of such virtual goods were thought to amount to somewhere between 200^[12] and 900 million USD.^[4]
Another estimate, drawn from 2005/2006 data, valued the market at not less than USD200 million per year^[13] and suggested that over 150,000 people were employed as gold farmers with average monthly earnings of USD145.^[13] This same report estimated that 80% of all gold farmers were from China;^[11] a fact which has led to prejudice towards Chinese players.^[14] 2008 figures from the Chinese State valued the Chinese trade in virtual currency at over several billion yuan, or nearly USD300 million.^[15]"

An academic analysis by Richard Heeks includes mention of speculation that as early as 2006 the market might be larger than $1b. And this is a market that has seen and is seeing non-stop growth.

Updating his figures in 2009 Hecks mentions that Nick Ryan put the Chinese RMT industry alone at $10b:

"Estimates of 400,000 people working in China on gold farming/trading are seen as very realistic, and the number could be 500,000 up to 1,000,000 (the latter figure is also estimated in Nick Ryan's recent articles on RMT, which claims total turnover for Chinese RMT operations of US$10bn per year). There are many brokerages in all major cities in China (Ryan's article estimates 60,000 in total)."

So in Diablo 3's first year is it fair to suggest that at a conservative estimate the global RMT market might be somewhere between $2b to $5b?

What's Diablo 3's cut?

I think there are a lot of reasons why D3 players will be more inclined to buy items than players of other games. First it's legal. Second there's the allure of believing that if you make yourself just that bit more awesome you'll be able to recoup your investment. Third it's the successor to WoW, Blizzard's first new avatar-based game since 2004 so it will inherit a lot of players who bought gold items and characters in World of Warcraft. Fourth the game provides significant blocks (difficulty level changes, pvp) that many people will only overcome by buying items.

So let's guess $5b gets spent and D3 players spend a fifth of it.

Diablo 2 sold 4 million copies. I strongly suspect that Diablo 3, launching on the back of WoW will sell more than that. There are simply more gamers around these days as well as a much higher number of older gamers. Also Blizzard has done really well with opening up new markets for WoW in places like Brazil, Russia and particularly China. Add in the allure of being able to get paid for playing, whether it's naive or not, which will draw in many more customers and I think it's not a stretch to say a big chunk of PC gamers will be playing D3. I'd guess about 10 million. I think at least 5 million is almost certain.

So if D3's real money auction house is going to turn over $1b in its first year and it has 10 million players that's $100 per player each year.

It won't distribute like that.

Hardcore mode (permadeath) players will get nothing through the legal AH. There will of course be a secondary market. (I suspect the existence of this black market will eventually push Blizzard into authorising RMT in D3 Hardcore).

The majority of players will never reach endgame.

Not all farmers are equal. Roughly a farmer's income = monsters killed * magic find bonus worth of magic items plus monsters killed * gold find bonus worth of gold.

Luck plays quite a big part, causing profits to deviate from the average that any particular playstyle might suggest.

Game knowledge can also play a big part, for instance a better method of killing fast (such as Javazons in the Cow Level in D2) or a better farming route.

Cheating (duping etc) can play a spectacularly big part but overall diminishes the game as there's less point being so interested in a game where people are able to cheat and hack and dupe. Hopefully Blizzard will keep cheating under control.

Game difficulty will play a big part. If the game can be farmed by under-geared characters in a relatively brain-dead way then uneducated Chinese labourers are perfectly effective. If the game is more difficult then players will need more grounding and understanding of the game. I'm speculating it may be hard for the typical Chinese gold farmer we saw in WoW to do this, ie it will change from a blue collar job to a white collar job. I'm sure they'll get up to speed in time but gold farming businesses that are not prepared may have a very rough first year. The current system of sharing characters in shifts with the guy on the next shift selling anything that isn't nailed down will be completely useless for farming Inferno.

All forms of arbitrage aren't actually significant in relation to the turnover figures. Arbitrage moves profit from one economic agent to another, it does not actually increase turnover itself.

Conclusion: if you're a skilled player who farms Inferno a lot with magic find gear on I think you'll earn over $1000 per year playing Diablo 3. If you also arbitrage effectively you will earn more. It won't support any but a few as full-time professionals but it's a financially significant hobby.

Or to put it another way if you're a reasonably competent gamer you will pay back the cost of the box at least if you do some magic finding in Inferno.