Market Discussions

With PLEX prices dropping under a half billion I for first time in awhile why not ask:
" Is PLEX the gold of Eve which can be used as an indicator of percieved inflation or deflation in the economy?"

If so it took awhile but after the FW nerf we're seeing PLEX prices deflating. Is that the right cause & effect
or has the new NPC AI ( along with the TD bugs ) significantly hit the bounty ISK faucet?

If not can say all the PLEX sales lately be the only reason for PLEX's current nosedive?

@OP

Open graph.
Make it show 1 year period.
Behold.

You're welcome.

I am the puppetmaster.

Dance fools, dance.

yup, it sure is.

Based on the history of PLEX prices, there will now be many players expecting the PLEX prices to come back up quickly, and will be buying all sub 500M PLEX they can, thus causing the price to come up.

My question is, if the drop in PLEX prices did not trigger a buying spree, would the PLEX price have still gone back up?

I have not actually checked prices to see if it has come up yet. Not in game at the moment. But I a m assuming it has just because it always does.

Some things are constants in the universe, like gravity, taxes, and greed.

I think all of you may be missing the point.

CCP represents the legislative, judicial and executive branches as well as the Central Bank of Eve. Are you foolish enough to think that they are bound by market constraints in the creation of PLEX? This is a misunderstanding of the PLEX dynamic.

Accept as given: CCP has the power to influence, including firmly fix, the price of PLEX. They own the game. If you do not agree, proceed no further and go read a book - preferably one that includes the economics of Weimar Germany.

Should they choose to move the price at any given time, it will be to maximize their long-term profits to the benefit of CCP shareholders (employees and three private equity firms). They are not in the business of making nice. In fact, Thor Bjorgolfsson would probably not take kindly to losing money because of some null-sec mother's basement dwellers' whining. Shareholders would not blow up ships in Eve if they were unhappy. They know where management lives.

So, how does CCP maximize long-term value for their shareholders? By balancing the need to keep current subscribers with in-game funded accounts against the profitable sale of PLEX and subscriptions to cash customers. Which do you think they care more about? Or should I say, which do you think their private equity firm shareholders care more about? Wake up.

Keep in mind, direct cash purchases of subscription time have an indirect impact on PLEX price discovery. Subscription purchases for cash are impacted because of the deterrence factor of potentially expensive future PLEX account funding in-game. On the other hand, those paying cash for PLEX (not subscription time) are looking to sell the PLEX in-game for ISK. Those people want high PLEX prices. Those buying subscription time directly want low PLEX prices, so they can aspire to future in-game account funding.

THAT is the dynamic driving the price of PLEX. CCP can not know, ex-ante, what price maximizes shareholder value. They must observe the price level of PLEX over time and its correlation to revenue, so they have an incentive to let the free market mechanism work, for the most part. However, MAKE NO MISTAKE, should they see revenues impacted, they will act, one way or the other.

One thing is virtually certain: in-game PLEX demand is highly price inelastic. Long-term players are like addicts with the prices of their drug. They will whine and moan, but they will pay whatever ISK it takes to keep getting it, so they are only a secondary driver in the big picture. (Editor's note: or should be, if CCP is not grievously mismanaged)

So, getting new subscribers for cash? Very important. Score one point for keeping PLEX price low. Getting people to buy PLEX for cash and sell for ISK in game? Very important. Score one point for high PLEX prices. Getting in-game players to keep playing? No points. They will buy the requisite PLEX until they get into rehab.

The current decline from 600+ to around 500 is likely the result of large corporation disgorgement after a failed store-of-value thesis (see gold in the real world) but who knows? It doesn't really matter. Price discovery is always noisy (see Brownian Motion in Asset Valuation). If CCP management has half a brain (where are you now, Eyjolfur Gudmundsson?), they will be running the regression on PLEX prices versus CCP revenues and filtering out stochastic noise to see how much revenue is explained by PLEX price dynamics.

Disclaimer: I have done some analysis on this, but I am an active trader of PLEX, and will share my results only in private so as to avoid threatening my own ISK profitability, addict that I am.

As for the consequences of a PLEX price rise on the general level of inflation, that is another, quite interesting, story. It is analogous to that of gold in the real world. Gold and PLEX are both assets while at the same time currencies in their own rights. Asset inflation in PLEX denominated terms is different than inflation in ISK denominated terms, especially since PLEX represents around 1/3 of CPI in Eve. This is more complicated than the analysis above and I am happy to discuss further if anyone is interested.

I do not know Eyjolfur Gudmundsson, or if he even still works at CCP, nor do I think he is widely published, but this better be what they are paying him for. I hope so, for the sake of Thor Bjorgolfsson, who I hear is a quite affable fellow if everyone is doing their jobs properly. Heaven forbid the price of PLEX keeps him from earning a profit.

Very interesting and well presented information. The people I have seen who buy PLEX to sell for ISK are regular players, they know a bit about the game and want to do something that they are not currently able to do, so they buy PLEX to sell for ISK.

I think that dynamic is the one that CCP (and probably most internet game co.) encourages; so they maintain an unreachable example of "end game" as represented by Mitani and co. along with some other "end game gold" for people to salivate over. And they make it possible to get those things either by long term grinding and good game play or PLEXing.

It would be interesting to see what % of PLEX is purchased by players under 2 months, I bet its small compared to that purchased by players who have been here a while. With the greatest PLEX purchased by players who have been in Eve for 3 to 6 months.

Honestly though I think CCP is just trying to make a great game, and that will bring money in more reliably and over a longer term than any kind of PLEX shenanigans. The price of PLEX in ISK will continue to rise as ISK accumulates in the game world. They are actually a great hedge v inflation that way. And the next time I take a break form Eve I might try and have a few stockpiled.

I wonder how long CCP would keep the servers up for people PLEXing their accounts if no new money was actually coming in?

Well the Chinese server has been shut down once already due to financial issues unless I got my information wrong?
You want to to see super expensive PLEX go there & check its price

Well the thing is, if you actually dig deep enough, the fluctuation of PLEX prices correlates with out side effects, much more than the EVE economy.

For example, at certain times of year PLEX prices rise and fall, regardless of the condition of the EVE economy. For example in the summer many players activity drops as they are out side enjoying the sun, rather than sitting at their PC. Nothing to do with the EVE economy, even though the in game activity is equally affected by the same outside source.

Every time CCP issues a PLEX sale the PLEX prices take a dive. The amount of this dive fluctuates depending on demand and how many players take advantage of the sale. But again, not really affected in any way by what is happeniong in the game. Except maybe the events in game influencing CCP's decision to have the sale. CCP can time this to try influence the game economy thru the prices of PLEX. But it is still the PLEX affected by outside influence that effects the game economy not the game economy affecting the price of PLEX.

There have also been PLEX market manipulation attempts by very rich in game players. I have seen PLEX pushed up by nearly 100M within only a few days. This has nothing to do with the state of the game economy, it was a direct effect of an action by a single or group of players. When A player, or group of players decides to do this has nothing to do with the state of the game economy.

It can often look like PLEX is a good measure of the EVE economy, as each on of these events effects the EVE economy as well. but the PLEX prices generally shift independently, with no way of predicting when one of these events will happen. Looking back at it after the fact, yes, the correlation is there, but it can not be used to predict these events, or the market fluctuations we see in EVE, as they are initiated by a decision outside the game. The PLEX changes first, and then it affects the EVE economy. The effect is not always the same, and can vary greatly. The EVE economy does not really affect the price of PLEX.

The only sure bet when PLEX prices shift rapidly, is the emergence of forum threads commenting on it. the price of Tritanium is a much better measure of the EVE economy, as it is the basic block EVE is built on, and traded in the highest volume, giving it the greatest opportunity to be impacted by the shifting game economy.

Oh I agree.

The last 2 patches where golden, players are getting what their asking for, CSM is doing a fantastic job figuring out what people want.

CCP, well, their doing such a good job that the complainers out there cant find anything to complain about other then the random anti dev post, usually because their Just being french http://imgur.com/r/funny/19T9Kfm and CCP is like why would you...

As for how long would CCP servers stay up?
Gut feeling, CCP wasn't doing to good 20 months ago, player count was declining, nothing new was coming out and game flaws where being fixed, the new stuff they where adding was not very notable, so their revenues where very very likely failing them.
I think their breaking records now, with all the new friends we get to play with now and the excellent changes we asked for and received, I doubt the servers are going to go down any time soon now.

Love the tale of 2 cows!