Wednesday, September 19, 2012

Guild Wars 2 market analysis by Sam

Hi, I’m Sam, I do high-level thinking.

What am I talking about when I say high-level thinking? I mean looking at a game and try to discern what the developers wanted out of the marketplace they were creating. Looking at World of Warcraft as an example, it’s very clear that Blizzard wanted the auction house to serve as a marketplace to buy and sell weapons, armor, and crafting materials. Therefore, in World of Warcraft, often the most profitable markets are those revolving around armor, weapons, and crafting materials. Guild Wars 1, on the other hand, was very devoted to allowing players to make their characters as unique as possible, as evidenced by the very low level cap and lack of really strong crafting outlets. Guild Wars 2 appears to follow a similar model to Guild Wars 1, which means that applying “buy low, sell high” techniques to crafting materials, armor, and weapons like you would in World of Warcraft will potentially lead to a net loss.

Entering the game, I had lost all of my expectations and knowledge that I had learned of Guild Wars 1's market and tried to apply logic that worked in World of Warcraft. Here are some examples of where that logic goes wrong:

1.The WoW auction house works on a queue, which means that if you're the first person to put in an item at a price, then you'll be the first person to be displayed (and ideally sold to) at that price. This means that in order to sell your items "immediately," you have to undercut the competition. GW2's Trading Post works on a stack, meaning that the first person to put an item in at a price will be the LAST person to sell it. The inverse is true as well, the last person to list an item at a price will be the first person to sell at that price. This means that there is currently (as long as this system is in place) ZERO reason to undercut competition, and if you're doing a sell order you should simply match lowest price.

2. The AH in WoW takes a 5% cut from what you sell. The GW2 TP, if you sell an item, takes 15%. This makes playing the market much more difficult on high volume trading, while High Volume Trading was very profitable in World of Warcraft. This was the major difference between GW1 and WoW that I forgot and wish I had remembered during GW2's launch. Guild Wars prioritizes luxury items as the items to make the most money on, where World of Warcraft prioritizes commodities (crafting materials, the things made with those materials, etc). While I don't think it's impossible to make a profit off of GW2's commodities market, or by buying materials and selling items crafted with them, I think it is going to be very difficult and generally not worth the effort of calculating the best return in this field.

3. The Surge. The article I wrote last week outlines the details of the surge and how it works and what it's currently doing to the trading post. The scale of the surge, however, was much larger than I accounted for in my article. While it is true that market correction will cause ore prices to rise once the huge influx of people playing GW2 starts to die down, this is not where the money is made right now. Ore prices are still dropping and will continue to drop as the less hardcore players who are rounding 40-50 right now make their way to 80 and sell all the mats they gather along the way. At BEST, ore will remain steady in it's pricing, however this means the market correction will be far less obvious and may not occur at all. (I think mithril might be very solid at about 25c ea, though once the surge hits 80 it might see a temporary or even a permanent spike as they all start crafting level 80 greens and blues)

Well, where does this leave us? I focus on metals because I think covering all crafting materials (not including fine crafting materials) is lot of wasted effort when each market seems to follow about the same trend. I don't think any of these markets are a good place to look because they're all commodities, something GW1 never really had a use for (except for special cases, which I'll touch on in a bit). The real money is in the luxury goods.

Currently, GW2 has no real endgame. The real endgame in Guild Wars 1 wasn't necessarily super difficult dungeons (they were, but then speed clearing started taking over) it was pride. The goal after hitting 20 in Guild Wars was to become awesome at PvP and join a famous guild to win some of ANet's monthly cash tournaments with, or to speed clear and farm and "vanquish" areas to work on titles to try to complete God Walking Amongst Mere Mortals. I think, although ANet will strive for a more conventional endgame in GW2, that the GW2 endgame will be about the same. At level 80, the goal isn't to get geared up to run story mode dungeons, the goal is to get gear to get exotic gear, legendary weapons, and anything else to set yourself apart from the masses as the biggest BAMF of all time. These BAMF items are LUXURY items, and they are already commanding a premium. As more people hit 80, look for a goal, and see these items, the demand will only go up, while the supply stays about the same. Here are the luxury items I'm keeping an eye on at the moment:
-Globs of Ectoplasm (Creates Exotic armor and weapons and is probably needed to craft the legendary weapons as well)
-Orichalcum/Gossamer/Hardened Leather/Ancient Wood (see above, though I'm not necessarily prioritizing these items)
-Dyes, specifically Abyss Dye, Black Dye, Celestial Dye, Midnight Fire Dye, Midnight Ice Dye, and White Dye
-Exotic Mini Pets
-Magic Find Gear (High Magic Find is the primary method of farming for level 80s at the moment, this means Opals, Claws (Vicious and Large), Explorer's, Pirate's, and Noble's runes)

Whether you want to try day-trading the items (watching like a hawk for an item to be put up for far less than it should be then immediately re-listing it), or you want to be speculating, these 5 fields are extremely safe IN THE LONG RUN. In the short run, all but orichalcum/gossamer/leather/wood are safe since the "easy" crafting materials are starting to hit the market in larger supply as people hit 80.

As a final note to anybody who eagerly awaited this article following my article from last week, I will no longer be updating the spreadsheet on that page as the information I am gathering and using now to make a profit on the Trading Post is somewhat proprietary and the amount of people I share it with directly lessens the chances I have of making money on those items. HOWEVER, following me on twitter @theothersamb will allow you to see when I find a quick deal or an item on the move that I either do not have the funds to act on immediately or are outside the scope of the markets I am trying to corner. I will post tips whenever I see them on my twitter, however be warned that my next few days will be spent doing school work.

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  1. Not a bad article, although you are wrong about the FILO(first in last out) system being applied to the GW2 market. Confirmed by Dev [ref]

    If it appears to work that way on your interface it is a bug.

    Also your recommendation about investing into what is required for exotics/legendaries is a good bit of advice, but you missed the most blindingly obvious crucial item that you should be trying to make a profit on xD

    Mystic Coins!

    Mystic coins are the only object that people need in legendary creation that you cannot farm, they are limited to your daily/monthly achievement and a one off bundle of them for gaining world completion...and ofc the trading post ;)

    Buy them now before too many people catch on (you can already see the market for them has doubled since the mystic forge info has started to emerge)

    Otherwise not a bad article.

  2. the picture should say GW2 > WoW

  3. Am i the only one who has actually realised how the TP works (and thus profited from it :3).

    The TP followed a FIFO structure, HOWEVER, as a higher priority lower stacks sell first.

    If 8 people sell a stack of 250, it will be FIFO, however if someone then sells a stack of 240, the 240 stack gets priority over the 250 and sells sooner.

    Although if some of that first 250 stack have sold, it is no longer a 250 stack, which gives it even higher priority.

    tl;dr, don't sell stacks of 250 unless your selling 1000s at a time.


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