The value of coin: an exploration of Mario’s currency

There have been so many dissertations written about the Super Mario series of games, with everything from the physics of the jump, to the design of the levels being subject to critical analysis by video game enthusiasts and game designers. I’m not a professional game designer, but I am an economist and so with that experience I try and do the same level of assessment, but this time with Mario’s currency: the iconic Coin.  This relates directly  to Nintendo’s Super Mario series of games, but its lessons can apply equally to the free-to-play market.

A History Lcoinesson: On 12 December 1983, the Australian Government floated the dollar, until which time it had been a fixed exchange rate pegged to a number of currencies over the course of its life.  Since then the value of the dollar has fluctuated with the market, reaching a high in July 2011 trading at higher than $1.10 against the US dollar.  There has been pain on both sides of the coin, for both importers and exporters, but for the most part it has served the country well by allowing the central bank control over the money supply and giving it new and efficient tools to combat downturns and slow down an overheated economy.  In short it was a good economic decision.  Fixed currencies are not in vogue within economic schools of thought these days and for good reason; the precedents being set by crises in both the Bretton-Woods system and the gold standard before it.  The question is has Nintendo sticking to its guns on how it uses its Mario coins set in on a path for rendering its currency obsolete?

I am fascinated by the economics of video games.  Not how much they sell and at what price, but how the designers shape the gameplay around the fundamental economic principles, often unknowingly.  Like it or not every video game has an in-game economy and whether it be collectables, coins or currency, or loot; each and every decision a designer makes to encourage people to act or behave (or not) in a certain way is driven by conventional or behavioural economics. Nintendo has maintained a fixed exchange rate for Mario games, effectively pegging the currency against lives at a rate of $100.00.  It may seem a bit abstract by the value of the coin has not changed for the most part throughout the history of the series.  That is with with the exception of the 2013 game New Super Mario Brothers 2 which saw Nintendo place a whole new value into its coin system.  But we’ll get more into that a bit later.  For now let’s stick with history.

Mario games have undergone a pretty fundamental shift in the way they treat their players.  While the concept of lives still exists (and the concept of death), they have become less and less important as the game designers have shifted toward a more user friendly game play experience, offering unlimited continues with very little cost or penalty to the player.  While many people would argue it is because of the more ‘casual’ nature of Nintendo consoles in recent years, there is probably more truth in an argument that the designers have moved with the technology.  No longer are games hamstrung by password systems and lack of system storage and so gone is the gameplay device that forces players to learn and perfect a game in order to get through it in a sitting.  Whatever the reason the fundamental design of what a Mario game game is had to change and in that transit the coin got dragged kicking and screaming along with it – for better for worse. new-super-mario-bros-u It is almost impossible to argue that the value of Mario’s coins hasn’t fallen.  With lives forming all but lip service to the games’ legacy the coins play no real functional role in the economy of Mario’s game design.  They exist almost purely for their intrinsic value and to that end the game makes the assumption that players place a high  value on the coins.  This belief is inherent in almost all aspects of the game design: coins are often out of reach of the player at which point the game assumes it is worth the player’s time to collection them; and reinforcing that fundamental assumption is that quicker times through stages is met with a coin reward.  Its a bit paradoxical to think that the game’s built-in opportunity cost is measured in coins; but the fact is that coins are a very large and central part of Mario’s in-game economy.  

The problem is that these iconic shining circles in fact hold very little true economic; and with that the key economic proposition being based around them any game play mechanic that relies on them heavily gives the player no inherent incentive to collect them, or play to maximise their coin returns.  Fundamentally Nintendo has lost its ‘lever’ over player behaviour, and what its left with is a perceived over-reliance on the physical mechanics of the game – essentially how the game behaves according to player input. How big of a problem is this for traditional Mario games moving forward?  Well it entirely depends on what Nintendo’s mantra for the series is.  The key question is if it is not worth a player collecting coins how does Nintendo design the levels to coerce the player into new areas?  Coins are more than just currency they are also in so instances ‘markers’ that point toward new or hidden areas.  If the coins hold low or little value to the player then there is no incentive to collect them, causing problems not just for how the economy is balanced, but also potentially as a device to encourage exploration.  This effectively changes how the developers have to think about level design and try and shape player action in some other way.  It may not be a terminal problem but it does call for thought to be put into how Nintendo try and guide player behaviour with the invisible hand and sign post parts of their game that are not found along the path of least resistance.

It is a problem that to date no modern 2D incarnation of the series has tackled. With the exception of New Super Mario Bros 2 on the 3DS that is, which threw any supply constraints on the coin out of the window.  In fact it went so far in the other direction that not only did it increase the money supply it actively encouraged a drop in the market value of the coins by setting the players goals to horde its money.  The gameplay choice worked a treat and mixed things up enough to keep the pursuit of coins fresh and exciting; but it did little more than provide an artificial stimulus on the demand for coins in the hope of driving an interest in collecting them.  Again though legacy design decisions such as the exchange rate for lives remaining fixed made it more stimulus and less structural change; with the impact being a short term devaluation of the value of coins in pursuit of a greater gameplay design decision.  It was a good gameplay decision but a terrible one for the already failing coin.

This all looks like it is leading to a financial crisis for the humble coin as Nintendo wrestles with very rapid depreciation of its iconic currency with an unwillingness to shift from its design choices of old.  But look beyond the coin and things get somewhat brighter because the team has sought to diversify its holdings to avoid disaster.

The answer is introducing new and competing currencies into their games’ markets.  The economic proposition in the case of collectibles is quite a simple one; they must have some value to the player usually beyond the simple act of attaining it; and for the most part both the star coins and stamps in the latest Super Mario 3D World for the Wii U do so successfully.   These coins and stamps actively unlocked more content for players, which in and of itself placed an opportunity cost value on them, forcing players to assess whether the time afforded to collecting them was worth it with respect to the value of the reward.  It has become a central part of Mario games and has featured prominently in the structure of recent games and in part resolved some of the issues surrounding the old-money by drawing players toward collecting these often hard to find and prized collectibles.  They in some ways have become the premium money in the game: supply constrained and able to be tendered for valuable in-game goods.  There are other tiers; primarily the ability to ‘bank’ power-ups, but these hold no value in the long-run and as such are merely play the role of a hedging currency more than anything else. This being the case though, I still believe there is merit in reassessing the value of the coin by changing its ‘pegging’ within the game.

The question is do they retain control and set the value or do they let player action decide how valuable those coins are?  Lets explore those options: We have established that the current pegging of the coin is fraught with negative economic consequences; notably the rampant deflation of the coin’s value.  But one of the key features of a fixed exchange rate is the ability for the policymaker (or game designer in this case) to reassess its rate against current market conditions.  Doing so would require Nintendo to make fundamental changes to what the coin represents in its economy.  With the near obsolescence of lives it is plainly clear that keeping coins pegged against them is keeping its value down.  Structural change is clearly required.  But this will come at the expense of the series’ conventions.  Either way whatever the currency is fixed to must in and of itself have a value to the player – could pegging it against continues work?

Nintendo could theoretically constrain the supply of continues  and fix the value of the coin directly to them to increase the exchange rate to artificially raise its value?  Perhaps powerups?  These are the questions this option would need to explore and answer; but there is inherent risk for the game’s balance if player behaviour is misunderstood by the designer.  Fixing the currency against another game-good is possible but fraught with issues. Which leaves us with a more market-based mechanism, similar to a floating of the dollar.  But what would this look like?

Like central banks the one thing Nintendo has up its sleeve is that its playing with an entirely known quantity of coins in the game’s economy, which makes life somewhat easier.  A system whereby the value of the coin is directly relate to player demand for the coins would not only allow for Nintendo to increase the value of the currency, but also for players to decide for themselves what value they place on the coins.  This system would see the tender value of coins for in-game goods and services to fluctuate according to how many they collect.  If the money supply in a level remains high due to a decision by the player to not actively collect them, the tender value of that currency to purchase goods and services will fall.  That is if more coins are left in a level then the number of coins required to purchase lives, continues or power-ups would be higher than it would in a situation whereby a player has collected all of the coins in a level.  It is a simple market mechanism that both gives the player incentive to collect coins by placing a higher value on them; but it also allows the developer to better balance its in-game economy.  It’s a win-win for everyone and in my view the best way to maintain the allure of the iconic Super Mario coin. So while it may on the surface look like the coin is destined for a collapse of enormous proportions, taking with it the entire Mario universe, Nintendo have taken steps toward stabilising (or balancing in game design terms) the 2D Mario economy.

Diversifying its currency base was a major step toward fixing some of the problems caused in some part by game design but in most part by the changing nature of how and who games are played by.  The problem still remains though that the core of Mario games is still entrenched in the monetary system of old, based on a currency that now has no inherent draw.  If Mario’s coins are going to remain an integral part of the games’ experiences then Nintendo needs to think long and hard about the role they play in balancing the in-game economy; retaining their value; and therefore how they move to shape player action and progression.  Without this those sparkling gold bullions will slowly fade into the darkness and Nintendo will be left with a real “Monkey on its back” and a dilemma in terms of how it designs its Mario games into the future.

Sir Gaulian is an economist with almost a decade of experience in markets.  He even dipped his toes into free-to-play game design once upon a time.  Get in touch on twitter @Oldgaulian or keep the discussion alive in the comments below. MarioQ

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8 Comments

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8 responses to “The value of coin: an exploration of Mario’s currency

  1. I enjoyed this. I was thinking it would use classic Mario coins as an explanation or example of economic phenomena, rather than be a strictly economic look at Mario currency, but it worked.

    I wish coins were used more effectively as a scoring system for each level as an alternative to time and the less obvious system they use currently. You’d probably want diminishing returns on lives to make that worthwhile, but it would be cool to see a physical representation of my score at the end of the level.

    Like

  2. Very well written post. I knew you were going to talk about New Super Mario Bros 2 when I read the title, the value of coins in that game is incredibly low. I agree with what you said, I think Sega got it right with rings in Sonic the Hedgehog. Rings hold way more value!

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  5. This is a great post and I can tell you had a lot of fun writing it! I think Kirby’s Epic Yarn used its bead “currency” very effectively, where you lose a certain portion if you get hit, which lowers – without ruining – your chance of getting a gold medal for the level.

    Liked by 1 person

    • I really did have a great time writing it – glad you enjoyed reading it.

      It’s a fascinating concept, that player behaviour is driven by the same incentives that exist in the real world, that is maximising ‘revenue’ subject to opportunity cost. Nintendo in particular have lost sight of why the coin was such a strong and symbolic part of the series in the first place, and the introduction of competing currencies had just muddied the waters further. Developers can learn a lot from the way that markets – particularly currency markets – work in the real world and inform their game design accordingly.

      Thanks for the comment – I’ve got Epic Yarn sitting there so I should go back and have a look at that 🙂

      Liked by 1 person

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