With CCP DrEyjoG leaving CCP "soon", it seems only fitting to comment on PLEX pricing, what drives it, and why. This comes in two parts. The first part is a personal theory, based on observation over the years about how the prices react to different factors ingame. The other part, far more interesting, is born out of DrEyjoG's presentation at FanFest. But we'll get to that.
The primary use of PLEX is, now and always, to pay for subscriptions. This is true and has remained true even as CCP adds more non-subscription uses for them. From a mechanical perspective, my observation is that there are a handful of factors that drive prices. All of them relate to available income sources, which is not at all surprising. PLEX are, after all, a tool of disposable ingame income.
- Magnitude of income. This one's dead obvious - the larger the amount of income you get out of an activity, relative to some arbitrary baseline, the more readily able you are to PLEX your account or accounts.
- Accessibility of income. The more people who have access to a given source of income, the larger the impact on prices. Accessibility moderates or amplifies the effects of the magnitude of an income source. Thousands of players making several times the baseline will have a far more dramatic effect than five players making thousands or millions of times the baseline.
- Effort required for the income. You can also think of this as "how passive is it" or "what's the isk per effort". As demonstrated by the prevelance of the Mackinaw amongst miners or the extensive use of Ishtars and drone ships in general for ratting, EVE players value isk per effort as much or possibly even more than isk per hour. The more passive an income source is, the more likely it is to have significant impact on PLEX pricing. Effort does ultimately come in behind the magnitude and accessibility, though. For an activity to really have an impact, it tends to have to cross a magic number that is, simply, most or all of the value of one PLEX. Even though a smaller number (such as a few hundred million isk per month) would significantly defray subscription prices, people seem to only really go through the effort if one or two characters doing something can pay for an entire PLEX.
- Ability to multibox the income. If you can do it with multiple accounts at the same time, you can make more money - it's a no brainer. More accounts requires more PLEX, of course, but once they pay for themselves, the 'leftover' isk will pile up that much more quickly.
The short version of those four points is that PLEX price is ultimately affected by the velocity of money in EVE, and any combination of more players getting more money more quickly or easily will tend to drive their price up. Contrary to popular belief, whether an income source is a faucet or a sink is irrelevant - if there weren't already so much isk in the economy, that might not be the case. That means that the classic scapegoat - Incursions, after their initial release - impacted PLEX prices as they did because their magnitude of income was quite a bit higher than that of Level 4 missions, yet they were very nearly as accessible in many ways. And, the most famous example of income driving prices (post-Inferno FW farming) was actually a massive isk sink. The rise in prices following that was so severe that DrEyjoG was forced to intervene in the PLEX market for the first time (that we know of) in history and CCP had to push changes to FW out ahead of schedule to curb it.
This begs the question, though. After a player has paid for their account, maybe any alts they want, and they've got whatever ships they want, what do they do with the extra money?
Perhaps they invest it?
PLEX have, for a very long time, been regarded as a relatively safe place to stick one's money if you're leaving the game for a while. Historically, the price has done nothing but rise (on average) over time, they're always in demand, and when you come back, they're easy to sell. Perhaps most importantly, unlike virtually any other major commodity (such as minerals) that one might choose to park money in, it's as near a sure bet as can be that CCP won't go and do something that dramatically lowers their value. That notion of safety was only reinforced when the CSM8 Summer Summit Minutes recorded EyjoG as saying that CCP had no target price for PLEX - their only concern was the rate at which they rose. He reiterated that philosophy during his presentation at Fanfest 2014. Many players naturally interpreted that as "PLEX will be allowed to rise, always."
Now, the notion that speculation is a huge driver in PLEX prices has been around for a long time, but has always just been a matter of speculation itself (how very meta!) Yet, after reiterating his policy on PLEX prices, Dr EyjoG went on and did everything just short of saying the actual words "PLEX is a speculation bubble." In light of that I am honestly surprised PLEX did not crash overnight. Perhaps investors did not hear what he'd said, or heard it but didn't believe that it's what he actually said. But believe me, it's definitely what he actually said. Let's go over the evidence. You can follow along on YouTube, starting at about 15:00 in, though for the sake of clarity, I'm going to take some points out of order.
By far the most important point made in the presentation was a real-life comparison. DrEyjoG stated that PLEX do not behave as a consumer good, but rather as an investment good with potential utility, "much like gold in the meatworld" (15:30). At this point we could just drop the mic and walk out. The attitudes many people hold towards gold in the real world and the resulting behavior in its price are both well documented, and invoking that comparison ought to speak for itself. Indeed, DrEyjoG specifically stated that the purchase of PLEX as a hedge against perceived inflation, or as an investment vehicle while taking a break, is quite common (16:10). There are other relevant points, though, so we'll be thorough.
First of all, PLEX have increased in usage since their introduction in 2008. This means not just actual usage (as cited at 15:03) but the actual sales volume by CCP as well (17:45). In short, both supply and demand have increased over time.
Second, subscriptions are still the largest driver in PLEX consumption. While CCP has introduced new services over the years, those services are a "marginal driver" in PLEX pricing (18:58).
Third, even as price has been increasing over the past year, the quantity traded on the market has decreased.
Supply goes down, price goes up. It's macroeconomics 101, except for the fact that, as stated earlier, the actual quantity purchased from CCP has continued to rise. What's actually pictured here is a drop in the average velocity of PLEX trade - the number of times each PLEX gets traded on the market, on average. Given the context, the conclusion is obvious: people buying PLEX off the market are tending to hoard them, rather than use or resell them.
The effects were abundantly clear. As we moved on from 2013 into 2014, the price began to rise faster and faster, which no doubt prompted more people to buy more PLEX as a hedge or investment. Finally, the rate of price increase broke whatever threshold DrEyjoG considers to be "too fast" and he stepped in, carefully injecting PLEX from banned accounts into the market, and stabilizing the price.
At least for a time.
While the good Doctor did fine work, all his intervention did was temporarily solve the increasing lack of liquidity within the PLEX market. Nothing about the collective mania changed, though, and before long, prices resumed their inevitable rise.
Of course, the only thing inevitable about bubbles is that they burst. Fortunes may be made along the way, but eventually the music stops and some poor sucker is left standing.
Just don't let it be you.