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Monday, September 30, 2013

High-sec POCO Economics

Now that the high-sec Player Owned Customs Office (POCO) is a reality and not just a sound bite from CCP Soundwave during last Fanfest, I've begun to really think about the real New Eden consequences of implementing this change. And I think I might have to back peddle on my opinion. In my Fanfest Keynote blog last April, I said,
"But first, I'll start off the list with something CCP Soundwave said yesterday. He said he'd like to see POCOs in high-sec. Yes, that's right, he wants to see player owned customs offices in high-sec. He mentioned that they would also be vulnerable to player attack. You know, that's not a super new idea as it's been mentioned before but I'm glad to hear that it's not forgotten. I don't know if it'll ever come to be, but it is something I can support."
I'm not so certain now, and it's not necessarily because large player organizations have a better chance of owning high-sec POCOs than single person corporations. There is another issue with this making me worry. I'll be sure to mention it after I fulfill last post's semi-promise of high-sec POCO tax income numbers.

The published tax rate on high-sec customs offices is currently 10%. The questions now is, how much ISK is that on a monthly basis? Fortunately I still have the data my buddy Kao Jai provided for my Why Be a Poor Noob series earlier this year. Just to remind everyone, my friend Kao Jai was attempting to make a half billion ISK a month manufacturing Nanite Repair Paste. Here is his March 2013 expenditure report.
His total planetary tax came out to 113,875,878.25 ISK. That's an average of just under 19 million ISK a planet, a figure I'll use in a bit. So to start this all off, I am going to fix the tax rate at the current 10%. It could go up, it could go down, but for the purposes of this post the rate is largely irrelevant to my point.

Now, that's not a lot of ISK in the grand scheme of things. But, he's not the only one doing PI on these six planets. How many capsuleers are doing PI on these planets? Well, I don't rightly know, so I'm going to have to make an educated guess. I'm going to use the Drake Equation as a model. I'll use an equation of possibilities.

The first variable for this POCO economics question is a known constant. How many planets have PI potential in high-sec? There is a table on Evelopedia that gives all the planets by type for various types of space in New Eden. These are only planets that permit PI, so restricted systems are already excluded from the table. Shattered planets are included, but you can't do PI on them. That's irrelevant for the purposes of this post as there are no shattered planets in hi-sec. The table tells us there are 10,392 planets in high-sec.

Now comes the probability part of the equation. Probabilities are based on assumptions. These assumptions are educated guesses in essence. For instance, the first one is the average tax per planet I calculated above. It assumes the data I got from Kao Jai is representative of all PI industrialists. By itself, it would be hard to make the case it is. However, if you could look at 10,392 independent data points you might just discover it is. Nevertheless, we need to account for fluctuation. I am therefore going to run three columns for tax value of a single planet over the course of a month: 10, 15 and 20 million ISK in taxes per planets.

The next probability I'll need to address is how many capsuleers are doing PI per system, and how many planets they run. At max training, six is the most any single capsuleer can operated. Then there are those with lesser skills, and high-sec is especially full of those capsuleers. The number of capsuleers per planet is the variable that is hardest to predict. Many systems are more appealing than others based on what a capsuleer can produce. That means some systems are inherently more valuable. Hell, some planets are more valuable than others. Who wouldn't pass up a chance to use a plasma planet? Furthermore, who really knows the skills of those capsuleers doing PI?

But we aren't dealing with individual systems here or individual planet gooers. We are dealing with probabilities of usage. There are ways to see a broad range of possible outcomes. What I need is a representation of possibilities. When I ran PI in Aporulie, I estimated there were five other capsuleers using the planets I was using. It's a starting point. I am therefore adding rows to my columns of potential taxation. I'll have rows for one, three, five, seven and ten capsuleers per planet. The equation to calculate cell values in the table is:

Projected POCO Income = ((10,392 planets * projected tax) * # of capsuleers per planet) 

Since my tax estimate is for a month the income will be monthly. That'll give us a fairly representative table I think. Here are the results for 10,392 high-sec planets.
There are six (6) zeros after every number in columns C, D and E. The least amount of tax income shown for high-sec as a whole is almost 104 billion ISK. The largest is over two trillion - per month. That's a big number in anyone's ledger.

But I don't think for one second that one player organization will control, or want to control, all those POCOs. They will be spread out amongst many organizations both large and small. The only prediction I will go out on a limb and make is that single carebear corporations will be left out in the cold. CCP has likely shat tremendously on the lone wolf industrialist ever owning even a solar system's worth of POCOs - thanks a lot. But that's not the end of them. They'll continuing working hard, paying their taxes to whomever, and struggling as they've always struggled. It isn't easy being a lone wolf industrialist, but that's why they do it. I'm not worried about them. Their lives won't actually change no matter who the taxes go to.

What I am worried about is that tremendously large number in the table above. That's only for one month. This was ISK that used to simply leave the economy. Customs Offices in high-sec have always been a means to help keep ISK growth down, and had an anti-inflationary effect. This was one of the reasons CCP instituted taxes in high-sec in the first place. Now that money is simply going from one capsuleer's pocket into another's. It won't be taken out of the economy. What's the long term implications for the New Eden economy in that decision? Won't that start helping inflation rather than hinder it? I'm worried the biggest change likely to be wrought by high-sec POCOs is a general price increase to everything due to inflationary pressures. I sure as hell hope CCP has figured that into their 3-year plan. If they have, I hope their plan doesn't rely on capsuleers blowing more stuff up than they are now. That's no way to run an economy. That's like handing someone a stimulus check and hoping they don't put it in savings.

Watch Out


  1. The thing is - at the low end of those estimates it doesn't make an awful lot of sense to control those POCOS - and is only marginally positive to blow up someone elses.

    And even if it's at the higher end of the scale, the lower end still exists. Who wants to control POCOS in the middle of Derelik, or Aridia? So - carebear organisation moves in, until they make enough isk that they are an attractive target - at which point large null sec entity comes in and blats them. At that point they form a rental agreement, or leave.

    Rinse and repeat, at the lower end you get an orgy of destruction, followed by a whole bunch of abandoned POCOS whose only effect is to stop people doing PI.

  2. You have detailed quite some numbers there. And you points about that ISK sink being turned into an ISK transfer is accurate. High sec players will now be handing over another huge ISK flow to the null sec cartels instead of to a CCP black hole.

    So what will be the next step, when inflation kicks in? Why of course, the null sec cartel propaganda teams will scream "It is high sec mission runner/incursion runners' fault we have inflation!! CCP must nerf their income". At which point CCP will nerf mission/incursion income, or perhaps, implement a higher transaction tax on trades/contracts.

    You can guarantee that the cartels worked out carefully the amount of cash they would gain from this when got CCP to make these changes. And you also guarantee that when the ISK sink to counter this injection of cash into the economy, it won't be the cartels that feel the pain.

  3. I find it difficult to believe there are over 10k people doing PI in hisec. But let's say there are for a second, what does that mean? Worst case scenario you get 200b a month out of the entirety of hisec. That's a bit over 20m per planet per month. Of course some planets will have more activity and be more profitable to hold than others, so lets say a ceiling of 200m a month.

    That's not much at all. Even 200b a month is only slightly more than 6b a day, which is the rough equivalent of 10-20 people casually playing eve every day. When I can break it down as easily as that, I just find it difficult to see any massive economic impact. After all its nowhere near the scale of prenerf Faction War where people were getting ~4-5 bil an hour total.

  4. My suspicion is that this is a step in the move to replace NPC corps for many services that players can do.

    We've already heard talk about using player owned labs to replace NPC research in highsec. This follows such an idea, and merely extends the replacement of NPC cutoms offices in low/null.

    I think you are correct in that a small corporation won't own many POCO. None of my PI is located in highsec, so I might not be able to take advantage.

    1. THey will give more "options" into player hands like thay said, but that dosn't mean the removal of NPC entities and stuff.
      I would realy want to know what CSM knows about that stuff ;)

  5. Another data point, lets you consider things from a differeng angle: Per CCP Diagoras tweets, there were approximately 10,700 export tax transactions by 340 pilots just in Sobaseki in January 2012.

    1. Thanks for sharing this! I'd love to see the numbers CCP has for PI. I personally feel I am low balling the capsuleer numbers in my little table. This seems to indicate I might be. Ouch to the economy if I am.

    2. If you're extracting from a planet, it makes sense to spread out and find a planet with little competition. Your resources will deplete less this way. However, I'd wager the majority of high-sec PI operations are focused on processing where there's no downside to stuffing 500 players on a single planet. So while there may be 340 pilots running PI in a single system (1j from Jita, I might add), that's far from the norm.

  6. To comment on the highsec POCOs acting as a money sink - I don't think that they'll be a major cause of inflation. If Corporation A puts up a POCO in highsec, they have a monetary motivation to defend that source of income. If Corporation B wants to place a POCO in that same place, they have to destroy Corporation A's POCO. This forces a combat scenario where ships, modules, and ammunition are destroyed for a logistical source of income.

    I think CCP's idea is that the amount of resources dedicated to fighting over and setting up highsec POCOs will serve as their money sink. I highly doubt that an economy as massive as New Eden's will be inflated by a single change such as highsec POCOs - especially when numbers such as your own are purely hypothetical (not to critique your math or anything, it's just that the real data that CCP has paints a much better picture of highsec PI than data for a single person or group of people applied to the entire population.)

    1. That was the same logic they used when setting up moons in null-sec in the beginning. It didn't really work out. That's what prompted my savings account comment at the end of the post. CCP can't rely on something as unpredictable as capsuleers fighting each other for POCOs. Capsuleers are far more likely to make treaties allowing all to make money without fear of loss than to fight for that same thing. Fighting is always the last option because it's bad for business. That's why OTEC happened. Hoping for a different outcome than what's already been proven to be the preferred course is... not good.

    2. PS: read mynnna's contribution to the discussion just above your post. Yeah, CCP has the numbers. They even used to share them with quarterly financial reports, but they don't (won't?) now. Still, I've been doing this a long time and I know my numbers are low-ball. And inflation is a tricky thing. That extra ISK flow will accumulate. Even a small trickle can eventually cause an entire dam to fail. I just want to know there is a sink to counter the faucet.

  7. T4 Factory planets are by far the most viable form of high-sec PI at present. The export tax for a single T4 product is 135K and the import tax for the materials to produce takes it roughly up to 200K total. Even at that level you can make around 200K profit per T4 if you know what you're doing. [In fact there's ways to make up to 500K per planet per hour].

    If you multiply everything by 24 hours you get maybe 5Misk in tax for a single character per day, or 150 Misk for a month. If we say we have 30 players on that planet doing serious t4 production then thats 4.5 Bisk in taxes for a single planet. I suspect the numbers are probably higher than that though as there's only a limited number of planets 1 jump from Jita that you can produce T4 on.

    One issue that we don't really know is what changes they're going to make to the system. As a solo high-sec PI player I'd be pretty annoyed if I could suddenly have to pay twice as much tax because there was a new POCO owner.

    Of course if there's massive amounts of conflict over the POCOs then the whole viability of high-sec PI maybe compromised as you might not be able to pull or push your materials from the planets during that conflict.

  8. I don't think for one second that one player organization will control, or want to control, all those POCOs. They will be spread out amongst many organizations both large and small

    Why don't you think this? I'd like at least a second of thought.

    It seems to me that taking and holding one POCO uses roughly the same resources as taking and holding two. You need a bigger fleet of battleships than anyone else in highsec. Whoever has that fleet can control all the POCOs, either directly, or by threat. (We offer you 80m for your POCO, or else.) He who can destroy a thing controls that thing. It's true that getting from one end of highsec to the other is time consuming. But then, jump clones. A corp with 500b ISK per month in income can pay for a lot of battleships and have five different fleets positioned to be within 15 jumps of all of contiguous highsec.

    To me, the big question still unanswered is will it require a wardec to attack a POCO? If not, then there might at least be a lot of picking around the edges. If so, there should be less warfare and more stability, but bigger players benefit.

    1. Wardecs are not required to attack a POCO; however, attacking without a wardec will raise a suspect flag.

  9. From the dev blog: "Once a POCO is in place, players can make a legal attack only if they’re at war with the owning corporation. Attacking without an active war on the owner will bring CONCORD intervention."


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