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Virtual economy boosts silently!
By Steven Golden
There is a new burgeoning economy that usually called Virtual Economy. This new economy is a growing, it is global, and, according to a recent story in the New York Times, sweat shops in China have already been setup to start profiting from it. The interesting thing about this new economy is that you have probably never heard about it, never stepped foot in it, and it is 100% virtual.
Although some of the transactions in Virtual Economy happen on eBay, I am not talking about the people buying and selling real goods and services, these transactions don't actually take place in the World you live in. Massive multi-player online games (MMOs or MMOGs), like Everquest, World of War Craft, Ultima Online and Second Life each have their own virtual worlds, and these virtual worlds are creating virtual economies. By some estimates, the traffic in virtual goods is worth as much as $880 million in real cash every year.
Stick with me here, this gets really interesting.
Each of these virtual worlds have their own currency and these currencies can be bought and sold with real dollars, yen, euros or pounds. In fact, some sites are being setup now to actually track the valuations of these currencies. Want to know the value of 1 Million WOW Gold pieces, or linden dollars compared to US dollars? GameUSD.com will tell you!
Developers not only have to regulate their software, but they also have to regulate the players. If the rich, high level players buy up all the basic goods, driving the price up so high that new players cannot afford to play is that fair? The programmers at Ultima Online addressed this problem by "dropping" objects in places where low-level characters could easily find them, and buying the generlly useless goods like animal skins that these low-level characters produced. Ultima online morphed from an entirely free market state, to a state which duelly operated on free-market princibles and what was basically a welfare program. Players decided that it was "fair" and kept playing. Most games now implement a system like this one.
Game developers also have to decide if they are going to allow players to use gold, items and characters that where bought off of online auctions. The problem with these things was that anyone with a credit-card now could buy that castle that everyone else had to work for. It destroyed the meritocracy, which was very highly valued by the gamers. Despite this, there was a high demand for these things. Many people did not want to waste the time it would take to kill 1000 bunnies in order to reach level two. There is also the allure of earning cash for doing something you enjoy. Even the most stoic, hard-core gamers are lured occassionally by the possible thousands of dollars of profits if they sold their characters and virtual goods. So, do developers let the players be, buying and selling as they choose, or do they outlaw pre-leveled characters and bought items and preserve the meritocracy? Do they cater to the professionals who play the game in their spare time and do not want to spend three days leveling, and the young and the rich who just want to be the most bad-ass without having to work for it (the american dream). Or do they cater to their core audience, the dedicated gamer who is going to buy the expansion packs and is going to keep paying that monthly fee for years?
Not only can you take out your credit card and buy currency for the games, you can also buy anything from high level characters and game items like clothing, swords, and shields. Some games like Second Life, are totally setup to be a virtual economy allowing you to buy virtual land, develop it, and resell it. Anshe Chung, dubbed "The Virtual Rockefeller", currently makes over $150,000 US buying virtual acres, developing these plots, and reselling them.
Most of the transactions are between players and happen in exchanges like eBay. Other sites have been setup to specifically for this function, ige.com, igxe.com, etc.... In a typical transaction, one player sells and item to another and they arrange to meet up somewhere specific in the game and make the agreed upon trade. Sony has setup Station Exchange, it's own trading site for their Games, and saw $180,000 in transactions in the first 30 days.
Are your kids playing these games? Join them! You might just find a new virtual business between ogre battles!
About the Author
Steven Golden is a researcher for many sites such as http://www.gameusd.com , http://www.world-of-warcraft-gold.us , http://www.bankofwow.com , http://www.bankofddo.com ,etc.
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