New Business:Real-life dollars buy in-game currency?

Steven Golden

Will people pay real dollars for in-game virtual money to help their virtual characters buy in-game goods?

One gamer, who goes by the screen name Haylo, said he spent $10 to $20 real dollars a month on in-game platinum(all nonexistent, of course) to buy weapons and other goods in Dark Age of Camelot (DAOC), but would spend more if he could afford it.

Most video games have some form of currency. In many ways, the in-game economy is similar to a real world economy - goods and services are traded to mutual advantage and are mediated in currency (platinum, gold,credit,etc.). With all the things you can buy in game, a gamer said, it's hard not to want them, just like real-life stuff.

The average Massively Multiplayer Online Role Playing Game(MMORPG) player is 27-year-old -- a demographic drooled over by marketers. Plus, nearly half of all players have jobs, which often means they have more money than time and are the perfect consumers of virtual assets. On the Internet, many gamers now buy virtual money that only exist as data files stored in a server run by a game company with real-world dollars, and the buying and selling of virtual currencies may be off most people's radar, but it is truly big business.

An online broker, who goes by the screen name Rolala, was not a fan of online games until his 15-year-old son became interested in Final Fantasy XI. He then noticed that a large number of gils which are the currencies used in FFXI were for sale on eBay. I started hearing about players leaving the game who were selling their assets at cheap prices, he said, so I figured, buy low, sell high.

But Rolala found his moneymaking options in FFXI very limited. He switched to World of Warcraft. There, he has leveraged his real-life experience into an online business. He converts his game profits into real money on sites like eBay, cheapwowgol, and 5mwowgold etc. Earnings can be considerable. He said he was on track to earn about $120,000 in real money in his first year in this business.

Rolala's business is just one example of how increasingly popular online role-playing games have created a shadow economy in which the lines between the real world and the virtual world are getting blurred.

World of Warcraft, the world's largest MMORPG, boasts more than 1 million paying users in North America.There are many sites like wow gold free strategics, teaching gamers how to earn wow gold in
game for free, however many players are still willing to buy gold and weapons to help their virtual characters get a higher virtual status more rapidly. Some virtual goods in World of Warcraft have been sold for thousands of dollars. It obviously creates a large real world market.

Edward Castronova, an economics professor at Indiana University who has written a book on the subject, calculated that if you took the real dollars spent within EverQuest as an index, its game world, called Norrath, would be the 77th richest nation on the planet, while annual player earnings surpass those of citizens of Bulgaria, India or China.

Go to GameUSD, an exchange-rate calculator for the virtual worlds, and do a search for the latest rates of virtual currencies against the U.S. dollar, and let your jaw drop open. The rates of some virtual world currencies are even better than that of the Iraqi Dinar! For instance, here is the recent exchange rate of several popular virtual currencies:

Everquest Plat ($0.54/1K), EQ2 Gold ($0.17/gold), WOW Gold ( World of Warcraft Gold ) ($0.098/gold), SWG Credit ($4.40/1M), Lineage 2 adena ($2.80/1M), Guild Wars Gold ($0.12/1K), FFXI Gil[/url] ($17.89/1M), etc.

Right now, this business is one of the most hotly debated issues on the internet. Many game companies such as Blizzard who run World of Warcraft discourage profit from in-game properties, though none have found a way to stop it.

Sony Online Entertainment, on the other hand, encourages the practice (albeit within the confines of their own Station Exchange, their own forum for the sale of in-game properties). It recently announced the first month's figures from Station Exchange. According to SOE, over 45,000 characters from ;EverQuest 2 have been active on the exchange and have spent over $180,000 USD in one month, half of which have been spent on in-game gold and platinum.

Despite of different attitudes towards virtual currency trade, the number of people who are getting into such business is rising, and the size of market has been expanding very rapidly.The market also creates a competitive environment. We could refer to sites like GameShopList, a price comparison site, to see the fierce price competition between different exchange sites.

For some ordinary gamers, however, such a capitalist approach spoils the experience. Nick Yee, a psychology researcher from Stanford University, believes many players dislike virtual currency traders because, by using real wealth to buy virtual power, they're breaking the fantasy-reality bubble, getting an advantage in a way that other players can't.

According to a recent survey by IGN, an internet media focused on the videogame markets, most gamers say they dislike and avoid this business, believing that it gives players with more discretionary income an unfair advantage.

But such attitudes are called into question by size estimates for the virtual asset trading market, which is seen having a value of $200 million to nearly $900 million in 2005.

One potential explanation for the disconnection between attitudes and money spent may be that gamers are unwilling to admit they use the services, IGN said.

In terms of the law's concern, another issue is, who owns the virtual money? Many virtual world designers maintain that anything created in the world belong to the company. They refuse to recognise the rights of their players in the virtual property for fear of attracting liability for its maintenance or security.

But will this work in the long term? Players spend considerable time and/or money acquiring such assets. In many cases they are the creation of the player and even the intellectual property ownership is questionable. As we spend more time in these worlds, it's not enough for companies to say that 'we own everything and we can turn it off at any time,' said a gamer. The question may soon be should we have recourse against a game company for obliterating virtual assets?

With the rapid growth of virtual currency exchange market, should people accord virtual property the same protection as property in the real world?

steviec

Oooh intellectual spam! This thread might be worth keeping if a mod deletes all the links...

Pugsley

This is hardly news, second life (http://secondlife.com/) is a game where you buy just about everything in game with real money, and its been doing it since 2003, millions of Dollers go through that game every month, there have even been a few people who have made a living by playing it and got very wealthy from it.

monument

steviec wrote:

Oooh intellectual spam! This thread might be worth keeping if a mod deletes all the links...

Done, just for you.

steviec

monument wrote:

Done, just for you.

Ah how kind of you.

I do think it has it's merits, it's not morally wrong or anything, and as was said some games like Second Life were built on it.

However, games that weren't designed to allow this sort of thing have their economies ruined by it.. when there's a lot of these companies farming gold and then filtering it through to people willing to buy it for real cash - all of a sudden there's a lot of people with a lot of money and inflation goes through the roof, but standard things like quest rewards and monster drops can't account for inflation, so the ordinary player ends up with what should have been a decent amount of money, but not able to afford anything in an over-inflated economy.

So for that reason developers have every right to ban people who engage in this activity if it was specified in the terms of service. I've no idea what the legal issues would be.