Economics of Online Gaming

PGillingwater writes "The Walrus has a nice article up about the economics of on-line gaming communities. Starting with the original 2001 paper which shows that Everquest has a GNP greater than India, Bulgaria and China, and going on to the billionaires of Ultima Online and the Mafia takeover of The Sims. "He began calculating frantically. He gathered data on 616 auctions, observing how much each item sold for in U.S. dollars. When he averaged the results, he was stunned to discover that the EverQuest platinum piece was worth about one cent U.S. -- higher than the Japanese yen or the Italian lira. With that information, he could figure out how fast the EverQuest economy was growing. Since players were killing monsters or skinning bunnies every day, they were, in effect, creating wealth. Crunching more numbers, Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.""

I want the money

Think you could cut me a check?

Re:I want the money

No, but we can put it in your PayPal account.

You laugh...

But there are sites that specialize in trading real-life dollars for in-game currency and vice-versa. I've recently started playing FFXI, and this has become a bit of a sore spot with fans, as gil (money) is in rather short supply in the game, and you need to spend a lot of it to have up-to-date equipment and be a good asset to a team (the game is weighted HEAVILY against solo play after about level 10 for all but one job class).

Some people with the Windows version are using "bots" to mainly do two things: fishing and camping for Notorius Monsters. Fishing is pretty straightforward: you sell the fish. Notorius Monsters are one-of-a-kind monsters that only appear sometimes, and often drop excellent items (Leaping Boots go for at least 250,000 gil at the auction house). Even without bots, players would have to "camp" these monsters for hours for the possibility of getting the item. But now they have even less of a chance, as people grab these items, sell them for gil, and sell the gil for dollars.

I 'skin the bunny' every day too

But it doesn't affect my economic situation at all. Should I use more lotion?

Outsourcing.

" that Everquest has a GNP greater than India, Bulgaria and China"

Has there been any outsourcing to Everquest yet?

Re:Outsourcing.

Not yet, although I'm wondering how long it'll be until players start outsourcing their in-game quests to India. :-)

Actually, it's already happening. :-)

You can outsource the levelling of characters (and specificy to what level, or what skills) and even the hours it should be levelled between (e.g. when you are at work & not playing it yourself). I've seen this advertised for City Of Heroes (which ironically, isn't that hard to level in), I would guess it's around for games like EQ and SWG too.

Re:Outsourcing.

You joke, but yes.

Several companies hire people in low-wage countries like mexico and have them produce EQ platnium. This in-game money is sold for real money on auction sites.

Re:Outsourcing.

Just in case you're even remotely serious: It takes a few months of serious gaming before you get to the point where you can earn several hundred platinum in an hour. I should know, I was hooked on the game for like 5 months. So before you get to earning it will cost you the monthly fee and a lot of time. If you'd play anyway is another story, but I can imagine a few more lucrative businesses than playing EverCrack

Re:Outsourcing.

Mind giving a link or something? How is this "Informative"?

It has really come of age when....

...we hear the Fed. Chairman Greeenspan talking about the upward pressure on inflation because of the EQIPEC (EQ Item Producing and Exporting Countries) are restricting demand and therefore driving up the value of the Platnium. Then pressing on he states that we should start 'mining' the American lunch hour reserves and use this otherwise down time to produce more domestic EQ Items.

Yes. At both ends of the game

There are quite a few characters who spend 24 hours a day at certain spots that drop above average amounts of platinum. Those teams/contractors sell their plat to IGE/Yantis who then sell it to the other players. The people playing the toons are getting paid a couple dollars per day.

The guides in the game (who are unpaid volunteers) are starting to get replaced, along with most of the GMs (who are employees of Sony, and used to be located in San Diego and UK) with GMs working in India.

Yes.

There are programs like MacroQuest for botting in EverCrack. Some of the scripts are for making tradeskill items, those are primarily used when there is some tradeskill recipe that makes a profit (which happened last year, depending on cpu speed, up to around 50kpp per hour; and to throw people off the scent, they started rumors about a broken banker in zones like najena or befallen). There are other experience making scripts. There are even some folks who find fun in griefing botters [vigormortis.net]. The folks who spend time writing the scripts and code for MQ could probably make more money writing their own games. But oh noooooooos, we be evercrackheads here.

Creating Wealth

<inflation impaired> If each platinum piece on Everquest == 1 cent real life, then the programmers should create 1,000,000,000,000 platinum pieces in the game and give it to themselves. Then they would be rich!!! </inflation impaired>

Re:Creating Wealth

This takes me back to the heyday of Magic: the Gathering. Comic book and gaming store owners discovered they could make more money on cards by opening the booster packs and selling the cards individually. The less scrupulous owners would put the less desireable rares back in the packs and reseal them. However, eventually, supply caught up with demand and only out of print cards (Black Lotus, Ancestral Recall) were still selling at a premium. And while kids still play, the market for cards is not nearly what it once was.

My point in telling this little parable is that the economics of online gamming are very dependant on the sustained interest level in the game. A small drop in people playing the game could cause staggering changes in exchange rates between Everquest and Real Life. As well as the fact that in order to maintain the economy as it stands, Sony has to either force users to purchase large amounts of consumables or create ever more powerful and expensive items for people to invest in. Stay tuned for my next segment where I discuss the pros and cons of Guns vs. Butter.

Great another reason

Just what the EverCrackHeads need, another reason to stay glued to the computer. While I have never played the game myself, other then for a few minutes just to see what it was all about, I have had friends literally stay in the house for weeks so they could play the game. It is amazing what a hold it can have over some people. My friend honestly did not want to stop playing because he feared he would miss out on something going on within his "clan". How ironic that he missed out on so much that happened in the real world with his "friends" and "family".

Re:Great another reason

Actually, it's an excellent example of truly free market economies.

Look at all the hours people are willing to put in to gain advantage. No "government" there stealing it's mafia-like cut. No "voting" to take some of your wealth and give it to people who don't wanna work as hard, or to some doofus who can't figure out the interface controls. No "minimum wage law" that tells the monsters to drop a lot more cash OR ELSE!

Re:Great another reason

Actually, there's nothing in European Law that forces you to work less than 35 hours a week or whatever. The law only states that your employers cannot stipulate that you do, as part of your contract. Meaning that if your boss asks you to work overtime, you have the choice between working the overtime and giving him the finger.

Now, I guess the standard Libertarian response to this would be "That's exactly the choice you have in a free market: either work the overtime or take a different job with a better boss".
Which is fine in theory, but when there aren't that many jobs about, and the bosses know it, and they all take advantage of the fact, what kind of a choice are you, the average worker, going to have?

While I sympathise with the Libertarian position as far as I don't think the gub'mint should be poking its nose in where it's not necessary, a few laws protecting the individual from the rapacious greed of their employers doesn't seem like such a bad thing.

Re:Great another reason

Why doesn't anyone ever worry about laws protecting employers from the greed of employees?

Re:Great another reason

While I have never played the game myself, other then for a few minutes just to see what it was all about, I have had friends literally stay in the house for weeks so they could play the game. It is amazing what a hold it can have over some people.

Let's turn that around to something a bit more apropos of Slashdot....

While I have never had sex myself, other than a few minutes looking at a magazine just to see what it was all about, I have had friends literally stay in the house for weeks so they could play with each other. It is amazing what a hold it can have over some people.

Ok, so you get the rather obvious point, here. Folks get involved in activities or communities and become engrosed. This is human nature. EverQuest is NOT a video game (a fact which Sony continues to this day to fail to understand). EverQuest is a community, much like Slashdot or the local coffee house. Just as people enjoy those activities and get more involved, they do so with EQ.

When I was a teenager I spent weeks in my room working on a rubick's cube.... which is worse, that or chatting with an old friend from college while whacking on an evil dragon?

At least there's some social contact in the EQ option, which is more than many people in my field get on a regular basis.

Too much time...

>

Perhaps I am taking this too seriously, but some people sure do have too much time in their hands.

The article fails to take into account that those EQ platinums aren't conversible. Meaning, you can auction them off in eBay, but only a minority will ever be. If they were a real currency, not necessarily the US dollar, then they would be convertible and these measurements and comparisions would make sense.

In that case, the value of the EQ platinum as a commodity would be much, much lower.

Re:Too much time...

> The article fails to take into account that those EQ platinums aren't conversible. Meaning, you can auction them off in eBay, but only a minority will ever be.

How is that not conversible? How many people holding the US dollar or the Japanese yen are selling their money on the foreign currency market?

>If they were a real currency, not necessarily the US dollar, then they would be convertible and these measurements and comparisions would make sense.

The exchange rate depends on the supply and demand of a currency, not on some arbitrary conversion factor (well unless you are talking about non-floating currency such as China's RMB). If there are a lot of a particular currency on the market (eg if some big finicial inventment company decides to sell due to falling interest rates), its price will fall against other currencies in the market.

Everquest and Money

I played EQ for a year and a half, averging 20 hours a week. (Quite a bit as I look back) When I "got out" I sold my character on a auction site and got 800 dollars for it! I couldn't believe it I thought that it was awesome money. Then I realized if I averaged out my time and what I got for my character, it was only like 50 cents an hour. That being said, my average was more like a "minimum" every week with some weeks being > 35 hours of game play. The other thing this study doesn't take in account for is that Sony ACTIVELY (when I played, things may have changed) fights out of game transactions, and selling in game money and items for real money. So your "PLAT" may be worth a cent each, but good luck cashing in!

Forget 3.42 an hour

1) Start playing these games when they first come out.

2) Build up a bunch up high level characters and items.

3) Sell them on ebay, or other RPG auction sites.

4) Profit!!!

isnt this

like valuing every ticket in a theatre based on the price the touts are charging outside the event?

Uh huh

Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.

Not bad, however... You do need to pay for a constant internet connection, ( EQ here, so some light form of broadband ) a PC, electricity and one EQ account. I don't think that with these constant costs substracted, EQ will be a very good job...

Outsourcing...

http://www.juliandibbell.com/texts/blacksnow.html [juliandibbell.com] It's already been tried - see link above. Some enterprising guy ran a China Everquest sweatshop where the employees played Everquest all day, and whatever they collected was sold for profit.

A quick overview anyone?

Would someone care to give us non-gamers an overview of Everquest so I can understand the article more. Thus far, it sounds like an RPG like the Sims but with broadswords?

Please don't mod this down until someone responds with a good description of Everquest.

Re:A quick overview anyone?

Its all about leveling your character(s). It is really one giant level treadmill (think of a hamster in a cage running furiously on his little cylinder).

As you kill more creatures (or build your tradeskills) you gain level points. As you increase in level you can more easily kill the lower level creatures; however, you also do not get as much benefit from these creatures, and thus must move on to an area with higher level creatures to allow you to level faster again.

This process continues indefinitely. There are certain levels that are called 'Hell Levels' - mainly due to the fact that your particular character is at a point where there are no monsters that fit the level of your character, or the skills available to your character make it difficult to make headway - so leveling slows to a crawl.

Tradeskills follows a similar pattern, at each level you can build more interesting and/or useful items - that you then sell to other players, which finances further development of your tradeskills.

I found this process to be very boring after awhile. So I migrated to a PVP server (player versus player) - where the players could fight each other, in addition to the monsters. This made it much more interesting. I tried all of the different PVP servers (one allowed free for all, and the other three were team servers of various makeups). This was my downfall...I was glued to the game after that.

Finally, the fact that my peers were able to level faster (I have a family after all, and couldn't spend the same hours my single friends did in game), stripped me of my leveling party, and it became a boring slog...at which point I was able to extract myself, and go cold turkey...

Been clean and EverCrack free for 3 years now (knock on wood). Of course I am now involved in World War II Online - but I can stop playing at any time and step away - that is the key. A game is just that - A GAME. It shouldn't take your concentration for every waking moment - which EverQuest requires, particularly at higher levels (if you camp out deep in a dungeon, for example, that required your whole group to fight into - when you come back and login again, you will have to fight your way out alone, which might be impossible depending on the monsters in the dungeon - so you can't just stop playing until you are at a relatively 'safe' location).

Hope that helps you get an idea about what the game is about.

Deepanalysis

Since I can't reach the page, I don't know why he only used 616 auctions (or however many he used). But you can use a tool obtained HERE [hammertap.com] for about $100 or so that will analyze Ebay listings for the past 2 weeks or so. Using this data you can get a MUCH more accurate reading that a measly 616 listings, which aren't even close to being correct since something around at least 80% of the business goes through IGE [ige.com]/Yantis [mysupersales.com] these days. And don't forget Playerauctions [playerauctions.com] which I can't access here at work due to the proxy but they don't get mentioned hardly at all nowadays despite the large amount of traffic going through them. If you want to read through more reliable reports you should instead roll around HERE [blogs.com] (terra nova blogs) where doctors, lawyers and all sorts of other people that have been analyzing this stuff before you created your first level 1 female elven monk, lurk around.

I thought it was the economics of online betting

Which would have been a fantastic article. As it is this one is interesting on its own.

Virtual currency

Backed by what? Bunnies? It's not like you can use this stuff to buy oil, either.

Articles like this just make me want to get away from my computer and go enjoy the sunshine.

More profitable that poker

I have recently picked up the game of Texas Holdem. I figured out that it was costing me around $8.00 to play online.

So I can make $3.00/hour in one online game to fund an $8.00/hour in another online game.

Heroineware anyone?

hmmmm. If I could only reverse the two then I would be in the money. Sounds like a plan

If if was a fifth then we would all be drunk--Words to live by

Evercrack

These games are so one dimensional (I am a recovering Evercrack addict - so I know what I speak of). Working on an assembly line would be more stimulating than building tradeskills in the game; and the damage model for combat is a points based system - so if you get the math right, you can consistently win (or conversely, get it wrong and lose).

That being said, there was an addictive quality - particularly when playing with the same group of people you know in the real world (many of my coworkers played at the time). I don't know if it was the color scheme, or some subliminal message they strobed in the background between frames; whatever it was, it made it very hard to stop.

Sadly, most online games are built for the least common denominator - for folks who want instant action, and little thought put into the gameplay, with few exceptions.

I have recovered from my addiction - and I warn everyone who considers buying the game: don't do it!

Re:Evercrack

I can identify with that completely...

and the damage model for combat is a points based system - so if you get the math right, you can consistently win (or conversely, get it wrong and lose).

To go off topic a little bit:

That's what always drives me nuts about the likes of EQ & SWG. Basically, it's up to who reads up the most online to work out the mathematically best combination of skills and then just grinds for a month or two till they have those attributes, and change their skill sets as appropraite whenever the developers nerf/buff something.

It runins the creativity and fun aspect for me. It's about as much fun as seeing who can optimise their MySQL database the most, or write the fastest XML parser. I DO think that sort of thing can be fun, just not what I want to do in a *game* most of the time (or I'd be playing Robocode or something ;-). I have an open source project I can play with when I feel I want to do that. I love reading fan sites for advice and tips (beats working! ;-), I just don't like having to read them as part of in depth research because the game system is unbalanced or unituative to the extent that if I don't read them I'm just wasting my time and effort doing the wrong thing.

I know it's hard to make a game that relies on a little more action (like say PlanetSide) due to lag, and the fact that the games engine would actually have to perform half well. I realise not every one wants an MMOG to play like version of Planet Side (think Unreal 2004 with vehicles, but larger scale - with hundreds of players and levels up to 8 kilometers square and persistant character growth), and I'm not sure I do, but a comprise is needed I think.

The best game I've seeen for this is City Of Heroes, it's still basically stats based underneath but thanks to a very fluid engine (decent netcode and fast rendering) it's able to rely more of knowing when to use a power and what power to use, as well as building up a character. The tedious specific details are hidden while not being oversimplified. There is still room for creativity because you can choose from a wide variety of skills to mix and match, or simply build a character that is uber at one specific type of thing.

Unfortunately the 'missing incredient' that shows if this approach can really work is PvP, which isn't coming till later (via an expansion pack, City of Villans). Given the system though, I imagine could create an uber PvP character, but you could equally create a character who would be perfect at counter acting that character.

EVE online combat is like that - you have such a wide variety of attibutes to choose from, a few things become standard (e.g. warp core stabilisers are virtualy a must, so you have a better chance at warpping out if you are in danger even if your opponent tries to scramble your warp) but much of it is entirely open to personal preference and so far more creative.

Having given up SWG a couple of months ago, I play PlanetSide, EVE and CoH (in that order) these days. I will likely get bored of CoH - dispite how well polished and solid underneath it is - I'm starting to feel the lack of depth (lagely due to no PvP or wider ongoing story arc, whcih I'm sure will be addressed as they say). PlanetSide and EVE both have great futures though, I think I'll be keeping them reguardless of what else I pick up.

More economics

http://terranova.blogs.com/terra_nova/2004/05/econ omics_of_ff.html#more provides more analysis of the economics of Final Fantasy.

Investment opportunity?

Now I don't know enough about Everquest et al. to make this thought coherent, but I'll try. Presumably there are organisations (guilds?) made up of co-operating players. These have assets, generate revenue, trade, etc.

So, they should be able to issue stock! Seriously, why not?

In fact, I expect it would be easier and more natural for a derivatives market to emerge (e.g. players trading futures contracts for in-game commodities, etc).

I wouldn't be surprised if that sort of thing doesn't already happen informally, of course. But if one could buy into an investment fund / unit trust which dealt in virtual equities... definitely at the "high-risk" end of the spectrum though!

If you think about some of the business models of public companies whose shares you can invest in via the conventional stock market (ahem SCO ahem), might you actually be better off putting your money into Everquest equities?

Just a thought. :)

Shadowbane economy was just as crazy

I never did play Everquest. But, I played Shadowbane, an Everquest-like game - where players completely controlled the economy, built cities, and created nations and guilds and fought among one another..

The first two months the game was out. One million gold pieces went for ~$100 on Ebay. It took my brother's farming character about 5 hours to earn $100. He made about $500 on Ebay when I decided to get the game. Twenty bucks an hour isn't bad for playing a video game..

Soon after I got it, gold quickly lowered in price. After about six months, 100 million gold went for $100 on Ebay. The economy was completely flooded. Any remotely valuable in-game item sold for millions of gold - or an impossibly-long farming time for a new player.

I read that some new MMORPGS that are coming out are actually going to try to take advantage of the players' willingness to pay for an advantage. Supposedly, people will be able to buy uber items that are impossible to get in-game.

Re:Shadowbane economy was just as crazy

Reminds me of SWG.

I had never put much faith in MMORPGs being a meaningful source of income (I believed I could earn more doing more traditional things like IT consultancy), but this changed when I sold my Jedi character (one of the early ones) for just under $1500.

For the amount of grinding work that it involved (approx. 1 month fairly hardcore play - i.e. most/all of the weekend and 7pm-early AM most weekdays) it would've been roughly equivalent to a 17,000 GBP per annum job over here, which is pretty scary.

Inflation / Deflation

Interesting. It would appear that the economies in online games are in a state of hyperinflation

I find it intersting too, but it's deeper than that, not all games have the same condition...

EQ and SWG have similar (not the same, SWG has more depth/complexity, but untilmately similar) economic models. MOST games do seem to suffer from the trading of in game credits off line, or of powergamers setting prices, making items more and more expensive, thus presenting a barrier to entry.

One shining example of a game that *doesn't* have this problem, and that has slow *deflation* (but kept up by a fixed level of the worth of raw materials and the time/effort/risk required to gather them) is EVE Online. It's got slow deflation at all times on the very expensive items, e.g. the cost of an uberbattleship was 100 Mil ISK last month, it's now 90 Mil ISK (and you can view trading results via the in built stock market, so it's great for having a stable market, though of course rip offs and bargins are still to be had). The difference isn't as noticeable with lower cost items (where the potential profit margin is smaller) but overall this is great news for players, as it means they can afford to spend more time blowing each other up and having fun with PvP, and not worrying about how much it will cost them.

Partly I think this is down to the unquie and superior skill system, where there is no limit to the skills you can learn (unlike other games such as SWG, which force you to be a fighter OR a crafter - you can't be good at both as the number of skill points are fininte, meaning crafters are rare and so can charge high prices). It's also down to how you learn skills - you pay for the appropriate skills (from another player, or from an institution like a space academy) and you devote time to racking up skills in that area, the training continues while you are off line.

Level I takes typically 20-60 min, while Level II skill in something might take around 2 hours or more and Level III a day or more and Levels IV and V days and weeks. You don't actually have to 'grind', just devote the time to learning it. From there you need to buy the blue print (single use, or unlimited reproductions), get the raw materials (easily enough done via mining or even more simply, on the open market) and rent some time in a station to begin some construction.

I know it may sound a bit complex, but honestly in reality it's all very simple and straight forward (thanks to a pretty clear interface), and the low barrier to entry keeps prices down. :)

They also introduce new technologies, such as new ships or the next generation of a given technology (so that items can be created that drain less power, use less ship CPU time, etc) which are rare and so the 'expensive new toys' for those with the cash to spend, while the older technology gets cheaper (but not cheaper than the raw materials).

It's the only game I've played with a wide and stable economy though, most MMOG do have hyper inflation, I put this down to bad gameplay design (though to be fair, while some of the problems are obvious, others are more subtle and harder to spot for non-economics majors, so it's understandable that as MMOG's are new there will be bad economic models initially). It may take a few iterations for developers (especially the likes of SOE) to start seriously thinking about them though. :(

From previous Paypal story...

http://attrition.org/~squido/paypal/

One persons experience of trying to sell the platinum wasn't so great...

Pay Me!

Then I realized if I averaged out my time and what I got for my character, it was only like 50 cents an hour Yeah, but you're PLAYING A GAME. If anyone wants to pay me 50 cents an hour for playing games, email me. I'll give it to my girlfriend so she can go shopping, which in turn will give me more game time.

Not how much -you- are making....

I think you guys totally missed what this guy meant. He's not saying you as the player are making $3.42 and hour, he's saying that the character in everquest is making the equivlent of $3.42 an hour. Of course this has a much less value in the real world, mentioned earlier.

Virtually, and this is why it is interesting, all those toons in EQ, are doing quite well for themselves.

It would be interesting to do a study like this on a newer MMORPG, like SWG, because their economy is far more intergrated into the gameplay.

Won't Work

The caculation of GNP assumes the fact that the 1st platinum piece sold (converted) to USD has the same worth as the 100 millionth, which is clearly an unsafe assumption for the report to make about a currency of an online game, even though this fact is usually taken for granted about real currencies.

In online games, people tend to not want to sell their in-game pieces just because they spent so much time earning them, inflating the real value of the platinum pieces. For example, if I were to value a ring I don't have so much that I would not sell it for a trillion dollars, that doesn't mean that if I were given the ring, my GNP would be greater than a few countries'.

payoff

the equivalent of $3.42 (U.S.) per hour.

If I play 20 hours a day, I could be raking in almost $500 a week...

One Slash Site links to another

Somewhat related, The Walrus [walrusmagazine.com] runs on the same software as Slashdot ( customized by Canadian company Openflows Networks Ltd. [openflows.org] )

.

Wired article

Wired magazine had an article about this back in November of 01. Interesting read. http://www.wired.com/wired/archive/11.01/gaming.ht ml

Everquest value equations

Although it sounds like a viable economy on paper, in reality the Everquest economy is extremely fickle, as you can expect in a game. Whenever games & money mix, trouble ensues. I think back to the beginning of the magic the gathering and the subsequent market that sort of grew out of that(and spawned several huge retailers like The Blue Troll). Although in this case the "economy" that evolves from a game is a little bit more viable (real property vs. virtual property), it's still unstable in the sense that it is extremely dangerous (today's prize card/ uber item is yesterday's filler/ twink item). I wouldn't in a million years ever think that anybody could make a 'living' off of EQ in the same way magic(and some other card games) has. Couple this with the evilness of SOE et all, and you have a recipe for disaster.

Making money fast

Of course,m the problem here is you have to play the game to make money. One guy tried a scheme in Star Wars galaxies to automate this. Here's how well he did. [gamespy.com]

What about the UT2004 economy?

I'm hatching a plan to steal Unreal Tournament 2004 vehicles from the other team and then sell them back on Ebay. You want that tank back, blue? It'll cost you!

need... more... money...

Hmm, $4 US/hour... guess I can't make a living playing video games just yet. Stupid mortgage.

Context Dropping

You can't equate an EQ platinum piece with 1 US cent, for the simple reason that a cent is a symbol (having the backing of a nation and its mints) recognized worldwide as having a specific relative value.

Everquest equipment, plat, etc. are valuable to some people - a subset of the 300,000 people who play Everquest, an infinitesimal fraction of the world's population - but believe me, if you tried to exchange that '319 platinum' for a cheeseburger or video rental you'd get nowhere. If you took this guy's study, and a bonded note guaranteeing the user 319 Everquest Platinum, into a currency exchange... how much real currency do you think you could get for it? Does anyone really believe they could get anything close to $3, or even $0.01?

There is no stable rate of exchange for EQ platinum to real world money, except among a tiny, ultimately transient subset of EQ players. This is like quantifying the value of a sunday sermon based on analysis of the donations that week...

That's a problem

Crunching more numbers, Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.

This marvel leads to a big problem:

• People start living on virtual income.
• They optimize their behaviour towards income, not fun.
• They disrupt the experience of the "normal" user.

I started playing Lineage II [lineage2.com] lately. There are complete areas inhabited only by Bots and Farmers. Bots are Programs which gather gold (scripted characters with hacked clients). Farmers are users which make a living from the virtual income. Both sell their gold/items through auctions [searchmarketing.com] and other eCommerce [ige.com] to (some) users. All three clases are not highly regarded by other players.

Regards, Martin

P.S. Please do not missunderstand me: If i had no income and could earn some living by playing a MMORPG, i would probably do it too. The problem is a direct consequence of the social gradient. I have no real solution for this... Banning [slashdot.org] the sales in the real world is only a measure of limited use.

Italian lira?

Please remind that some european countries have introduced the euro a couple of years ago.

Wealth?

Since players were killing monsters or skinning bunnies every day, they were, in effect, creating wealth.

Something about that sentence doesn't seem quite right. If the government printed money and gave it to citizens that waited in line for it, that would not be creating wealth, would it? It would be more like redistributing wealth.

Everquest is small potatoes

The North American version of Cleavage II has been flooded with professional farmers since before it was released. Want a character leveled for you? Don't have enough money in the game? Just cough up the cash [gmhelper.com]. (Link contains images of Dark Elves. May not be work safe.) Want a job? They're hiring [sina.com.cn]. (That last one may be an ad for a porn version of Gilligan's Island instead. I don't read Chinese as well as I could.) Want something to whine about? No problem. [lineage2.com] There are reports about organizations like Adena Farming Inc. [lineage2.com] all over the official boards.

Any time there is profit to be made by ruining an online economy, there will always be people lining up to make it.

One Giant Problem

In Everquest, there is virtually no control of the money supply. And since very little of the things EQ money is spent on are consumable, there is nothing to take money out of the economy.

So it's really irrelevant to compare EQ's economy to real economies. The only point of interest is how the trading market works in EQ.

Ignorance, greed, and desire are all prevalent in the trading of items, and those who see and take advantage of it can make lots of money as brokers.

What we need...

is a trade agreement. In order for this to happen, the US (or perhaps Japan would be a better place to start) would have to recognize EverQuest, DAoC, SWG, and thelike as actual countries.

Because they -are-, in every sense except that they don't own land. They have citizens, who create valuable products (apparently, since people trade them for real money), make relationships, govern the land, etc. What is lacking in these cyber-countries is a sense of law, to some extent - the crime rate is insane, and governance is a joke. There's simply no way to govern a group of incredibly powerful people. And part of the point of video games is to give you power over the universe you play in.

It's very difficult to reconcile a virtual world with the real one. Should an economic bridge exist at all? .. there's a lot to think about here, and I haven't had my coffee yet.

Link to the original study

It's available on SSRN [ssrn.com]. Search 'castronova' and take your pick. Or go here [ssrn.com]. One thing: EverQuest's GDP PER CAPITA is bigger than India's. I don't why people keep reporting it as 'EverQuest's GDP is bigger than India's.' It isn't. That would be absurd. PER CAPITA. {sigh}.

/em looks confused at %t

[quote]When he averaged the results, he was stunned to discover that the EverQuest platinum piece was worth about one cent U.S.... ...Crunching more numbers, Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. [/quote]

now I admit I haven't read anything more then the above summary...but can someone explain how this works out?. 1 plat = .01 | 319 * .01 != 3.42 /confused.

besides noone who sells plat cares in increments below 10k plat(occasional 5k). Which based on current market prices is about 25.00 USD. Thats .0025 USD per plat piece.

Another example: 100000 plat is about 85.00-100.00 USD, which means 1 plat still equals .0025 USD or less!

(yes I am an EverCrack Head...no don't buy/sell plat, but I do watch what happens with it.)

Pre-Computer Fantasy Game World Economics

Almost forgotten in the of the MMPORG: multi-player play-by-mail games.

Most of these were fairly simple strategic tournaments. Flying Buffalo Inc. was the big wheel of this industry. It's still in business, running games like Starweb for afficianados.

A few companies ran open-ended society games which were similar to Civilization or Masters of Orion.

The biggy was "Tribes of Crane" by Schubel & Son. It was entirely paper based. You led a tribe of nomads on a barbarian world. If your tribe found something neat, or your shamans learned a new spell or whatnot, you got a paper chit explaining it. Money was in the form of paper slips too. You spent money by mailing it to the game master or another player.

I played another S&S game, "Star Master." You designed an alien species, picked out a homeworld, and did standard Masters of Orion type stuff ("Explore, Expand, Exploit, and Eliminate" or something like that). If you engaged in trade, you could earn EUs, and trade them in for tech advances.

There was a vigorous out-of-channel trade in artifacts, money, and even entire species. People leaving the game would sell their empire to the highest bidder. That's what I did.

Some of the trading was illegal. After the "Central Galaxy" filled up, S&S opened up the "North East Galaxy." It was many, many months away by fast spaceship. Essentially a different universe.

Central Galaxy and NE Galaxy had different-colored EU chits. Not exchangeable in-game. However, a few players had species in both galaxies. They acted as middlemen.

Small scale and under the radar compared to the economic sideshow of Everquest, but still interesting.

Infinite resources

If the world didn't have to allocate resources via supply/demand. If supply programmatically matched or just tailed demand...

This silly author should do a conversion table for EQ platimun to US dollars. Then calcualate how much startup cost, electricity, and mountain due impact the players bottom line.

Right now all this crap is bullshit until these markets *really* converge.

What about inflation?

Wouldn't EQ inflation really dillute the real value?

You know...

While this is interesting, it doesn't really mean much in the long run just yet. The implications for the future, though, are pretty big. Imagine a MMORPG, somewhat like the matrix mixed with .hack, in the future, as a solution to overpopulation. Too many people? that's alright, we have 40% of our population living, working, and communicating in a fake reality. But still, will false items in this fake world account for anything in the real world? Will anyone care? Just my $.02.

Eve OnLine

I'm starting to see this occur with Eve Online as well. Recently, a 3 Account bundle went for over $1200 (US) on eBay. And it appears that ISK (the currency) is averaging 1Mil ISK = $1 US. So, if you're heavily into mining rare ores and can gather 10M worth of minerals in an hour then you're making around $10 an hour. Not bad for playing a game.

Does This Mean I Have To Quit My Day Job?

Which I don't have.

Oh, wait, EverQuest IS my day job.

I still don't get how the mafia took over The Sims

Can't you just kick people out of your house or put them on ignore?

How come everyone says crime is rampant in the Sims Online?

Trade your game currencies here

The article mentions that there's a market maker for game currencies, but doesn't link to it.. It's here. [gamingopenmarket.com]. Gaming Open Market makes a market in ten different game currencies, from Therebucks to EVE ISKs. The usual charts and chatter of commodity speculation appear on the site:

• "Are we seeing a reversal in TBUX prices? The past few months have pushed the price of the Therebuck down substantially from around $1.04 (per 2000 Therebucks) at the start of March to an all-time low of $0.85 seen on April 19. Just this past week has indicated that there might still be some hope."

Gaming Open Market offers game currency portability; you can exchange your Ultima Online gold for Therebucks. This may increase game churn, just as number portability does for phones. You can take it with you when you leave the game.

Re:Effect on Economics

> Are we on the road to net.currency Or, more worryingly, currency.NET :D

Re:dupe

More like almost two and a half years [slashdot.org] Rip van W.

Re:Wha...?

Set up your cash farming action in Old Sebilis. If you have a strong group (levels 60+) you can hunt at the bottom of the well in Sirens Grotto where the cash and gem split at the end of an evening can be 500-1kpp per hour grouped.

Re:Effect on Economics

How real is the value of some old stamps or a comic book that no one will ever read?

Re:Wha...?

Yeah - I think his numbers are an average over the totals...most people don't get to the high levels - so they average lower levels of PP per hour.

As a 'part time' player, my group of single friends would level away from me, and I would be stuck trying to get pickup groups, or try leveling alone...both making for slow leveling.

As a result, I started several different characters, none of which made it above level 30 - and enjoyed PVP and part-time free play. It was much more enjoyable that way...eventually this allowed me to break my addiction completely and break away from the game. Even 'part-time', each gaming session took way too much of my real-life time.