The virtual games world has been around for a long long time, and recent years have seen an explosion of interest as gamers from around the world bid to buy and sell their game artifacts for real money.
Certainly potential there for setting up virtual monies that are in some way related to the normal monies for meatspace. One thing: there isn't the usual security problem, as players have some incentive to act honestly, and some way to punish those that don't.
By Daniel Terdiman 02:00 AM Apr. 07, 2004 PT
The buying and selling of virtual currencies, weapons and other goods from massively multiplayer online games like EverQuest and Ultima Online may be off most people's radar, but it is truly big business.
One company, Internet Gaming Entertainment, or IGE, has more than 100 full-time employees in Hong Kong and the United States who do nothing but process its customers' hundreds of thousands of annual orders for virtual goods, the lion's share of which average nearly a hundred dollars each. And demand is so strong, says IGE CEO Brock Pierce, that the company is hiring about five new people a week.
IGE is by no means the only outfit on the Internet that's trafficking in items from games like EverQuest, Ultima Online, Dark Age of Camelot and others, but it is the biggest.
"In this industry, it's eBay and us," boasts Pierce. "We're the major players. We've consolidated most of the other players out there."
While IGE has had several hundred thousand customers since its inception in 2001, it depends on a stable of more than 100 suppliers -- hard-core players who sell IGE surplus currency, weapons and other goods they regularly accumulate.
"They can play games all day and make a little money for it," says Pierce. "Most of the time, they're selling off their garbage, but one man's garbage may be another man's treasure.... They'll sell us that (extra) suit of armor, or sell the suit of armor in the game and sell us the currency, and then they'll go pay their rent with it."
IGE's business treads into controversial waters in the gaming world. That's because its buyers are spending real cash to improve their lot in life, or at least in the games they play, without having to spend the time to do so.
Some game companies, like Origin, which produces Ultima Online, say they don't mind if players buy and sell the virtual goods in secondary markets because, ultimately, it increases interest in the game. Linden Lab, which produces the metaverse Second Life, actively encourages secondary-market trading, because it sees such activity as part of a larger social and economic experiment, with its game at the center.
And still others, like EverQuest publisher Sony Online Entertainment, see such trafficking as nothing but a headache.
"The official line is that the selling of characters, items or equipment in EverQuest goes against our end-user licensing agreement," says Sony Online Director of Public Relations Chris Kramer. "It's currently not something the company supports and causes us more customer-service and game-balancing problems than probably anything else that happens within the game."
Kramer adds that Sony Online's objections are based mostly on the idea that such trafficking isn't fair to players who've spent countless hours in the game.
"From a design perspective, our developers don't like it, because essentially what it comes down to is it rewards the rich. It sort of cheapens the experience for people who have invested the time in the game to get to a certain level.
"We have people who have been playing for a number of years in EverQuest," he continues. "They've invested a large number of hours into creating their character, (and) amassing a small fortune in platinum. To have a person who has spent that much time and effort turn around and see someone else who has a character with equal abilities who has done nothing more than buy it on eBay, it turns off a lot of our players."
Yet despite the fact that trafficking in EverQuest goods runs counter to the game's end-user licensing agreement, it is the driving force that keeps IGE's operations center in Hong Kong running 24 hours a day, every day of the year, says Pierce.
To some, like Sony Online's chief creative officer, Raph Koster, the question boils down to different philosophical approaches to the creation of virtual worlds. Some companies, like Linden Lab, There and, to some extent, Origin, get excited watching what happens when their players take elements of their virtual worlds out into real secondary markets. Others, like Sony Online, see them as games, and nothing more.
"We don't happen to regard being a game as being somehow less noble of a goal," says Koster. "It's not a bad thing. A lot of people will want that. That doesn't mean that as a company and as individuals, we're not excited (with) virtual worlds as exciting and interesting places. But at the same time, if we've created one that's specifically a game, the audience wants it to be a game. We try to do right by that philosophical desire: to keep it a game."
But it is impossible to ignore that, percolating within many of the MMORPGs in operation today, including EverQuest, are economies that straddle the real and virtual worlds.
This has led IGE to bring on Ken Selden, a Hollywood screenwriter and leading peddler of virtual goods, as its chief economist.
"There's a relationship between real-life economies and a virtual economy," says Selden. "I happen to believe that these virtual economies are very real, serious economies."
Selden says the strength of a virtual economy is determined largely by how stable its currency is. And because IGE is the largest secondary market for the currencies of games like EverQuest, it has a lot of influence over the stability of the exchange rates between the game currencies and U.S. dollars.
"Everything circulates around the exchange rate between a real and virtual-world economy," explains Selden. "We set the rates that we buy and sell at, and those are divined by supply and demand. The amount of currency in circulation at any point is extremely important to the out-of-game exchange rate."
He also explains that real-world events often have an impact on what people pay for the virtual currencies.
"Bubbles in the economy, they'll also impact the exchange rate between the two economies, because by and large the buying and selling of virtual-world economies are something I would consider to be a luxury," says Selden. At "tax refund time, demand goes up, because there's more money. The consumer wants to spend (and) he has more discretionary income."
Kramer says Sony Online is aware of IGE and has spoken with the company.
"At this point, we're still sort of trying to decide what direction the company's going to move in on this topic," he says.
But whether Sony Online likes it or not, EverQuest players are lining up to buy the game's currency, weapons and armor from IGE all day, every day.
And Selden thinks the game companies should accept that fact and learn that they can benefit from supporting the secondary markets in their games' goods.
"One of the problems is that there isn't enough communication between the people who are minting the currency and the people outside who are selling it and defining it," he argues. "It's almost like the treasury isn't talking to the federal reserve in these worlds. And I think it's because the game companies are just waking up to how important it is."
Posted by iang at April 9, 2004 11:56 AM | TrackBack