Virtual Gaming Economy

As the average age of online gamers increases, many are finding themselves with less time to work their way up to higher levels, but more money in their pocket that allows them to buy a higher virtual status. On the Internet, real-world dollars can buy a virutal bazaar of items for sale that only exist as data files stored in a server run by a game company.

Washington Post staff writer Mike Musgrove was online to discuss this new virtual economy. Musgrove explored the topic in an article on Saturday and narrated a photo gallery .

A transcript follows.

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Mike Musgrove: Hi-- thanks for joining, let's get started....

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Edmonton, AB, Canada: What is the ratio of on-line gamers who buy gold, items, or characters, compared to those who don't? Is it 1%, 10%, 50%, or more?

Mike Musgrove: Game makers say they can't keep track of that since it mostly takes place outside their game worlds, on Ebay or via other sites, such as IGE.com.

There seems to be some feeling out there that the gaming audience is roughly divided in thirds. A third likes the practice, a third doesn't and another third doesn't care.

The economics professor I talked to said its a $200 million per year. IGE.com, the biggest player here, says it is much higher and claim that their revenues will exceed the revenues of the games that give rise to these secondary markets.

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Falls Church, VA: Time IS worth something, as the gamer you quoted said. That's why some MMOG companies (Mythic) specifically allow you to sell your accounts when you're done with them, just not the items or the gold. Thus the subscription continues to count as active.

Other companies used to be violently opposed to the concept (Sony) until they learned they could take a cut of sales and started their own Ebay.

Mike Musgrove: Good point. Just posting this...

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Corona, Calif.: Are there any sociological studies being done on the development of cultures, and cultural structures (such as tribes, markets and the like) in virtual worlds?

Mike Musgrove: Edward Castronova, a professor at Indiana University, has written a book on the economics of virtual worlds-- Synthetic Worlds. He has been called the "Adam Smith of EverQuest."

A journalist I talked to for the article named Julian Dibbell has a more first-person account, a book in the works coming out in the spring, called Play Money. He took a year and supported himself by playing Ultima Online.

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Arlington, Va.: Did you see any correlation between games with stiff learning curves and the price of identities and/or weapons/currency, etc? Sometimes I'd love to be able to spend a couple bucks to jump a couple levels.

Mike Musgrove: That's just one of the elements that determines the relation between a game world's currency to real-world curency on this market.

Others: How hot or new is the game right now? How hard is it to get ahead and how motivated are players to get ahead? How vigilant is a game maker in knocking out players who are misbehaving or playing just to rack up gold pieces & resell them?

A year ago, you might go on Ebay and pay a couple of thousand bucks for a Jedi knight account, I'm told. But now Jedi characters are more common and another, more popular game, World of Warcraft, has come along and sucked in a kajillion players. Jedi's are less pricey these days...

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Fairfax, Va.: I'm surprised this market exists with so many free cheats available online. Can't people gather these items and succeed on their own?

Mike Musgrove: Thre are shortcuts or cheats available for these games, I believe, but getting to the exciting part(s) of one of these games can still be a lot of drudge work. When players are going through the monotonous work sometimes required to build up a character, it's called "grinding" -- because it can be tedious, a grind.

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Burke, Va.: I'm not sure I understand why game companies discourage this behavior. Doesn't it encourage people to begin or stay with the game, while others are dropping out?

Mike Musgrove: Game makers are kind of split. Many, like Mark Jacobs at Mythic (of Dark Age of Camelot fame) say the practice is akin to subscribing to cable and re-distributing/re-selling the signal for profit. His fear is that people will get annoyed by the practice and quit the game. Richard Garriott, the designer of a game called Ultima Online says that he doesn't have a problem with the practice, on the other hand.

Gamers who like the practice say that game makers shouldn't care as long as they keep paying their subscription. Gamers who dislike it think that it's cheating-- sort of like getting ahead in Monopoly by paying real $$ for Park Place, say, or paying somebody to run the first 20 miles of a marathon for you. Actually, let me post a comment by one player who hates the practice next...

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McLean, Va.: I've read numerous articles on this subject and I don't understand why the general tone of the articles is always that this is a good thing. I play World of Warcraft and let me tell you something. People HATE these players who buy gold and other items. We also don't like people who buy "powerlevelling" services where you pay a group of people to play your character 24 hours a day until it reaches a certain level. We have no respect whatsoever for anyone who does this.

We also hate the people who sell the gold in the first place. We call them "gold farmers". Some people call them Chinese gold farmers because often it is people in China who play hours a day for very little pay to do this.

We can usually tell who's paid for their character because those people don't know how to play well. If you've spent the time to develop your character you will be a good player and people will want to group with you. If you bought your character and anyone finds out, you will be "outed" on the server and no one will want to group with you.

Mike Musgrove: Here's some good reasons why players hate the practice.

I orgot to mention one funny point. Garriott, the famous designer of Ultima Online, admitted he had bough World of Warcraft currency because he didn't have enough time to grind up...

I wish I'd talked to this guy for the article. Btw, my email addres is musgrovem (at) washpost (dot) com.

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Washington, DC: In your research, did you play any of the aforementioned MMORPGs? If so, what were your experiences like? Did you ever feel the urge to spend some real life cash for some online cash, or for a higher ranked character?

Mike Musgrove: Yes, I bought 5 million Imperial credits for the Star Wars game to see how the exchange works. Will be interesting to see if the Post reimburse me for that expense. If you see a character that looks like Greedo and is named 'Rhubarb' on the Tarquinas server of Star Wars Galaxies, do say hi. Or kill me, I suppose, if you hated the story....

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Vienna, VA: No game company really likes the idea of some players bypassing the game. Players who "skip to the good parts" actually miss out on the community building, relationship aspect of the game. And that's the part of an MMOG that retains players over the long term. These players who buy their way to the top actually quit sooner than players who "earned" their treasures.

Mike Musgrove: Another reason game makers don't like the practice. Excellent point.

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Oak Brook, IL: How frequent are cases of scams or fraud in this new online market?

Mike Musgrove: Bob Kiblinger, of GamingTreasures.com, said there's about a five percent scam rate. He's a veteran in this industry, so I'd guess he know pretty well. Different games have diffeent scam rates. For some reason, Lineage II has more scammers than other games, he said. If anybody knows why this is, please chime in.

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Fairfax, Va.: You didn't mention one of the most pervasive problems in the genre relating to the real world value of game items - bulk gold sellers.

There's a company called IGE, based overseas to avoid legal action. (Selling gold, unless sanctioned by the company a la Sony, is against most end user agreements.) They sell so much in game currency that they've grown rich off other people's intellectual property. Do a few google searches, they throw money around like it's water.

If it's illegal to sample a musician's work and thereby derive profit, why is legal for these jackals - who hide in Hong Kong, though in their quest to buy legitimacy they've planted a shell office in New York - to get rich off the intellectual property of a game company?

Mike Musgrove: This seems like somebody who might work at Mythic-- or might be able to get a job there...

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Falls Church, Va.: Ivory tower types try too hard to emulate real world economies in their "games," which creates the inevitable result of people having to work - or simply buy, with real world cash - to get the things they want.

An economy of sorts can't help but develop when people get together in groups (a representative means of value exchange is a form of communication), but a game should make it easy to access the fun without bringing Ebay into the equation.

Items from Mythic's game (you didn't mention it in your article; it's called "Dark Age of Camelot") sell for less "real" money on the net, because they are easier to acquire in the game without sacrificing your marriage. When game currency/items takes on too much real world value, something has gone wrong at the design level, and the game has become a simulator.

Which is, of course, fun for some.

Mike Musgrove: Good points here.

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Parkville, MD: Though some may think it absurd, I think it makes more sense to spend money on these digital, virtual items than on their actual material counterparts. Think about it: if you spend $150,000 on a Ferrari in real life, you'll never be able to exploit its true potential. You'll just take it out on weekends for a casual spin along the seaside to see and be seen in your fancy car. And most of the time it'll just sit in your garage. If you manage to get your hands on a rocket launcher, you'll end up mounting it on the wall for display purposes and hope that no one from the BATF spots it while peeking through your window. But in a virtual world I can use my Ferrari to speed through downtown at 100+ mph and outrun cop cars all day long before careening off a mountainside into a 200ft ravine while clipping a couple of seagulls on the way down. And as for my rocket launcher: well I can use that to unleash a merciless swath of wanton destruction on my virtual enemies that would make Osama Bin Laden blush.

So don't tell me that the Virtual world doesn't make sense, my friend. It's the Material World that's full of shallow poseurs who believe that the suit makes the man, when, really, it's the other way around.

Mike Musgrove: This is a pretty funny post. but the weird difference between real goods & virtual ones---is that Sony Online or Mythic or whatever game company could decide that a certain game/virtual world is not profitable and pull the plug on that world. The goods you spent real $$ for would cease to exist.

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Fairfax, Virginia: Where does all this virtual money being sold come from? I have a hard time believing that much virtual cash is just lying around.

Mike Musgrove: Games tend to pump virtual rewards faster into their game worlds than they suck them out. Game currencies tend to depreciate against the dollar over time, thusly.

Players sometimes discover bugs that let them double their in-game money by exploiting some software bug or other. That sort of thing, as you can imagine, can make a game's economy go haywire. And there are "farmers" players who do the same rote task all day long in order to garner gold coins in order to sell them to middle-man companies like IGE.com-- these players are typically in Asian countries, like China.

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East Lansing, Mich.: Did you see any evidence that this economy is having a harmful effect on the casual gamer, the one who doesn't have hundreds of hours to spend "levelling up"? Do you think that in order to have fun in these games now without buying items at auction you have to basically spend all your free time playing in order to be competitive?

Mike Musgrove: It's all a balancing act. Game makers often talk about making these players simpler so that there's less of a learning curve to get folks hooked-- that way, theoretically, they'd reach more mainstream audiences with their games. But make a game too simple and everybody gets bored.

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Columbus, OH: I admit it - I buy currency. I've played every game out there, except DAoC (Dark Age of Camelot) and I've bought currency for every single game.

I think its ridiculous that people think its wrong. Its NOT wrong. Why should I spend 10 hours at level 5 with crap gear if I can drop 30 bucks, and spend 2 hours at level 5? Once I get higher, where money can be made easier, then I'll have no reason to buy it, because I will have gotten out of those levels early on, and wont feel like I'm "missing out" on anything.

Mike Musgrove: Cool, we have a defender of the practice here.

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Loveland, CO: Do companies really care about game money being bought with real cash? I play world of warcraft and blizzard has stated they would shut down ebay and sites that do this. From what I have gathered from reading the end user agreement and the official forums they don't want people selling in game gold for real life cash. Yet searching Ebay and ige.com it seems there is a lot of in game gold for sale.

From my standpoint it looks like they just turn a blind eye to it. From a financial standpoint wouldn't it be beneficial for blizzard to turn a blind eye?

Mike Musgrove: Companies like Blizzard regularly announce that they've shut down x thousand accounts for engaging in farming or what not. If too many people are abusing a game to make a real-world $ it can destroy the balance/fun of a game. But it can be hard to stop this practice.

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Mike, DC: Expanding on the comment above about "gold farmers" ...

Farmers can really wreck havoc on a server's economy. Because they are logged in for close to 24 hours a day they can permanently camp areas that contain the best enemies or trade skill spots. For example, World of Warcraft crafting uses arcane crystals for high level blacksmithing. Crystals only drop from mineral veins in high level zones. If there are 3 total veins in the zone, a farmer can ride around the zone and continuously farm the vein. So the problem is twofold, first they control all of the veins in a zone so no one else can mine, and second they control the market for the arcane crystals in the auction house. So now instead of paying 10 gold for a crystal, you may pay 25 gold because there is only 1 seller. And in turn, your crafted item becomes more expensive to make and you have to price the finished good much higher than people are willing to pay for it.

That is just one example, but farmers can make life very difficult for honest players.

Mike Musgrove: just posting this, as we are running low on time...

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State College, Pa.: Is the collection of virtual money dominated by low income workers (often considered Chinese)? The phrase "Chinese Gold Farmer" has become synonymous with a person spending hours a day in a virtual world collecting massive amounts of virtual money for sale to big companies on the internet (Such as IGE).

Mike Musgrove: Yes, this type of thing is different from the fellow at the top of my article who was just moving on from the Star Wars game. He just wanted to recoup some of the time/effort he spent in the game. Others are making a living out of this thing.

Game makers often say they want to stay out of the practice of selling goods directly to players, because it might influence how they balance the game-- for fear some players might get angry if they bough, say, a rare sword and suddenly it became less powerful or rare...

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Mike Musgrove: So. I am out of time. If anybody wants to contact me outside the chat: musgrovem (at) washpost (dot) com

Sorry I didn't get to everybody.

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Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.