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Re: <nettime> Virtual world grows real economy
Forced Entertainment - Tim on Sat, 23 Mar 2002 23:23:48 +0100 (CET)


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Re: <nettime> Virtual world grows real economy


This from todays Guardian (UK) re the not so-recent posting of the NY
Times piece on Norath/economies of virtual worlds.

Thursday March 21, 2002
The Guardian 

Lords of the ring 

Norrath rules virtual gaming and has just been ranked the 77th richest
country in the real world. Sean Dodson reports.

In the last decade of the millennium, a group of software engineers in San
Diego began building a vast, virtual world. Their plan was to build a
space so large that it would eventually welcome nearly half a million
visitors a year. They called their world Norrath and floated it off the
coast of California in March 1999.

Norrath is a virtual world owned by Sony. The company runs a massive,
unending, online role-playing game set in a fantasy world similar to
Tolkien's Lord of the Rings. It has taken six years and cost the company
more than $15m to develop. The game is called EverQuest, and it offers its
players the persistence of the Truman Show with the interactivity of Pac
Man.

EverQuest is one of about a dozen online role-playing games that have been
around since 1995. To visit a virtual world, you first need a powerful
computer with a good internet connection. You then need to buy the game's
software (about 30) and pay a 10 monthly fee. Nearly half a million have
already subscribed to EverQuest, and up to 100,000 are online at any given
time.

Contrary to what you may think, virtual worlds are not necessarily
isolated worlds. Strong communities grow around them and many have
developed complex systems of trading, where digital goods are being sold
for hard cash in the outside world. And that is where any talk of online
role-playing goes beyond dungeons and dragons.

Shortly after the launch of EverQuest, its players began trading the
game's internal currency - the platinum piece - for real dollars on
internet auction sites. The problem got so bad that last January, Sony put
pressure on the big auction sites to close their EverQuest markets. Sites
such as eBay and Yahoo complied, but the markets simply shifted elsewhere.
There is still a highly liquid - if illegal - exchange rate between the
EverQuest platinum piece and the US dollar.

Other games also have similar currency exchanges. In the Dark Age of
Camelot, a consortium of professional players is suing the games owners
for the right to sell the game's currency on the open market. In a twist
that could almost belong to Jorge Luis Borges' The Lottery in Babylon, the
players have even issued a bill of rights for citizens of all virtual
worlds.

And the plot gets deeper. A US economist has now published the first
assessment of virtual worlds. Edward Castronova, of the California State
University in Fullerton, says the average EverQuest player generates
revenues of $2,266 a year. When compared with data from the World Bank,
Castronova says Norrath's per capita income is roughly between Russia and
Bulgaria. Or put another way, Norrath is the 77th richest country in the
world.

But how can a computer game create more wealth per person than a European
country? Castronova tracked thousands of EverQuest transactions on
internet auction sites to determine the economic value generated by the
inhabitants of Norrath. This allowed him to calculate how much each
character is worth if sold on the open market. If telecommunications costs
were not so prohibitive, it would be more productive for your average
citizen of Sofia to play EverQuest than go to work.

EverQuest is extremely complicated. Unless you have a good PC (and
EverQuest can only be played on PCs) you are likely to experience myriad
technical difficulties. The game-play is wilfully arcane and requires a
rulebook that runs to several hundred pages. Players communicate via an
internal language that uses similar abbreviations to text messaging. To
the uninitiated, just getting another character to say "hello" in Norrath
takes supreme effort.

But the appeal of virtual worlds, says Castronova, is easy to understand.
"Unlike Earth, in virtual worlds there is real equality of opportunity, as
everyone is born penniless... In a virtual world, people choose their own
abilities, gender and skin tone. Those who cannot run on Earth can run in
a virtual world.

"Some 20% of Norrath's citizens already consider it their place of
residence, they just commute to Earth and back," says Castrovnova. "People
at the top level of these games spend virtually all of their time there.
They earn enough money in the virtual world to do what they want there.
But their principle problem in life is how to get enough money in the real
world to support their time in a world like Norrath."

And that is where the currency trading comes in. Most "professional"
players don't make much and you have to play a lot of EverQuest to scratch
a living. Castronova's research shows that EverQuest players can earn an
average of $3.42 for every hour spent playing the game, a buck below the
minimum wage.

"I have both bought and sold items over the internet," says Dana Jones, a
35-year-old software engineer from Georgia. "I have never taken it too
seriously but there are people who mostly farm items and sell them for
virtual money (platinum pieces) and then sell the platinum in 10,000 lots
for about $100. I bought a set myself from someone who was selling
hundreds of lots. Most of the people who sell seem to be college students.
Many are making at least a couple of hundred bucks a week."

Sony is none too happy. Scott McDaniel, head of marketing, says: "The
selling of digital goods outside the game clearly breaks the end-user
licensing agreement and we object to people trading our intellectual
property. But also I think it does a great disservice to the players and
spoils the game's development."

Not all EverQuest players are in it for money. Many dislike the trading of
platinum pieces. "It's like cheating," says Amber Barnes, a 23-year-old
former marketing worker from Texas. "The amount of money people make,
though, is absurd. I have looked on one site recently and saw auctions for
$400 to $2,000 before for items or characters. I just can't fathom it."

Amber wants to be a professional games master (GM) - one of the hundred or
so elite players hired by Sony to referee in Norrarth. Part actor, part
police, the GMs push the narrative inside Norrath while cautioning abusive
players and, in extreme cases, exiling repeat offenders.

Amber is unusual in a game such as EverQuest, because 84% of players are
male - more than half in their twenties. But virtual worlds may not stick
to such pronounced demographics. In fact, the signs are that they threaten
to go mainstream.

This spring, Electronic Arts releases The Sims Online, a net-enabled
follow-up to the popular computer game that has already shifted seven
million copies. The Sims Online will allow groups of up to 30 players to
interact and role play with each other in real time. Players will operate
in a truly interactive soap opera, with themselves as the virtual stars.

In the Sims Online, players can build houses, open bars or run shops.
There will even be a sniff of passion, says EA, although nothing stronger
than kissing. Instead of the bloodthirsty chaos of EverQuest, there is a
strict behaviour code, with points awarded for neighbourly behaviour. The
Sims is, in fact, based on the behavioural strata identified by the 1960s
psychologist Abraham Maslow, who first developed a theory on the hierarchy
of human needs.

November will see the launch of Star Wars Galaxies, a collaboration
between Sony and Lucas Arts and a virtual world with proven mass-market
appeal.

Despite the pioneering work into the first text-based virtual worlds
(often called multi-user dungeons or MUDs) in UK universities in the
1980s, the UK has no commercial virtual world of its own. BTexact - the
research and development arm of British Telecom - has played around with
virtual worlds for years and produced a couple of TV tie-ins in the
mid-1990s. Says a spokesman at BTexact: "I think what we'll see next is a
move to produce a game that is compelling to people who aren't on the edge
of society... If you look at the Sims model, an idea that I've been
kicking around my head is why not do a Sims version why not offer a
persistent game set in Albert Square?".

Many games manufacturers seem shy of the real-world economies their games
create. But what if the makers of virtual worlds tried to stimulate such
economies - what then? In Sweden, a private corporation called MindArk is
planning to launch a virtual world later this year that will actively seek
the infusion of real money into the game. Unlike most existing virtual
worlds, Project Entropia will be distributed free. To combat the creation
of currency markets, players will be able to purchase digital artefacts in
the game from the company.

It could only be a matter of time before other companies see the
attractions of virtual worlds.

This leads analysts to think that games such as Project Entropia will
eventually attract bricks-and-mortar companies to establish virtual 3D
stores in virtual worlds.

With or without the currency markets, online gaming already makes serious
money. And while other forms of online entertainment struggle to attract
paying customers, virtual worlds are turning handsome profits. Revenues
from online gaming were already $208m in 2000 and some estimates see that
figure rising to $1.7bn by 2004. Sony's monthly revenue from EverQuest
alone is estimated to be $3.6m. In the far east, virtual worlds earn more
than that. The most successful online role-playing game in the world is
South Korea's Lineage, which has 2.5 million subscribers and is played in
one of every eight households.

Not so easy, then, to dismiss virtual worlds as arcane activities played
out on the obsessive edges of the internet. The coming of the Sims Online
and Star Wars Galaxies should add a mainstream audience to what already
amounts to a whole new form of entertainment. Just be prepared to spend a
lot of time in there.


1969: Rick Blomme writes a two-player version of Massachusetts Institute
of Technology's famous Space War for the Plato service.

December 1979: Roy Trubshaw and Richard Bartle develop the first working
multi-user dungeon (MUD) at Essex University in Colchester.

1983: Kesmai launches MegaWars I. It closes 15 years later.

1985: The first virtual reality environments using avatars - virtual icons
- begin to appear.

1995: Worlds Chat becomes the first avatar environment on the internet.

October 1996: Two Microsoft interns, Andrew and Chris Kirmse, release
Meridian 59, an experimental virtual world. It quickly becomes a cult
classic and a dedicated community builds up around it. It finally closes
in August 2000. Today, unofficial versions of M59 continue in Germany,
South Korea and Russia.

Autumn 1997: Electronic Arts launches Ultima Online (OU), the first
commercial virtual world, a follow-up to its successful computer game that
simulates galactic trading in deepest, darkest space.

March 1999: Verant Interactive, a subsidiary of Sony, launches EverQuest.
It sells 120,000 copies on the first day and becomes the most popular
virtual world in the US.

Spring 2000: Microsoft joins the fray with Asheron's Call.

Summer 2001: Virtual worlds such as Norway's Anarchy Online and Mythic
Entertainment's Dark Age of Camelot join the fray. Current estimates put
the number of virtual worlds at 18, with another 40 in development.

2002: Electronic Arts launches the Sims Online: Sony and Lucas Arts
release Star Wars Galaxies. Perhaps the two most eagerly anticipated
virtual worlds.




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