THEY might not sound very appealing, but the Boots of Flowing Slime can mean the difference between life and death. Not only does this enchanted footware raise its owner’s resistance to curses, it boosts health and energy too. No wonder they’re changing hands for $86. The boots, of course, don’t actually exist. They are part of an online computer game called Everquest. But their owner Cathole, who’s a player in the game, has earned hard cash for them. In the new virtual economy, goods like these have created a market worth millions. And though the company that owns this game tried to stamp out the trade, others are now trying to cash in on the phenomenon.
Some form of trade in virtual items has been going on for over two decades, ever since players informally traded characters in early text-based online games, such as Multi User Dungeon (a.k.a MUD). But the real explosion in the trade of magical objects, weapons and property was only made possible with the launch of web-based auction sites, such as eBay.
Most online worlds work in much the same way. As players progress through the game, their characters accumulate special magical powers and powerful weapons. The longer they play the more they accumulate. The trouble is it can take many hours – even weeks – to progress, and not everyone can be bothered to go through the menial stages. So those players who had acquired powers or possessions hit on a cunning plan: sell their virtual items for real money. The first step was to advertise their wares on auction websites such as eBay and Yahoo. Then once the real-world transaction was made, both parties would agree on a virtual location to transfer the virtual goods. The players would meet up in the gaming environment – in the Dungeon of Doom, for example – at a specified time. The seller would simply drop the item, and the buyer would pick it up. Transaction complete.
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Business boomed. In fact, a whole cottage industry sprang up, with people claiming, at the height of the dotcom boom at least, that they were making a living out of the practice. “I’ve certainly heard of students paying their way through college by selling items from online games,” says Bill Roper, an online games developer based in Los Angeles. The traders aren’t just based in the US either. “During a normal week, I expect to sell about £50 worth of stuff,” reveals Nothnogg, a British trader of items from another fantasy game called Ultima Online. Currently selling a large white marble house with patio (bid £75), he says he can make up to £200 in a good week.
The implications of this booming virtual economy went largely unnoticed in the real world until April 2001 when Edward Castronova, an economist at California State University in Fullerton, decided to calculate EverQuest’s nominal gross national product per capita. Castronova – himself a denizen of the game – sent out a survey to thousands of virtual traders and, based on the liquidity proved by their online auctions, calculated the average hourly wage of players to be a nominal $3.42.
From the survey data, Castronova also calculated the gross domestic product per capita for EverQuest to be $2260. That places the playtime of the 400,000-strong nation of EverQuesters higher than that created by the full-time work of countries such as Syria, Egypt and China. In fact, Castronova reckons that EverQuest would rank a staggering 77th in the world league table, roughly the same as Russia. Some might disagree with his calculation, but Castronova says the ranking doesn’t really matter. “The real point is that this proves the stuff in EverQuest is valuable,” he says.
Not everybody was happy about this economic miracle. EverQuest’s creators, Sony Online Entertainment, could only stand by and watch as players exchanged real money for the virtual items they had created. Having never dreamed that this situation would one day exist, Sony had no system in place to control the sales or get a cut of the cash. Eventually Sony decided on a crackdown. It made an agreement with eBay and Yahoo to prohibit the sale of EverQuest items through their auction sites. The reason Sony gave for the ban was that people were not always receiving goods they had paid for. But many traders refused to stop their lucrative dealings and today a thriving black market flourishes on specialised websites, such as playerauction.com.
Not all games companies were so draconian in their response. Some have finally woken up to the potential of mixing the virtual world with the real economy. In September 2002, Electronic Arts began selling what it calls advanced Ultima Online characters direct to players for $30 a piece. For their money, players get to select a character with a completed set of skills, saving months of menial in-game action.
Industry experts, such as Mike Sellers, an online game designer who worked at Electronic Arts before setting up his own consultancy, believe companies could go further. “Most companies have not considered the internal assets of their games as tradable objects and so the trading of them for cash has been forced outside of the game,” he says.
One company that is trying to cash in on the idea is MindArk. The Swedish company has been quietly developing a world for virtual traders. Its game, Project Entropia, makes a direct connection between the in-game currency and the mighty US greenback. With the exchange rate fixed at 10 PEDs (Project Entropia Dollars) to $1, players can either choose to spend their own money to get items directly or make their own by working through the game. In April, MindArk began giving the game away for free to encourage players to join in. The company claims 60,000 people already play the game, and hopes to have 300,000 players by the end of the year.
In an attempt to mimic the real world, Project Entropia relies on a specially developed deterioration mechanism that ages items in the game. It works as follows. A player buys an item, say some clothes or a weapon, each time it is used its quality deteriorates slightly. Eventually it will lose its function, and at that point the player has to either repair it, or buy a new one.
Turning experience and objects into hard cash is easy. You can sell objects or even whole characters using the in-game auction system. Alternatively, MindArk will buy back items at a base price. You can then convert the PEDs to dollars and MindArk will put the cash straight into your bank account.
Jan Welter, MindArk’s Managing Director, claims that some players are already earning a modest living trading items for cash. He says the company is doing well out of the game too. “We only make money on the deterioration of things that players buy and use,” he says. “This already generates enough revenue to cover the company’s monthly running costs.”
Whether enough players take to the game to sustain it in the long run, however, remains to be seen. Who’s to say that now the illicit nature of the trade is gone, the attraction of the games won’t evaporate? “These worlds are competitors to ours,” says Castronova, “you have to make it better than Earth to get people to go there.”
But while the money keeps flowing from the players’ wallets, the virtual worlds will continue to exist. Even in the virtual economy there are always winners and players.