WowEx

The most interesting things seem to be happening in WoW these days. Perhaps because of its unprecendented subscriber base, problems arise on such a scale that new tactics and measures are being invented and tested in this virtual arena. Just last month, OffGamers warned their WoW gold customers that Blizzard had started monitoring and blocking in-game deliveries of gold. In response, they have advised their customers about a new set of delivery options to get around that policy. Each has a different set of risks associated with it, but they have to be given credit for trying to best serve their customers. Here's a summary of their new options:

1. PM or Telephone
The customer is to either already be in-game or available by phone at the time of purchase. They are to pick up their gold within 30 minitues of being notified of the transaction. I suppose it takes Blizzard that much time to notice large transactions due to the vast amount of servers and transactions they would have to monitor.

2. Direct Transfer to Account
Amazingly, this procedure requires the customer's game username and password! Didn't your mother tell you not to give this out? OffGame actually recommends you use a "secondary" account. So now some players are so determined to make their gold transacions that they may actually be opening accounts and paying another subscription fee just to safeguard their gold transactions. Kind of like laundering through real world bank accounts I suppose.

3. Mail to Character
In this case, the player will get an email notification of the gold delivery and again is advised to pick up the gold within 30 minutes of receiving the email.

Now we need to sit back and see what Blizzard's next move is against this heinous (sarcasm on) practice of buying and selling. The game of Wow seems to have spawned a new unintended mini-game - or would this be a meta-game? - of "try and catch me buying gold." Like criminals who avoid incarceration, players can brag to their friends about how they have bought X million gold and haven't been caught once. Hey can you get prison tatoos in Wow? Just asking...

Keeping It Real

Recent events at XBOX Live! remind us how "real" virtual economies are. Very revently a number of XBOX Live! accounts were hijacked and Microsoft Points were purchased with the account holders' credit card information. Microsoft points to social engineering as the probable cause of the compromised accounts. A group calling themselves "Infamous" says they are able to steal 10 accounts a day by taking advantage of the people manning the Microsoft help desk. The group also seems to take accounts in retaliation for anything they take offense to (like someone else winning?).

Does this look like an online gaming "Mafia" to you? There's a group of people who "rub out" the accounts of hostile opponents and take over their "turf" (account and points). Over time, people will become afraid to offend them, maybe even to the point of "donating" Microsoft Points to these guys in exchange for them *not* stealing an account. Maybe they already have someone working on the inside at MS who helps them get account info. Other operatives can sell off ("launder") the points for real cash.

Yes, the Microsoft Points can be sold outside the game. I'm looking at a Yahoo! auction right now that has an $18 bid for 1600 points. If the points are stolen, this is all profit. Ten of those a day gets you $180 = $1260/week = $65+K/year. Look out Tony Soprano!

They don't even need a "laser"

Just this week, FierceGameBiz passed on a report that MMOG's in North American and Eurpoe combined for 1 BILLION DOLLARS in market value. The report also predicts that by 2011 game accounts will generate 1.5 Billion USD in consumer spending. FierceGameBiz also cites a report from early last year that online gaming (not specfic about which types, so this may include gambling) would hit 3.2 Billion USD in 2011.

Unfortunately, Screen Digest's full report has to be purchased, but they did tease us with some key findings like:
- casual MMOGs and new business models (I'm guesing the free game/pay-for-items type) have helped market growth
- Germany is the largest market in Europe and should remain so for the next 5 years
- France is slated to have the biggest growth in Europe with Spain and Italy right behind
- WoW generates 54% of the total MMOG subscription revenues

Yeah, "WOW" to that!

Blurred Lines, Real Value

As a member of the American Society for Quality (ASQ) I was recently reminded via email about their "Each One Reach One" program which awards members with 5 ASQ Bucks for every new member they recruit. Each ASQ Buck has a real workd value of 1 USD which can be used toward membership or merchandise. The reason I mention this on a "game" blog is that I think this many of the elements of a virtual economy. Here are some parallels between this program and what goes on in an MMORPG:

- You must be a member of the world (ASQ "game") to earn the reward
- The reward has both a virtual and a real-world monetary value
- The reward can be exchanged for goods or services in the world (ASQ)
- The game can be described as a "recruit people" game.
- Some people will devote more energy to this than others and will receive more benefits accordingly
- Members may feel a sense of competition as they try to reach more people than their peers, or at least use their recruitment number as a status or prestige symbol

On a larger scale, the ASQ can be described as an "education" game. They provide training and certifications for different quality disciplines. You can get certified (skills) in multiple disciplines if you like. Gold in a video game is not the end, it's means to improve your equipment so you can advance further in level, skills, etc. Likewise, the ASQ Bucks are used towards membership (guild dues), education (skills) and certification (abilities). I guess one nice thing about this system is that since you don't ever receive actual real money, there's nothing to pay taxes on. You only "activate" the virtual bucks when you use them for a purchase. Again, similar to the current treatment of virtual world gold holdings - as long as it stays inside the game world, it's not income.

Going one step further, the ASQ makes a correlation between certification and real-world income. So, in this "game" your virtual bucks go towards activities that ultimately should increase your real-world wealth (plus an added time component to attend the classes, study for exams, etc.). The ultimate value of an ASQ Buck may not be 1-to-1 with the dollar, but a portion of your net income increase that can be attributed to your ASQ Buck purchases, divided by the number of ASQ Bucks you used.

I'll expect you to keep an eye out for other real-world "games" you are invited to play which pay you in a virtual currency.

Terms of Endowment

Came across an MMORPG called "Eternal Lands" and found some interesting economy-related items in the terms of service that you have to accept before entering the game:

7. Illegal Multi (cont'd)
NO same-owner IP trading.
Middlemen are NOT allowed and do not make same IP trading legal between characters.
This is really the first time I've seen a prohibition on this. Subscription funded games love when you do this because you have to sustain two accounts. For games that charge for items, I can see why this would be discouraged, though. Which brings up another interesting point - this is also the first game I've seen that maintains there own item shop *outside of the game* check it out here.

12. Sell And Trade At Your Own Risk
Eternal Lands will not be held responsible for any transactions dealing with real monetary currency/items or in game money/items. No selling of character or guilds, or advertising of them, is to be made in game public chat or channels.
Pretty standard fare here - caveat emptor.

14. No Improper Advertising
Do not market, promote, advertise or solicit within the Eternal Lands or any non-Eternal Lands related businesses, organizations or websites.
Hooray! This sounds like a good policy to me. I can think of two good reasons why:
1. to curb annoying spam in chat and
2. attract/secure in-game advertising by preventing any "non-paying" advertisers to get their word out.

17. No Bag Spamming
Do not drop large numbers of bags for any purpose as this may lead to the bags of others to disappear and cause people to lose the items they have temporarily placed at their feet.
Seems like we have a "feature" here that can be put to evil use. You don't want a gazillion bags accumulating on the ground, so you make them go away when they exceed the maximum allowed. BUT, someone figgered out that they could cause grief to other players by making legitimate bags disappear prematurely. I'm not sure how you catch someone or decide who to blame when this happens, but if I had to put my bag down I'd find a remote place to do it.

Some new twists and there's logic behind every one. One marvelous thing about all these game worlds is that they each have their own unique system or interpretaino of how to run and control commerce and we just get to sit back and see which ones work.

By The Book

Just so you know I haven't been slacking. I am a little less than halfway through reading Edward Castronova's book "Symthetic Worlds" (which you can click to purchase on the sidbar) so I offer you this nugget of insight to ponder while you're waiting for the next installment of this blog.

Castronova discusses a mechanism behind migration from any one place to another where people who are not doing well in the place they are at will be willing to accept the risks associated with moving to a new place and starting over there. In the U.S. this might make you think of covered wagons heading west, or even more specifically, the migration to gold rushes in San Francisco and Alaska. But also think in terms of virtual worlds as another option. Not doing well financially, socially, or achievement-wise in a "real world" place? No problem - find an MMORPG that suits you and try starting over there. If this happens on a large scale, this could impact the workforce numbers in our flesh and blood world. Some other side effects would be that people may get counted as unemployed only because that statistic limits its vision to planet Earth. What would the impact be of people dropping off of tax and Social Security rolls? Which services would flourish, fail or be unaffected?

Food and electricity come to mind as industries that would not be impacted. What about the automobile and gasoline industries? - will virtual worlds lead to a "greener" Earth by keeping people more people at home? I'm finding it a little harder to come up with an example of an industry that would grow as a result of massive online "employment." It would have to be something that give the player/worker more return for their time spent. Maybe computer sales would double as each player operates multiple characters at a time (or at least monitors if users run multiple sessions using VMware). Can you think of any?

Read His Lips - No MMO Taxes

In October last year, gamepolitics.com reported that Joint Economic Committee Charman Rep. Jim Saxton (R-NJ)went on the record to say that it would be a mistake for the IRS to tax virtual economies within games like Second Life or World of Warcraft.

Before you get too excited about this, his exact statement reveals that this sentiment is only meant to apply to transactions that take place solely inside the virtual world - e.g. using virtual coins to buy a virtual sword: “…if the transaction takes place entirely within a virtual economy, then it seems there is no taxable event.”

This approach is sensible with respect to the principle of preventing double taxation. For example, you get taxed on the virtual gold you sold online for real USD, but if you also got taxed on the virtual gold profit for selling a magic sword inside the game, then you would essentially be penalized - er, taxed - twice for exercising your economic acumen.

Now, maybe someone will come up with a game that has its own governments and taxation systems, but I'm not sure that would really be an attractive feature - well, yes I suppose for the people who would seek the positions and roles in the game world where you receive and control the incoming taxes. That's just a little too much in the "real world" direction for me. I like "escapist" games as opposed to ending up in a virtual world with all of the same hassles of the real one.

Saving Private Citizens

Yesterday I discovered the Stop Disasters game. It's free to play and doesn't even require you to download or install anything. The game prosents five scenarios in order to educate the user about what measures contribute to making populations and infrastructure safer from various types of natural disasters. You are given time and a budget to select upgrades of various types and costs. At the end of each scenario you are graded according to loss of life and property.

While I applaud the concept of using a video game to help instruct people on the issues and resources needed to successfully prepare and protect people from natural disasters, I have to question what the game is teaching. In the first scenario at Easy difficulty, the goal is to "provide accommodations for 320 people, build a hospital, a school plus two hotels to increase tourism in this area." So, if you are in an area known to be at risk, why are you building hotels to bring even more people into the danger area? That makes sense if the goal is to maximize wealth and employment for the island, but doesn't seem to make sense if the goal is to minimize damage or casualties from disasters. At least the game goes on to provide options for protecting the structures themselves, but I would rather plan on how many people could be accomadated with the best protection - not stuff a bunch of people on the island and make tradeoffs to protect them as good as is possible. Anyway,I went through the exercise and though I lost 50 people and the school was destroyed, but that still was a passing grade. I got a report on the "cost of damages" which was only with respect to the items in the game that were destroyed. It's a shame there isn't any further analysis on economic impact due to potential loss or increase of tourism, wage and cost increases to employ workers in the rebuilding process, etc.

Even more interesting would be to compete with a neighboring island and then the one that survives best draws capital, labor, etc. from the loser. There could also be a way for the islands to trade or buy excess materials with each other. This could also lead to the lesson that cooperation leads to the mutual benefit of both communities.

Being from Miami, the second simluation - a hurricane simulation - was more up my alley. This time I didn't have to lure tourists to their death. Just make sure the boats are secure and the people are protected. Oh - and this time you are encouraged to protect the banana trees and cane fields because of their positive economic impact on the island. In that one I only lost 4 lives but $5,900. This apparently was good enough to earn me a silver medal - yay me!

I'll let you discover the other three scenarios on your own but without too much more in terms of programming I think this game could contribute more to communicating the near term and longer term effects of destruction within a community.

Hits and Myths

I encourage you to read brief PBS/MIT essay on video game "myths" which addresses the social and cultural affects of video gaming from a different perspective than you will get from most politicians and media outlets. Here are some pieces of information in this essay that relate to our own topic of video game economies:

- 90 percent of boys and 40 percent of girls play
- 62 percent of the console market and 66 percent of the PC market is age 18 or older
Okay - so these are some basic demographics of the "consumers" of game related currency, goods and services. Also, "40 percent of girls" is a significant chunk of market and spending potential. Games that appeal to girls and provide opportunities for purchases with real world dollars should be a profitable combination. For example, see the previous "Gem of an Idea?" blog on this site.

- The Federal Trade Commission has found that 83 percent of game purchases for underage consumers are made by parents or by parents and children together.
Ah, the role of parents in viceo game-related purchases should not be overlooked. Advertising should appeal to both the purchaser (parent) and consumer (gamer). Likewise, methods or services for purchasing game items should be easy, secure and appealing to the purchasing parent.

- Many current games are designed to be ethical testing grounds. They allow players to navigate an expansive and open-ended world, make their own choices and witness their consequences.
While this statement mostly applies to the "physical" aspects of the game such as combat, puzzle solving and socializing with other gamers, there are also quite a few significant economic choices made by gamers like

• do I level up or farm gold?
  
• which trade skill should I develop to make money from crafting?
  
• should I save up for better armor or by the best I can afford now
  

and specifically, choices related to economic "ethics"

• do I split from my guild so I can be boss of my own and collect tribute money?
  
• how much do I charge for crafted items on top of the cost of the raw materials?
  
• should I try to sell my in-game items or characters even though it's against the Terms of Service?
  
• should I ask this person for gold before I will buff/resurrect/help them?
  
• do I keep all of the loot for myself or share it with the rest of the party?
  
• should I hire someone to farm gold for me?
  
• do I create a bot to do crafting?
  
• should I log in from work to do a little bit more mining?
  

And then we must ask ourselves, what do our answers to these questions reflect about our real-life selves?

- Thirty-three percent play with siblings and 25 percent play with spouses or parents.
Have video game economies tapped the full potential of virtual "presents." While, "Honey, I got you gold armor for our anniversary" might not go over well in every gaming household, think about how easy it is to send electronic cards on special occasions. Giving game currency or item gifts should be made just as easy - especially for the non-gamer who knows how much their friend loves their online game but has no idea *what* would be good gift or *how* to get it for them.