Virtual Economy Research Network

I'm writing this at Shanghai Oriental Riverside Hotel, where the first ever Game Developers' Conference China has just ended. By all accounts the event was a success: there were over 2000 visitors at the exhibition and some 800 attendees at the conference. The exhibition part was largely about outsourcing, recruitment and training, but also showcased neat Asian titles like the phenomenally popular online dancing game Audition. All the big Chinee MMO companies were present, as well as EA, Ubisoft, CCP and others.

For me GDC China was particularly interesting because of the emphasis on online gaming typical of China. I was able to contrast the more theoretical musings of State of Play V last week with practical insights from game developers. For example, there were discussions on how to make Chinese titles palatable to the Western audience and vice versa; World of Warcraft's big success here shows that it's possible. This is a practical approach to "bridging the East and West" that SoP V called for but didn't yet deliver so much.

Shanda, one of the leading MMORPG companies in the world, plans to create a new service similar Second Life. This was reported today by Financial Times, quoting Shanda's founder and chairman Chen Tianqiao. According to Chen, the Nasdaq listed company wants to diversify away from fantasy worlds, but he wouldn't say anything about release dates.

Earlier this year, another "Chinese Second Life" called HiPiHi attracted attention in the blogosphere. HiPiHi is already in the beta stage, but lacks the resources of China's biggest MMORPG company. The graphics look somewhat dated by today's standards, although so do Second Life's.

Last month I blogged about how the virtual Q Coins are being traded for real money and used as an online payment system in China, and how the Chinese government has reacted to this. In the comments section, one Boaz Rottenberg provided some additional details and also offered some disagreeing views. In particular, he wrote:

There is no secondary trade going on in Q Coins in the open market. The currency itself is not transferable through QQ's platform and definitely not cashable by QQ. [...] From my findings, I believe all real money trade in virtual currencies in China is in gaming currencies - mainly WoW gold.

In this posting, I describe how Q Coin secondary market trading (or one facet of it) works in practice, and illustrate the process with some screenshots. I also provide some figures from a trading site. Many people have seen the news articles about QQ, but for most non-Chinese speakers, this is probably the first glimpse of the actual Q Coin market.

An executive from Shanda Interactive has been handed a sentence in a Chinese court for creating virtual assets out of thin air and selling them through accomplices to players. This is according to PlayNoEvil's report of a story in China Daily yesterday. The copying took place in The Legend of MIR II, a popular Korean MMORPG operated in China by Shanda.

The story helps to highlight how the value of virtual assets is often based on their artificial scarcity. Many virtual assets are positional goods, meaning that their value is derived not from their absolute attributes, but from the relative advantages they confer compared to other goods of similar kind.

We have all heard about real-money trade of virtual property — but how about paying in real blood for your virtual stuff? Players of the Chinese MMORPG Cabal bleed half a litre to get their banned accounts back.

Thanks to Lassi ;)

A couple of weeks ago it was reported (via PlayNoEvil) that China aims to restrict the trading of virtual currencies that have become popular as a payment method even for third-party services. According to the joint announcement of 14 Chinese government agencies including the Ministry of Public Security and People's Bank of China, virtual currencies should not be used to buy real commodities and can only be traded back to real money for amounts not exceeding the original purchase price, eliminating any opportunity for profits.

This is the most severe notice so far in a series of growing government attention to the use of virtual currencies and real-money trade of virtual property in China. At the time of writing, however, RMT markets seem to be operating as usual. For example, Taobao lists thousands of sell offers for Q Coins, the virtual currency of Tencent QQ. I dug a little bit into Chinese language sources to find out more about what's going on.

A worm virus (targeted to steal passwords for the ubiquitous QQ service and other game accounts)with the logo of Xiongmao Shaoxiang (Panda burns joss-sticks), has hit millions of computers in China since November 2006.

According to Xinhua, BEIJING, Feb. 13 Police Monday arrested eight suspects involved in producing and disseminating a severe computer virus.

It was the first case related to the spreading of computer viruses in China. The virus writer programmed the virus on Oct. 16, 2006, and made more than 100,000 yuan (13,000 U.S. dollars) selling it to over 120 people via the Internet both himself and through agents.

As Vili introduced before, Tencent QQ is the dominant form of instant message for online communications in China. It supports instant messaging, games, and other value-added services, all of which are paid for with Q-coins. With the usage of Q-coin, you can buy everything from QQ sausages and clothing to QQ credit and debit cards, which builds the QQ virtual world.

According to Virtual China, there is a new QQ service called iTQQ.

The VERN blog has been quiet this month. Rest assured that the reason is not that we have been inactive, but that we have been busy working. In January I hope to have a little announcement to make.

Meanwhile, Steven Davis at PlayNoEvil has posted three excellent articles on virtual economies and plans to regulate them in the Far East. The first one is a Xinhua report on how virtual Q(Q) Coins are increasingly being accepted as a viable currency by Chinese businesses and how the goverment is reacting to this. The second one refers to a Korea Times story providing new details on Korean lawmakers' plans to restrict RMT. The latest Xinhua article discusses Chinese Ministry of Culture's regulatory ambitions over RMT.

Does regulation mean the party is over? Will governments step in and sever the links between real and virtual economies? Will games and community services go back to being "entertainment and relaxation, and nothing else", as one Chinese MOC official puts it?