Virtual Economy Research Network

Anshe Chung, proclaimed "the virtual Rockefeller" by Business 2.0, has published plans to launch an inter-virtual world financial market, linking the internal markets of Second Life (SL), Entropia Universe (EU) and IMVU. The public launch of the service is set at early June. As I understant, the service makes it possible for e.g. users of SL to use their Linden Dollars for purchasing shares of portfolios consisting of EU assets.

The press release states that RMT is not involved. A possibly related piece of old news: Chung got one of the EU banking licenses a while back.

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.

Quite a few very different estimates of the volume of real-money trade of virtual items (RMT) are available. Part of the reason for the different estimates is the very rapid growth of the user base, and the number of potential real-money traders, in virtual worlds. New service types also spring up, and there are difficulties in defining what RMT should actually include. Regardless of what we decide to include in it, measuring it directly is practically impossible. In this post I review the existing estimates, speculate on what exactly might be included in them, and try to sum up some of the latest regional figures to produce an estimate of the grand total size of the RMT market.

According to Sweden's largest newspaper Dagens Nyheter, Sweden is planning to set up an official embassy in Second Life. Modeled after the House of Sweden in Washington, the building is to be the virtual world's first official embassy.

In reality though, the facility will not deal with passports or visa applications like a normal embassy, but rather acts as a marketing outpost for Sweden designed to reach the digital generation. The idea is being developed at Swedish Institute instead of the Ministry of foreign affairs.

Linden Lab announced a week ago that official land prices in the virtual world Second Life will receive a boost. Currently Linden Lab is renting out 16-acre small private islands to users for a one-time set-up fee of 1250 USD plus a monthly maintenance fee of 195 USD. After the change is implemented, the set-up fee for newly rented small islands will be 1675 USD (a 34% increase) and maintenance fee 295 USD (a 51% increase).

In an interview by CNET News.com, Linden Lab's new CFO John Zdanowski states that the purpose of the price hike is to make renting out land profitable to the company. According to Zdanowski, seven-year-old Linden Lab has yet to turn in a profit. But due to negative feedback from users, the hike is now delayed until November 15th.

Tencent QQ, China's most popular instant messaging service, has been a big interest of mine since I bumped into it in Shanghai. The service works similarly to e.g. MSN Messenger, except that it has a built-in virtual economy based on "QQ coins". Pacific Epoch reports that the virtual currency has now raised legal concerns.

Users can buy QQ coins for a fixed price of one RMB per coin from Tencent. The coins can be used to pay for premium features, such as decorations for a chat avatar. Coins can also be transferred to other users. In addition to the official premium content offered by Tencent, third parties have begun accepting QQ coins as a method of payment for their services.

Yesterday's seminar was a great success, thanks to all who participated. A video recording of the presentations is now available through here.

One of the themes was what creates demand for virtual property. For MMORPGs, Professor Sang-Min Whang showed us data from Lineage that linked property value with time required to obtain it. In the social virtual world Habbo Hotel, Sulka Haro told us how Sulake time-limits the supply of certain items to create valuable rares. Sulake does not profit from this directly, as they sell the to-be rares at a mere 4 euros when they are available. However, it makes Habbo's "economic game" of barter exchange more interesting and raises prices in the budding secondary market.

We also heard some fascinating stuff about demand for virtual items in a service that is nothing like a virtual world, but a "flat" community site, similar to MySpace.