Unfortunately the technology behind the site was starting to show its age. Commenting was difficult and VERN integrated poorly to social media. Spam filters were not able to keep up with the new microwork-based human-generated spam. Complex backend interface discouraged writers. For this reason, we have spent the autumn moving VERN to a new platform, namely WordPress.com. This will cause some inconvenience to readers while we adjust to the new home. The biggest inconvenience is that the old URL addresses could unfortunately not be preserved. If you came here following a broken link, please use the search box to find the content that you were looking for. Each and every article continues to be available, simply under a different address. Our sincere apologies for this inconvenience.

A big thanks to Matti Nelimarkka for his massive help in the migration process!

As always, please feel free to send feedback via comments or email.

Here’s to another successful five years!

Dr Vili Lehdonvirta, Founder & Co-editor

In November 2009, Blizzard opened an online “pet store”, selling virtual items for real money. In order to not affect player abilities, available items are limited to $10 vanity pets and $25 mounts. Buyers are given a code that they link to their game account, or that can be give to another player. Codes can only be used by a single account. Once used, items are automatically bound to the account to which the code was applied and are not tradeable within the game.

In a new option for virtual good purchases, Blizzard has now announced a pet that functions differently. The Guardian Cub companion is not automatically tied to the account that uses the code, meaning that it can be given or traded to another player either directly in world or through the game’s auction house system. The economic implications of this development are interesting. In addition to serving as a gift, this pet makes possible a form of real-money trading (RMT), and has the potential to affect the in-game economy.

Blizzard has positioned the pet as a gift. The company points out that, “The Guardian Cub is also the Pet Store’s first tradable pet, meaning it can be swapped between characters in-game or given as a gift to guildmates, friends, family, or that special someone”. Along with gifts, Blizzard also acknowledges the possibility of residents selling the pets to other players for in-game currency, potentially allowing players who do not want to spend real money on a virtual pet a way to obtain one. In the release, Blizzard notes that, “Since the introduction of the Pet Store, many players have been asking for ways to get the companions we offer there without having to spend real-world cash. By making the Guardian Cub tradable… players interested in the new pet will have fun, alternative in-game ways to get one.”

Although the earlier pets and mounts available through the store could also be given as gifts, this is the first time pets purchased with real money have been tradable directly within the game world. These new tradeable pets appear to be at least partially motivated by an attempt to reduce real-money trading (RMT) through third parties, which can be unsecure and present issues for players. Although RMT has been banned by Blizzard, players still buy gold from sellers to facilitate their game experience. Because the pet can be traded or sold within the game, the Guardian Cub can take the place of some RMT transactions and doesn’t require a third party or any interaction between players outside of the game world. By buying a $10 pet, sellers have the opportunity to trade that pet for in-game gold for relatively little effort, essentially indirectly buying up game currency for real money.

The question now is whether there will be enough in-game demand for these pets to be profitable. If there is a large supply, or not enough interest from people who will not buy the pets directly from the pet store, selling pets may not be a viable option for obtaining game currency. These conditions will drive the in-world cost of the pets, and will determine how expensive or inexpensive they are. Consequently, they will also affect the conversion rate of real money to in-world currency.

In addition, this process requires that players who want to sell the Guardian Cubs bear some risk. If a potential seller buys the pet, there is no guarantee that it will sell, a fact that Blizzard mentions as a warning. What they do not explicitly mention is that if the demand is not enough, or the supply is too great, the $10 cost of the pet may not be worth the return in gold. Although the option to use a pet as a form of RMT may be far safer than relying on third-party gold sellers, if the return on investment is not high enough, players will be less likely to use this option.

In this report, we understand the virtual economy more widely than as mere online game economies, although online game economies are big part of it. Other sectors of the virtual economy are markets for such things as Facebook likes, Twitter followers, and digital microtasks. All of these are valuable yet scarce digital assets that have emerged as the so-called “digital economy” of online services has grown (see Figure 1).

The development potential here refers to the potential to provide income opportunities to poor and undereducated people in developing countries, and to support the development of local ICT infrastructure. It is well known that gold farming provides income to many people in developing countries. In this report we estimate that it may employ as many as 100,000 full-time equivalent game laborers. For the first time, we also examine the full value chain through which gold farmers’ services are brought to Western players: everything from advertising to account hacking. We call all of these functions together the “third-party gaming services industry”, of which actual gold farming is only a small part. The total revenues of the industry are estimated at 3.0 billion USD.

But the future development potential of the third-party gaming services industry does not look good. It is threatened by game publishers’ decision to start selling virtual goods to players directly. Moreover, its services often bring harm to other players and game publishers, meaning that their net social value may often be negative.

In contrast, another sector of the virtual economy represents an unequivocally positive contribution to society: the market for microwork, or small tasks such as tagging an image or trascribing a snippet of hand-written text. E-commerce sites and other companies need such work. With suitable technology, this demand translates to income opportunities for digitally connected individuals in developing countries. In the report, we examine the value chain of this industry and assess its development potential.

One important point to make is that microwork is distinct from the related concept of crowdsourcing. Crowdsourcing refers to the outsourcing of all kinds of tasks to a crowd via an open call. Microwork refers to tiny, digitally distributed tasks, whether these are sourced via an open call or, as is also common, through closed networks (see Table 8).

In authoring the report, I enlisted the help of my friend and colleague at the University of Tokyo, Dr Mirko Ernkvist. He is an economic historian specializing in entrepreneurship, innovation and development, and has studied the Chinese online games market.

See also:

• Lehdonvirta, V. and Ernkvist, M. (2011) Knowledge Map of the Virtual Economy. Washington DC: World Bank.
• Presentation slides
• The Economist article
• Washington Post article
• Press release (below)

In Washington, D.C.:
Name: Nadine Ghannam
Phone: (202) 473-3011
E-mail: nsghannam@ifc.org

$3 Billion Virtual Economy Provides Jobs in Developing Countries, Finds IFC/World Bank Study

Washington D.C., April 7, 2011 A new study by the World Bank Group’s infoDev program shows that virtual online currencies and digital work now provide real income opportunities to poor and unskilled workers in developing countries.

infoDev is a global technology and innovation-led development finance program of the World Bank and IFC. The new study, Knowledge Map of the Virtual Economy, finds that more than 100,000 people in countries such as China and India earn a living through online games and websites disseminating micro-tasks.

Jobs in the virtual economy include micro-tasks like categorizing products in online shops, moderating content posted to social media sites, or even playing online games on behalf of wealthier players who are too busy to tend to their characters themselves. The study estimates that the market for such gaming-for-hire services was worth $3 billion in 2009, and it suggests that with suitable mobile technologies even the least-developed countries could benefit from this emerging virtual economy.

“Developing countries’ roles in the digital world have been mostly limited to users and consumers, not producers. But today, a growing mesh of digital services is giving rise to a new layer of entrepreneurial opportunities with very low entry barriers,” said Valerie D’Costa, Program Manager of infoDev.

Tim Kelly, infoDev’s Lead ICT Policy Specialist, said, “Some of the poorest people in the world are already connected to digital networks through their mobile phones. The study shows that there are real earning opportunities in the virtual economy that will become accessible as mobile technology develops. This could significantly boost local economies and support further development of digital infrastructure in regions such as Africa and southeast Asia.”

While the virtual economy unlocks a plethora of business opportunities, it should be noted that not all these activities are viewed positively. According to the infoDev study, certain business ventures and services offered may actually detract from the experience of other Internet users. For example, harvesting and selling online gaming currencies or mass clicking “Like” on corporate Facebook pages can create an unfair environment where legitimate game play and user opinion loses value and is represented inaccurately.

“Entrepreneurs should focus on digital micro-work that benefits society. Examples include transcribing books, translating documents, and improving search-engine results,” said Dr. Vili Lehdonvirta, a researcher at Helsinki Institute for Information Technology and the main author of the study.

The study, funded by the United Kingdom’s Department for International Development, is available on infoDev’s website and in print. For more information, visit www.infodev.org.

About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.

I’ve posted the details at: http://ict4dblog.wordpress.com/2011/03/30/the-financial-life-and-death-of-an-east-european-gold-farm/

However, the postscript is that the continuing devaluation of WoW gold has led to at least a temporary shut-down of the operation. There is also a hint that only through botting can gold farming be viable.

The date that wow: Cataclysm’ could be launched

The newest expansion pack for “World of Warcraft” is ready to be launched Tuesday. At 12:01 a.m. on December 7, the World of Warcraft: Cataclysm” expansion can be released. Anyone who pre-purchases the digital download will be immediately turned on to the “World of Warcraft: Cataclysm” the moment it is launched into the world. You can purchase “World of Warcraft: Cataclysm” with a physical copy if you’d like. Dec. 7 could be when this is available.

What ‘world of Warcraft: Cataclysm’ benefits are

”World of Warcraft: Cataclysm” is fairly cool. “WoW” is updated a lot with it. You can then choose 2 brand new races of characters too. Worgen and Goblin are these races. The races aren’t new as they have been within the game for a while. This is the first time the races can be played though. The story behind “World of Warcraft: Cataclysm” includes a disaster that directly effects the Goblin race. The Horde has the Worgen in it although they’re an Alliance race. They’re just one of the things going on in “World of Warcraft: Cataclysm” though. There is a lot more of brand new stuff in “World of Warcraft” with the expansions with a level cap at 85 now, new backgrounds and 2 locations being revamped totally.

Brand new pets for the ‘world of Warcraft: Cataclysm’

There is a reason why you might like to get the boxed set of “World of Warcraft: Cataclysm” rather than playing it as shortly as it is released. The collector’s edition of “World of Warcraft: Cataclysm” includes an exclusive pet family. These animals are available to “tame.”. There are a lot of different looks you can choose for the Shale Spiders in “Cataclysm.” They are fairly cool too.

Citations

World of Warcraft

worldofWarcraft.com/cataclysm/

This sounds familiar. Here’s an interesting exercise: let’s compare EU carbon credits with the virtual gold of the online game World of Warcraft. See if we can find a difference.

• Both credits and gold are elements in an abstract system of rules, implemented as a computer program. Neither have any shape or function outside this system.
• Both systems have a certain group of participants, and each participant has a “user account”. Each credit/gold coin belongs to exactly one user account.
• Both credits and gold can be transferred between accounts, but creating new ones is not possible; only the operators of the system can do that. Both are thus artificially scarce.
• Both credits and gold can be exchanged to national currency by selling them to another participant who finds them so useful as to be willing to pay money for them.
• Because of the above, both are targeted by cybercriminals who attempt to steal them through phishing attacks.

ETS credits are clearly the industrial version of game currency — industrial grade virtual goods. Funnily enough, it seems from the news coverage that ETS has worse cybersecurity than WoW. Those who set up new virtual economies would do well to learn from their predecessors in the game industry.

Meanwhile, the Researchers’ Toolbox issue has been split into two parts. My co-authored paper on data collection methods will apparently be published in the second part, which is supposed to come out this month.

The journal suffered from delays in the publication schedule last year as it underwent an editorial transition. But I’d like to thank the outgoing editor, Jeremiah Spence, for his contributions, and wish success to the incoming editor, Yesha Sivan.

The editorial team for this issue includes: Sun Sun Lim, National University of Singapore Lynn Schofield Clark, University of Denver, USA Editor′s Corner Virtual worlds as a site of convergence for children’s play Sun Sun Lim, Lynn Schofield Clark.

Peer Reviewed Research Papers

Beyond Being There: A Grounded Investigation of the Value of Virtual Worlds for Remote Family Interaction
Lizzy Bleumers, An Jacobs

Virtual Epidemics as Learning Laboratories in Virtual Worlds
Yasmin B. Kafai, Nina H. Fefferman

Who’s Watching Your Kids? Safety and Surveillance in Virtual Worlds for Children
Eric M. Meyers, Lisa P. Nathan, Kristene Unsworth

Making Sense of the Virtual World for Young Children: Estonian Pre-School Teachers’ Experiences and Perceptions
Andra Siibak, Kristi Vinter

A Framework for Children’s Participatory Practices in Virtual Worlds
Terhi Tuukkanen, Ahmer Iqbal, Marja Kankaanranta

Research-in-brief Papers

Penguin Life: A Case Study of One Tween’s Experiences inside Club Penguin
Diana Burley

Virtual Junk Food Playgrounds in Europe: Advergames in the UK and Hungary
Arhlene A. Flowers, Katalin Lustyik, Emese Gulyás

Think Piece

Growing Up with Neopets: A Personal Case-Study
Stephanie Louise Lu

We can get a bit more of an insight into what’s happening by looking at the virtual currency exchange rate: if Cataclysm was causing an in-game shortage, that would likely lead to WoW gold appreciating against real-world currencies.

Comparing the January 2011 rates to October 2009, there has actually been a depreciation of around 11%: where 2,000 gold earlier cost an average of US$8.35, now it costs an average of US$7.41. This therefore looks like a dog that didn’t bark: the currency is not deviating from the pattern of depreciation that has been seen ever since gold farming began (associated with competition in the market and discovery of better (i.e. quicker and thus cheaper) ways to farm gold).

Looking in a bit more detail, though, suggests something slightly different. In the 14 months since October 2009, WoW gold has depreciated 11%. In the 14 months prior to October 2009, it depreciated by 58%. We can also compare WoW gold with other virtual currencies. Taking a basket of FFXI, LOTR, EVE Online, and EQ2, their currencies depreciated against the US dollar an average of 51% during the period Oct 2009 – Jan 2011.

So that suggests there may have been a Cataclysm effect – significantly slowing the “normal” process of depreciation; possibly reflecting a supply-side impact on gold farming, for example, in the need to build up post-expansion knowledge about gold farming sources and methods.

One final snippet comes from looking at prices for power levelling. This also has been subject to depreciation over time, albeit at a slightly lesser rate than the currency. From Oct 2009 to Jan 2011, however, prices for levelling seem to have appreciated by about 20% (e.g. levelling from 1-60 rose from an average US$69 to an average US$83). That could reflect either increased supply side costs in having to learn the new levelling paths and/or growth in demand from new players wanting high-level characters but in either case it again suggests some sort of “Cataclysm effect”.

Does anyone else have data or experiences to share on this?