News, research and discussion on virtual goods, currencies and economies globally.

Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games

TitleCurrent Analysis and Future Research Agenda on “Gold Farming”: Real-World Production in Developing Countries for the Virtual Economies of Online Games
Publication TypeUnpublished
Year of Publication2008
AuthorsHeeks, R.
Series TitleDevelopment informatics working paper
Institutionnstitute for Development Policy and Management, University of Manchester

From the start of the 21st century, a new form of employment has emerged in developing countries. It employs hundreds of thousands of people and earns hundreds of millions of dollars annually. Yet it has been almost invisible to both the academic and development communities. It is the phenomenon of “gold farming”: the production of virtual goods and services for players of online games. China is the employment epicentre but the sub-sector has spread to other Asian nations and will spread further as online games-playing grows. It is the first example of a likely future development trend in online employment. It is also one of a few emerging examples in developing countries of “liminal ICT work”; jobs associated with digital technologies that are around or just below the threshold of what is deemed socially-acceptable and/or formally-legal.

This paper reviews what we know so far about gold farming, seeking to provide the first systematic analysis of the sub-sector. It assembles available data at the sectoral, enterprise and worker level. Five main analytical lenses are then applied. Economic analysis shows how exchange rate variations and scale economies do and do not impact gold farming; and the strong influence of information failure in the purchase of virtual items: known as “real-money trading”. Analysis from the perspective of industrial sociology charts the commoditisation and globalisation of the sub-sector, while value chain models identify resource dependencies and power inequities. Enterprise analysis investigates enterprise entry, existence and progression, and outlines the competitive forces shaping the sub-sector’s development; particularly threats. Developmental analysis investigates the impact of this sub-sector in macro and micro terms. Finally, there is a sociological analysis of the role played by perceptions and other social forces.

In using a broad base of analytical perspectives, the paper aims to encourage, and provide a stepping stone for, further research on this growing phenomenon. It concludes by outlining and justifying a future research agenda.