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

Virtual goods in context: presentation slides


For those who asked for the slides I presented today at the Virtual Goods Conference, please find them here. Feel free to get in touch if you have any comments.  Read more

Community dynamics that create demand for virtual goods: case Habbo

Update: the authoritative version of the article is now up on Routledge's site, here. For those who don't have access to that repository, the pre-print version is still available here .

Early this year, I posted a pre-print version of an article (see Why do people buy virtual goods?) and promised to post more later, as the scholarly publication process can be as slow as the proverbial snail. Here you go: a pre-print version of Virtual Consumerism: Case Habbo Hotel, a sociological study of the motivations and practices of virtual consumers in a popular teenage online hangout. The publication venue is a reasonably prestigious journal called Information, Communication & Society, to whose reviewers I and my co-authors are much indebted.

The bulk of this work was actually completed two years ago. While virtual goods have continued to spread like crazy since then, I believe the motivations for purchasing them remain the same. In contrast to the previously posted article, the main audience of this paper is sociologists. People who are in the business of selling virtual goods to other people might also find some "actionable insights" there.  Read more

Economics of EverQuest II


Ted Castronova, Dmitri Williams, Cuihua Shen, Yun Huang, Brian Keegan, Robby Ratan and Li Xiong have published a paper dealing with the economy of EverQuest II based on analyses of huge amouts of log data. See Dmitri's post at Terra Nova. Congrats! I know it must have been a huge amount of work.

I don't quite agree with their concept of mapping and the idea of talking about MMOs as if they were somehow worlds apart from the real world, but the paper offers an extremely nice quantitative view into some of the internal workings of a MMORPG economy. HIIT's Tuukka Lehtiniemi published similar work on macroeconomic indicators in EVE Online last year in his Master's thesis (including some criticism of applying the concept of GDP to a virtual economy, which Castronova et al. should perhaps have a look at).

It's been almost customary for social science oriented papers dealing with MMOs to at least mention the idea of using MMOs as a large-scale research platform to contribute something to social sciences. With this work on EQII and EVE, it looks like the tools are starting to be in place — perhaps that contribution is not too far off.  Read more

15% discount – Engage! Expo

Tomorrow (Aug 14th) is the last day to register with the earlybird registration fee and with a code VERNVIP you’ll get additional 15% off. (The code will work after the earlybird registration deadline as well).

The two-day Engage! Expo comprises four parallel events: Social Media Strategies, Virtual Goods Conference, Digital Law Conference, and 3D Training, Learning and Collaboration (3DTLC) Conference.

Our very own Vili Lehdonvirta will be speaking at the first session of the virtual goods track – ” Analyze This: The Virtual Goods Marketplace & State of The Industry”.

Overview of the schedules.   Read more

Game design as marketing: How game mechanics create demand for virtual goods


Hamari, J. & Lehdonvirta, V. (2010). Game design as marketing: How game mechanics create demand for virtual goods. International Journal of Business Science & Applied Management, 5(1), 14-29.

In short: In this paper, we consider the question of what leads consumers to purchase virtual goods. Most previous studies adopt the individual user as their unit of analysis, focusing on motivations and decision processes that lead to virtual good purchases. We adopted a complementary approach, focusing on how the rules and mechanics developers build into MMOs encourage virtual good purchases.

Download paper here and read more below.

  Read more

"I have an avatar therefore I exist" - Virtual commerce special issue @ Electronic Commerce Research

I added papers published in Electronic Commerce Research journal's special issue "I have an avatar therefore I exist" into the VERN bibliography.

 

Papers:

Meredith A., Hussain Z., Griffiths M.D. (2009).  Online gaming: a scoping study of massively multi-player online role playing games.  Electronic Commerce Research. 9(1-2), 3 - 26. Link

Bryceson K.P. (2009).  The development of VAG -- a 3D virtual agribusiness environment and strategy game.  Electronic Commerce Research. 9(1-2), 27 - 47. Link

Cagnina M., Poian M. (2009).  Beyond e-business models: the road to virtual worlds.  Electronic Commerce Research. 9(1-2), 49 - 75. Link

Guo Y., Barnes S. (2009).  Virtual item purchase behavior in virtual worlds: an exploratory investigation.  Electronic Commerce Research. 9(1-2), 77 - 96. Link

Lehdonvirta V. (2009).  Virtual Item Sales as a Revenue Model: Identifying Attributes That Drive Purchase Decisions.  Electronic Commerce Research. 9(1-2), 97-113. Link

Goel L., Prokopec S. (2009).  If you build it will they come? -- An empirical investigation of consumer perceptions and strategy in virtual worlds.  Electronic Commerce Research. 9(1-2), 115 - 134. Link

Bourlakis M., Papagiannidis S., Li F. (2009).  Retail spatial evolution: paving the way from traditional to metaverse retailing.  Electronic Commerce Research. 9(1-2), 135 - 148. Link   Read more

Live Gamer acquires N-Cash - towards integrating primary and secondary markets?

Live Gamer announced the acquisition of Korean virtual good sales facilitator N-Cash. The acquisition expands Live Gamer's current service repertoire from secondary market targeted v-commerce solutions to facilitating both primary and secondary markets of virtual goods.

As separated these two service elements might not provide anything new. But the possibilities provided by integrating primary and secondary markets under a single platform are highly interesting. What kind of integration strategies would work under which kinds business models and service design? How integrated markets would affect the internal economies of MMO's? What new revenue streams can be harnessed?   Read more

Press release below.

China attempting to keep virtual and real economy separate

... by restricting purchases of real goods or money with virtual currencies.

Pre-paid cards are also considered virtual currency, but virtual items are not.

The new law states: "The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services."

Justifications offered:
- prevents illegalities
- prevents gambling
- prevents money laundering
- preemptive step towards preventing "virtual economy" having a negative influence on Chinese financial system

Affects:
- farmers selling virtual currency - the definition of currency only covers medium currencies between real-money and items. This situation becomes a bit hazy though, because in some VW's there is only one currency (earned through gameplay AND at the same time purchased with real money). In a way farmers selling virtual currency would still fall into the banned category, but the legistelation doesn't seem to be targeted to "harmless" currencies such as WoW-gold, but towards currencies such as QQ-coins, which are widely used outside the Tencent QQ service.

- users doing business in VW's (such as Second Life)
- Prevents gambling? Because you can not convert v-currency back to real money?
- Secondary market of pre-paid game cards
---> everything that includes exchanging virtual currency (as defined by the law) into real money or products.

Doesn't affect:
- farmers selling virtual goods directly
- operator selling v-currency and v-goods   Read more

Four Phases of Gold Farming


A somewhat downbeat assessment of the current state of gold farming emerges from a discussion with Dr Jack Qiu from the Chinese University of Hong Kong; who has been a regular observer of gold farming and other informal sector activities in China.  I report this as, and appreciate that it is, conversational rather than "hard" evidence.

Jack observes four phases of Chinese gold farming.

1. Globalisation (c.2003-c.2006)
The growth that we are all aware of, serving the global and regional games market
  Read more

State of Play VI ++


 

 

- State of Play VI - We'll be there

- CFPs: JVWR

- VERN Facebook group - Join

 

June 19-20, 2009: The State of Play VI Conference A Conference on the Serious Study of Virtual Worlds On June 19-20, 2009, New York Law School’s State of Play Conference will convene in New York to examine the past, present and future of virtual worlds. In conjunction with the University of Southern California Network Culture Project at the Annenberg School for Communication, and with support from the John D. and Catherine T. MacArthur Foundation, the conference will focus on the startling rise of virtual worlds and multiplayer online games, and ask whether these worlds have reached a plateau in their development. At the same time we will question whether we have reached a limit in our understanding of these worlds, and ask whether there are useful research questions still left to pursue.

Please visit www.nyls.edu/stateofplay for more information.   Read more