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

Guest articles

Virtual Goods and Regulatory Insights from the European Perspective

Guest article by Petteri Günther on EU regulatory issues in connection with real-money trade on digital items in virtual worlds.

Introduction

Virtual worlds, for example various massively multiplayer online role playing games (MMORPGs) are becoming increasingly real to many people around the world. This emerging field of digital economy within virtual worlds has made us to face the interdependence of those and “real” offline worlds. This occurs e.g. in form of real-money trade (RMT) on digital items, while the question on property rights over digital items remains basically unresolved in Europe, although the US and the rest of the world are pretty much in the same situation.  Read more

Resolving Goldfarming through Concealed Validated Auctions

Guest post by Jan Pontzen on a RMT free trade mechanism for MMORPGs and other virtual worlds.  Read more

The Genesis of the Virtual Goods Model

Guest post by Matt Mihaly on how the virtual goods sales model was born.

Matt Mihaly is a CEO and Creative Director of Sparkplay Media and Chairman (formerly founder, CEO, and Creative Director at Iron Realms Entertainment.   Read more

The virtual goods/microtransactions model dominates Asia and is now far and away the most popular business model for online games in the West with the meteoric rise in popularity of games on Facebook and MySpace. Twelve years ago, in ’97, I pioneered this model at the company I had founded two years earlier – Iron Realms Entertainment – out of pure necessity. This is the brief history of how the virtual goods model, and soon thereafter the dual currency model, came to be.

Update on Chinese Gold Farming

The following represents some notes and comments building on my earlier research report on gold farming. It draws mainly from a couple of interviews kindly given by Anthony Gilmore, who has been filming in China for his forthcoming documentary, Play Money: http://www.playmoneyfilm.com. Also from Rowenna Davis' earlier article that interviewed both myself and Anthony.   Read more

ARPUs in social networks and social games: An acronym that needs scrutiny

How do you monetize social networks and social games? Similar to the online games space, there is a growing consensus that the answer is by complementing advertising with a virtual goods micro-transaction business model. Social networks and start-ups are positioning themselves accordingly. Hi5 has announced its own virtual currency. Facebook is now implementing “credits” and MySpace seems to be working on their own payments platform.  Read more

Guest article: Are secondary markets profitable for item sales based businesses?

The question whether secondary markets limit the profits of a monopolistic seller has generated a lot of controversy over the years. The “conventional wisdom” is that secondary markets eat manufacturer profits because used goods create competition for new goods by acting as close substitutes. Instead of buying a new good, consumers can choose to buy used goods instead; especially so if they offer better value in terms of price. However, it has also been shown that secondary markets have other implications as well and therefore the conditions under which secondary markets are detrimental to the profits of a monopolistic supplier are subject to debate. In this essay, I will review some of the previous microeconomical work on secondary markets and then seek to determine how their results apply the context of virtual asset markets. The key question would be “how do secondary markets affect primary market profits?”  Read more

Guest article: Game Commerce from virtual item sales to gold farming

The following Guest Article by Steven Davis is an extract from his recently published book, Protecting Games: A Security Handbook for Game Developers and Publishers. The extract is from Chapter 22: Game Commerce: Virtual Items, Real Money Transactions, Gold Farming, Escorting, and Power-Leveling


Money makes the (real and virtual) world go around. In some sense, money itself is the oldest, most widely used virtual item. Because money is so universally understood, virtual currencies are widely used as incentives in online games. Whatever one's views are about “consumer culture,” we all seem to have a Pavlovian response to accumulating more things.   Read more

Diablo II economy in chaos as Ladder season ends

Diablo II Diablo II is a game released by Blizzard Entertainment in 2000. In the game, the player travels in the world of Sanctuary on a quest to defeat the three prime evils, Mephisto, Diablo and Baal, while fighting their demonic minions along the way. The original game ended in defeating Diablo, and the quest of defeating Baal was added in 2001 as part of the Lord of Destruction expansion.  Read more