Economics of Online Gaming

PGillingwater writes "The Walrus has a nice article up about the economics of on-line gaming communities. Starting with the original 2001 paper which shows that Everquest has a GNP greater than India, Bulgaria and China, and going on to the billionaires of Ultima Online and the Mafia takeover of The Sims. "He began calculating frantically. He gathered data on 616 auctions, observing how much each item sold for in U.S. dollars. When he averaged the results, he was stunned to discover that the EverQuest platinum piece was worth about one cent U.S. -- higher than the Japanese yen or the Italian lira. With that information, he could figure out how fast the EverQuest economy was growing. Since players were killing monsters or skinning bunnies every day, they were, in effect, creating wealth. Crunching more numbers, Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.""

Comments

Creating Wealth

[ajakk]

If each platinum piece on Everquest == 1 cent real life, then the programmers should create 1,000,000,000,000 platinum pieces in the game and give it to themselves. Then they would be rich!!!

Great another reason

[WordODD]

Just what the EverCrackHeads need, another reason to stay glued to the computer. While I have never played the game myself, other then for a few minutes just to see what it was all about, I have had friends literally stay in the house for weeks so they could play the game. It is amazing what a hold it can have over some people. My friend honestly did not want to stop playing because he feared he would miss out on something going on within his "clan". How ironic that he missed out on so much that happened in the real world with his "friends" and "family".

Too much time...

[leandrod]

> Perhaps I am taking this too seriously, but some people sure do have too much time in their hands.

The article fails to take into account that those EQ platinums aren't conversible. Meaning, you can auction them off in eBay, but only a minority will ever be. If they were a real currency, not necessarily the US dollar, then they would be convertible and these measurements and comparisions would make sense.

In that case, the value of the EQ platinum as a commodity would be much, much lower.

Re:Too much time...

[Little Hamster]

> The article fails to take into account that those EQ platinums aren't conversible. Meaning, you can auction them off in eBay, but only a minority will ever be.

How is that not conversible? How many people holding the US dollar or the Japanese yen are selling their money on the foreign currency market?

>If they were a real currency, not necessarily the US dollar, then they would be convertible and these measurements and comparisions would make sense.

The exchange rate depends on the supply and demand of a currency, not on some arbitrary conversion factor (well unless you are talking about non-floating currency such as China's RMB). If there are a lot of a particular currency on the market (eg if some big finicial inventment company decides to sell due to falling interest rates), its price will fall against other currencies in the market.

Everquest and Money

[MandoSKippy]

I played EQ for a year and a half, averging 20 hours a week. (Quite a bit as I look back) When I "got out" I sold my character on a auction site and got 800 dollars for it! I couldn't believe it I thought that it was awesome money. Then I realized if I averaged out my time and what I got for my character, it was only like 50 cents an hour. That being said, my average was more like a "minimum" every week with some weeks being > 35 hours of game play. The other thing this study doesn't take in account for is that Sony ACTIVELY (when I played, things may have changed) fights out of game transactions, and selling in game money and items for real money. So your "PLAT" may be worth a cent each, but good luck cashing in!

isnt this

[Dr.Knackerator]

like valuing every ticket in a theatre based on the price the touts are charging outside the event?

Uh huh

[Dark Lord Seth]

Castronova found that the average player was generating 319 platinum pieces each hour he or she was in the game -- the equivalent of $3.42 (U.S.) per hour. "That's higher than the minimum wage in most countries," he marvelled.

Not bad, however... You do need to pay for a constant internet connection, ( EQ here, so some light form of broadband ) a PC, electricity and one EQ account. I don't think that with these constant costs substracted, EQ will be a very good job...

Deepanalysis

[Moo Moo Cow of Death]

Since I can't reach the page, I don't know why he only used 616 auctions (or however many he used). But you can use a tool obtained HERE for about $100 or so that will analyze Ebay listings for the past 2 weeks or so. Using this data you can get a MUCH more accurate reading that a measly 616 listings, which aren't even close to being correct since something around at least 80% of the business goes through IGE/Yantis these days. And don't forget Playerauctions which I can't access here at work due to the proxy but they don't get mentioned hardly at all nowadays despite the large amount of traffic going through them. If you want to read through more reliable reports you should instead roll around HERE (terra nova blogs) where doctors, lawyers and all sorts of other people that have been analyzing this stuff before you created your first level 1 female elven monk, lurk around.