Virtual World and Real World - Birth of Virtual Economy

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Birth of Virtual Economy

When we have first heard about the online item trading in the late 1990s on eBay, it was surprising because of the fact that “virtual” game item is exchangeable for “real” money. Item trading through eBay must be one of key aspects that refer to the collapse of boundaries between real economy and virtual economy. Through the real money trading (RMT), we can see that entirely different form of economy is established, regardless of game industry’s expectation. While game industry sells software and game environment to game players, players trade in-game (by-) products with other players. In the same way, while MMORPG players pay monthly subscription to game industry, players are given the monthly right to develop their virtual items, to acquire competent skills, or to slay the giant monsters. Thus, there are two distinct game economies – out-game economy (game industry) and in-game economy (RMT). This seems to mean that game players are independent of the game rules and restrictions, coded in game software and its network environment. As if they were independent capitalists, entrepreneurs, or self-employed workers, they trade various resources from virtual world. According to Julian Dibbell, those resources include “high-powered weapons, invincible armor, choice real estate, rare collectibles, or basic commodities like lumber, leather, metal ore, and of course, money.”¹ This kind strange trading is possible, because “there are many MMO [MMORPG] players who, lacking the time, the patience, or the ability to acquire fantasy goods through fantasy means, will instead purchase them form other players with cold, hard, and real-life cash.”² Furthermore, Dibbell himself proves that to earn a living solely by trading game goods for real cash is not just an imagination.

Real Money Trading of Virtual Goods

However, the scale of RMT has grown so large that we cannot neglect its effects on our real economy. It has no meaning now to say that game business has outgrown movie industry. RMT became a big business model, not limited to small deals between individual players, to the extent that “worldwide, annual sales of virtual goods run to an estimated $880 million and growing.”³ According to Castronova’s estimation, “the collective volume of annual trade in synthetic world is … almost certainly above $1 billion” which “exceeds the total sales of a few real countries.” If we apply this estimation to total synthetic world production, we come to know that “GDP per capita inside synthetic worlds is far higher than in the real world’s poorer economies, such as those of India and China.”⁴ Considering these economic factors, there is no essential difference between our world and the virtual world in that they are sharing the same value system and the “institution of money.”⁵

With the growth of virtual world and its economy, the problem of RMT among online game enthusiasts became quite controversial. Those who are opposed to RMT in the game world criticize RMT as a kind of cheating with which fair chance of achieving higher level character or item throughout the game play is taken away. They believe that RMT enables the offline rich to be the higher rank online power and that it ruins the nature of the game. In addition, though lots of gamers are actively supportive of RMT, whether through direct purchase from other players or through item sales sites such as IGE.com, most of the online game companies consider RMT an illegal activity since it is against the EULA (End User License Agreement) and the ToS (Terms of Service). For instance, section 8 of the World of Warcraft ToS clarifies illegitimacy of RMT: “Blizzard owns, has licensed, or otherwise has rights to all of the content that appears in the Program. … Blizzard does not recognize any virtual property transfers executed outside of the Game or the purported sale, gift or trade in the ‘real world’ of anything related to the Game. Accordingly, you may not sell items for ‘real’ money or otherwise exchange items for value outside of the Game.”⁶ But it fails to convince the gamers not to trade the virtual goods obtained through many hours and hard work, even though the game companies have all the rights of intellectual property. The complexities involved in RMT and intellectual property law give rise to a series of lawsuits, but actually most of game companies leave RMT untouched. For, after all, as far as it does not destruct the economic structure of the games, RMT will facilitate the games by fueling the economy and making it persistent.