Virtual economy – buying online content that doesn’t exist in real life
A virtual economy is an emergent economy existing in a virtual world exchanging virtual goods in an internet game. Basically it is the economy that exists within online games, usually massively multi player online role-playing games (MMORPGs) like World of Warcraft or life simulation games like Second Life.
What interests me is not the economy that goes on within the game, but the real life money that can be exchanged to buy online content. Type in “World of Warcraft gold” into Google and you’ll see the multitude of companies that sell this virtual gold for a real life profit (even though World of Warcraft game developers Blizzard prohibit it).
Entropia Universe, another massively multi-player online universe, “uses a micropayment business model, in which players may buy in-game currency (PED – Project Entropia Dollars) with real money that can be redeemed back into real world funds at a fixed exchange rate of 10:1. This means that virtual items acquired within Entropia Universe have a real cash value, and a participant may, at any time, initiate a withdrawal of their accumulated PEDs back into real world currencies according to the fixed exchange rate, minus transaction fees, the minimum amount for a withdrawal is 1000 PED. As a result, revenue of the business is largely generated from activities within the virtual universe.” (from Wikipedia) To an extreme, in 2004 a 23 year-old gamer bought an island on Entropia for U.S. $26,500 and made his money back in under a year by selling land to buy virtual homes and taxing other gamers to hunt or mine on the island. Another gamer bought a virtual space station for U.S. $100,000 (more from the BBC here and here).
Zynga, the online game maker behind Farmville, CityVille and Texas HoldEm Poker played on Facebook, is worth an estimated $10 billion dollars. They make most of their revenue by charging small amounts of money to buy virtual items in the games (more info here about their plan to go public).
The virtual world Second Life has its own economy with its currency Linden Dollars, which can be exchanged for U.S. dollars (approximately L$265 per US$1). In 2006, Second Life real-estate mogul Anshe Chung was on the cover and interviewed in Businessweek here. At the time of print Chung’s firm had virtual land and currency holdings worth US$250,000.
It is possible to make enough money to live comfortably by buying and selling content that doesn’t actually exist in real life. Virtual online shopping that has direct links to your not-so-virtual wallet.