In a world first, University of Manchester professor of "development informatics" Richard Heeks has published a study considering the plausibility of virtual world "gold farming" as an international development strategy. The paper, titled
"Gold Farming: Real-World Production in Developing Countries for the Virtual Economies of Online Games" quantifies the trade in and measures the stability of virtual world currencies so as to assess the viability of the practice as a tool for international development, particularly for the development of information technology infrastructure and skills. This "real money trade" (RMT) market is worth at minimum
over a billion dollars per year, and estimates place the GDP of all virtual game economies combined at over
$25 billion/year, larger than the real-world economies of Nepal, Lebanon or Lithuania. China now includes virtual world economies in its yearly GDP, while the US and Korea now have specific taxation schemes applying to those who claim "virtual gaming" as the primary source of their income.
For the uninitiated, "gold farming" is the practice of purposely playing virtual world games like EverQuest, World of Warcraft and others to earn in-game gold that is tradable and convertible to real-world currencies. The globalization of wage labor has brought these games to developing countries where impoverished citizens are recruited by golf farming firms and paid fractional amounts relative to the value of the in-game gold they earn (pennies on the dollar, or less). Maximizing the accumulation of gold usually requires the player to engage in hours of senselessly repetitive activity. This gold is then sold by the gold farming firm through currency exchange websites to wealthy first-world gamers willing to pay real currency to avoid the time spent earning the gold themselves.
Heeks provides a typical example of the money involved in this transaction. In the case of World of Warcraft, the world's largest "massively multiplayer online role playing game" (MMORPG), it will take around 10 hours of gaming to earn the 1000 gold pieces that is typically valued at around $US50. As the player in the developing nation is typically paid just a few cents per hour, most of the money goes directly to the farming firm. It is classic sweat-shop economics, and well documented in an upcoming documentary entitled
Chinese Gold Farmers, a preview of which is available on YouTube.
Global estimated value of RMT
For it's part, the developer of World of Warcraft, Activision-Blizzard, officially condemns the practice of RMT as a form of cheating and recognizes the moral problems in exploiting unorganized off-shore wage labor. Players caught engaging in the practice risk having their accounts permanently disabled, a capital form of punishment given the 1000's of hours of work that goes into building in-game assets. With more than 10 million subscribers and billions of transactions however, it is presumed that most incidental RMT continues unchecked. In response, Acitvision-Blizzard is gradually altering the very structure of the game to reward players with non-convertible achievement tokens rather than gold. However, this has the recognized effect of reducing legitimate in-game economic activity between players, which many see as a fundamental part of the fun.
Activision-Blizzard might also be in the minority in condemning RMT as other game developers see it as a way to recoup their development and upkeep costs. Sony Computer Entertainment operates a number of MMORPGs centered around their Station Exchange, a Sony-run marketplace that openly allows gamers to buy and sell game related equipment and gold for real money. In addition to monthly subscription fees, Sony takes a cut of each transaction. In theory, legitimately run exchanges like The Station Exchange should cut the middle men out of the picture, but foreign players are often blocked from creating accounts and don't have the sophistication to bypass such restrictions. As well, the practice of "micro-transaction monetization" is blooming into ever smaller market niches. It is already a mainstay business model in more casual web browser-based strategy games like Travian or Ikariam, wherein players can exchange small amount of money (typically between $5 and $50) to buy in-game assets and resources that leapfrog them ahead of those players who otherwise enjoy the game content for free.
In my mind, the real problem with RMT is linked to the reason it occurs: these games are designed to provide rewards as a function of time played, rather than for the pure skill (that should be) involved.
August 8th, 2008
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