Masood Mortazavi's Weblog

Monday May 16, 2005

[ Networks ] Recent Study on Online Computer Games

This morning, my daughter demonstrated to me what she had been telling me over the weekend. She pulled up an eBay page of running auctions of virtual Runescape game assets. On the first page, one virtual asset was selling for more than $1000. Other items were listed in British Pound and in Australian Dollars.

There has been a lot of news on such auctions. Surely, these may never become as revenue generating as the spectrum auctions but they do deserve thorough study. I recently wrote a little entry about the auction of virtual gaming assets, and this morning, a recent entry on professor Lawrence Lessig's blog drew my attention to a study by OECD's Working Party on Information Economy, released on May 12, 2005 and exploring the economics and cultural ramifications of online computer and video game industry.

Here's the first paragraph of the report. For more, go to the original, which is available for free.

Computer and video games is a young industry with rapid growth underpinned by technological development. The global market in 2003 was estimated to be over USD 21 billion compared with USD 32 billion for the recorded music industry; US games revenue in 2001 surpassed film box office ticket sales. The main segments in 2003 were the console off-line (73%) and PC-offline markets (17%). Online and wireless games are still relatively small (6.4 and 3.4% respectively). However, there is a trend towards online games in PCs and consoles. New games are released with some online capabilities, and it is expected that nearly all will become at least in part online. Computer games are R&D and innovationintensive and games programming and design are highly skilled occupations. Market expansion is coming through development of online network technology, diversifying content and developing large-scale online games. The industry is also increasingly seen as strategic by major media, Internet and consumer electronics firms.

In the meantime, it is worth nothing that OECD's Working Party on Information Economy has also conducted a whole series of other related studies on digital content.

OECD study does seem to miss the important trend in online game communities I mentioned at the beginning of this entry—i.e., the auctioning of virtual game assets. In fact, it may have been worth noting that some online games, such as Runescape, seem to have been designed to enable exchange of virtual assets. Such ability to exchange unleashes all that comes with it, including real auctions performed with real money.

Online Games, Economics, Virtual Assets, Auctions.

2005-05-16 11:34:48.0 -- Comments [3] ; Permalink ; Trackback.

Comments:

I can't come up with a link for it here at work, but recently SOE(Sony Online Entertainment) announced a plan for items in their game(s?), either Everquest or Everquest II, to help enable the selling of games for money. I think part of it was to cut down on the amount of fraudulent sales, but I also imagine they want a piece of the pie, so to speak.

It will be interesting to see where this goes in the future.

Posted by Jeff on May 16, 2005 at 12:52 PM PDT #

Yes, you're right. Sony did this partly to create some level of control in the sale of virtual game assets. Such sales, either through auction or other means, pose interesting questions for the online game economics. Sony's main reason, other than what you noted, appear to have been the problem they were facing when servicing customers who had fallen victim to fradulant virtual asset sales. In the words of some executives, it had become a customer service nightmare, on which Sony could exercise no control unless it could start its own controled auction site.

I think I have the links for the Sony auction site in an earlier weblog entry noted above. The weblog entry also includes links to some early scholarly studies of "virtual" economies.

Posted by M. Mortazavi on May 16, 2005 at 01:30 PM PDT #

Hi, You made the comment about people selling virtual items online and making real world money. This is great for some people, but in almost every case it is against the TOS of the online game itself. I personally don't have a problem with people doing this, but seeing as it is against the rules of the game that were agreed to, it just doesn't seem right. By the way, did you know that Runescape is the number 1 searched for video game term on Yahoo. And it has been that way for a long time. Check out this great guide if you need help playing the game. Take care. Runescape Money Making Guide

Posted by Runnie on December 25, 2005 at 09:37 PM PST #