In an earlier post I suggested a business model in a virtual world based around establishing a manufacturing industry whose products were sold for gold in the world, and/or real money to players. Under this model the business process of the manufacturer is still separate from the economy in which the manufacturing occurs.

i.e. the manufacturing occurs in the virtual economy of the MMORPG, but the business process occurs when the gold gained or the items made are  sold by credit card in the real world. The virtual economy is arid and perhaps quite limits the ability of manufacturing to succeed there, though some researchers are finding that real economic “laws” function in virtual worlds.

I wonder if there is a way that activity in a virtual world could be construed directly as real money, so that all economic transactions in the virtual world functioned with real money. Under such a system, all objects and items collected in game could be sold in game for money, which would start out as a pittance at a low level and gain value at higher levels. Obviously for the game company to make a profit they would need to arrange the licensing fee kind of like life insurance, so that at low levels your monthly subscription could not possibly be less than the amount of money you made, but at high levels you might make more money than your subscription fee – the game company would essentially be paying high level characters to play. Further profit might arise from the swarms of players who (like me) pay a few months’ subscription fee and then drop out without ever being economically burdensome. 

Of course the gaming company doesn’t have to pay real money in game to create resources (like items on monsters, or herbs) though it does have to pay real money in the real world to developers to design these things. Resources it created would act like a kind of money supply, so that (for example) if they increased the supply of a certain herb the value of potions made thereof might decrease (as one would expect). But within this corporate-controlled world, one would be able to make and sell potions for real money, with the lure being that the more you play the more chance you have of neutralising your subscription costs or even making money. 

I can only think of one real-world business model under which such a virtual economy might be considered sensible by a company – if the company were paid by third parties to put advertising in the game. If it were, then it would serve to benefit financially from any system which encouraged people to play for longer hours, since it would expose more  players to more advertising. I can’t imagine such a game world appealing in fantasy settings, but a bladerunner-style sci-fi setting would certainly be able to have in-game advertising without losing its flavour. I suppose something like this might also work in a synthetic world like Second Life. 

The other way such a business model might work is if beginning players were allowed to bring real-world money into the game to buy starting (and subsequent) equipment. The game company would then make money from players (on top of subscriptions) to sell them the equipment they need for their gaming. Players would then  have to make much stricter decisions about the type of equipment they are willing to buy and how often to use it, since they would be burning real money every time they used a potion, etc. If the company felt it wasn’t making sufficient profit from its own stores it could make raw materials scarcer. It could even make licenses to run stores available to actors from outside the game, along with licenses to change the world, and to make new items. Other gaming companies could buy these rights and set up their own adventures in their own sections of the world, with their own flavour, and charge a customs tax or duty for characters to enter these realms.

Under this model a gaming company could even license expansions out to other companies, so that those companies just build on a new world or a new castle/kingdom, etc. Powerful players could be given the chance to buy a section of land, build a fortress, and defend their treasure – with the incentive being, of course, that failure to build good traps and install powerful monsters would lead to loss of treasure, which would correspond with real money (or at least historical investments).

Around these bones the flesh of a fully-functioning virtual economy might actually grow. But the risk for any company which established such a business would be too great, I think, for it to be considered by rational people. But that, I suppose, is what random blog-thoughts are for… irrational ideas from irrational people…