Online game economies weathering real-world financial blizzard

Millions of Americans are spending more of their time these days in Azeroth, a land where they don't have to worry about economic crises. There, you can make a living as a tailor, healer or equipment vendor. And if you find yourself falling on hard times, you don't collect welfare. You go out and kill more gold-toting monsters.

Azeroth, the fictional world in which the massively multiplayer online (MMO) game World of Warcraft is set, is bustling with activity. Gearing up for the release of the second expansion pack, World of Warcraft: Wrath of the Lich King, which hits stores today, the game's 11 million players worldwide logged more hours in the virtual world than usual -- a phenomenon seen by developer Blizzard whenever an update is imminent.

Activision Blizzard, the parent company that lost more than $4 billion in market value in just one week last month, is looking for a huge boost from the update to its best-selling title. "Historically, recessions have kind of affected us less -- not that we're unaffected," said Rob Pardo, Blizzard's executive vice president of game design. "But I think gaming, in particular, has a lot of value for the money."

The new version adds a slew of original items and quests for players to complete, as well as upping the maximum level a character can achieve, from 70 to 80.

One might think the U.S. economic snowstorm would cause users tight on money to cut the $15 monthly fee from their budgets faster than ...

... Web celeb Kevin Rose canceled his cable TV. Pardo says that's not the case.

"It hasn't been something we've seen happen," Pardo said when asked about an increase in cancellations. "It may have happened at a small, small percentage level, but not really noticeable compared to the incoming players."

When you realize that a large population of World of Warcraft players are signed on more than 60 hours a week -- more time than most people spend at their full-time jobs -- $15 a month begins to seem pretty reasonable. And for some who auction off their high-ranking characters and rare items, the game can turn into a profession of sorts.

Though Pardo says the company strictly forbids selling in-game content for cash and will ban offending users, EBay and specialty websites such as ToonStorm.com are populated with virtual goods selling for hundreds of dollars. Yes, real dollars.

Many players detest character peddlers because they feel the practice minimizes the effort they put in to build their own legitimate characters. World of Warcraft is supposed to be separate from the real-world economy, after all. Blizzard doesn't even police its own financial system.

"There's no cap on how much gold can be inserted into the economy because at the end of the day, it's just a game," Pardo said. "It's not quite like we're the Federal Reserve. There are some different MMO games out there that really try to run their economies that way."

Second Life is one of those games. Time spent in that virtual world is more like traveling to a foreign country. U.S. dollars still have value there -- once converted into Linden dollars, the in-game currency.

For the last year, the value of the Linden dollar has remained fairly stable at 265 L$ for every USD. But considering the USD has been weak for the last few years compared with other currencies, that could translate to relatively feeble game money.

Much like the U.S. housing bubble, Second Life is not without its own real estate price fluctuations. Developer Linden Lab announced last month that it would be increasing the price of certain areas of land by two-thirds.

But players needn't worry about any emergency bailouts in this virtual world. While companies including Reuters and American Apparel have bases set up in the game, Linden Lab is really the only company on which the virtual economy relies, and it's turning profits, Chief Financial Officer John Zdanowski said in an e-mail.

"Unlike the real world, there are no companies in Second Life whose operations could affect the entire economy other than Linden Lab," Zdanowski said. "Despite the chaos in the world's economies, economic indicators for Second Life remain strong."

You know, John McCain said the U.S. economy was "fundamentally sound" right around the time the banks were failing. Just saying.

-- Mark Milian

Photo of World of Warcraft: Wrath of the Lich King, from Blizzard

Comments

hi..
i just my wrath of the lich king CD keys from gamersloot.net last i checked they still have stock. they are sending out keys now.

[Fan of the game]

wow is a good mmorpg game. it is seen by some as addictive and i see that as true. i hope that the expansion pack doesn't interfere with the schoolwork of my fellow peers, as some have skipped to play the exp pack.

[pawan]

how u download this games? lol

love it

[forsas77]

nm,n,n,k,k,kk

[Game World]

It can be a good thing to make a financial investment inside of a virtual world when you look at the economical climate in the real world choosing to make a solid investment with a game company can be a smart move to make. On the other hand you really have to do your homework because certain platforms like Second Life for example tend to lure people to their game telling people they can buy land and make money but then suddenly increase the fees for that land with 67% like they have done a few weeks ago. One should really be careful and the best thing (just like in real life) is to spread your investments you make in online worlds over different worlds. Many new game platforms are getting online these days so people will have a wide range of choices where they want to settle down to have a virtual life which is a good thing. Spreading your assets over different platforms is a wise choice. In the past there wasn't a lot of choice, certain platforms had a monopoly, this is about to change now so it will be better for the player or consumer to get a fair deal for their virtual investments they make online.

[Paul Berger]

Very cool article! Online games are truly fun; I've been playing Call of Duty 4 for a long time and have taken a liking to online casinos such as BetSoft Gaming. Definitely something fun to do when you don't feel like going out.

Thanks again for the article!

[WoW Fan]

while most people are cutting spending on many things like fuel, shopping, travel, etc, don't expect gamers to cut spending on subscriptions, game cards, and wow gold.

[WoW Accounts]

I think that WoW is quite an interesting MMORPG game. I have tried my hands on this and enjoyed playing them a lot. :)

[wow account]

Hey,its an amazing article about MMO with great graphic an sound track......

[wow accounts]

this financial mess is a real pain in the rear. i wish it would just end soon.