While the big graphical virtual worlds developers grapple with each other about standardizing the virtual experience for consumers, several big social media websites are steaming towards currency standardization with surprising cooperation.
Pixels and Policy reports on how several social media sites are preparing for the launch of a currency exchange in early 2010. It's going to change the way social media does business.
Creating a Foreign Exchange for Zynga Dollars
A recent article in CNET details how social media websites IMVU and MyYearbook are well into the process of constructing a virtual currency market to better facilitate transactions between websites. The joint project – currently titled "Currency Connect" – aims to foster a big change in the way social games bring in money:
Currency Connect is billed as a "cross property virtual currency exchange" system similar to how you would change U.S. dollars into euros if you were traveling in Europe.
Users simply swap their currencies depending on what site they are on. Overall this is not a bad idea as I still find it surprising that users pony up real money for virtual money that can never be taken out of a specific site.
Currency Connect may seem overambitious, but if it succeeds, the project could serve as a much-needed catalyst for encouraging the easy swapping of currency across virtually every social media game. Think of the project as a Lindex that includes other virtual worlds in addition to Second Life – a truly global virtual currency exchange.
Low on FarmVille Dollars? Why not convert some of your Mafia Wars currency at a predetermined exchange rate? Since earning Mafia Wars currency is much simpler than amassing the slowly-accumulating FarmVille dollars, you'd best be prepared to fork over a pretty penny for the higher-valued Farmville bucks.
As the article points out, a successful launch could spur PayPal – the biggest name in purchasing goods online – into providing a universal virtual currency. PayPal would certainly be the heavy hitter in any future currency exchange, perhaps even powering the mechanics behind the trades, and the weight of PayPal would surely bring in names like Facebook, MySpace, and pay-for-perks worlds like Runescape and Evony.
A Virtual Market Economy
These browser-friendly social worlds are blossoming into revenue-generating monsters, and a true virtual currency exchange would further remove constraints that limit the market potential of games like Evony and FarmVille.
What constraints, you might ask? Simple: Gamers invest a great deal of time in their Mafia Wars or FarmVille rank, and aren't keen on starting over from scratch at another time-consuming online game.
By opening up the virtual currency markets to easy trading, gamers can now use their progress in a game like Mafia Wars to purchase a helping hand in Evony, and vice versa. In effect, creating a virtual currency exchange like IMVU and MyYearbook have planned would mean your wealth and success in one virtual world would become transportable to other participating worlds.
What about speculation? Could players invest real money into virtual currency in the hopes that their holdings will appreciate compared to another game? Does the virtual currency exchange mean that virtual currencies can also be cashed out into real-world money at a market-driven exchange rate? If so, wouldn't virtual currencies also qualify as investments in the same way foreign exchange trading does?
Developing a virtual currency trading mechanism opens up a lot of questions about the platform of social media gaming. Will consumers jump at the chance to move their virtual coins around with the same eye to profit that they focus on a child's college fund or their own sagging stocks? Most of all, will competing in a world where long-time gamers can throw their wealth around be as fun as the current environment?
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