Virtual Economies Remain Badly Flawed Research Tools

1229493866106_us_backyard1_997 There's been a lot of work done on virtual economics over the past few years, from Indiana University studies to the Virtual Economy Research Network.

These researchers all use virtual economies as a test-bed for real-world economic policies, as well as testing grounds for real-time experiments on price, economic growth, and wages.

They had best be cautious. As Pixels and Policy reports, virtual economies are far from the hailed research tools some virtual world cheerleaders think.

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The Risky Legal Waters of RMT in Social Media Games: A Zynga Case Study

Pixels and Policy previously reported on the potential risks of building an online gaming platform around the concept of real money transactions, or RMT's. Customers have proven willing to shell out large sums of money for virtual goods in the form of microtransactions, the $1 – $5 purchases common to games on Facebook and MySpace. So what's the problem?

There's an emerging legal question regarding RMT, and it centers on the growing partnership between online game developers and marketing agencies. What happens when a developer offers "free credits" for filling out "trial" offers? As social gaming titan Zynga found out, offering another venue for RMT is proving far more complicated than planned.

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Why Do People Pay Real Cash for Virtual Items?

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Here's a question many researchers have stumbled over at one point or another in their careers as pioneering virtual world analysts: Why do people pay real money for virtual items?

Pixels and Policy takes a look.

Digital Growth, Real Revenue

The virtual economy is certainly more than an aberration, and with Second Life bringing in nearly $500 million a year in virtual sales alone, the virtual economy may even be doing better than the real economy!

A new report published in the Virtual Economy Research Network argues that Second Life and other virtual worlds have such healthy real-to-virtual economies because of one main factor: social pressure.

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Facebook Integrates Its “Credits” System into Zynga’s Vastly Profitable Games

One of Pixels and Policy's favorite discussion areas is digital integration – whether we're looking at how augmented reality is finding a niche in the music industry or how virtual currency standardization is moving much quicker than many suspected.

Facebook's recent announcement that the social gaming titan Zynga would be accepting Facebook's pay-to-play "credits" in addition to Zynga's PayPal currency transfer method went relatively unnoticed, but it could be the catalyst for more major changes in how we fund our virtual lifestyles.

Pixels and Policy investigates.

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Developers Should Open Virtual Goods Markets

Gamestop-sign We recently wrote that developers were fighting a failing battle by trying to restrict secondary virtual goods markets through tools such as account banning and eliminating in-game trade.

Now an article published by the CIOL Network seems to agree: Fighting the market in in-game goods will not only ruin the experience for honest players, it won't work.

Pixels and Policy takes a look at what CIOL recommends, and whether or not their recommendation could soon come true.

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How Can Developers Combat Secondary Loot Markets?

Wow-gold-guide-300 The California Gold Rush of 1849 flooded the West with prospectors chasing dazzling riches.

It also created a boom market for general stores, taverns, brothels, and government where previously there had been only desert.

If the current boom in the profitability of virtual worlds is any indication, we may be seeing a Gold Rush for by 21st Century standards.

Pixels and Policy investigates how virtual goods dealers are growing rich supplying busy gamers with the rarest in-world items and weapons, and why this stands to change the future of gaming and commerce.

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Investment in the Virtual Goods Market Triples in Size Over 2008 Figures

We kicked off 2010 with our report on how the virtual goods market – the virtual farm seeds and dragon-slaying armor you buy with real currency – could hit $5 billion in just under five years. But how has the virtual goods market grown over the past year, and is it an indicator of future trends?

Pixels and Policy takes a look at how the market for swords, armor and Farmville equipment exploded over 2008 and 2009, and why 2010 looks great for the continued expansion of virtual commerce.

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Manual Labor in Virtual Worlds: How Fair Are In-Game Auction Houses?

One of the most frustrating times in an MMORPG player's digital life is "grinding" for experience to attain a game's highest levels. This often entails killing hundreds – if not thousands – of enemies over the course of days and weeks to obtain a small advance in the character's level and vital statistics.

But what happens when in-world auction houses like those in World of Warcraft, EVE Online and other games allow time-strapped players to contract out portions of quests to be completed by others in exchange for money?

Pixels and Policy looks at some interesting emerging research on the subject.

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South Korea’s Supreme Court Decriminalizes Real Money Transactions in Online Games

As many unlucky MMORPG players can attest, most subscription-based online games come down hard on players caught purchasing in-game currencies with real money. World of Warcraft bans players caught buying game gold, and and Everquest does much the same.

Now a new legal decision by South Korea's Supreme Court could be changing the balance of power decisively in favor of consumers.

Pixels and Policy investigates.

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How Much is the Virtual Economy Worth? Try $5 Billion.

The BBC has an interesting report up that puts the virtual economy's banner $30 million in virtual holiday sales into perspective: Within five years, the virtual economy of the United States alone could be worth a staggering $5 billion.

Pixels and Policy takes a look at how the virtual economy is set to expand through 2015, and what this means for real-world business.

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