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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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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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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Entropia Universe Sells Virtual Space Station for Record-Smashing $330,000

300px-Crystalp Earlier this week we wondered what 2010 might show for emerging and expanding virtual economies, especially those related to free-to-play (non-subscription) worlds like Second Life.

According to a recent report in the venerable Virtual Worlds News, the virtual economy is setting new records only a week into 2010 after a virtual region in Entropia Universe sold for over $330,000!

Pixels and Policy investigates.

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Is 2010 a Breakout Year for Virtual Economies?

A2(1) Thanks to enterprising social media developers, virtual economics hit the stratosphere in the second half of 2009. Companies like Zynga turned low-overhead, pay-for-premiums games like Farmville and Mafia Wars into a profit stream stretching into nine figures.

Can this fantastic growth in the value of virtual objects and virtual economies continue into 2010, or could developers be headed for their own virtual financial crisis?

Pixels and Policy does a little digging and takes a look at a recent Forbes interview with Slide CEO Max Levchin to assess the growth potential of the virtual economy in 2010.

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Industry Increasingly Doubtful Over Second Life’s Sustainability

Beatlefest_Blarney_10-09-2006_1077x808pxBashing Second Life is a time honored tradition, but a recent piece critiquing the world's long-term potential may be the most compelling.

Michael Hickins, a writer for InformationWeek, combines the concerns of various media outlets and virtual world skeptics into a readable and disconcerting piece on the potentially grim future of Second Life.

Then again, skeptics have been calling Second Life's death for years. Pixels and Policy investigates whether Hickins has the proof behind his predictions.

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Reuters and the Flawed Research Value of Virtual Worlds

Have a puzzling economic problem or a social program you'd like to beta test before dropping it on the American people? Reuters recommends you turn to virtual worlds as a possible test-bed for real-world policies.

In a recent article, Reuters jumped on Edward Castronova's well-trod "Metaverse as a laboratory" bandwagon, even calling up the respected Indiana University virtual worlds researcher for his thoughts on the utility of virtual worlds:

"We can do controlled experiments in virtual worlds, but we can't do that in reality," said Castronova.

"Controlled experimentation is the very best way to learn about
cause and effect. We are on the verge of developing that capacity for
human society as a whole."


To find out why Reuters is out to make Castronova skeptic Dusan Writer squirm, read on below the fold.

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Northern Kentucky Univ. Gets a $6 Million Virtual Worlds Mecca

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Northern Kentucky University is joining South Dakota State University and St. Paul College in Minnesota as a pioneer in the virtual world revolution.

According to an article in Scientific Computing, Northern Kentucky University just received a $6 million grant to construct a virtual world informatics center complete with the academic-sounding CAVE: computer assisted virtual environment.

Read on to find out how NKU is poised to change the model of how virtual worlds research is conducted, and why the Midwest will soon be in the driver's seat of academic research into virtual worlds.

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Virtual Economy Booms; Real Economy Busts

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The future world reserve currency?

Second Life may know something we don't, if this morning's report from the disconcertingly-titled Manolith is any indication.

It appears the economy of Second Life has surpassed that of the real world by a large margin, as the real-world recession fails to penetrate the confines of the Metaverse. Investors wiped out by the subprime mortgage scandals may want to pay attention.

The mad scientists at Linden Lab report stunning growth in the virtual world, with Linden – and real – Dollars flying out of wallets to the tune of $50 million per month.

That makes the locked-up credit markets of developed nations seem flimsy by comparison, with high interest rates choking real-world borrowing. Read on to learn how virtual economies are evading the real-world financial fallout.

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