UPDATED 12:29 EDT / SEPTEMBER 03 2012

NEWS

Guild Wars 2 on the Virtual Gaming Economy

Virtual items have become a part of the mainstream Internet culture by way of massively multiplayer online games (MMOs) and social games such as hook into Facebook. After all, what exactly is a pair of sunglasses for your Farmville sheep, or your cute little avatar worth to you? Perhaps a few cents, but sometimes these virtual items may be valued up to several thousand dollars in popular online games such as World of Warcraft or Everquest. As these games age we can look at how their in-game economies have been affected and how they effect change in our “real world” economy as well.

Not too long ago, the Occupy movement gave a little bit of a reason to look at how gold distribution worked in World of Warcraft and now that it’s launched, the resident economist from ArenaNet has given some statistics on the economy of Guild Wars 2.

John Smith, the economist in question, made a handy little infographic outlining the economy from the game during one of its beta weekends before the recent launch.

The takeaways from this information seem interesting (even if the data pool is very small) because they show that people in the beginning of the game saw a great deal of their earning coming from actually playing in the game moreso than killing critters—there’s little information about the virtual economy powerhouse effect of the auction house. Over 31% of the total gold earned came from just being part of the community (rewards from exploration and just being part of events) and another 25% came from dynamic events. Very little came from kills themselves, coming in at 12%.

Apparently, jewelcrafting in game became by far and away the most popular profession ranking up over 60,000+ gold generated. This profession in the game is lucrative because it produces upgrade items that can be used to enhance equipment without having to replace the equipment outright. It’s unknown to me if this huge desire to be a jeweler is an anomaly of the beta or not; but something tells me that the professions will round out now that the game has launched.

“As of 2007 in America 20% of the people controlled 85% of the wealth,” wrote Smith about wealth distribution in GW2. “By the end of the GW2 beta 85% of the wealth was still spread amongst 50% of the population; while the GW2 Economy is young, we hope to maintain a high level of equality.”

The Rise of the Virtual Economy as a Force for Monetization

Virtual economies are interesting things, they reflect the interests and standards of the gamers playing the games; but there’s a revolution happening to in-game economies that’s outside of the black market practice of gold farming (an illicit form of real-money trade for virtual money in extremely popular games where it is against the Terms of Service.) That revolution is happening both in experiments with real money auction houses for virtual items and the free-to-play market that generate real-money trade for in game currency (also referred to generically as “gold” even if it’s called credits, crystals, Foofs or whatever in game.)

Blizzard has been toying with the idea of virtual items for real money for some time now with their first RMT item, the Guardian Cub mini-pet; and when they first released a virtual item for real money, the Celestial Steed (aka Sparklepony) the company made almost $2 million in under four hours. Now the gaming giant has opened up RMT in the auction house permitting players to trade virtual items for real money.

The free-to-play market is also changing the standards by which virtual items are valued and traded and games like Guild Wars 2 contain a way for players to exchange their own cash for virtual gold. In GW2 “gems” can be bought with money that can be traded for in game services such as experience boosts or fancy clothing; but they can also be exchanged for gold to other players who want gems.

In this way, players with money can make gold faster by trading their gems to players who have more time than money (and therefore a lot of in game gold). In this way, Guild Wars 2 makes money off players farming for gold and it reduces the overall benefit of a black market for gold farmers by cutting into their ability to make a profit.

Of course, gold farmers will still abound because they will be able to provide gold at a discounted price below the current gem market; but unlike other games, GW2 has a legitimate trade forum for exchanging gold for services (although not money) meaning that players who would prefer that will go there and the result flows into ArenaNet’s coffers.

Perhaps we’ll see the economics of that come from John Smith’s notebook one day.


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