VIRTUAL WORLDS VS. REALITYBY: ALISON OLSON

VIRTUAL WORLDS: A FIRST-HAND ACCOUNT OF MARKET AND SOCIETY ONTHE CYBERIAN FRONTIER

• Norrath: is a virtual world that exists entirely on 40 computers in San Diego.

• 12,000 people call this VW “home”

• 20% a place of residents

• ~60,000 people are active in Norrath at one time

• https://www.youtube.com/watch?v=fJZO8MtQ-ek

MAKING MONEY IN VIRTUAL WORLDS

• 2004: annual revenues were expected to top USD 1.5 billion

• Developed assumptions to be made for the future of VWs to be the main source of online activity

• Meeting place

• Market place

• Home

EXCHANGE OF CURRENCY

• Norrath Currency vs. US dollar

• Highly liquid (if illegal) currency market

• Surpsses both Japanese Yin & Italian Lira

• Avatar shoes vs. Car tires

COMMERCIAL POTENTIAL

• Mindark: Private Swedish Company

• Build up a global network monopoly in internet interface

• Commercial Potential: Lara Croft lookalike avatar will be able to follow up her tough day of adventuring with a run into the nearby virtual JC Penney -- to buy her owner a new suit, for real money.

3 FEATURES OF VIRTUAL WORLDS

• 1.) Interactivity: it exists on one computer but can be accessed remotely (i.e. by an internet connection) and simultaneously by a large number of people, with the command inputs of one person affecting the command results of other people.

• 2.) Physicality: people access the program through an interface that simulates a

first-person physical environment on their computer screen; the environment is generally ruled by the natural laws of Earth and is characterized by scarcity of resources.

• 3.) Persistence: the program continues to run whether anyone is using it or not; it

remembers the location of people and things, as well as the ownership of objects.

OTHER VIRTUAL WORLDS

• Meridian 59 or M59 (1995)

• Ultima Online (UO), (1997)

• 3,600 employees & $1.3 billion in annual revenues

• Sims Online (2002)

MONOPOLIZING HUMAN BASED NETWORK

• User purchases game software

• User purchases additional monthly fees ($10-$20) to allow access on an ongoing basis

• Sony monthly revenues Everquest ~$3.6 million

• Online gaming revenues $208 million (2000)

• Estimations made for $1.7 billion by 2004

WHY ARE VWS SO APPEALING?

• Be whoever/whatever you want to be

• Customize your avatar

• Short Be tall

• Desire Brilliance Wizard

• Aggressive Immense Strength

• Fly, teleport, shoot flaming fireballs, (*budget constraints apply)

WHY ARE VWS SO APPEALING? (CONT.)

• Real equality of opportunity

• Born penniless

• Same minimal effectiveness

• Bad reputations can be stripped clean & replaced

CONSTRAINTS IN VIRTUAL WORLDS

• Death robs Avatar of some/ all powers

• Large amount of goods can only be obtained from other Avatars or biots

• Always at cost of risking death

• No free lunches

• Social roles are not open all

• Must compete against other Avatars to obtain a role

HOW TO GAIN MONEY

• Develop social roles

• Surpass a new “level”

• Avatar at level 6 kills 100 kobolds level 7

• Leads to enhancements to make the Avatar more desirable socially

ARE VIRTUAL WORLDS REAL?

• Economists view it is real

• Labor force

• Gross national product

• Floating exchange rate

• Norrath > currency transactions than other VWs

• Norrath is distributed over 40 different servers

EARTH VS. REALITY

• 20% “live” in Norrath as a permenant resident

• 22% express desire to always spend time there

• 40% claim that if a satisfactory wage were available they would stop economic activity of Earth (i.g. work or school)

• 60,000= population, 12,000= permanent residnce

NORRATH DEMOGRAPHIC

• Well-educated, single, U.S. man, 20 yrs. old, earning $20 per/hour

• 35% students

• Residents: lower education, fewer work hours, lower wages, less likely to have major obligations (spouses, children)

• 4 hours per day for visitors

• 6 hours a day for residents

INCOME

• a2a markets= scarce goods

• Buying & selling weapons, spells, etc.

• Shrewd buyers travel to zones where the goods they seek are abundant

• Two markets:

• a2b markets for hunters to gain their wages by killing monster biots & selling their loot to merchant biots

• a2a goods market, existing in all zones but heavily concentrated in just one, where merchants and hunters engage in a cumbersome trade in certain scarce items. (auction and trade)

TRADES IN VIRTUAL WORLDS

• Norathian goods are underground

• Intellectual poperty

• Trading for U.S. currency is considered theft

• Foreign trade markets & exchange rates

• Several $ based for platinum pieces, Avatars, & auctions exist on web auction sites.

• Ex.) Earthling A gives Earthling B the money. Then they both create avatars in Norrath and meet at an agreed-upon spot, where Norrathian B gives Norrathian A the item

• Ex.) Earthling A gives Earthling B the money. Then they both create avatars in Norrath and meet at an agreed-upon spot, where Norrathian B gives Norrathian A the item

TOTAL VOLUME OF SUCCESSFUL AUCTIONS

• Successful Auctions= 112

• Totaling $9,200.32

• Currency transactions conducted= 32

• Totaling $3,700

• At an annual paces these numbers put the gross exports of goods & currency at more than $5 million (3.5% of gross annual outout)

AUCTION TRADES

• Avg. price of a platinum piece in U.S. dollars= 0.01072

• A little more than a penny

• Higher currency than Yen & Lira

• The market for avatars can be used to develop an estimate of Norrath's GNP per capita

• Avatar accounts= $500 to $1,000 (ready made loose freedom to design your own personal wizard)

• Auctioned Avatars have a pre made account

• Higher Avatar levels increase their stock wroth

SHADOW PRICES

• $13 dollars per level of Avatar

• Data from NES (Nintendo Entertainment System) shows that Norrath’s Avatars create about $15,000 in avatar capital in an hour

• Gross national product = $135 million

• Per capita = $2,266

• According to GNP data from the World Bank. Norrath is the 77th richest country in the world, roughly equal to Russia

INFLATION

• Price index based on 29 different goods (ex. chest armor, boots, helmets, weapons, etc.)

• Avoided very high end items & low end items

• All item are equal in weight

• Looted from biots vs. crafted by Avatars

• Apart of original Everquest or an expansion of the game

INFLATION TABLE

Table 4. Price Indices For Norrathian Items

INDICES

Q4 2000 Q12001 Q2 2001 Q3 2001

Overall Item Index - Weights each item equally 100.00 89.85 82.05 71.17

Loot Index - Items not made by avatars 100.00 90.68 81.36 69.28

Old World Index - Items before Kunark and Velious 100.00 93.76 87.26 82.73

New World Index - Items from Kunark and Velious 100.00 79.60 68.39 40.84

Craftwork Index – Items crafted by avatars 100.00 84.67 86.40 82.97

Old World Loot Index - Looted old world items only 100.00 95.90 87.46 82.6

NOMINAL WAGES

• Hourly Wages < Earth Wages

• Estimate wages of platinum pieces by amount of work Avatar has put in

• 3,619 NES respondents gave valid information on 7,397 of their Avatars

• Avg. Avatar makes 319 PP per hour

• Market exchange rate of 0.01072 PP per dollar= $3.42 per hour

• Avg. Earth wage in NES= $20.74 Norrath Residents= $17.57

• Avg. Norrath Resident utility worth= $14.15

• 80 hrs. Norathian Cash & Goods worth= $273.60 1 month= $1,000, 1 yr.= $12,000

POVERTY& INEQUALITY

• Single Person in U.S. =$8,794

• Higher Level Avatar= more wealth than lower

• Avatars with wealth holdings allow us to calculate two stats:

• 1.) poverty rate as the % of Avatars wealth >50% of te median wealth (33% of Avatars are poot)

• 2.) poverty rate at mean wealth, poverty rate =68% , Norrath is less equal that its distribution in post-industrial societies on Earth

WHY ARE ECONOMISTS & SOCIAL SCIENTISTS SO INTERESTED?

• Unique laboratory for research on human society

• Potential to be the most important forum of human interation (telephone) widespread changes in organization on Earth society

• Expansion is likely to keep growing

• Tens of thousands spend more time on VWs than at their paid employment

• Similar #s use Earth money to buy things in VWs

• $1 million & growing willingly pay monthly fees

FUTURE OF VIRTUAL WORLDS

• Project Entropia: Buy things for Avatars with real currency & credit cards

• Mindark: Virtual Jobs (ex. Walmart uses you Avatar to sell Avatar clothes in a virtual Walmart)

• Norrath: chat based a2a meetings & classes

• Emailing reports to the boss, will eventually become "going to work" in a virtual office and holding face to face meetings with the avatars of coworkers

• Family gatherings while living thousands miles away, etc.

DICE 2010: “DESIGN OUTSIDE THE BOX” PRESENTATIONPROFESSOR JESSE SCHELL

BEYOND FACEBOOK

• Farmville > Twitter

• Facebook is HUGE

• Lead Generation > Direct Payment

• Play games for free

• Gain virtual $$$

• Only use virtual $$ if you pay real $$

• Get credit cards for virtual money

• LG is making more $ vs. Direct payment

FACEBOOK: BIG, STRANGE, UNEXPECTED

• Wii fit: $1 billion

• Club Penguin: Inexpensive flash game for kids, millions a month, sold for $350 million to Walt Disney

• Guitar Hero: $70 dollar plastic guitar, winning game of the year

• Webkinz: Estimated value at $2 billion

WHAT DO ALL OF THESE GAMES HAVE IN COMMON?

• Involve psychological tricks

• Club Penguin

• Free to play at first

• Gain vritual $$ Spend by being a paid member

• Webkinz: $12= $20

• Magic animal inside stuffed animal (bring to life)

• Mafia Wars

• Play real friends want to beat them

• All busting through into reality

WHY ARE PEOPLE DESIRING MORE REALITY?

• Reality TV Organic Foods

• “Authenticity” Book

• Are things real or authentic?

• Virtual has taken us form nature

• Desire to be “real” now

• Fantasy football, Weight Watchers, growing virtual plants in cars to motivate fuel efficient driving, etc.

FUTURE

• Disposable technology

• Can of pop= wifi with a screen

• Points for brushing teeth, eating cereal etc.

• Using bus= tax incentives from government

• POINTS will be for everting inspire us to be better people is the games are designed right

• http://www.g4tv.com/videos/44277/dice-2010-design-outside-the-box-presentation/