... by restricting purchases of real goods or money with virtual currencies.

Pre-paid cards are also considered virtual currency, but virtual items are not.

The new law states: "The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services."

Justifications offered:
- prevents illegalities
- prevents gambling
- prevents money laundering
- preemptive step towards preventing "virtual economy" having a negative influence on Chinese financial system

Affects:
- farmers selling virtual currency - the definition of currency only covers medium currencies between real-money and items. This situation becomes a bit hazy though, because in some VW's there is only one currency (earned through gameplay AND at the same time purchased with real money). In a way farmers selling virtual currency would still fall into the banned category, but the legistelation doesn't seem to be targeted to "harmless" currencies such as WoW-gold, but towards currencies such as QQ-coins, which are widely used outside the Tencent QQ service.

- users doing business in VW's (such as Second Life)
- Prevents gambling? Because you can not convert v-currency back to real money?
- Secondary market of pre-paid game cards
---> everything that includes exchanging virtual currency (as defined by the law) into real money or products.

Doesn't affect:
- farmers selling virtual goods directly
- operator selling v-currency and v-goods

A somewhat downbeat assessment of the current state of gold farming emerges from a discussion with Dr Jack Qiu from the Chinese University of Hong Kong; who has been a regular observer of gold farming and other informal sector activities in China.  I report this as, and appreciate that it is, conversational rather than "hard" evidence.

Jack observes four phases of Chinese gold farming.

1. Globalisation (c.2003-c.2006)
The growth that we are all aware of, serving the global and regional games market

 

 

- State of Play VI - We'll be there

- CFPs: JVWR

- VERN Facebook group - Join

 

June 19-20, 2009: The State of Play VI Conference A Conference on the Serious Study of Virtual Worlds On June 19-20, 2009, New York Law School’s State of Play Conference will convene in New York to examine the past, present and future of virtual worlds. In conjunction with the University of Southern California Network Culture Project at the Annenberg School for Communication, and with support from the John D. and Catherine T. MacArthur Foundation, the conference will focus on the startling rise of virtual worlds and multiplayer online games, and ask whether these worlds have reached a plateau in their development. At the same time we will question whether we have reached a limit in our understanding of these worlds, and ask whether there are useful research questions still left to pursue.

Please visit www.nyls.edu/stateofplay for more information.

The following represents some notes and comments building on my earlier research report on gold farming. It draws mainly from a couple of interviews kindly given by Anthony Gilmore, who has been filming in China for his forthcoming documentary, Play Money: http://www.playmoneyfilm.com. Also from Rowenna Davis' earlier article that interviewed both myself and Anthony.

How do you monetize social networks and social games? Similar to the online games space, there is a growing consensus that the answer is by complementing advertising with a virtual goods micro-transaction business model. Social networks and start-ups are positioning themselves accordingly. Hi5 has announced its own virtual currency. Facebook is now implementing “credits” and MySpace seems to be working on their own payments platform.

+8* - Plus Eight Star, a consultancy firm, has posted a well-reasoned guestimate of the size of the virtual goods market in China, Korea and Japan: 5 billion USD! Contrast this with our guestimate in 2007 that the global virtual goods market was worth 2.1 billion USD. Some other estimates and revenue figures can be found here.

We are happy to welcome two new regular contributors to the VERN blog: Taiyoung Ryu and Juha Tolvanen. Welcome!

Taiyoung Ryu is doing research on the design of micro-transaction business models, especially virtual goods, as a graduate student at the Interactive Media Division at University of Southern California USC. He has presented at GDC and DiGRA, and his advice for developers has been published in the Game Developer Magazine. Before joining USC, Taiyoung had a successful career as a game designer in the Korean game industry and is credited as Lead Designer in six titles, including mobile, casual online and online FPS (see video below).

Game Developers Conference 2009 took place at Moscone Center in San Francisco USA in March 23. One of important keywords from this year’s Game Developer Conference is digital distribution of video games. So, many sessions dealt with issues related to digital distribution like virtual economy models, new revenue models for casual games distributed via console networks including PSN, XBLA. In addition, virtual goods trades and how to make more money through various new distribution methods were focused by a number of sessions.

The question whether secondary markets limit the profits of a monopolistic seller has generated a lot of controversy over the years. The “conventional wisdom” is that secondary markets eat manufacturer profits because used goods create competition for new goods by acting as close substitutes. Instead of buying a new good, consumers can choose to buy used goods instead; especially so if they offer better value in terms of price. However, it has also been shown that secondary markets have other implications as well and therefore the conditions under which secondary markets are detrimental to the profits of a monopolistic supplier are subject to debate. In this essay, I will review some of the previous microeconomical work on secondary markets and then seek to determine how their results apply the context of virtual asset markets. The key question would be “how do secondary markets affect primary market profits?”

To find out, read more about upcoming panel discussion here and here.