The Financial Life (and Death) of an East European Gold Farm

Last year I was given access to the financial balance sheet of an East European gold farm, selling on WoW, which allows an insight into income, expenditure and profitability – as well as sales channels.

I’ve posted the details at:

However, the postscript is that the continuing devaluation of WoW gold has led to at least a temporary shut-down of the operation. There is also a hint that only through botting can gold farming be viable.

Impact of Cataclysm on Warcraft Gold Farming

A quick, and unscientific, summary of the impact of the recent Cataclysm expansion on gold farming in World of Warcraft would be that it simultaneously changes everything and changes nothing. At a micro-level it changes pretty much everything – all of the specific locations and in-game activities that gold farmers would have learned are gone or different, and they are having to re-learn the good spots and specific actions. But at the macro-level, it looks like business as usual: gold is still being farmed and sold just as it ever was.

We can get a bit more of an insight into what’s happening by looking at the virtual currency exchange rate: if Cataclysm was causing an in-game shortage, that would likely lead to WoW gold appreciating against real-world currencies.

Comparing the January 2011 rates to October 2009, there has actually been a depreciation of around 11%: where 2,000 gold earlier cost an average of US$8.35, now it costs an average of US$7.41. This therefore looks like a dog that didn’t bark: the currency is not deviating from the pattern of depreciation that has been seen ever since gold farming began (associated with competition in the market and discovery of better (i.e. quicker and thus cheaper) ways to farm gold).

Looking in a bit more detail, though, suggests something slightly different. In the 14 months since October 2009, WoW gold has depreciated 11%. In the 14 months prior to October 2009, it depreciated by 58%. We can also compare WoW gold with other virtual currencies. Taking a basket of FFXI, LOTR, EVE Online, and EQ2, their currencies depreciated against the US dollar an average of 51% during the period Oct 2009 – Jan 2011.

So that suggests there may have been a Cataclysm effect – significantly slowing the “normal” process of depreciation; possibly reflecting a supply-side impact on gold farming, for example, in the need to build up post-expansion knowledge about gold farming sources and methods.

One final snippet comes from looking at prices for power levelling. This also has been subject to depreciation over time, albeit at a slightly lesser rate than the currency. From Oct 2009 to Jan 2011, however, prices for levelling seem to have appreciated by about 20% (e.g. levelling from 1-60 rose from an average US$69 to an average US$83). That could reflect either increased supply side costs in having to learn the new levelling paths and/or growth in demand from new players wanting high-level characters but in either case it again suggests some sort of “Cataclysm effect”.

Does anyone else have data or experiences to share on this?

Three Phases of Gold Farming: Scientific American Article

The January 2010 issue of Scientific American carries an article (by me!) that divides the development of gold farming into three phases (pre-history; golden age; and “backlash and beyond”), and examines the phenomenon particularly from a developing country perspective.

The article has been available online at:, though may get closed off behind a subscription firewall.

The text can also be found at:

Deflation of Virtual Currencies, 2004-2009

I’ve published online a spreadsheet of data on the US dollar values of virtual currencies from eight different games, tracked over time from 2004 to 2009. And a Google Motion Chart also for those who like to look at pretty pictures (though this tends to draw attention to the two outliers more than the main deflationary trend).

To be found at:

Richard Heeks
Centre for Development Informatics
University of Manchester, UK

Four Phases of Gold Farming

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

2. Localisation (c.2006-c.2007)
A very rapid expansion of gold farming serving the local Chinese market, spreading West from the Southern/Eastern coastal origins of gold farming.  In particular, related to Shanda’s Legend games.  At least some of the livelihoods created in this way were "playbourers" who received payouts from Shanda itself.

3. Partial Decline (c.2007-c.2008)
A severe decline of gold farms ("workshops") serving the local market for the Legend games; particularly due to a furore over the business model that Shanda had been using, and a notorious case of "gold slaves" in which students at a South China university were found to be forced by their professors to undertake unpaid "internships" if they wanted to pass their classes.  These involved gold farming either all night (male students) or all day (female students).  As evidence of the decline, Jack cites the example of  his own home city of Wuhan (popn. c.6m), which had some 4,000 "workshops" that grew up during the second phase to serve the local market but which now has few, if any.

4. Current State (c.2008-date)
Gold farms serving the global market remain as, too, do farms serving the local market.  The latter particularly represent a very "footloose" form of capitalism.  Footloose in the traditional sense of readily closing down operations in one place and opening up in another that has low wage and low rent costs and has recently obtaining decent broadband access.  And footloose in the sense of games.  The workshops will target a new or growing game, and try to find ways to make money out of it for a month or so.  If it succeeds, they stick with it for the moment. If not, they move on to the next game.

One further conclusion I noted from our conversation: there is a whole lot of data about gold farming that never makes it across the dual barriers of geography (it stays in China) and/or language (it stays in Chinese).

Update on Chinese Gold Farming

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: Also from Rowenna Davis’ earlier article that interviewed both myself and Anthony.


A. Overall Prevalence:

Estimates of 400,000 people working in China on gold farming/trading are seen as very realistic, and the number could be 500,000 up to 1,000,000 (the latter figure is also estimated in Nick Ryan’s recent articles on RMT, which claims total turnover for Chinese RMT operations of US$10bn per year). There are many brokerages in all major cities in China (Ryan’s article estimates 60,000 in total).

B. Brokers and Farms:

Brokers (i.e. those doing the trading of currency/accounts/levelling) employ English-speaking graduates, and so locate within main cities (those graduates would not go to work in more out-of-the-way places). These are seen as legitimate customer services businesses.

Gold farms employ those with just high-school diplomas or below, and so the farms are put where they can get space cheaply; typically some way outside a city or in smaller towns/cities. Of course, there are limits to this: they still need a broadband connection, so this goes down as far as medium-sized towns but not yet to small towns and villages.

There is typically an n-to-n relationship: each gold farm (“workshop”) serves multiple brokerages; each brokerage sources from multiple gold farms. (Though there are also cases where brokerages own their own gold farm.)

The relationships to date have been almost exclusively in-China. However, some brokerages were starting to look to other locations outside China for gold farms, such as VietNam and the Philippines. It is not clear if this is to reduce labour costs further, or to link up with sources for games that are particularly popular in those countries.

C. Typical Brokerage Size and Division of Labour:

In Changsha, one of the main brokerages (with a turnover of around US$1.5m per year) employs more than 130 staff: 20 people doing ads in game and email spamming; 4-5 on customer services with whom players place orders. These numbers are doubled because they work two shifts in a day. There are 5-6 in the IT department sorting out servers and Internet connections. Then there’s the delivery department who interact with the gold farm and deliver the money in-game. They contact the gold farms to find out how much money they have banked on particular servers, and will take amounts until they can fulfill the customer order.

There are some gender divisions of labour: most customer services staff are women; almost all gold farmers and technical staff are men.

D. Gold Farmers and Other Workers:

The gold farms Anthony saw were full of young guys aged around 18-20 with beers and cigarettes, hanging out playing games and having a good time. They realise it’s not a long-term occupation but they also appreciate that they are part of something that is rather new and different. His estimate is that they’ll stay for maybe 1-2 years before moving on to another kind of job.

Typical earnings, etc are in line with earlier estimates: around US$140 per month with food and accommodation provided, working c.10 hours per day. It seems there are two 10-hour shifts per day, with some down time allowed for IT maintenance, though the notion of a strict shift period isn’t present: start and end times are a bit fuzzy and the farmers generally have a target of gold to earn rather than a set number of hours; that target varies depending on market conditions. Some of the gold farmers are killing mobs or gathering resources, but others are making money by arbitrage in the auction houses or trade channels on WoW.

Customer service staff in the brokerage are paid more like US$350 per month; they typically deal with 100 or more customers per shift. Managers earn significantly more (unfortunately no figures available).

E. Customers:

Brokers have a mix of Chinese and Western customers. Some brokers are wholly World of Warcraft-dedicated; others work a mix of Chinese and Western MMORPGs. Typical purchases are for around US$25-worth of in-game currency. (Highest reported purchase was for more than US$3,000.)

F. Bots/Automation:

There is quite a lot of use of automated software in the gold farms, to automate fighting or resource gathering. At least some of this is written in China, bought by the gold farms and then the code is adapted by gold farm staff.

Photo credit: Anthony Gilmore