China's domestic market for farmed gold booming

Xinhua news agency carries a story with a lot of figures on World of Warcraft gold farming in China. An interesting point is that since half of WoW’s 6 million players are now Chinese, farmers are increasingly able to make a buck in the domestic market in addition to the North American, Korean and European servers.

Via PlayNoEvil

According to the article, 100 gold sells for approximately one USD on Chinese WoW servers. For comparison, a quick browse through English language gold shops shows prices of around 2-4 USD for European servers and 10-20 USD for North Americans.

I’ve often heard it said that the next up-and-coming gold producer country after China is Indonesia, though no data probably exists.


Virtual trinkets and advertising combine in IRC-Galleria

Yesterday’s seminar was a great success, thanks to all who participated. A video recording of the presentations is now available through here.

Star Wreck's Captain Pirk -trinket at IRC-Galleria One of the themes was what creates demand for virtual property. For MMORPGs, Professor Sang-Min Whang showed us data from Lineage that linked property value with time required to obtain it. In the social virtual world Habbo Hotel, Sulka Haro told us how Sulake time-limits the supply of certain items to create valuable rares. Sulake does not profit from this directly, as they sell the to-be rares at a mere 4 euros when they are available. However, it makes Habbo’s “economic game” of barter exchange more interesting and raises prices in the budding secondary market.

We also heard some fascinating stuff about demand for virtual items in a service that is nothing like a virtual world, but a “flat” community site, similar to MySpace. Taneli Tikka, CEO of Dynamoid, spoke about IRC-Galleria, the most popular community site in Finland. This February, Dynamoid launched a service where IRC-Galleria users can buy “trinkets” that they can attach to pictures on their personal site. The two-dimensional trinkets range from text bubbles to rubber boots and have a limited lifetime. According to Tikka, advertising now amounts to less than half of their revenues, the rest coming from trinket sales and services such as VIP memberships. Trinket prices range from a few eurocents to 12 € and VIP memberships cost 10 € per year. Together they amount to sales of around 200 000 euros per month and an average revenue per user of 55 cents per month.

According to Tikka, the most popular category of trinkets in IRC-Galleria are celebrity-related. Together with advertisers, Dynamoid has launched trinkets that bear names, faces and symbols of famous characters, actors and musicians, advertising upcoming movies and albums. Some of the trinkets have been distributed for free, and users keep messaging the advertisers months afterwards, begging for more trinkets. Tikka attributes this zeal to the fact that fans want to have a way to display their “fanship” to others.

To me, this seems like a textbook example of contemporary consumerism: the users’ behaviour can be explained as e.g. willingness to seek and/or signal membership in a specific group; an attempt to differentiate onesself from some others; or as an attempt to build and/or communicate identity through pre-established symbols. Discussions on authenticity are also relevant. Anyone could have copied the trinket graphics and pasted them onto their photos, but I suspect that trinket look-alikes obtained this way would not be perceived as legitimate (and thus valuable) by peers.

These are the some of the same reasons why consumers pay a premium for brands. Currently, brand owners use services like IRC-Galleria as advertising channels for physical products. The next step is to forget the physical product and sell the brand value only.

Other strong purchase motivations that Tikka identified were gift-giving and seasonal decorations. During the FIFA football championships, national flags and shirts were in great demand. After school final exams, a 50-cent text bubble saying “I flunked maths” proved popular.

Live webcast for VERN mini-seminar on item payment revenue models

Next Tuesday’s (Sept. 26) next mini-seminar on massively-multi user services and item payment revenue models will be streamed live over the web. Those watching the stream will be able to take part in the discussion using a chat interface. After the seminar, the video will be available for download.

The stream will be available at Currently, the address is displaying a test stream, which I recommend you try out now to make sure your software is compatible.

The seminar starts at 13:00 Helsinki local time (10:00 GMT). Speakers are professor Leo Sang-Min Whang from Yonsei University, Korea; Sulka Haro, Lead Cocept Designer for Habbo Hotel; and Teddy Grenman, one of the founders of Dynamoid, the company behind IRC-galleria and Dark Portal. Questions that will be addressed during the seminar include “how is demand for virtual items created?” and “what are the limits of virtual property trade?”

There are some seats open for physical attendants as well. Please email me at if you wish to participate.

Report from Nordic Game conference: virtual property and in-game advertising

Greetings from the Nordic Game conference in Malmö, Sweden. About 600 delegates from game companies, public bodies and research organisations showed up for two days of talks and workshops on a variety of topics – including virtual economies.

At last year’s conference, I gave an introductory talk on real-money trade of game property, and that was all. This year, Julian Dibbell is giving a keynote speech on the topic, and I understand he will be talking about his experiences with Chinese gold farmers, which I am very much looking forward to. “Masu” Masuyama, a Japanese game designer and author, spoke about “money games” earlier today, and Jørgen Tharaldsen, product director at Funcom (Anarchy Online, Age of Conan), talked about new business models for game developers.

One of the things Funcom’s Tharaldsen was going to talk about was RMT, but thanks to an active audience, he only got as far as in-game advertising. What he said about that was interesting though: that there are more than 150 games with in-game ad technology in development; extra revenue per unit sold is upwards from 1-2 USD; and there is potential for in-game advertisers to reach 18-34 y.o. audiences bigger than US TV networks.

As you probably know, Funcom’s Anarchy Online has been a pioneer in this field. Tharaldsen claimed that thanks to good execution, he has received “tons of positive emails from the players about the ads, but not a single negative one”. Graphical filters and other measures are used to make the content fit better into the game world, and latest experiments involve interactive advertising elements.

Tharaldsen stressed that games are not TV: if the player community doesn’t like the ads, the plan backfires. Final control over what ad content is released is retained at Funcom. It’s not too difficult to find players who don’t like the ads, though, so one suspects the model still boils down to a balance between added revenues and not annoying too many people.

Advertising will obviously not fit in the medieval fantasy world of Age of Conan, but Funcom’s following MMO title will rather craftily be set in present times. Funcom is working together with Massive Inc, but there are also other in-game advertising networks such as Double Fusion and IGA. Last year, Yankee Group estimated that the in-game advertising market exceeds 1 Bn USD in 2010, which is significant but not huge.

CCP, the company behind EVE Online, is sponsoring Nordic Game this year, and I got a chance to interview their CEO and CMO about EVE’s virtual economy. I will be posting up segments of that next.

VERN mini-seminar on item payment revenue models in Helsinki

Time: Tuesday, 26. September, 13:00-16:00 (GMT+3)
Location: Helsinki Institute for Information Technology (6th floor), Tammasaarenkatu 3, Helsinki.

On 26. September, the DCC research group at HIIT is organising a mini-seminar under the topic “Massively multi-user services and the item payment model”. A keynote speech will be delivered by our visitor from Korea, professor Leo Sang-Min Whang of Yonsei University. Prof. Whang is a leading researcher of the psychology of MMORPGs and virtual items in Korea.

Other speakers are Sulka Haro, Lead Concept Designer at Sulake Corporation, creators of the popular teenage virtual world Habbo Hotel; and Teddy Grenman, founder of Dynamoid, the company behind Finland’s top community site IRC-galleria and WoW-players’ picture community Dark Portal. Both of these successful companies are applying the item payment revenue model. Questions that will be addressed during the seminar include “how is demand for virtual items created?” and “what are the limits of virtual property trade?”

Preliminary schedule

13:00 Introduction & relevance
Dr. Marko Turpeinen, leader, DCC research group
Vili Lehdonvirta, researcher

13:20 Prof. Leo Sang-Min Whang, Yonsei University

14:30 Teddy Grenman, Dynamoid

15:15 Sulka Haro, Sulake Corporation

The seminar is targeted at researchers and companies working in related fields. Please RSVP to before Friday, 22. September.

Vili Lehdonvirta & Mikael Johnson / HIIT DCC

IGE, ready to sweep the Korean RMT market?

About a month ago, IGE bought a Korean RMT mediator, Itemmania. It is not the biggest player but its share in RMT transaction is considerable, around 35%. Hard to believe fact was the price of the company, 4.7B KRW(1000KRW is around 1 USD). It was really under-valued price considering the size of the Korean RMT market. Many suspected that there might be another secretive option in the contract.

Today, some newspapers reported that the biggest player in the market, Itembay, was under negotiation for selling itself to IGE. The selling price is estimated to be between 80B and 90B KRW. If this contract be done, IGE would acutally monopolize the RMT mediation in Korea.

According to an unnamed source, Itembay has tried hard to go public in Korean stock market, but only to fail. The failure was supposed to come from the nature of its business, RMT. Virtual item trading/mediation is not totally legitimate in Korea. Many company are doing their business around RMT-related area, but nothing has been confirmed as perfectly legal in Korea.

If there be another big swing on the issue, I’ll post about it, a.s.a.p.

Also posted on

Virtual Economy Research Network website open

I am happy to announce that the Virtual Economy Research Network website is now ready for action. Welcome!

The purpose of the website is to act as a platform for communication and knowledge dissemination regarding real-money trade of virtual property and related phenomena. In practice, the website has two main features: 1) a bibliography and 2) a blog. In addition, VERN also has an email discussion list.

The purpose of the blog is to relay virtual property related news, announcements and research results from all over the world. This includes material that would not otherwise be available in the English language. Contributors are currently me from Finland/Japan and Jun-Sok Huhh from Korea. We welcome researchers from other countries to join us; please send email to vern (ät) if you are interested.

A few words about the bibliography: In September 2004, I put up a web page with an annotated bibliography of materials related to virtual property. It was the only online bibliography on the topic so quite a few people found it useful, but I lacked the time to keep it up-to-date. Now, there’s a new and updated bibliography on the VERN website. What’s different about it is that everyone can add their own annotations (that is, comments) to the entries. You can even add new entries to the bibliography if you register as a member. Try it out!

Why research virtual property?

This is a good moment to briefly discuss the scientific agenda behind VERN. As the tagline says, this site is concerned with things related to real-money trade of virtual property. If you are not familiar with the concept, I suggest you read the Introduction first.

The so-called real-money trade phenomenon is an important research topic for many reasons. From a sociological point of view, the phenomenon teaches us not only about online society, but about the symbolic nature of our consumer economy in general. From a legal and ethical point of view, it presents unsolved issues and conflicts of norms. From a business perspective, the interest is obvious: virtual property attracts real value.

So far, the central concept in research on these issues has been the virtual world: a simulated geometrical space, presented in (3D) graphics, where users interact by controlling an avatar. Indeed, most of the entries in this site’s bibliography are concerned with virtual worlds. Virtual property has attracted attention especially in the form of characters, items and currencies that exist inside massively-multiplayer online games and are traded on online auction sites.

However, virtual property is also found in contexts other than virtual worlds. Community services such as Cyworld have built their revenue models on selling virtual items. Some services, such as China’s leading instant messaging system Tencent QQ, seem to have attracted whole ecosystems of business around their internal economy. As Richard Bartle (2003) reminds us, immersion is not all about graphics. People attach meaning to symbols that exist in a variety of contexts.

Many previous works define virtual property by referring to virtual worlds (including my own work). If this is not sufficient for our purposes, how do we define virtual property then? Fairfield’s (2005) definition looks very promising. He defines virtual property as rivalrous, persistent and interconnected online resources (“code”). These legally relevant characteristics seem to capture the whole range of virtual item trade as outlined above, while excluding information goods like music and movies. I will discuss Fairfield’s definition in more detail in a later posting.

In summary, while recognising the importance and popularity of virtual worlds, we should select virtual property itself as the central concept when researching the real-money trade phenomenon. This approach allows us to appreciate the whole gamut of contexts where people attach meaning to virtual things.

I would be happy to hear your thoughts on this line of thinking.