GDC 2005: Serious Games Summit - MMOG Econ 101

Online Worlds and Serious Gaming
Edward Castronova

Ted Castronova's background is in economics. His passion is clearly the economics of virtual worlds (ie, MMOGs and related things). Anyone interested in this sort of thing should check out TerraNova and Ted's papers on SSRN. In his talk, Ted hit the high points from his experience as a virtual world economist. For instance, by his latest calculations, one gold piece from World of Warcraft is worth $0.40 USD. Perhaps the most interesting idea centered around the notion that there is very little difference between the virtual and the real, at least in terms of economics. According to Castronova, only about ten percent of real-life economics can't be "ported" to virtual economy, and that ten percent mostly consists of eating and sleeping.

Having said that, Ted went on to discuss the potential positive and negative impacts of mixing real world and virtual economies. He pointed out that there are important social justice issues involved in the visual anonymity of virtual worlds. People with real-world disabilities or non-standard bodies have a chance to start over with any body they want in a virtual world. Castronova worried that too much real-world involvement in virtual worlds might lead to a diminished ability to escape in this fashion. He suggested keeping some worlds closed to outside economies while opening up others, thus maintaining a safe refuge while allowing experimentation. Finally, Ted posed the idea that virtual worlds might act as a mirror for the real world, leading to positive change in real-life.