Virtual Economy

From Baruchnewmedia

According the the Virtual Economy Research Network [1]:

Virtual goods, also known as virtual assets and virtual property, are artificially scarce resources that exist in online spaces. Examples of virtual goods include powerful characters in massively-multiplayer online games (MMOG) and virtual items and gifts in social networking services (SNS). Many platforms that contain virtual goods also have virtual currencies and markets, forming systems that can be called virtual economies and subjected to economic analysis.

Virtual goods and currencies are frequently bought and sold for real money. In 2007, the volume of this real-money trade (RMT) was estimated at 2.1 Billion USD per year globally. Much of it takes place on so-called secondary markets, where MMOG players purchase characters and currencies from other players and professional "gold farmers". Game operators are also increasingly selling virtual goods to their players themselves, particularly in the Asian market. This has challenged subscription fees as the primary source of revenues for online game operators and given rise so-called free-to-play games.

Besides games, virtual goods are available on a variety of platforms that people use for computer-mediated social activities. Korean social networking site Cyworld, Chinese instant messaging service Tencent QQ, Finland based teenage "virtual world" Habbo and U.S. based social networking site Facebook are examples of very popular online services that sell virtual goods to their users. Typical goods are graphical items that are used to enhance one's virtual presence, given as gifts to other users or employed as tools in activities. Some platforms like Second Life and IMVU encourage users and third-party content developers to create new virtual goods and components for sale.