virtual-economics
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A virtual economist's defense of the subscription model
ZeniMax Online and Bethesda's decision to release The Elder Scrolls Online as a subscription-based game unleashed a fresh wave of debate on the future of MMO payment models and the unique advantages and drawbacks offered by each. Virtual economist Isaac Knowles is the latest expert to offer his opinion on the announcement, posted in the form of a meaty defense of the subscription model in general. Knowles (who works under game economist Edward Castronova) posits that there are three primary criticisms with the sub model: it incentivizes players to rush through content, it requires the steady release of expensive content, and it prevents companies from price discriminating (charging players for how much those players value the game rather than a flat rate). He then works to dismantle each criticism, using math as his primary weapon. If you're into detailed looks at payment models, the full blog is worth a read. Hit the jump for a quick summary of Knowles' main points.
Massively interviews EVE Online Lead Economist Dr. EyjoG
The sci-fi game EVE Online is unique amongst the other massively multiplayer online titles on the market. One major aspect of the game is that its far future setting of New Eden functions as one server, where players can build up empires -- or topple those of their rivals -- across more than 5000 solar systems. Beyond its scale, what distinguishes EVE Online from other games is that it has a player-driven virtual economy, the backbone of the game. EVE's economy has been a major draw for players interested in market and crafting sophistication generally unseen in an online game. EVE's creators, CCP Games, have fostered a setting where players can do what they want in the 'sandbox', a setting where the tools are in place for players to use as they see fit. Nearly every ship, module, and item used by a player in the game was produced by another player in New Eden at some point. Fight for military dominance and control vast regions of space, or corner the market as part of an industrial conglomerate -- it's all possible in EVE. In fact, the game's warfare and industry are very much intertwined, making EVE's virtual economy a dynamic one. Monitoring and researching this economy is important to CCP Games, and to further that goal, they've hired real world economist Dr. Eyjólfur Guðmundsson (aka CCP EyjoG). Massively recently caught up with Dr. EyjoG, who told us about his rather unique position at CCP Games, and what he's learned about virtual economies along the way.
The slow demise of virtual tax havens
Is taxation of commerce in the virtual space inevitable? We've been hearing more and more about this coming out of China, South Korea, and Sweden, but a recent piece on BBC News -- "Slapping a tax on playtime" -- hits a bit closer to home for many of us. Flora Graham, a technology reporter for BBC News, spoke with Professor Edward Castronova of Indiana University, well-known for his research and commentary on virtual economies over the years, and game researcher Dr. Richard Bartle about the impact of taxation on games and virtual worlds. Castronova points out the idea of taxation of virtual goods exchanged for virtual money, saying, "... it's an extraordinarily dangerous development... It's as if every time I played soccer in my backyard and scored a goal, I would have to pay the government three euros. It takes away from the game's contribution to human happiness."
China legislates 20% tax rate on virtual currency profits
While much of the world's gold farming activity is based in mainland China, the black market industry operates in violation of the law. Despite this, a large part of the problem in curbing illegal activities in China is that there's a substantial divide between what the law states is illegal and the actual enforcement of those laws. This may well be the case with the law passed last week by China's State Administration of Taxation, which will impose a personal income tax rate of 20% on profits made from virtual currency.Juliet Ye at The Wall Street Journal's "China Journal" blog reports: "The policy would cover China's legions of online gamers, who can use online virtual currency to buy better equipment and new powers for their online warriors. But it also affects millions of others who use virtual currencies on instant-messaging services and Web portals." The widespread use of virtual currencies in China spurred last year's restrictions on exchanging virtual currency into RMB. If the new law becomes a reality rather than a technicality in the lives of China's internet users, it will be a substantial change in virtual economics in the country.
