A Brief History of Virtual Economy
Mohamed Nazir
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Abstract
The virtual world economy is a multibillion-dollar industry. There is significant evidence for the growth of virtual economies within a variety of virtual worlds. There is an increasing demand from users to buy, sell, and invest in virtual items and services, including virtual properties. However, there is also evidence suggesting that many companies struggle to succeed in the virtual economy platform. In order to facilitate and drive success in virtual business strategies, it is necessary to have a framework for classifying elements of virtual economies. This paper proposes a classification framework of virtual economy elements based upon the characteristics of products and services, the transaction and marketplace, as well as the currency and exchange systems present in these economic environments. In addition, this research highlights the opportunities and challenges presented to both users and companies within the virtual economy platform.
Key takeaways
- In the last 10 years, there has been extensive growth in both the number of virtual world users and the VE market size.
- SL is widely considered the most popular social virtual world.
- Mainly two elements determine the value of the virtual product: How rare the virtual item is, and the cost of time spent in the VW to gain, or create, the virtual product (Huhh, 2005;Ondrejka, 2004).
- EU users collecting virtual objects and trading these to other users, is an example of C2C VE.
- Virtual worlds such as SL have a website, which is called SL Marketplace (www.marketplace.secondlife.com), in which users can list for sale virtual items that they have created, and where they can search for virtual items available for purchase.
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