Animation Blog

Virtual worlds are more than a social experiment using the powers of technology. It is actually a parallel of real life; it has its own nuances and intricacies. One can even say that it is the microcosm of what’s really happening in the world – or better yet, it is an extension of real-life itself. Thus, it is interesting to take note of a certain aspect of virtual worlds which are now developing a life of its own and separating it from its real-life counterpart: virtual economy.

In a nutshell, a virtual economy is a system of trade and commerce where products, services and consumers are in place – with the notable exception of all these happening in the context of a persistent virtual world. More often than not, this world exists in the plane of the World Wide Web and because most of the business models in the Internet are free virtual worlds, virtual economies has served as a source of revenue for the administrators of these free online virtual worlds.

Unlike its real-life counterpart, the virtual economy is not a necessary thing for people to experience. There are no biological needs which are satisfied by virtual economy – none of the need for food, shelter and clothing. But truth be told, these virtual economies have slowly emerged as a viable source of actual income.

Virtual economies are much more existent in massively multiplayer online role playing games (MMORPG) because of the competitive nature of these online communities. Because of the need to find an advantage or edge over opponents, virtual economies have become a potent source of added accessories and skills for MMORPG aficionados.

In MMORPGs, the virtual economy is more of a complement to the gaming experience of the users. However, for life simulation virtual worlds, virtual economies are the game itself. Popular social networks embedded in virtual worlds such as Second Life have come up with innovations to the virtual world experience by recognizing the value of intellectual property rights for assets created “in-world” by subscribers, and its laissez-faire policy on the buying and selling of Linden Dollars (the world’s official currency) for real money on third party websites. Moreover, Second Life has come up with the concept of virtual furniture while most of the virtual worlds out there in the World Wide Web have used their virtual economies to sell accessories and clothes for avatars.

Although most virtual world inhabitants’ concept of a virtual economy revolves around items being sold in-game, it goes beyond that. Subscription fees, the selling of customized avatar designs as well as in-game advertising all comprise a virtual economy in the perspective of the administrators of the online community. It can refer to Internet games which use real money before anyone can play. Virtual economy covers everything which can generate monetary value in the context of the online community.

Here are some characteristics which are typical of virtual properties:

- Rivalry. ­Possession of property is limited to one person or a small number of persons.
- Persistence: ­Possession is maintained even when the property is not in use. Users expect property to remain in their possession between sessions.
- Interconnectivity: ­Property may affect or be affected by other people and other property. The value of property varies according to a person’s ability to use it for creating or experiencing some effect.
- Secondary markets: Virtual property may be created, traded, bought, and sold. Real assets (typically money) may be at stake.
- Value added by users: Users may enhance the value of virtual property by customizing and improving upon the property.