The Economics of Virtual Worlds


Edward Castronova is first up on the PopTech stage in the afternoon session of Day 2. He talks to us about the economics of virtual worlds. Odd theme given that he’s actually a professor of telecommunications at Indiana University.

He transitioned into this ‘other world’ in 2001, when he started to apply value measurement techniques to the economies generated within online video games or “synthetic worlds.” His initial paper reporting these findings, “Virtual Worlds”, continues to be one of the most influential works of economics on the net, with over 30,000 downloads at the Social Science Research Network as of May 2005.

He gives us a sample of numbers to think about:

Star Wars made $50 million as of May 22, 2005
Spiderman 2 made $116 million from June 30-July 2, 2004
Halo 2 made $125 million as of November 4, 2004
Game industry annual revenues, $10 billion in 2004, $7.6 billion of it was software. And its growing.

There are 10 million people playing synthetic world games.

Real money trade, for example, when someone pays $$ for a magic wand or a gold piece…..numbers are $100 million to $1 billion.

Synthetic money trade is $2 billion – $20 billion

Compare these numbers to the GDP per capita of China $500 versus the wage of a gold farmer, which is approximately $1.00 per hour.

I thought this excerpt was cool and gives you som perspective into his personality and the way he looks at the world; he includes this in his bio…..

“Our revels now are ended. These our actors,
As I foretold you, were all spirits and
Are melted into air, into thin air:
And, like the baseless fabric of this vision,
The cloud-capp’d towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve
And, like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
As dreams are made on, and our little life
Is rounded with a sleep.”

The Tempest, IV 1

Tag: PopTech Tag: PopTech 2005 Tag: Economics of Virtual Worlds

Renee Blodgett
Renee Blodgett is the founder of We Blog the World. The site combines the magic of an online culture and travel magazine with a global blog network and has contributors from every continent in the world. Having lived in 10 countries and explored nearly 80, she is an avid traveler, and a lover, observer and participant in cultural diversity.

She is also the CEO and founder of Magic Sauce Media, a new media services consultancy focused on viral marketing, social media, branding, events and PR. For over 20 years, she has helped companies from 12 countries get traction in the market. Known for her global and organic approach to product and corporate launches, Renee practices what she pitches and as an active user of social media, she helps clients navigate digital waters from around the world. Renee has been blogging for over 16 years and regularly writes on her personal blog Down the Avenue, Huffington Post, BlogHer, We Blog the World and other sites. She was ranked #12 Social Media Influencer by Forbes Magazine and is listed as a new media influencer and game changer on various sites and books on the new media revolution. In 2013, she was listed as the 6th most influential woman in social media by Forbes Magazine on a Top 20 List.

Her passion for art, storytelling and photography led to the launch of Magic Sauce Photography, which is a visual extension of her writing, the result of which has led to producing six photo books: Galapagos Islands, London, South Africa, Rome, Urbanization and Ecuador.

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