Virtual Economies

I’m not much of a gamer, but Matt got me following video game law with curious interest. And now, via ArsTechnica, I’ve learned of crazy things going on in role playing game economies.

To some, the only surprise in Jon Jacobs’s US$100,000 purchase of in-game real estate is that nobody thought of it sooner.

The first thing to know is that unlike most other MMORPGs, Project Entropia mixes its virtual economy with the real world. Money can be earned in-game, or “transfered” at a fixed exchange rate of US$1 for PED$10 (PED = Project Entropia Dollars).

The $100,000 purchase netted Jacobs a space station that he plans to develop into “a cross between Jurassic Park and a disco.” Visitors to the station can hunt dinosaur-like monsters and spend time in the stations nightclubs. The AP story quotes Jacob’s saying “I want to operate this thing at the level of a major nightclub in a major city,” and explains that he expects to make $20,000/month on hunting fees and other activities related to the station, though the article doesn’t make clear whether that number is in US$ or PED$. It’s also not clear how he’d extract his game earnings as US$.

He refinanced his house shortly after and considered investing some of the cash in the hot Miami real-estate market, but he realized that if he bought a rental property, it really wouldn’t generate any income beyond what he’d pay for the mortgage and repairs.

So he invested the proceeds in the game.

Interestingly, the article notes that IGE, “the leading MMORPG services company” has handled deals worth more than $100,000, “but would not provide details because of client confidentiality.”