World of Warcraft’s Virtual Economy Worth 3 Billion in Non-Virtual Dollars

In America, long hours playing World of Warcraft online gets you a hand cramp and the world’s worst tan. In developing countries like China, it can actually lead to making some real money. How? It’s called gold farming. Basically, someone sits in Asia playing WoW for untold hours as you go to work. Then you come home, pay an intermediary through PayPal for the gold they earned in the game, and then you buy fancy armor and weapons for your level 80 orc mage without having to do any of the work.

This is a serious industry; in 2009 alone, third-party gaming services including gold farming and power leveling (leveling up through the monotonous act of killing hundreds and hundreds of weak enemies) added up to a $3 billion market, according to a study by infoDev, with gold farming making up 2/3rds of the market and power leveling the rest. Ars Technica explains the complexity of the whole operation:

The virtual gold market is fully developed in every sense of the word … There are large market makers, commodity speculators, and multiple regional centers where larger firms source gold orders out to a fluid network of rural farming studios and (believe it or not) wholesalers. The latter group, wholesalers, are probably acting as arbitrageurs, buying gold low in low-demand times and selling it high when demand spikes.

In short, this is essentially a shadow economy living online — much to the chagrin of WoW officials. Gold farming is actually against the rules, and WoW’s developer, Blizzard, spends lots of time shutting down both human gold farmers and bots, automated programs that run around the clock harvesting gold.

The report takes the position that this is a boon to developing countries, as almost all of that $3 billion flows from developed countries in North America and Europe to developing nations in Asia, most prominently China, which leads the world in exporting farmed gold. He points out that almost all of that $3 billion goes directly to developing countries, as opposed to the coffee trade, which might be a $70 billion business but only around $5.5 billion actually goes to the countries that produce the coffee.

Around 121 million people play World of Warcraft and other MMORPGs (Massively Multiplayer Online Role-Playing Games) like Star Trek Online and Rift and that number is growing, meaning the market for third-party gaming services is only going to expand. The average amount spent by each person on this secondary market (about one in four gamers): $369 per year. The problem is, most of these operations are still under the radar. Blizzard and other developers actively try to ban them, countries are befuddled on how to tax and regulate them, and the work itself is mind-blowingly monotonous, often involving earning as low as 30 cents an hour during 60-hour workweeks.

So yes, a lot of the money being created in this virtual economy is going to developing countries who need it, but it’s far from being as stable as other industries like, say, coffee. Before you make your virtual dwarf paladin pat itself on the back for buying virtual gold, know that the people farming the gold are barely making anything and the markets themselves are underground, forbidden by the game developers and unregulated by the countries they exist in. It’s nice that almost all of the money goes directly to developing countries, but committed gamers might help more by taking a WoW caffeine break with a cup of fair-trade coffee.

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Photo: dyashman, Flickr, CC

About Keith Wagstaff

Keith Wagstaff is a journalist living in New York City. He received his degree in print journalism from the University of Southern California and his work has appeared in such publications as The Village Voice, Newsday, The Huffington Post, Kilimanjaro Arts Journal, The L Magazine and others.

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