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Globalization of Gold Farming

Virtual Currency Has Value in the World Economy

By

World of Warcraft

An image from the World of Warcraft MMORPG, courtesy of Blizzard Entertainment.

Blizzard Entertainment
Due to economic globalization, outsourcing has become a modern business norm. Goods are now often manufactured in developing countries and shipped overseas to be sold in industrialized markets. This practice, however, is not limited just to the exchange of concrete items. Today, even virtual goods and services are outsourced.

MMORPGs

Massive Multiplayer Online Role-Playing Games, known as MMORPGs, is one of the fastest growing sectors of the entrainment industry. Every day, tens of millions of people login online to play with friends from all over the world. Of the hundreds of titles currently available, the most popular is the World of Warcraft (WoW). Wow is produced in Irvine, California, by Blizzard Entertainment, and it is one of the most profitable computer games in history, earning over $1 billion a year in monthly subscription fees alone.

Much like in the real world, MMORPGs have a form of currency that players need to acquire in order to achieve social and gaming success. In the popular Korean game Ragnorak Online, the currency is known as the "zeny." In the Japanese produced Final Fantasy XI, it is the "gil." And in World of Warcraft, it is simply, "gold." In order to earn this virtual money, players must partake in a variety of income-generating activities, such as kill monsters, collect herbs, craft materials, and provide enchantments (a service that uses resources to improve a player's equipment), etc. The process for virtual currency generation can be very repetitious and time consuming. For players who lack patience or doesn't want to grind (labor for money), there is another way to earn digital money: exchange real money for it.

Gold Farming

Gold farming is the process in which an individual plays an MMORPG for multiple hours a day for the sole purpose of acquiring virtual currency to be sold for real currency. Gold farming is a lucrative industry because it takes advantage of basic global economic inequality and labor value differentials.

Most gold farmers are from developing countries such as China and Vietnam. According to World Bank estimates, there are currently over 100,000 people working as full-time gamers in China. They toil away for 12 or more hours a day in internet cafes, abandoned warehouses, and small offices, making about 25 cents an hour, or roughly $75 a month. There are quotas in place and work performances are heavily evaluated. The workforce is dominantly made up of migrant teenagers and young adults who come to the cities looking for work. These "virtual sweatshops" resemble the thousands of toy and appliance factories that have opened in China in the past several decades to take advantage of China's abundance of cheap labor.

While the practice may be somewhat exploitative, when compared to other forms of hard labor, gold farming is considered less strenuous and relatively safe. Moreover, the exchange of virtual currency is now an industry that yields up to $3 billion dollars annually, with 80% going directly into China's economy and 20% going to other less developed regions of the world, including Mexico and Eastern Europe. According to a 2009 research report by infoDev.org, gold farming actually provide workers with a higher percentage of foreign revenue than even fair trade coffee because money is flowing directly into the developing countries, as opposed to be consumed by Western intermediaries. The report contrasts the $3 billion dollar figure with the market for coffee, which was $70 billion globally in 2009, but only $5.5 billion of it went to the countries that produced the beans.

For much of the late 1990s and early 2000s, most real-money trading, or RMT, were done through eBay, Yahoo, Craigslist, and other online trading platforms. After a consumer makes a purchase, he or she will then provide character and server information to the seller, and typically within a few hours, the player's gold will be delivered to their in-game mailbox. A hundred WoW gold coins could be sold for as little as $20. Most buyers are from the United States, Western Europe, South Korea, and China itself. The reason why gold farming is so prosperous is because consumers often valuate their time. A common rationale behind conducting a RMT transaction is that 100 WoW gold coins during "Vanilla" (the WoW game before any expansion packs were introduced) could easily take players over 20 hours to acquire; therefore, a western player who earns even just minimum wage could essentially exchange the value of 3.5 hours of real life work for 20 hours worth of virtual work.

Recognizing the economic potential of RMT, many game developers have recently started to partake in the practice. Blizzard Entertainment, ArenaNET, and Sony have all started to regulate their own sales of digital money. This has dramatically shifted the direction of real funds globally. Less money is now going to the gold farming countries and more of it is being allocated domestically. Legal RMT also provides jobs and is subject to taxation, which makes it especially valuable to local economies. Zynga, which employs over 2,000 employees in the United States, is a social-network-gaming company that was developed based on the RMT business model. It is now a multi-billion company that trades publicly through the New York Stock Exchange.

With gold farming now on the decline, many of the virtual sweatshops have started to convert their operations to item farming, instead. For most MMORPGs, the best items in the game cannot be purchased with gold. They can only be obtained when players complete a difficult quest or defeat strong monsters. Rather than exchanging real money for virtual money, some players now pay farmers to help them complete in-game objectives. Although there is demand for this newer RMT venture, it is still not nearly as profitable as traditional gold farming used to be.

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