Picking apart the hype of new and classic video games.

Posts tagged “Economy

World Bank: Gold Farming Benefits Developing Nations

The research arm of the World Bank recently released a report indicating players forked over more than $3 billion in gray-market transactions in 2009.

Although practices like gold farming and power leveling, in which wealthy players pay others to either generate in-game currency or grind characters to build up their stats for real-world money, are almost universally frowned upon by the video game industry, the World Bank says these services can provide the foundation for a bustling online economy in nations with few economic prospects.

According to the report, gold farming businesses can in some cases be more beneficial than traditional agricultural trade because the majority of the money stays within the earning countries.

“The gross revenues of the third-party gaming services industry were approximately $3.0 billion in 2009, most of which was captured in the developing countries where these services were produced. In comparison, the global coffee market…was worth over $70 billion – but only $5.5 billion was captured by the developing countries that produced the coffee beans,” the report says.

Given the margins, it’s easy to understand why the practice has spread like wildfire through many developing nations where more traditional job opportunities have become scarce. According to a 2006 New York Times article, China accounts for about 35 percent of the farming business and was estimated to have over 100,000 people working 12-hour shifts at the time (and making up to $250 a month for their troubles.) The World Bank estimates that number has increased in the past five years.

Although farming was predominantly found in online role playing games like World of Warcraft, the recent social gaming boom has drawn farmers out to greener pastures like Farmville, the Facebook focused farm simulator/feed clogger. Last year Farmville developer Zynga leveled a suit against farming hub playerauctions.com claiming the website has been siphoning money away from Zynga-approved transactions by offering cheaper rates on in-game goods.

I’ve always believed the journey is greater than the level 60 destination when it comes to role playing games and that being pounded into the ground as a low-level player in COD Black Ops simply makes ranking up that much more of a reward. But at least the time-strapped, financially-solvent gamer, buying into the online gold economy seems to have a better net social impact that purchasing from any of these 10 major companies.