1(20) CS5038 The Electronic Society Lecture : Online Games Lecture Outline What are Virtual Worlds and MMOGs How many people are playing Types of Games – mainly Fantasy Genre Example: World of Warcraft (WoW) Where do players come from? Problems with private servers The In-Game Economy Linking to the real economy – how to make real money Example: Second Life Cheating in Games, and company responses Gold Farming Unresolved legal issues Criticisms of online games – addiction problems Non-Game virtual world uses

2(20) What are Virtual Worlds and MMOGs? A virtual world are computer-simulated environments, typically quite similar to the real world (3D with realistic physical laws and societies), Users interact in the world via avatars. Persistence: The world should be active and available 24/7 Events should happen even if a user is not connected Plots continue to unfold (in reality there will have to be some downtime for maintenance) Primary use is games, but also used for education MMOG=Massively Multiplayer Online Game Hundreds of thousands / Millions of people interacting via avatars Communicating by text or VOIP Note: This phenomenon is quite new, and different to eCommerce, eHealth, eGovernment etc. It is more similar to the beginning of cinema or television.

3(20) How many people are playing? Charts from MMOGCHART.COM

4(20) How many people are playing? Note: MapleStory said to have >50 million players in all of its versions

5(20) Types of Games Fantasy Genre Dominant (94%) Remainder include Sci-Fi, Superhero, combat, social Business Model: Typically pay for client software for a one- time fee + pay a monthly subscription to play ?? $65 billion industry (2011) Typical Features: Character development: increasing abilities Economy: currency and trade of items (e.g. weapons / armor) Guilds or clans: organisations of players Game Moderators: supervise the world

6(20) Market Share April 2008

7(20) Example: World of Warcraft (WoW) (Currently most popular MMOG) Currently >50% of overall market (62%) >10.3M subscribers (November 2011) ~5.5M Asia (2008) ~2.5M North America (2008) ~2M Europe (2008) Initial player cost ~US$20 Daily play cost ~US$0.50 Different pricing model in China – CD key to access game Piracy less of a problem due to need to connect to servers Reason for major success compared to earlier US games

8(20) Where do Players come from? Extremely popular in Asia: South Korea: 38% play online games (pop.~50M), Advanced Broadband infrastructure More people play the MMORPG Lineage than watch TV Well-funded professional video gaming leagues TV channels devoted to games China: ~20M MMOG players in 2005 (457 million Internet users) Majority of World of Warcraft players based in China, but recent legal problems Also Japan, Taiwan Growing popularity in North America and Europe

9(20) Private Servers Run by volunteers -> free Private servers -> less popular in west than the official servers In Asian countries private servers popular High fees for official servers 100MB/s fiber optic internet connections, ~US$30 a month Costs of running a server in China very low -Damage commercial MMOG development Many gamers feel the companies make game progress slowly to make more money Private servers allow faster progression

10(20) Virtual Economies In-Game Economy: Players can specialise, gaining valuable skills which others will pay for Leads to competitive advantage + division of labour Commerce: magic weapons, houses, goods and services can be bought and sold in game-currency Need for property rights, and protection against crime Second Life recognises IP rights for assets created in the world Game economy mirrors many aspects of real economies For example: problems with inflation

11(20) Virtual Economies Link to Real Economy: Users willing to spend real time and money for virtual resources Magic weapons, real estate, game-currency and characters are bought and sold on auction exchanges for real money (e.g. eBay) lists virtual exchange rates Examples: Island in Project Entropia sold for U.S. $26,500 Virtual space station for U.S. $100,000 Level 60 EverQuest characters sell for up to $5,000 Criticisms: Many regard trading game items for real money as unethical Usually violates terms of EULA (end-user license agreement) Blizzard (WoW) has banned it (but hard to enforce) April 2006: Blizzard banned >5,400 players and suspended 10,700 (for farming, often using bots) Sony launched Sony Station Exchange for EverQuest to legally buy&sell

12(20) Virtual Economies Link to Real Economy: Valuations of secondary market (real money trade of virtual commodities) $400m in billion in 2011 World Bank report $20m in real-world dollars made by dealers in virtual currency and goods (2004 figure) Professor Edward Castronova Statistics, check: Some virtual countries wealthier than real ones (higher GNP per person) See BBC article Virtual kingdom richer than Bulgaria New trends: Companies beginning to use Second Life as a means of marketing Politicians campaigning there Mark Warner (former governor of Virginia + possible Democratic candidate for president in 2008) First politician to give an interview in Second Life.

13(20) Virtual Economies Some people have made the buying and selling of virtual property their full-time jobs. Case: Julian Dibbell ( Buys and sells virtual cash, weapons, armour, homes and other artefacts from the Ultima Online game Game developer Origin does not prohibit activity Game has well established economy (less inflationary problems) Real world transactions take place on eBay or Tradespot Producers of economy are the teenage kids Have a lot of time but no money Do the hard work to produce items to be bought and sold Consumers are rich who do not want to invest time Much money to be made from accounts of long time players Selling the items individually can generate large profit Can make profit of $1,000 (US) per week Some players making >$100,000 annually Risky business without real-world laws to protect virtual property

14(20) Virtual Economies – Second Life Second Life gives property rights to players Allows players to create new objects from primitives Allows them to decide if these may be copied, modified or transferred Residents actively trade their creations ~230,000 items are bought and sold every month (Economist 2006) In-world currency Linden dollars are exchangeable for hard currency Total value US$567 million in 2009 (in real dollars) ~7,000 profitable businesses (Economist 2006) Avatars supplement or make their living from their in-world creativity Top ten in-world entrepreneurs averaging $200,000 a year (Economist 2006) Example of Web 2.0 – online collaboration and sharing Business Model: virtual property company (Economist 2006) Residents lease property $20 per virtual acre per month 25,000 residents, or about 3% or the population, lease property Monthly revenues of $1m Companies taking notice: Toyota is selling virtual cars Hopes for viral advertising

15(20) Cheating in Games Botting External program simulates player actions for common tasks Usually prohibited and is a bannable offense Rarely enforced Duping Exploit a bug in the game software to duplicate valuable items Very damaging to virtual economy Sharing Multiple people share an online game character Scams against new players Uneven trades or bad-faith dealing Players misrepresent value of goods or substitute lookalike worthless items

16(20) Cheating in Games Companies Responses May take different viewpoints Ignore cheating Ban it (Blizzard) If a company does not take cheating seriously, game may lose players Cheats also bring subscription money… Technical responses – tradeoff Efficiency versus security More code on server – slower but more secure Example: wall hacks

17(20) Gold Farming Gold Farmer = a player who farms items for the sole purpose of sale to other players via an out-of-game venue (e.g. eBay) Most MMOGs include terms of service that forbid this China dominant in market, but also in Eastern Europe, Mexico, Philippines ~ 100,000 people in China employed as gold farmers (December 2005) Represents about 0.4% of all online gamers in China Typically work 12 hour shifts, sometimes up to 18 hour shifts. Generates between $200 million and $1 billion annually, When I entered a gold farm for the first time, I was shocked by the positive spirit there, the farmers are passionate about what they do, and there is indeed a comraderie between them... I do see suffering and exploitation too, but in that place suffering is mixed with play and exploitation is embodied in a gang-like brotherhood and hierarchy. When I talked with the farmers, they rarely complained about their working condition, they only complained about their life in the game world. – Ge Jin, a PhD student from UCSD

18(20) Gold Farming Ethical? Some players feel that this is unfair and "spoils" the game Others believe they should be allowed to buy items if they do not wish to spend the time to earn them Effect on Virtual economy: Inflation (introduces more money) Skews the cost of a variety of game items: increasing supply of those easy to acquire items increasing demand for the more difficult items Gold farmers make the game more difficult for players to "grind" their way to in-game wealth Company responses Usually banned Significant manpower required to perform investigations Players need to spend large portions of their time on repetitive actions or "farming anyway - difficult to distinguish farmers for reselling Termination of a compliant user account -> very bad publicity Termination of a gold farmers account -> very little benefit

19(20) Virtual Crime Virtual gangs and mafia have emerged in South Korea Powerful players mug and steal from weaker ones Demand that beginners give them virtual money for their protection Case: Chinese Exchange Student (in Japan) Mugged players in Lineage II Used software "bots" to beat up and rob characters Stolen virtual possessions sold for real cash Arrested by police in Kagawa prefecture, southern Japan Case: Evangeline (The Sims Online) 17-year old boy going by the in-game name Evangeline Built a cyber-brothel: customers would pay sim-money for cybersex His account was cancelled but no legal action

20(20) Virtual Crime Case: Li Hongchen (Beijing) sued Artic Ice Technology Hacker broke into game and stole his biological weapons. Court ruled that weapons had indeed been his property He had invested time and money in acquiring them Arctic Ice was forced to pay damages and recreate all weapons lost Case: Qiu Chengwei (Shanghai) killed Zhu Caoyuan Qiu obtained weapon in game and lent it to Zhu Zhu sold weapon for 7,200 yuan (real money) Qiu went to the police to report the theft Police said weapon was not real property protected by law Zhu promised to pay, but Qiu lost patience and attacked Zhu at his home

21(20) Virtual Crime and Real Police Example from South Korea Some countries like South Korea have special police investigation units for "virtual crimes 40,000 cyber crimes reported in the first six months of ,000 related to online gaming

22(20) Unresolved Legal Issues Clicking I agree on an end-user license agreement (EULA) Could mean property rights are lost Game and contents remain the intellectual property of company Attorney Greg Lastowka (US): In the US, I think that youd have a hard time making a case in court for the loss of virtual property because of license agreements. Power seems to be in the hands of game companies Case: Peter Ludlow, Sim citizen & Professor at University of Michigan Started a newspaper, The Alphaville Herald Documented crime and prostitution in Alphaville, largest Sims city. Ludlow promptly kicked off the game (continues to write outside of game) Case: Earth and Beyond (Electronic Arts) shut down September 2004 One player had just bought an avatar for $3,000 Players sometimes organise uprisings or boycotts to reclaim their rights

23(20) Virtual Crime Stealing Players Accounts Most common technique is via trojans which steal account details Trojan is disguised as a program to give a character special powers (e.g. invisibility) Trojan distributed through games' chat rooms or by . Trojan secretly collects users login and password information Information sent back to the hacker Hackers then sell the virtual items (gold or weapons), for real world cash Player accounts can be worth up to $10,000 Player accounts also stolen by in-game nontechnical attacks Pose as a game administrator (staff of game company) Ask naïve player for account details Alternatively: offer hints on cheats or offer membership of gang

24(20) Virtual Crime Stealing Players Accounts Also done via hacking company servers Case: September 2006: Hackers break into database of "Second Life" Accessed 650,000 player accounts Information included real life names and contact information, and game passwords, credit card information was encrypted Developer asked players to change their log-ins "I reported that my SL account had been hacked on Sunday. Of course, the only reporting that could be done was a message to Customer Support and Live Help as the individual was selling off my first land and deleting my inventory... I know of two other accounts that were hacked..."

25(20) Virtual Crime Identity Theft ~250,000 characters created in Lineage (Korean) using stolen identities Characters likely put to work in gold farming in China (Korean ID number required to sign up to play Lineage in Korea ) Most Ids stolen from non-players Used to sign up without their knowledge

26(20) Game Criticisms Addiction: June 2005, it was reported that a child had died due to neglect by her World of Warcraft-addicted parents A player has also died from playing non-stop without eating or sleeping August 2005, China introduced restrictions on how many hours gamers can play

27(20) Virtual Worlds – non-game uses Managing a city or a country Form support groups for cancer survivors Rehearse responses to earthquakes and terrorist attacks Build Buddhist retreats and meditate. Second Life examples: Peter Yellowlees, psychiatry professor Leases a virtual island in Second Life for $300 a month Simulates schizophrenic hallucinations Understand schizophrenia by visiting virtual island Therapists help autistic children Also for long-distance learning.

28(20) Summary What are Virtual Worlds and MMOGs How many people are playing Types of Games – mainly Fantasy Genre Example: World of Warcraft (WoW) Where do players come from? Problems with private servers The In-Game Economy Linking to the real economy – how to make real money Example: Second Life Cheating in Games, and company responses Gold Farming Unresolved legal issues Criticisms of online games – addiction problems Non-Game virtual world uses