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Virtual Economies - How to Get Rich from Video Games

Updated on November 11, 2014

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An Introduction

Mention the words 'game' and 'money' in the same sentence, and you will capture the attention of half the internet. For years now, gamers dream of using their past time hobby to rake in a few extra bucks. Yet what was once a wasteful time-sink is now a viable and very lucrative opportunity.

This articles will be covering the basics of the Virtual Economy, explaining the market and how people have used it to their advantage. We'll also be examining various underhanded techniques employed by the more dishonest players, and finish up with some of the greatest financial gains and losses in some of the best-known video games.

Diablo III

Diablo III, infamous for its inclusion of a real-money auction house. It has since been shut down.
Diablo III, infamous for its inclusion of a real-money auction house. It has since been shut down. | Source

What are Virtual Economies?

The Virtual Economy defines the entire structure of an in-game market. This is the ensemble of the production of items (player made or gathered from monsters and the environment), the distribution of these products (trading among players and NPCs) and the consummation (usage of items to heal, to earn experience).

Supply and Demand

For those who aren't too familiar with economics, Supply and Demand serve as the needs of the players. If there's an item players want and a low quantity of it, it's going to be priced higher. If it's in plentiful supply, the price will be lower. As a general rule for MMORPGs, there are items which are always in demand, notably those that need to be gathered and are used to make other items.Whereas some players will happily frolic through the wilderness to collect ores, there are others who will sit at the Marketplace, buying what they need to raise their skills.

However, the market can be influenced at any moment. Maybe there's an update to the game, offering a ton of new rewards for learning Blacksmithing, but reducing the effectiveness of the Herblore skill. Now, many players decide to abandon their potion-making roots and take up a hammer at the local forge. Whilst there's a massive increase in weapons and armour, fewer potions are being made and thus are in high demand. All of a sudden, a short term boost to Blacksmithing has resulted in a long-term price drop, with Herblore now much more profitable.

Currencies

Whereas once the only form of monetary bargaining was gold or credits, the ever-intelligent player base has devised new currencies to use. Notably for rare objects, traders will be unwilling to accept gold. Instead, they might ask for a particular item that is both frequently traded and recognized as a gold alternative.

One of the more famous examples is Team Fortress 2. Items are priced with three major currencies. Refined Metal (also known as Ref), the highest level of tradeable metal and worth around $0.24-$0.25 in real money. Mann Co Keys, used for opening in-game crates and worth around 8.55 ($2) Refined Metal at the time of writing. Finally, there's Earbuds (commonly referred to as Buds), a cosmetic item given out in limited supply several years back. As of now, they are worth 16-17 keys ($32-$34).

Refined Metal

We don't take gold here...
We don't take gold here... | Source

Scamming Paradise

In the real world, we are protected with PIN Numbers and countermeasures against fraud, making a scammer's job significantly harder if he/she wants to get any of our hard-earned money. Add to the risk of jail time and heft fines and you'll find few people who will want to take the risk. Compare that to the online world however, and we begin to see some differences.

Aside from game rules and maybe some assistance from a moderator, there is a very limited level of protection in the virtual world. And some games don't even offer that! Take EVE Online, a universe where ripping off players is encouraged! Scams are pulled daily, be they pilfering a few bucks here and there or robbing a player of his eighteen dreadnoughts. The risk to them is minimal, save for the loss of a single account. Then it's just the case of setting up another one.

The Cost of War

Let's face it, violence and video games go hand in hand. Every day players engage in one-on-one conflicts, maybe spending a few gold on bandages or a handful of credits on some bombs. But what happens when The Sharks and The Jets get into an argument on bingo night and decide to declare war on each other? Aside from a slew of bodies, there's going to be a very annoyed accountant.

War in any game will incur expenses. You'll need healing items to keep your troops fresh for starters. But then you catch wind that Lord Jeeves has finished building a bunch of repair drones for the enemy fleet, meaning you'll need some new toys to overcome the faster healing abilities. But that's just one side to the war...

We talked about Supply and Demand earlier. Chances are, when two factions go to war, the prices for offensive, defensive and healing items are going to shoot up. Whereas a Super Mega Death Laser once costed 50,000 credits, the price of eviscerating your enemies has now hit a peak of 80,000! War is expensive, and certain players are smart enough to know that. This especially applies to EVE Online.

EVE Online's Market

The mere mention of this game and a quick glance at this image should tell you what kind of economical giant you're facing.
The mere mention of this game and a quick glance at this image should tell you what kind of economical giant you're facing. | Source

Exploiting The Market

A true player-maintained market can make or break someone in an instance. There exist those who would exploit the economy to their advantage, using vast sums of money and a certain degree of cunning to manipulate commerce and ultimately sway things their way, making a lovely profit.

Say for example certain ships run on a specific fuel, like cars, which is found only in one major area of the game. What happens when someone goes ahead and buys almost all the fuel on the market. The price goes up. Then, what about if transports carrying this fuel are shot down and destroyed, cutting off the chain of supply? The price goes up even more. And finally, what if these people are the only ones selling the fuel? They set the price.

Behind every great fortune is an even greater scam.

Real World Impact

On occasion, the devastation of an in-game event is of such a level, it affects that awful thing we call reality. Maybe a massive skirmish takes place that results in the total destruction of a fleet, or one player pulls off a disgusting yet clever scam. Either way, the blow-back strikes the real world with virtual bankruptcy or maybe brings in the media.

Below, you'll find some of my favourite examples of these events. The best scams, battles and anything that cost a lot of money!

EVE Online

  • In 2005, The Guiding Hand Social Club (GHSC) was contracted to assassinate Mirial, CEO of Ubiqua Seraph. Whereas some players would get a few ships together and ambush the target, the GHSC are not 'some players'. They infiltrated Ubiqua Seraph and placed operatives at every level of the organisation, all in the span of a year. When the day finally came, not only did the GHSC destroy Mirial's ship and claim her cold corpse, their double-agents proceeded to loot the clan's resources, resulting in a gain of around $16,500.
  • Investment scams have been present in EVE almost since the beginning of the game, but none has pulled in more money than the Phase Inc. Investment Scheme. Two players, using a mix of charm and promises of fortune, convinced players to invest over ONE TRILLION ISK, culminating with the scammers closing shop and fleeing with their 'hard-earned' cash. Over 4,000 players were affected.
  • If relieving an entire clan of their fortune and ripping off 1% of the playerbase wasn't enough, The Battle of B-R5RB takes the crown. When the CFC, the largest organisation in EVE, took control of an enemy space station, it sparked a conflict that has left a mark on the game to this day. The station in question formerly belonged to Pandemic Legion, which in turn is a part of N3, a massive coalition. When they got wind of what had happened, they mustered the bulk of their fleet and launched an all-out assault on the station, only to be met by a similar sized fleet belonging to the CFC. In the 22 hours that followed, around 600 ships were destroyed and 20 million crew members lost their lives. Out of these ships, 75 were Titans, each worth around $3,500. The previous record for Titans lost in a single battle was 12. In total, the damages amounted to $300,000.

Second Life

  • In 2006, Marsellus Wallace, the Don of Second Life, launched a revenge attack against someone who dared to cheat him. Drax Lumiex, owner of the once-famous Red Dragon Casino, proposed that Wallace go into business with him. Drax then proceeded to keep all the profits for himself, claiming that the casino was running at a loss. Wallace earned Drax's trust and was soon given permission to modify the establishment. The head of the Mafia proceeded to delete the piece-de-resistance of the casino, a huge red dragon whose open mouth served as the entrance.
  • In 2005, virtual terrorists begin an attack on the Second Life servers. They constructed self-replicating items that eventually led to severe lag and crashes. One particular group even had the incentive to construct a Semtex style object, coded to bring down a large section of the Second Life universe and destroy everything in it! It reached the point where Linden Lab (the owners of Second Life) called in the FBI to sort things out.

Second Life's Mafia

Don't mess with the mafia...
Don't mess with the mafia... | Source

Team Fortress 2

  • Whilst there aren't any massive events to mention, it is worth noting that the Team Fortress 2 economy runs on the power of hats. Strange hats, Genuine hats, Unusual hats! With a bit of luck, you too can own a piece of headwear that can be worth a few extra bucks or even thousands! For hats. Stuff you wear on your head. Clothing.

Final Words

Once upon a time, in-game markets were controlled by the developers. Now, they belong to the people who inhabit their world. We are in an age where the players decide how the economy works. Formerly, battles could only be fought with swords and guns. This is no longer the case, as economic warfare has risen to become the new PVP.

Further Reading

Virtual Econmoic Theory - A fantastic article that served as a huge inspiration to this Hub.

Understand How To Control MMORPG Markets - An amazing, in-depth guide that's perfect for beginners.

Voidspace - The Future of MMORPGs? - An article written by yours truly, analysing an upcoming game that dares to change the industry. It also features a player-run economy.

A video on Diablo III

World of Wacraft - Perfect Competition Market

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