| We cannot see the future, of course, but there | | | | in the Dungeon of Befallen, but if tens of |
| are a number of technological innovations that are | | | | thousands of us go there to hunt them, none of |
| relevant to gaming, that are also fairly easy to | | | | us will have a good time. Sometimes the only |
| see coming. Currently, access to gaming involves | | | | way to reduce congestion is to add content, but |
| some sort of access to computing technology, | | | | this, again, is labour intensive. There will also be |
| and access to gaming that can earn money | | | | congestion effects related to connection speeds |
| involves access to a shared, persistent, physical | | | | and bandwidth. |
| computing environment, specifically a virtual world | | | | A third reason that the market will probably not |
| . The technology supporting virtual worlds is | | | | be dominated by a few companies can be found |
| advancing so quickly that it would be foolish to | | | | in the many competitive strategies that are |
| describe the next generation in any detail. Suffice | | | | available even now, but have not yet been |
| it to say that there are large, lucrative industries | | | | exploited by new entrants. For example, the |
| working energetically on different dimensions of | | | | current set of developers have managed to |
| the environment that virtual worlds thrive in. | | | | impose huge switching costs on players by |
| These industries produce three items of interest, | | | | structuring gameplay around the time-intensive |
| namely, connections, interface and content. | | | | development of avatar capital. A player starts the |
| Developments in connections include the internet | | | | game with a weak avatar, but gameplay gives |
| and, increasingly, wireless communications. | | | | the avatar ever-increasing powers. As power |
| Development of interfaces includes voice | | | | increases, the avatar is able to take more |
| command, head-up displays and body motion | | | | advantage of the game world, to travel farther, |
| detection (computer-controlling gloves, gaze | | | | do more things, see more people. A person with |
| readers). Developments in content include the | | | | a high-level avatar then faces a high hurdle in |
| supply side of the market for games, where | | | | switching games, because in the new game he will |
| annual revenues have grown beyond Hollywood | | | | start out poor, defenceless and alone again. This |
| box office revenues. All three industries are | | | | situation definitely locks in the game's player base, |
| expanding at a rapid rate. Whatever emotional | | | | but it is also open to defeat by any number of |
| experiences people seek, it may become possible, | | | | schemes to reduce the switching costs. |
| in the near future, to effortlessly connect to a | | | | Surprisingly, no competitor to a current game has |
| virtual world that provides that experience at | | | | offered new players the opportunity to start their |
| fairly low cost. Kurzweil argues that the explosion | | | | avatars at a higher level of wealth and ability if |
| of computing power alone may be sufficient to | | | | they can provide evidence of a high level avatar |
| change the daily course of life. | | | | in another game. On the other hand, two games |
| Since these developments all involve networks, | | | | (Ultima Online and Dark Ages of Camelot) now |
| they may seem to suggest a monopolistic | | | | offer methods to effectively start out ahead: in |
| market structure. If economic life online involves | | | | Ultima, you can directly buy your levels; in |
| getting your email and hanging around with | | | | Camelot, you can start a new avatar at level 20 |
| friends, there will be positive externalities with | | | | if you have already gotten one to level 50. These |
| respect to the sheer size of the virtual world one | | | | strategies help companies discourage the buying |
| visits. If I spend my time on Rubi-Ka, while you | | | | and selling of avatars outside the game, perhaps |
| spend your time in Albion, we cannot talk to one | | | | at a cost to the atmosphere within the world. In |
| another, and we cannot do things together. Thus, | | | | sum, what appear to be strong lock-ins and |
| our time in virtual worlds is more valuable if | | | | switching costs in the game market today may |
| everyone we know is in the same world. | | | | not be as strong as they seem; when savvy |
| Moreover, if two worlds compete and one has | | | | competitors appear, the player bases will generally |
| more players than another, wouldn't everyone | | | | be at risk. For example,some network games |
| have an incentive to join the larger world, so as | | | | such as lotro gold,runescape gold,guild wars gold |
| to enjoy the larger network of society, | | | | etc. |
| communication and entertainment that it affords? | | | | A final argument against a monopolization |
| Might such network externalities lead to a | | | | tendency comes from the nature of the content |
| domination of this market by one player?For | | | | itself. Games are art, for the most part, and |
| example,some network games such as lotro | | | | markets for artistic output exhibit a great deal of |
| gold,runescape gold,guild wars gold etc. | | | | churn due to herding effects and the star |
| There are reasons to expect, however, that this | | | | phenomenon (MacDonald, 1988). If a company |
| market is not likely to be monopolized. First, there | | | | designs a better game, it will attract players. And |
| seems to be a great diversity of tastes for the | | | | while it is true that development costs can be |
| different features of a world. Mr. Bird may want | | | | significant, it will always be possible to produce a |
| to be on Pluto, while Mr. Castronova prefers | | | | fun virtual world for a tiny amount of money and |
| medieval Britain. One of the major attractions of | | | | then scale it up as it becomes more |
| life mediated by avatars is the anonymity it | | | | popular.Whatever network externalities, |
| affords, and anonymity requires a person to have | | | | supply-side returns to scale, and barriers to entry |
| exit options: other worlds to escape to if one's | | | | may exist in the market for virtual worlds, they |
| reputation in this one gets unpleasant. Perhaps a | | | | seem insufficient to produce domination by a |
| savvy game developer could make a world so | | | | single company. The distribution of populations in |
| large and varied as to provide the essential | | | | virtual worlds is perhaps less like a natural |
| minimum level of entertainment and anonymity to | | | | monopoly market than a club goods market. |
| a sufficiently large number of people, so that | | | | Populations will sort according to the services, |
| membership in that one world becomes optimal | | | | ambience, and fees of the various worlds. Virtual |
| for all. This seems unlikely, however, given that | | | | worlds will compete, as clubs do, but their size will |
| there is a marginal cost to creating and | | | | be limited by congestion effects and by the |
| maintaining game content. Moreover, there are no | | | | marginal cost of increasing the scale of the world. |
| economies of scale on the supply side to match | | | | This analysis allows a tentative answer to the first |
| the increasing returns on the demand side | | | | question of the study: in the medium-term future, |
| (Liebowitz and Margolis, 1994). Production of game | | | | the online multiplayer gaming market will probably |
| content and its maintenance are both | | | | consist of a number of large, densely populated |
| labour-intensive activities. One could perhaps | | | | worlds, with varying degrees of portability |
| increase production of content by allowing other | | | | between them. The worlds will generate large |
| producers (say, by opening game code to the | | | | revenue streams and will occupy many hours of |
| public), but continued control of the world being | | | | human time, some of it considered play, some of |
| created would be problematic. On the whole, it | | | | it considered work. The hours that people devote |
| seems very unlikely that one developer could | | | | to games will result in the accumulation of stocks |
| produce a world big enough to monopolize the | | | | of digital capital goods. These objects will have |
| market. | | | | considerable economic value. Given the expected |
| A second reason involves congestion. Virtual | | | | growth in connectivity, interface technologies and |
| worlds are virtual because they are online, but | | | | content, there is reason to believe that this digital |
| they are worlds because there is some physicality | | | | capital stock may eventually become quite large. |
| to them. Avatars take up space. If a world has a | | | | These considerations then lead to the next set of |
| certain amount of entertaining content in it, that | | | | questions: If virtual worlds do become more |
| content will almost always be subject to some | | | | important, how will this affect the real Earth |
| kind of congestion effect. The cool monsters are | | | | economy? |