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Games and role-playing are as ancient as Mankind. Rome's state-sponsored lethal public games may have accounted for up to one fifth of its GDP. They often lasted for months. Historical re-enactments, sports events, chess - are all manifestations of Man's insatiable desire to be someone else, somewhere else - and to learn from the experience.

Last week, Jeff Harrow, in his influential and eponymous "Harrow Technology Report", analyzed the economics of Massively Multiplayer Online Role Playing Games (MMORPG). These are 3-D games which take place in comprehensively and minutely constructed environments - a medieval kingdom being the favorite. "Gamers" use action figures known as avatars to represent themselves. These animated figurines walk, talk, emote, and are surprisingly versatile.

Harrow quoted this passage from regarding Sony's (actually, Verant's) "EverQuest". It is a massive MMORPG with almost half a million users - each paying c. $13 a month:

"(Norrath, EverQuest's ersatz world is) ... the 77th largest economy in the [real] world! [It] has a gross national product per capita of $2,266, making its economy larger than either the Chinese or Indian economy and roughly comparable to Russia's economy".
In his above quoted paper, "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier", Professor Edward Castronova, from California State University at Fullerton, notes that:

"The nominal hourly wage (in Norrath) is about USD 3.42 per hour, and the labors of the people produce a GNP per capita somewhere between that of Russia and Bulgaria. A unit of Norrath's currency is traded on exchange mark ets at USD 0.0107, higher than the Yen and the Lira. The economy is characterized by extreme inequality, yet life there is quite attractive to many."
Players - in contravention of the game's rules - also trade in EverQuest paraphernalia and characters offline. The online auction Web site, eBay, is flooded with them and people pay real money - sometimes up to a thousand dollars - for avatars and their possessions. Auxiliary and surrogate industries sprang around EverQuest and its ilk. There are, for instance, "macroing" programs that emulate the actions of a real-life player - a no-no.

Nor is EverQuest the largest. The Korean MMORPG "Lineage" boasts a staggering 2.5 million subscribers.

The economies of these immersive faux realms suffer from very real woes, though. In its May 28 issue, "The New Yorker" recounted the story of Britannia, one of the nether kingdoms of the Internet:

"The kingdom, which is stuck somewhere between the sixth and the twelfth centuries, has a single unit of currency, a gold piece that looks a little like a biscuit. A network of servers is supposed to keep track of all the gold, just as it keeps track of everything else on the island, but in late 1997 bands of counterfeiters found a bug that allowed them to reproduce gold pieces more or less at will.
The fantastic wealth they produced for themselves was, of course, entirely imaginary, and yet it led, in textbook fashion, to hyperinflation. At the worst point in the crisis, Britannia's monetary system virtually collapsed, and players all over the kingdom were reduced to bartering."

Britannia - run by Ultima Online - has 250,000 "denizens", each charged c. $10 a month. An average Britannian spends 13 hours a week in the simulated demesne. For many, this constitutes their main social interaction. Psychologists warn against the addictive qualities of this recreation.

Others regard these diversions as colossal - though inadvertent - social experiments. If so, they bode ill - they are all infested with virtual crime, counterfeiting, hoarding, xenophobia, racism, and all manner of perversions.

Subscriptions are not the only mode of payment. Early multi-user dungeons (MUD) - another type of MMORPG - used to charge by the hour. Some users were said to run bills of hundreds of dollars a month.

MMORPG's require massive upfront investments - so hitherto, they constitute a tiny fraction of the booming video and PC gaming businesses. With combined annual revenues of c. $9 billion, these trades are 10 percent bigger than the film industry - and half as lucrative as the home video market. They are fast closing on music retail sales.

As games become graphically-lavish and more interactive, their popularity will increase. Offline and online single-player and multi-player video gaming may be converging. Both Sony and Microsoft intend to Internet-enable their game consoles later this year. The currently clandestine universe of geeks and eccentrics - online, multi-player, games - may yet become a mass phenomena.

Moreover, MMORPG can be greatly enhanced - and expensive downtime greatly reduced - with distributed computing - the sharing of idle resources worldwide to perform calculations within ad hoc self-assembling computer networks. Such collaboration forms the core of, arguably, the new architecture of the Internet known as "The Grid". Companies such as IBM and Butterfly are already developing the requisite technologies.

According to an IBM-Butterfly press release:

"The Butterfly Grid T could enable online video game providers to support a massive number of players (a few millions) (simultaneously) within the same game by allocating computing resources to the most populated areas and most popular games."
The differences between video games and other forms of entertainment may be eroding. Hollywood films are actually a form of MMORPG's - simultaneously watched by thousands worldwide. Video games are interactive - while movies are passive but even this distinction may fall prey to Web films and interactive TV.

As real-life actors and pop idols are - ever so gradually - replaced by electronic avatars, video games will come to occupy the driver seat in a host of hitherto disparate industries. Movies may first be released as video games - rather than conversely. Original music written for the games will be published as "sound tracks".

Gamers will move seamlessly from their PDA to their PC, to their home cinema system, and back to their Interactive TV. Game consoles - already computational marvels - may finally succeed where PC's failed: to transform the face of entertainment.

Jeff Harrow aptly concludes:

" ... History teaches me that games tend to drive the mass adoption of technologies that then become commonplace and find their way into "business." Examples include color monitors, higher-resolution and hardware-accelerated graphics, sound cards, and more. And in the case of these MMORPG games, I believe that they will eventually morph into effective virtual business venues for meetings, trade shows, and more. Don't ignore what's behind (and ahead for) these "games," just because they're games..."

About the Author

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. Until recently, he served as the Economic Advisor to the Government of Macedonia. Visit Sam's Web site at