CS5038 The Electronic Society

1. CS5038 The Electronic Society • Lecture 13: 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. 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 24/7Events should happen even if a user is not connectedPlots 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 GameHundreds of thousands / Millions of people interacting via avatarsCommunicating 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. How many people are playing? • Charts from MMOGCHART.COM

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

5. 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 • ?? $30 billion industry • 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. Market Share June 2006

7. Example: World of Warcraft (WoW) • (Currently most popular MMOG) • Currently >50% of overall market • >10.9M subscribers (November 2008) • ~4M China (2006) • ~2M North America (2006) • ~1M Europe (2006) • 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. 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 • Majority of World of Warcraft players based in China • Also Japan, Taiwan • Growing popularity in North America and Europe

9. 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. 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. 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) • http://www.gameusd.com/ 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. Virtual Economies • Link to Real Economy: • Valuations of secondary market (real money trade of virtual commodities) • $400m in 2004 • $20m in real-world dollars made by dealers in virtual currency and goods (2004 figure) Professor Edward Castronova http://pc.gamezone.com/news/01_05_04_10_11PM.htm • Somewhere between $1 Billion USD to $3 Billion USD in 2006. • 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. Virtual Economies • Some people have made the buying and selling of virtual property their full-time jobs. • Case: Julian Dibbell (http://news.bbc.co.uk/1/hi/technology/3135247.stm) • 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. 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 • In-world currency Linden dollars are exchangeable for hard currency • Total value ~$60M (in “real” dollars) • ~7,000 profitable “businesses” • Avatars supplement or make their living from their in-world creativity • Top ten in-world entrepreneurs averaging $200,000 a year • Example of Web 2.0 – online collaboration and sharing • Business Model: virtual property company • 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. 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. 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. 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. • “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 • http://uk.youtube.com/watch?v=KH1LGdjZUKQ

18. 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 farmer’s account -> very little benefit

19. 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. 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. 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 2003 • 22,000 related to online gaming

22. 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 you’d 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. 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 e-mail. • Trojan secretly collects user’s 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. 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. 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. 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. 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. 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