MMORPG as theme park?

January 29th, 2008 Jun Sok Huhh

Today, Game Rating Board of Korea approved mini-games in MMORPG Lohan. The rating on them had been denied for its speculative nature. It sounds strange, but in Korea, the criteria that rating agency does much importance on are difference between gaming and gambling. The serving firm of Lohan made up for some ambiguous parts about in-game currency charging with respect to mini-game, and got a final admission of Rating Board.

It is interesting that Lohan is one of typical MMORPG based on fixed fee. But, as you already knew, there have been a lot of mini-games in MMORPGs. Part of them was invented unofficially by players, others were provided by developers to give small fun for players. In case of Lohan, they benefited unexpectedly from a mini-game, that was a Baccarat in reality (See this). It made a huge surge in players' activities and RMT, which was finally a helping hand for firm’s revenue. Lessons from this experience might be more profound than we think. This time, they intend to make players to charge more in-game currency in micro-payment fashion.

Anyway, recent rush to micro-payment also gives some inspiration to traditional MMORPGs. Like this case of Lohan, games in game may make a way to charge players additionally besides fixed fee. Actually, this type of pricing scheme is originally from theme park business. Under some assumptions, two-part tariff that consists of entry fee and price by usage enables the firm to extract more surpluses from consumers, and results in higher profits. In Korea, a mini-game of Lineage, dog race, has been popular contents among players. Weirdly some do heavy buying from RMT for this petite thing. Especially, in Korea, gamble-related mini-games tend to be pretty popular. In extreme case, MMORPG might serve as a platform for virtual gambling.

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NCSoft is now testing micro-transactions in Japan!

January 25th, 2008 Jun Sok Huhh

http://shop.plaync.jp/goods/showPearlGoods.nc

Plaync Japan, the Japanese portal of NCSoft, are now launching 'purchasable' items on Lineage II. It is intriguing in that Lineage II is originally traditional fixed-fee based game. As not so many items are on the shelve, change in NCSoft's strategy is more meaningful. Are micro-transactions able to be applied to fixed-fee based game? Do micro-transactions go well with typical MMORPG design?

According to a source unnamed, early sales record in Japan is impressive. Is this a symptom of a change in traditional business model by a Korean giant?

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Peril of informal economy

January 25th, 2008 Jun Sok Huhh

RMT Middlemen in Korea is generally trustful. Their system of transactions has been well operating for last 4 years, and the criminal cases around RMT has been noticeably decreasing since they have been in the game.

But, what about the moral hazard of middleman himself? This is one of classical problems in economics. "Who watch the watchman?" Moreover, recently the business of RMT mediation slides into stagnation. In Korea, this resulted from continual decline of Lineage series–Lineage I and II might consist of 60%+ market share in Korean unsanctioned (secondary) RMT market–, social and governmental pressure against RMT, and changing in strategy of publishers from the fix-fee based to micro-transactions.

A Korean news article (written in Korean language) reported that a staff of ItemBay, the top middleman in Korea, was arrested for appropriating the account of a customer in illegal way. News said that he made around 45 USD for this case, but is now suspected to commit similar crimes for many other cases.

This act of crime might be just an exceptional episode. Actaully, It may not a big deal. However, what if the trustfulness of middleman be put on the test? When the trust of a bank be on the doubt, bank-run would precipitates and system collapses. The time horizon of RMT mediation business might not be so long enough to be careful about their trust for ever. Hypothetically, when the ending time comes sooner or later, what happen to huge RMT secondary economy?

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Simple Economics of Real-Money Trading in Online Games

January 24th, 2008 Jun Sok Huhh

Simple Economics of Real-money Trading in Online Games
Huhh, Jun-sok
Seoul Nation University

Abstract

This paper is to provide a theoretical investigation on real-money trading (RMT) observed frequently in online games. To overcome former studies focused much on description itself, economic incentives behind RMT are modeled and identified by reconsidering economic studies related. Firstly, RMT is analyzed by its modes of trading. It is shown that two modes of trading, the continuous and the discrete, have different consequences on the configuration of RMT market. Secondly, economic impacts of RMT are explored in the context of network externalities. Thirdly, two issues of RMT, gold farming and micro-payment, are shortly addressed as an application for the analysis.

Download latest revised version here.

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RMT, collapsing down?

October 10th, 2007 Jun Sok Huhh

Recently, some serious threats to Korean RMT market emerged. Three major RMT mediation companies have been gone through technical problems with their operations. A rumor said that a group of hackers had set this attack to get some side money. But, according to the companies, the problems were just from minor technical difficulties, not from systematic attacks.

Local experts, however, suspect that it was not a coincidence that all of them had same problems at the same time. A small middle-man, Itemria, confessed that there were threats from hackers due to vulnerable system security. An expert of internet security said, "there were some requests from RMT mediation companies to investigate sudden connection surge from China. It is highly probable that some groups of hackers planned this attack."

How do Korean online gamers response to this virtual 'financial' crisis? If trust is at danger, the system cannot go on. Those who had the remainder for their item trading is now hurrying to clear their accounts against system failure. It is just like the bank-run of real world.

UPDATE) One of big three, ItemPF, admitted that the connecting difficulty was from hackers' attacking. Now, it is obvious that the networks security infrastructure of middlemen is extremely fragile in comparison to their trade volume.

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