The Virtual Land Market in Project Entropia

By on December 17, 2004

Gamer buys $26,500 virtual land: At first, I thought this was the stupidest thing I’ve ever heard of.

A 22-year-old gamer has spent $26,500 on an island that exists only in a computer role-playing game. […]

The land exists within the game Project Entropia, an RPG which allows thousands of players to interact with each other.

But, then I read further:

[The gamer] will make money from his investment as he is able to tax other gamers who come to his virtual land to hunt or mine for gold.

He has also begun to sell plots to people who wish to build virtual homes.

Project Entropia is different from other MMORPGs in that it has a real money economy built into it, meaning that people can buy and sell things for actual money within the game. (A lot of games have ad hoc markets offline — you can buy or sell stuff on, say, eBay. However, I don’t think there’s any way to force the seller to deliver the actual goods in the game, but I could be wrong.)

So he buys this island, and he’s started selling pieces of it to other people. If he develops it right, and nets more than he paid, then he has legitimately become a real estate developer of land that doesn’t exist.

Stupid as we might think it is, things are worth what someone wants to pay. If people want to pay this guy more than he paid for the item in question, then it’s a good investment, no matter how silly the notion of developing fake land seems to most people.

The downside is wrapped up in the law of supply and demand

Demand in the “virtual economy” is fairly untested. In the real world, the value of land has held true for millions of years. Who knows if this trend of people wanting stuff in a fake universe is going to continue? The market could fall apart in an instant, whereas the real world land market is comparatively stable.

As for supply, this virtual land market is dependent on the “owners” of the game not destroying it by expanding the world. Land (or any other commodity) has value only because there’s a finite amount of it. If the producers of this world just decided to flip a switch and double the size of the world, thus flooding the virtual land market with other islands like this one, then this guy’s investment drops like a stone.

In the real world of land development, you have the protection of the simple fact that you can’t just flip a switch and “create” new land. Thus, your investment has value. In the virtual world, this may or may not be true. Before I invested money, I’d want some contractual agreement with the game producers that they weren’t going to flood the market I’m speculating in.

And then I’d want an opinion from my doctor as to whether I’m completely insane, or just partially…

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Comments

  1. Jonny2Rivers says:

    Couldn't agree more- if there is a demand then no matter how stupid it may seem to you or me, it may appear to be a good investment- only for the short term as you correctly point out. This demand may not continue- either due to sudden creation and availability of new land or to changes in the game rules, and as I understand it the game rules will change under the "development" - if enough people want a certain thing in the game and take a vote on it, the owners of the game can imlplement the new rules. Under these circumstances a contractual agreement would be a must before investing this heavily. Its risky- but it could pay off.

  2. While you are right that there's no way to force an eBay trade to be enforced in a game, that's true of every trade you make on eBay. eBay can't force any trade to actually happen in the real world or any virtual world.

  3. The Optomist says:

    The only reason they double the land is because more players arive. Just as the they build on more land in the world as the population rises, what you said is not true because we do not use all the land in the world and many places are untouched. In entropia profit is more marginable and reachable because

    1. It would be possible to buy something the size of the sahara dessert
    2. You can charge a tax and premote your piece of land with events such as giving away prizes.
    3. "Jon Jacobs" is rich because of entropia he owns a nightclub, bank, and land which he gets tax from. Infact most people on entropia dream of getting to club never die or buying a space ship to go there. He has shops there to rent which are mostly taken up. He gets the rent from the shops.
    4. Entopia is fun if you make it fun. If you make it all about cash you will get no satisfaction or fun. You need to have fun and maybe try to make a little cash. People that buy land are like stock investors. Stocks are risky, just like buying in entropia, but virtual game players on on the rise. So I think people are making a great investment.

    As for me I just started playing. I have deposited no money and are slowly getting better. My profesion that I chose was mining once I earned enough cash trading, It took less than a few hours you can split up this time through out a few days. I see that the more I mine the more payout I get. I think if I mine enough I will make some cash. I am not saying it will be a full time job and I can just relax the rest of my life, but I will be having fun shooting stuff and making money.

    So think realy hard before you talk about land value.

  4. An Entropia Player says:

    You are right and wrong. Even if land size was doubled, if the land was just sand who would go ther. There is an agreement and they would have to notify you a long time in advance beffore closing the game. If my land had the best monsters to kill and the best resources it would probably have more people going there.

  5. Emperor says:

    If there is a market for it, and its profitable, its a good investment. I would be taking my returns, and use those to start other websites, or maybe even buy a real house and rent it out. Diversification is your safest guard against manipulations like this. But it comes at the cost of lack of specialization (or increased payment for specialization; which are one in the same).

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