By Deane Barker 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…