Sunday, April 5, 2009

Intangible Value

Many moons ago, kids would play baseball outside with a group of friends. In today’s society, kids play baseball from the comfort of their couch. This is made possible through video games, technology, the internet, etc. No, the concept of video games is not new to the world, but the platforms that gaming companies engineer are making new waves in the economic ocean. Specifically, Changyou, a Chinese online gaming business, priced at around $820 million, has been finding their niche in the gaming market. The prize game of Changyou is “Tian Long Ba Bu”, which is an online multiplayer role playing game. This game has been known to have 738,000 members playing at once. What is remarkable about this game is that the users who enter this virtual reality have the freedom of buying commodity goods for real money. These goods only exist in the game; they are not items that UPS ships to your house 5-7 business days later. Items in the game might include weapons, medicine, food, real estate, etc (anything can be programmed). Changyou also sells a virtual gem online that is priced at $180. Through this platform of buying non-tangible items in a game for real money, Changyou is able to generate income for products they don’t have to physically manufacture. Changyou is not the only company that has purchasable “in game items”. More and more gaming companies are starting to provide this feature. Programmers at Changyou study market prices for similar items in similar games to remain competitive.

http://www.economist.com/business/displaystory.cfm?story_id=13415293

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