When Fantasy becomes Reality – a book review

14th January, 2006

SYNTHETIC WORLDS: The Business and Culture of Online Games
by Edward Castronova
University of Chicago Press $29, 344 pages

Review: Financial Times, 14 January 2006

“This book claims to take a serious look at online computer games. You are actually reading it,” begins Edward Castronova in Synthetic Worlds. “If you are a serious, hardheaded person like me, you must be feeling a bit strange.” Quite. Castronova, an economist as well as a games enthusiast, is well aware of the need both to explain his subject, and to justify his choice of it. Although both explanation and justification are laborious (one suspects Castronova also found them so) they are worth the effort. Synthetic worlds – that is, silly online games about wizards and goblins – are an idle pastime no longer.
In an online role-playing game, the computer displays a three-dimensional world to explore, presenting babbling streams and ice-tipped crags in glorious fidelity. The game can be anything from a fantasy styled after The Lord of the Rings, to a journey in a spaceship across a galaxy. Exploring the same world are several thousand other people, each also playing as a wizard or alien. The longer you play and the more imaginary equipment you acquire, the more the game will allow you to do: with a better spaceship, you can move faster around the synthetic world and overcome more of its dangers.
Online role-playing games are part online chatroom, part special-effects extravaganza and part game of let’s pretend. If they were merely that, they might be intriguing but hardly worth scholarly analysis. Where the surprise comes – and the economists start to pay attention – is when games players spend real cash to gain virtual items. If I want a head start in Star Wars Galaxies, for example, I can visit eBay, or a specialist website such as ige.com, and buy a Jedi Knight character (today’s price $686).
That seems a lot of money for an asset that exists only inside a game, but perhaps it’s not so remarkable. Admittedly, the Jedi doesn’t physically exist, but neither does Darth Vader, and that didn’t stop me paying money to watch the Star Wars films. The Jedi will give its user a smoother, more enjoyable game experience, a bit like owning a better tennis racquet.
More interesting is the fact that the Jedi Knight is both consumed and produced inside a synthetic world. In principle the company that hosts the game can manufacture advanced characters at almost no cost. In practice, game owners have resisted the temptation to allow people to buy advancement because many players think it spoils their fun. (Imagine if I started bribing other players with real money during a game of monopoly.) The result: advanced characters are produced the hard way, by playing long hours in the tedious early stages of the game. This is labour intensive and, predictably, has been outsourced to China. Synthetic worlds have also exhibited inflation, the spontaneous emergence of market institutions and fraud.
Many observers believe that online games are like real economies. In Synthetic Worlds, Castronova demonstrates that he knows better: online games are real economies. People devote time and skill to producing things that other people value, such as Jedi Knights. That’s supply and demand: an economy. The aliens and the light sabres aren’t real, but the human effort and the human desires are. It becomes easier to realise this when the synthetic economies spill out into the corporeal one – when grand wizards are bought and sold on eBay or Romanian entrepreneurs supervise workshops of virtual gold-miners.
One synthetic world, Second Life, offers no game-play as such but sells virtual real-estate that users can build almost anything on. One real-estate maven, “Anshe Chung”, a Chinese teacher based in Germany, is reported to make $150,000 a year buying, improving and reselling virtual homes in Second Life. Others have businesses designing virtual clothes or selling virtual advertising. “Tringo”, a game-within-a-game that was created and made popular within Second Life, was bought from its creators by Nintendo and released for the GameBoy console. (Tringo’s programmers, not the Second Life hosts, owned the intellectual property.)
At this point it is possible to take the discussion in almost any direction, and Castronova tries many. He has an eclectic approach to research – some amateur sociology, a spot of anthropology, some national income accounting with liberal use of the back of the envelope. The research occasionally seems a little flaky, but it’s well ahead of the gushings of consultants and media pundits. Meanwhile, Castronova’s grab-bag of methodologies works fine for exploring unmapped territory.
When will synthetic worlds become economies worth reckoning with? They are already real, and are the fastest-growing economies in the world. But they are small: all the synthetic economies put together, with about 10 million players, are about the size of Bosnia and Herzegovina. It’s possible to compute an hourly wage in a synthetic world, how much one could make seeking gold in a synthetic world and selling it for cash on eBay. The answer is small but not minuscule: enough to attract the Chinese and perhaps some teenagers, but less than you can earn working at Starbucks. “Anshe Chung” may make $150,000 a year but such a salary would hardly be news if earned in the corporeal world.
All this will change, as Castronova argues convincingly. More players will spend more time in synthetic worlds as the technology becomes easier to use, more enjoyable and cheaper. Not only will more people spend more time in synthetic worlds, but it seems likely that the economies of the worlds will become more interesting.
Today’s synthetic economies are dull, even if the games are not. A popular game of the moment, World of Warcraft, has an economy largely based on killing monsters, taking their gold, and spending the money to acquire better weapons and armour. There is no technological progress, little gain from specialisation, and no opportunity to invest in capital stock (castles, for example, are created by game designers, not enterprising players). Second Life, which allows people to build almost anything, is more fertile territory, but remains small relative to the simpler games. For me, the interesting moment will come when – if? – a world with the popular appeal of Warcraft or Star Wars Galaxies allows entrepreneurial players to invest and invent.
Castronova asks questions most readers will never have thought of: what will autocratic governments do with synthetic worlds? Can governments emerge inside synthetic worlds? What will happen when a government tries to shut down an addictive world, and can’t because it’s hosted on decentralised computers – much as music files are illegally copied today? His answers are not always convincing but the questions themselves are enough.
Meanwhile, Castronova has “gone native” – entranced by the distant lands he set off to explore. Rather than puffing a tedious subject full of hot air, he is a giddy enthusiast desperately trying to sound sober. In a book that often managed to provoke the expert while informing the novice, that is a winning enough combination.

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