We all know that the video game industry has long since left the niche market and is now a thriving multi-billion-dollar industry, generating revenue not just from sales of actual video games, but also through merchandising, e-sports events, movie franchises, among others.
But video games can also influence –and have significant implications –real-world concepts: in 2008, epidemiologists from the World Health Organization, Centers for Disease Control and Prevention, and other private health research firms used the “Corrupted Blood” incident from the videogame World of Warcraft to study pandemics, with the incident becoming a key figure in creating a virtual model of virality that scientists still use today.
But perhaps one of the most studied video games is the game Second Life, an online virtual world that differs from other online games for focusing less on being a ‘game’ per se and focuses more on the concept of creating a virtual world as an augment to reality.
And just like reality, Second Life relies on a surprisingly complex economic model that revolves around its own marketplace, powered by its own currency, and perpetuated by millions of players around the world, not to mention providing a computer-related business opportunity for some people.
What is the Second Life Marketplace?
As a virtual world, Second Life features options for players to modify and/or augment their avatars via cosmetic changes and items, not to mention offer virtual services to other players. These goods and services are all available in the Second Life Marketplace.
Think of the Second Life marketplace as a virtual mall-cum-stock market: it’s the central engine of the Second Life economy and it’s powered by both SL’s virtual economy, the Linden dollar, and real, actual dollars.
Why the Second Life Marketplace Economy Matters
As mentioned, the Second Life economy is run by Linden dollars, a virtual currency that is regulated directly by Linden Labs, the game’s developer and publisher. Because of this, the U.S. Department of Treasury’s Financial Crimes Enforcement Network recognized Linden dollars as an official convertible centralized virtual currency back in 2013.
This means that Linden dollars have an official exchange rate with the U.S. dollar. While it has remained fairly floating over the years, the exchange rate is around US$1 to LD$320. With the number of players and the amount of money they spend on virtual goods and services, the Second Life marketplace is in charge of an economy that, as of 2015, was worth $500 million, which is more than the GDP of some small countries.
Because of the demand for Linden dollars, the Second Life marketplace even has an official trading platform called LindeX, a currency exchange website where users can exchange ‘real’ dollars for the game’s Linden dollars.
This is important for two reasons: one, Second Life acts as a microcosm for world economies, which means that in-game incidents (like the Corrupted Blood incident in World of Warcraft) that have a significant effect on Second Life’s marketplace can be used as case studies that have real-world applications.
And secondly, because of the amount of money that flows through the game, people can actually invest in Second Life and make serious returns, which, frankly, history has shown is more stable than other foreign exchange investments like the “dinar guru” scam.
Second Life Marketplace: A Viable Investment?
These investments can come in the form of exchanging real-world dollars for Second Life products and services which they can then sell and exchange in the Second Life marketplace. Of course, as with any investment, especially a digital one, this is a risky and volatile investment to make, but one that doesn’t come with more or less risks than, say, start-up stocks.
One of the most viable revenue-generating activities in Second Life is acting as a virtual real estate agent. Perhaps the most popular virtual real estate agent in Second Life is Anshe Chung. Anshe Chung has the honor of being one of the very first Second Life players (or videogame players in general) to become a real-world millionaire. It got to a point where Anshe Chung earned enough real-world money to open their own studio and employ over 80 people to build and develop communities in Second Life. Investing in Second Life marketplace goods and services is now one of the most popular ways that college students can make money from, albeit one that requires some technical skills and a whole bunch of time.
But for every Anshe Chung, there will be thousands of other players who lost life savings because they were unable to leverage the money they put in. As with any investment, caveat emptor.