A recent article (subscription required) in the Wall Street Journal discusses the increasing significance of MMORPG virtual economies and the implications of selling in-game goods for real money. The article examines the way that Microsoft and Sony each respond to issues like gold farming and the sale of virtual items through Internet auction sites.
According to an analyst referenced in the Wall Street Journal article, the Internet gaming market could reach US$13 billion by 2011, US$5 billion of which represents “non-subscription revenue” from sale of in-game items. In January, Ars covered an article published in Legal Affairs that addressed the taxation issues associated with the sale of in-game items. An Ultima Online trader reported his US$11,000 in game-related earnings to the IRS, and learned that the government doesn’t have an official policy on taxing the sale of virtual goods. The author of the Legal Affairs article pointed out that, since in-game items can have significant monetary value, trade of items within a game could potentially be subject to a barter tax.
In contrast, Microsoft’s position on the sale of in-game goods. Apparently, the Redmond software giant does not object to gold farming or the sale of in-game goods. One analyst suggests that Microsoft’s position on the subject may be related to the comparatively small size of Microsoft’s MMORPG market share.
By taking a permissive position regarding such activities, Sony and Microsoft may be able to win a little bit of market share from Blizzard. The individuals associated with those 30,000 accounts banned from World of Warcraft may be inclined to take their business to games with less-restrictive policies. It could also go the other way as well. Players that don’t want to buy and sell virtual goods may become frustrated with the lack of balance in a game populated by item-buying players, and may decide to move to a game that enforces fairness. As gold farming and game commerce become more pervasive, gaming companies will have to seriously consider which position they plan to take.