For (old) folks who still think Monopoly when they think about games, the concept behind Live Gamer Inc. may be hard to grasp. The tech startup provides a legitimate way for gamers to buy and sell, for real money, the goods, services and even the characters in online games.
For the Monopoly set, that would be a little bit like a bank where you could pay real dollars to buy the best real estate properties and utilities, or pay your way out of jail so you didn't have to wait for a "get out of jail free" card. But do people really take games so seriously that they are willing to pay real money to game the game, so to speak, and doesn't this ruin the fun of playing? Yes, and apparently no.
Last December, Live Gamer raised its second round of venture backing, bringing to $24 million the total it has raised from Charles River Ventures, Kodiak Venture Partners and Pequot Ventures. The company has also signed up a number of MMOG, or massively multiplayer online game developer partners, including Sony Online Entertainment, Funcom, GoPets, 10Tacle Studios, Acclaim Games and PingO Interactive, that are working to incorporate the Live Gamer trading system into their titles.
"These games have real complex economies, and Live Gamer is trying to be the central banker," says Chip Meakem, a Kodiak partner.
Industry estimates show that some $1.8 billion (in real dollars) is spent each year to buy and trade stuff like virtual real estate, virtual currency and online characters. Because games currently have no organized system for managing these trades, they are all handled in a black market that enables a small group of players to manipulate the game dynamics for their personal gain. Such illegal trading is commonly referred to as "gold farming," in which individuals enter games not with the intent of playing but of performing the same actions over and over again just to accumulate money and other goods they can sell on the black market. Reports from Asia have documented some so-called sweat shops that employ groups of these gold farmers who work 12 or 18 hours at a time accumulating virtual goods.
"The black market is fraught with corruption," says Live Gamer president Andrew Schneider. The executive, who previously served as executive vice president of marketing for WindUp Records, founded Live Gamer with Mitch Davis, who started Massive Inc., the company that pioneered in-game advertising. Microsoft Corp. acquired Massive in 2006.
"The problem of gold farming has overwhelmed a lot of games and game developers. They are all looking to combat it," Schneider says. - Andrea Orr
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