
Lunch Time 2, originally uploaded by jasonrr.
Black Moves Next, originally uploaded by jasonrr.

Purple and Green, originally uploaded by jasonrr.

Tulips, originally uploaded by jasonrr.

Arden Point Bridge, originally uploaded by jasonrr.
Over the past decade, the popularity of Massively Multiplayer Online Games (MMOGs) has led to an incredible amount of development by major game producers. With revenues in the billions of dollars each year, over $1.7B for Blizzard/Vivendi’s World of Warcraft alone (Boyer), this industry has grown to include hundreds of titles. These numbers have game producers hurrying to figure out the best way to capitalize on this fast growing source of revenue. As with other high growth markets, secondary markets have developed to satisfy the needs of customers in the primary market that either can’t or won’t be met by primary market makers. Not surprisingly, a market this large, approximately $1B (Brightman), has attracted the attention of entrepreneurs looking for opportunities to support or supplement the primary activities in these markets with products and services that enhance the gamers’ experience.
There are many different forms of secondary markets in the gaming world, some legitimate and legal, and others which have been deemed by game developers to be illegitimate, or even illegal. An example of legitimate secondary market is the host of gaming magazines and websites that offer strategies, content guides, and communities where gamers exchange ideas. An illegitimate market is generally defined as one where people exchange real world currency for characters (avatars), items, or in game currency in ways that violate the Terms of Service defined by the game developers. I will examine how the nature, and implicit goals of a game, affects its interactions with secondary markets. Further, I will argue that the “illegitimate” markets have had a direct impact on primary innovation, shaping current and future game design very quickly to account for these markets’ impact on the value of in-game assets.
I will focus primarily on Vivendi’s The World of Warcraft (WoW) and use Linden Research’s Second Life (SL) as an example of a vastly different approach. In order to effectively explain the impact, and resulting strategies of the game developers, I will detail how value is created and measured in MMOGs , a brief history of secondary markets in MMOGs, their current revenue models and legal concerns, the vastly different responses from Vivendi and Linden Research, the role and impact of secondary markets on design innovations WoW and SL and , finally, my prediction of the impact these markets will have on future game development.
Continue reading ‘The Effects of Secondary Markets on Primary Innovation in MMOGs’
Well, shortly after my last post this happened:

Yes, that is me, and yes I am that lucky [sic]. It was a lot of fun to have my friends and family around for this, and the location was really amazing. If you are at all interested, you can see more of the photos here. In addition, I am one semester through my Masters degree. My next series of posts will focus on some of the work that I have been doing for those classes, including a term paper that I wrote on the impact of secondary markets on massively multiplayer online games.