Expansion of the Online Video Game Black Market

Article  by  Romain GOULOUMES  •  Published 11.10.2011  •  Updated 14.10.2011
[NEWS] It has been reported that North Korea has set up a body of experts to collect virtual money from online games, and to sell it on the black market. This practice is increasingly popular in developing countries.
Held hostage by various embargos and international sanctions that were decided upon after the ballistic missile and nuclear tests in 2008 and 2009, North Korea appears to have found a new source of finance through video games. South Korean authorities are accusing Kim JongIl’s regimeof training a team of IT pirates whoillegally infiltrate certain online video games to pick up virtual money and then exchange it for real dollars. On 4 August 2011, the Seoul police announced the arrest of fourSouth Koreans and a Chinese-Koreansuspected of setting up a team of expertsacting illegally from Northern China. These accusations come in the wake of those made in May 2011 for hacking into the computer network of a South Korean bank, further adding to the already venomousclimatethat exists between North and South Korea. In both cases, North Korea categorically denied such acts, and went on to accuse its southern neighbour of conducting a disinformation campaign.

In fact, it seems that the hackershave created their own programme to infiltrate theservers of online video games that are wildly popular south of the border, such as Lineage and Dungeon Fighter, both of which were developed by South Korean studios. Once the games’ barriers were lifted, the hackers set up a number of fictitious accounts managed by computersto generate virtual money. These points were subsequently sold to players wanting to improve their avatar more cheaply. The system being condemned by Seoul, which was set up two years ago, has apparently made 6 million dollars,and 55% of the sum was received directly by the hackers, while agents of the Pyongyang regime pocketed at least 500 dollars of this sum each month.
The practiceof farming has spread throughout a number of online environments over the past ten years. Players carry out a simple task like hunting or mining - either endlessly repeating it or following a script - the sole aim of which is to cumulatevirtual money. Regular players and games designers condemn “gold farming”, accusing the “gold farmers”of upsetting the balance and creating inflation. This activity has reachedalmost industrial proportions in China,where for the first time in 2007, it was decided to regulate money used in virtual worlds in order to manage the impact on its actual economy. “Gold farming”is still permitted in China, however. Organisations that belong to the state have done exceptionally well, taking advantage of the legal vacuumwith total impunity. In May 2011, a prisoner from the Jixi camp, in the province of Heilongjiang, in the northeast of China, explained how he carried out his five-year sentence, spending his time breaking stones, reading communist literature or in front of a computer screen. For 12 hours a day, the prison management forced the inmates to artificially produce gold on World of Warcraft, the most popular massively multiplayer game so far.

World of Warcraft's Chinese Gold Farmers posted by wozardofiz on Dailymotion
On their sales platforms, some operational sites boast about producing all the virtual money “by hand”. According to a study by the World Bank produced inApril 2011, there are apparently over 100,000 professional playersaround the world earning on average €100 a month. In 2008, a researcher from the University of Manchester estimated the number of “gold farmers” at 400,000, of whom 80% were working in China. Ge Jin, from the Universityof San Diego, revealed an unknown side to “gold farmers” and stressed the uneasinessfaced by the Chinese players, who are both persecuted and solicited by their clientele, simultaneously treated as pariahs and suppliers;but this type of gold farmingactually accounts for less than half of the total, the majority being made by “bots”, computer-run characters, rather than players.
In total, according to the figures from the World Bank, the video game black market is generating three billion dollars a year. With the exception of India, the phenomenon of gold farmingissweeping acrossdeveloping countries.The World Bank, while condemning this practice, sees its takeoff as boding well for the future:thanks to the very high rate of return, virtual economy activities could create jobs and wealth in developing countries. However, in its 2008 report, the American Internal Revenue Service voices concern about not seeing any of this money, and considers the creation of a tax on business activities related to virtual worlds, which may havesince been abandoned, or which is still being studied as a possibility. South Korea dealt with the problem in 2010 by placing a 10% tax on profits from the exchange of game money for wons, the national currency. Despite that, the trading of virtual currencies is not highly regulated and is almost untraceable.


The tools forcountering gold farmingand gold farmersare in fact limited. Illegal accounts are regularly banned by administrators for not respecting the terms and conditions of use. Networks are forming within gaming communities. The NoGold association, for example, buys advertising space from sites that sellvirtual currencies;and it is not rare to see a team making an attack on gold farmers. Given that repression - carried out on a case by case basis - is proving ineffective, American researchers are working on coming up with methods and criteria for automatically detecting offenders. For its next video game, Blizzard, the publisher of World of Warcraft, had decided on a mercenary alternative. Diablo 3 will therefore include its own sales platformfor players, formally incorporated and managed by the publisher, who will receive a percentage of every transaction in real money, although exchanging games money will remain possible. The Blizzard’s decisionmay be criticized from an ethical point of view: rather than attacking the black market already adversely affecting its other games, the publisher has chosen to profit from it. For the time being, the issue of equality between players –their ability to play depends on how much money they have – has not yet been broached. Buying objects or virtual money with the contents of one’s own wallet, usually considered to be a form of cheating, may well become an integral part of online video games.
Translated for the French by Sara Heft

Photo credits :
For the article : CC THQ Insiders ;
Screen captures : CC dyashman et CC Mythokia.
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