Cyclopedia Of Economics 3rd edition


Massively Multiplayer Online Role Playing Games (MMORPG)



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Massively Multiplayer Online Role Playing Games (MMORPG)

Games and role-playing are as ancient as Mankind. Rome's state-sponsored lethal public games may have accounted for up to one fifth of its GDP. They often lasted for months. Historical re-enactments, sports events, chess tournaments, are all manifestations of Man's insatiable desire to be someone else, somewhere else - and to learn from the experience.

In June 2002, Jeff Harrow, in his influential and eponymous "Harrow Technology Report", analyzed the economics of Massively Multiplayer Online Role Playing Games (MMORPG). These are 3-D games which take place in comprehensively and minutely constructed environments - a medieval kingdom being the favorite. "Gamers" use action figures known as avatars to represent themselves. These animated figurines walk, talk, emote, and are surprisingly versatile.

Harrow quoted this passage from Internetnews.com regarding Sony's (actually, Verant's) "EverQuest". It is a massive MMORPG (now with a sequel) with almost half a million users - each paying c. $13 a month:



"(Norrath, EverQuest's ersatz world is) ... the 77th largest economy in the [real] world!  [It] has a gross national product per capita of $2,266, making its economy larger than either the Chinese or Indian economy and roughly comparable to Russia's economy."

In his above quoted paper, "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier", Professor Edward Castronova, from California State University at Fullerton, notes that:



"The nominal hourly wage (in Norrath) is about USD 3.42 per hour, and the labors of the people produce a GNP per capita somewhere between that of Russia and Bulgaria. A unit of Norrath's currency is traded on exchange markets at USD 0.0107, higher than the Yen and the Lira. The economy is characterized by extreme inequality, yet life there is quite attractive to many."

Players - in contravention of the game's rules until recently - also trade in EverQuest paraphernalia and characters offline. The online auction Web site, eBay, is flooded with them and people pay real money - sometimes up to a thousand dollars - for avatars and their possessions. Auxiliary and surrogate industries sprang around EverQuest and its ilk. There are, for instance, "macroing" programs that emulate the actions of a real-life player - a no-no.

Nor is EverQuest the largest. World of Warcraft from Blizzard Entertainment has 1.5 million subscribers. The Korean MMORPG "Lineage" boasts a staggering 2.5 million subscribers. "The Matrix Online", released by Warner Brothers Interactive Entertainment and Sega Corporation in 2004-5, may surpass these figures due to its association with the film franchise - though Star War Galaxies, for instance, failed to leverage its cinematic brand.

The economies of these immersive faux realms suffer from very real woes, though. In its May 28, 2002 issue, "The New Yorker" recounted the story of Britannia, one of the nether kingdoms of the Internet:



"The kingdom, which is stuck somewhere between the sixth and the twelfth centuries, has a single unit of currency, a gold piece that looks a little like a biscuit. A network of servers is supposed to keep track of all the gold, just as it keeps track of everything else on the island, but in late 1997 bands of counterfeiters found a bug that allowed them to reproduce gold pieces more or less at will.

The fantastic wealth they produced for themselves was, of course, entirely imaginary, and yet it led, in textbook fashion, to hyperinflation. At the worst point in the crisis, Britannia's monetary system virtually collapsed, and players all over the kingdom were reduced to bartering."

Britannia - run by Ultima Online - has 250,000 "denizens", each charged c. $10 a month. An average Britannian spends 13 hours a week in the simulated demesne. For many, this constitutes their main social interaction. Psychologists warn against the addictive qualities of this recreation.

Others regard these diversions as colossal - though inadvertent - social experiments. If so, they bode ill - they are all infested with virtual crime, counterfeiting, hoarding, xenophobia, racism, and all manner of perversions.

Subscriptions are not the only mode of payment. Early multi-user dungeons (MUD) - another type of MMORPG - used to charge by the hour. Some users were said to run bills of hundreds of dollars a month.

MMORPG's require massive upfront investments. It costs c. $20 million to develop a game, not including later content development and technical support. Consequently, hitherto, such games constitute a tiny fraction of the booming video and PC gaming businesses. With combined annual revenues of c. $9 billion in 2001, these trades are 10 percent bigger than the film industry - and half as lucrative as the home video market. They are fast closing on music retail sales.

As games become graphically-lavish  and more interactive, their popularity will increase. Offline and online single-player and multi-player video gaming may be converging. Both Sony and Microsoft Internet-enable their game consoles. The currently clandestine universe of geeks and eccentrics - online, multi-player, games - may yet become a mass phenomena.

Moreover, MMORPG can be greatly enhanced - and expensive downtime greatly reduced - with distributed computing - the sharing of idle resources worldwide to perform calculations within ad hoc self-assembling computer networks. Such collaboration forms the core of, arguably, the new architecture of the Internet known as "The Grid". Companies such as IBM and Butterfly are already developing the requisite technologies.

According to an IBM-Butterfly press release:



"The Butterfly Grid T could enable online video game providers to support a massive number of players (a few millions) (simultaneously) within the same game by allocating computing resources to the most populated areas and most popular games."

The differences between video games and other forms of entertainment may be eroding. Hollywood films are actually a form of MMORPG's - simultaneously watched by thousands worldwide. Video games are interactive - while movies are passive but even this distinction may fall prey to Web films and interactive TV.

As real-life actors and pop idols are - ever so gradually - replaced by electronic avatars, video games will come to occupy the driver seat in a host of hitherto disparate industries. Movies may first be released as video games - rather than conversely. Original music written for the games will be published as "sound tracks".

Gamers will move seamlessly from their PDA to their PC, to their home cinema system, and back to their Interactive TV. Game consoles - already computational marvels - may finally succeed where PC's failed: to transform the face of entertainment.

Jeff Harrow aptly concludes:

" ... History teaches me that games tend to drive the mass adoption of technologies that then become commonplace and find their way into 'business'.  Examples include color monitors, higher-resolution and hardware-accelerated graphics, sound cards, and more. And in the case of these MMORPG games, I believe that they will eventually morph into effective virtual business venues for meetings, trade shows, and more. Don't ignore what's behind (and ahead for) these 'games', just because they're games..."

(Mass) Media (in Countries in Transition)

A June 2005 IREX report, quoted by the Southeast Europe Times (SE Times), analyzes the media in countries in transition from Communism by measuring parameters like free speech, professional standards of quality, plurality of news sources, business sustainability and supporting institutions. It concludes that "most transition countries in Southeast Europe have made progress in the development of professional independent media". The Media Sustainability Index (MSI) for 2004 begs to differ: "...(F)ully sustainable media have yet to be achieved in any of the countries.

Karl Marx decried religion as "opium for the masses". Yet no divine worship has attained the intensity of the fatuous obsession of the denizens of central and east Europe with the diet of inane conspiracy theories, gaudy soap operas and televised gambling they are fed daily by their local media. There is little else on offer except the interminable babble of self-important politicians. It is the rule of the abysmally lowest common denominator.

In Macedonia, it is impossible to avoid a certain entertainer, a graceless Neanderthal hulk with a stentorian voice, deafeningly employed in a doomed attempt to appear suavely quaint and uproariously waggish. The natives love him. Private, commercial, TV in the Czech Republic - notably "Nova" - has surpassed its American role models. It has long been reduced to a concoction of soft porn, soundbite tabloid journalism and Latin American "telenovelas". Jan Culik, publisher of the influential Czech Internet daily, Britske listy, once described its programming as "sex, violence and voyeurism ... a tabloid approach".

The situation is no different - or much improved - elsewhere, from Russia to Slovenia. As Andrew Stroehlein, former editor in chief of Central Europe Review, so aptly put it - "Garbage in, money out". This sad state of affairs was brought on by a confluence of economic fads (such as privatization, commercialization and foreign ownership) and technologies of narrowcasting - satellites, video cassette recorders, cable TV, regional and local "stealth" TV stations and, in the not so distant future, Internet broadband and HDTV.

Writing in Central Europe Review about the Romanian scene, Catherine Lovatt observed that "television was one medium through which Romanians could vicariously experience the 'Western' dream. The popularity of programmes such as Melrose Place indicates a preference for certain lifestyles - lifestyles that are as glamorous as they are out of reach. The seemingly unabating craving for commercial TV has been fuelled by the need to escape the Communist past and the stresses of today's reality."

Grasping its importance as a tool of all-pervasive indoctrination, television was introduced early on by the communist masters of the region. Still, tortuous stretches of personality cult and blatant, laughable, propaganda aside - monopolistic, state-owned communist TV, not encumbered by the need to compete, offered an admirable menu of educational, cultural and horizon expanding programming.

It is all gone now. The region is drowning in cheaply produced mock talk shows, hundreds of episodes of Latin American serials, hours on end of live bingo and lottery drawings, tattered B movies, pirated new releases and sitcoms and compulsively repeated newscasts.

From Ukraine to Bulgaria, commercial channels are prone to featuring occultists, conspiracy theorists, anti-Semitic "historians", hate speech proponents, racists, rabid nationalists and other unadulterated whackos and have taken to vigorously promoting their pet peeves and outlandish conjectures.

The intrigue-inclined postulate that this visual effluence is intended to numb its hapless recipients and render them oblivious to the insufferable drudgery of their dreary, crime-infested, corruption-laden and, in general, rather doomed, lives. It is instigated by unscrupulous politicians, they whisper, eyes darting nervously. It is a form of state-sponsored drug, also known as escapism.

How to reconcile this paranoid depiction of a predatory state with the fact that most private television stations throughout the region are owned by hard-nosed, often foreign, businessmen?

The suspicious point to the fact that "local content" and "cultural minimum" license requirements are rarely imposed by regulators. National broadcasting permits were granted to cronies and insiders and withheld from potential "troublemakers" and dissidents.

It is also true that, as Stroehlein puts it, there is a massive "repatriation of profits generated from newly private stations to Western firms." As a result, "local production companies are losing out, and the loss of funds damages the domestic entertainment and arts industry and the economy as a whole."

And the collusion-minded have a point. The dumbing-down of audiences is as dangerous to newfound political and economic freedoms as are more explicit forms of repression. Both democracy and the free market will not survive long in the absence of an informed, alert, intellectually agile public. It is hard to retain one's critical faculties under the onslaught of televised conspicuous consumption and the unmitigated folly of mass entertainers.

Many scholars and media observers believe that the battle has already been lost.

Péter Bajomi-Lázár, associate professor at the Communication Department of Kodolanyi University College, Budapest-Szekesfehervar in Hungary, wrote in January 2002 in a comparative study titled "Public Service Television in East Central Europe":



"The transformation of public service television from a tool of agitation and propaganda into an agent of democratic control has been but a partial success in East Central Europe. Public service television channels have failed to find their identities and audiences in a market dominated by commercial broadcasters. Some of them are underfunded and their journalists encounter political pressure."

But even where public broadcasters enjoy the proceeds of a BBC-like television tax - like in Macedonia - they fail to attract spectators. The stark reality is that when people are faced with a choice between intellectually demanding and challenging programs and easily digestible variety shows they always plump for the latter. It is easy to condition people to complacent passivity and inordinately tough to snap out of it once exposed. The inhabitants of central and east Europe are mentally intoxicated. The hangover may never happen.

In October 2008, the car of the outspoken editor of the Croat investigative weekly "Nacional", Ivo Pukanic, exploded as he tried to remote unlock its doors. Niko Franjic, the magazine's marketing director, also perished. Pukanic as investigating mob-related murders and racketeering.

This was only the latest in a series of gruesome and grizzly assassinations and attempted murders of journalists throughout the territories of the former Soviet or socialist Bloc.

Just two years before, in October 2006, Anna Politkovskaya, a Russian author, journalist, and human rights activist was gunned down at the entrance to her home (near the building's elevator). Politkovskaya was renowned for her opposition to Vladimir Putin (then, Russia's president) and to the Chechen conflict, in which fortunes were made by corrupt figures in the military and other unsavory characters.

Aleksandr Plotnikov died in June 2002 in his dacha. He was murdered. He has just lost a bid to restore his control of a local paper in Tyumen Oblast in Russia. Media ownership is frequently a lethal business in eastern Europe. The same week, Ukrainian National Television deputy chief, Andryi Feshchenko, was found dead in a jeep in a deserted street of Kyiv. Prosecutors suspect that he was forced to take his life at gunpoint.

In an interesting variation on this familiar theme, a Moldovan parliamentarian accused the editor of the government-run newspaper, "Moldova Suverana", of collusion in his kidnapping.

Governments throughout the region make it a point to rein in free journalism. Restrictive media statutes are being introduced from Russia to Poland. Romania's Senate approved, on June 6, 2002, a law granting persons offended by a print article the right to have their response published in the same media outlet and to seek monetary compensation all the same.

The Romanian president attacked the media and said that he is "amazed" at their "talent to distort" his statements. He attributed this to a "lack of information, lack of culture, or malevolence." In Belarus, journalists are standing trial for defaming the president. They face 5 years incarceration if convicted.

Early in 2006, Macedonia was poised to pass a long-overdue Freedom of Information law even as the government attempted to shut down the highly efficient and (from repeated personal experience) indispensably helpful Agency of Information. Thus, journalists, both foreign and domestic, cannot now obtain accreditation ("press card"). The distinct red card served hitherto as a form of much needed protection in these nether regions and a prerequisite to securing a mandatory work permit and custom clearances for bringing in TV equipment. Some say that the ruling party wished to minimize its exposure to the foreign media during the forthcoming, closely-contested, heated and sensitive parliamentary elections.

The Agency of Information survived as a department, but not so the freedom of the press. The media in Macedonia has been rendered completely subservient and dysfunctional in the last three years, under the governments of Nikola Gruevski.

This is the outcome of the confluence of a few developments:

1. Increasing involvement of corporate interests. The private sector in Macedonia is rent-seeking and the owners of the media can't afford to be seen to be "anti"-government. They implement self-censorship on a ubiquitous and all-pervasive scale (including "black lists" of who not to interview).

2. The government's soaring share of the nation's advertising dollar. The media are reluctant to alienate the country's largest advertiser: the government.

3. The fragmentation of the nation's media market (with 12 daily papers and 10 national TV stations!!). This apparent "pluralism" actually allows the government to "pick winners" and favorites and to extend its "benevolent network of patronage" to hitherto independent media. Many papers and electronic media are too small to survive on their own.

4. The government micromanages the media. Government officials bombard editors and journalists with complaints, accusations, and what can easily be interpreted as veiled threats every time the media publish an unflattering bit of analysis (or even information that runs counter to the official line). Turnover of independent-minded journalists has never been higher


(translation: they are being sacked at record rates).

Macedonia is not an isolated case.

In 2002, Putin's Russia introduced a decree regulating the licensing of audio and video production duplication rights. According to abc.ru, a license from the Media Ministry is required to make copies of any multimedia work. The Culture Ministry licenses such oeuvres for mass audiences.

The frequency of A1+, Armenia's most vocal independent TV station, was auctioned off to politically-sponsored business fronts, forcing the hard-hitting station off the air on April 3, 2002 - just in time for the following year's elections. The new owners - "Sharm" - promised to concentrate on "optimistic news".

The station appealed the tender procedure to the Armenian Economic Court and opposition groups took to the streets. AFP carried a statement by the self-appointed watchdog, Raporteurs Sans Frontieres, that called the tender "the muzzling of the country's main news voice ... the most serious violation of pluralism in Armenia in years".

Even the US Embassy in Yerevan stirred:



"A1+ performed a valuable public service in offering substantial media access to a broad spectrum of opinion makers, political leaders, and those holding differing views."

The Azerbaijani prime minister promised to allocate $3.5 million in credits to media outlets - but, tellingly, made this announcement exclusively on the state-owned channel. The bulk of the television tax in Macedonia ends up in the coffers of the somnolent and bloated state channel which caters to a mere one quarter of the viewers. The independent media - both print and electronic - face unfair competition in attracting scarce advertising revenues.

The managers of six Latvian private television and radio stations published an open letter to President Vaira Vike-Freiberga, Prime Minister Andris Berzins, the Competition Council, the National Radio and Television Council (NRTC), the State Support Monitoring Commission, and political parties.

They deplored the commercialization of the public media. State support - fumed the signatories - allows these outlets to undercut the prices of advertising airtime. They urged a major revision and modernization of the law. Latvia is considering the introduction of a monthly mandatory "subscription fee" to finance its state-owned media.

Media properties are awarded to loyal cronies and oligarchs - having been expropriated from tycoons and managers who fell from official grace. Such assets are often "parked" with safe corporate hands ad interim. Russian energy behemoth Gazprom, for instance, acquired a media empire overnight by looking after such orphan holdings. It is now dismantling these non-core operations.

In Russia, the tendered broadcasting rights of TV6 were allocated to Media-Sotsium, a consortium led by regime stalwarts such as Yevgeni Primakov, a former prime minister and the current chief of the Chamber of Commerce and Industry and Arkadi Volski, head of the Union of Industrialists and Entrepreneurs. The group included leading managers and active political figures. The consortium's general director is none else than Yevgeni Kiselev, the erstwhile general manager of TV6.

TV6 was taken off the air by the Kremlin in 2001 - as was Russia's most popular independent station, NTV. Quoted by Radio Free Europe Radio Liberty, the Editor in Chief of the Ekho Moskvy radio station commented that this "completes the redistribution of television property in Russia from one oligarch who was not loyal to the authorities to others that are".

Gorbachev, whose group bid for the station, concurred wholeheartedly. In a rare show of consonance, so did the communist Zyuganov. Muscovites polled in April 2002 said they hoped TV6 would become a sports-only channel.

In a speech to the National Press Club in Washington on April 9, 2002 Russian Media Minister, Mikhail Lesin, admitted that "developments surrounding the NTV and TV-6 companies certainly had a political background, and there is no denying it". He promised to substantially cut funding to "politically oriented mass media".

Russian media, insisted the Minister, is having "growing pains". Referring to the older and more mature media in America, he asked: "Let us remember how this 100-year-old gentleman looked when he was 10 years old. He did not have any problems at that time?"

State interference rarely stops at the ownership level. Subtle self-censorship by obsequious or terrorized journalists is often coupled with governmental micromanagement. The license of NTV, the eponymous successor of the shuttered independent Russian TV station, was renewed only recently for another five years - after many delays and public statements casting doubts on the outcome. This form of subtle pressure to self-discipline is common.

The Russian business daily Kommersant commented:



"(The delays were intended to) stimulate Gazprom to more quickly sell its shares in the company and to frighten (NTV's General Director) Jordan into being a bit more attentive to what NTV puts on the air."

Belarusian president, Alaksandr Lukashenka, instructed the chief of the Belarusian Television and Radio Company to "work around the clock" to improve programming. "The Belarusian Television and Radio Company works in the same information field with powerful foreign broadcasters: ORT, RTR, NTV, Radio Rossiya, Radio Mayak, Radio Liberty, Radio Racja, and others. It is in a state of ideological competition with them and, speaking straightforwardly, sometimes in confrontation."

"Belarusian Television, as before, remains an information supplement to foreign television companies." - he was quoted as saying by REF/RL. How would such a turnaround be achieved with a shoestring budget was left unarticulated. Belarus couldn't pay Kirch Media the $500,000 it demanded for the World Cup rights.

The Belarusian Language Society appealed to UNESCO and the EU to help launch a Belarusian heritage and culture satellite broadcast on the Discovery Channel. Russian-language broadcasts, they noted ruefully, account for a crippling 97 percent of airtime.

Lukashenka finished his diatribe with a practical advice: "Beginning from tomorrow, every manager in the Belarusian Radio and Television Company has to sleep with a television set." In a country where disagreeing with the president can be the last thing one does, his wish is a command.

The situation is especially egregious in the fiefdoms of Central Asia.

In Georgia, the politically-pliant tax police, often an instrument of intimidation of opponents, raided Rustavi-2, an independent thorn in the irate government's side. In Kazakhstan, in November 2001, all the media properties of Alma-Media - including its prized Kazakh Commercial TV - were suspended. Malicious rumors were spread by the police against the editor of the outspoken newspaper, "Karavan". The rumors were promptly denied by the Kazakh Minister of Internal Affairs.

If all else fails, crime does the trick. the independent Kazakh paper, "Delovoe-Obozrenie-Respublika", was first firebombed and then - five days later - closed by the court because it failed to provide a publication schedule. OSCE slammed Kazakhstan for its new Administrative Offenses Code which is replete with 40 media-related transgressions.

RFE/RL quoted a statement by Rozlana Taukina, head of the Independent Media Association of Almaty, in a press conference in Moscow. She complained that 22 independent media outlets have been closed in Kazakhstan over the past month.

Another instrument of suppression are libel suits which invariably result in exorbitant and destructive penalties.

Aleksandr Chernov, a Krasnodar judge, won in February 2002 $1 million in compensation from "Novaya Gazeta", a paper owned by the disgraced and self-exiled oligarch Boris Berezovsky. Senior Russian public figures issued a passionate plea to reduce the fine and prevent the paper's bankruptcy.

In an unrelated lawsuit, Mezhprombank, alleged by "The Moscow Times" to be a money laundering venue, won c. $500,000 in damages from the aforementioned besieged "Novaya Gazeta". Court bailiffs seem determined to force the closure of the paper despite a pending appeal.

The largest circulation Slovak paper, "Novy cas", was ordered to pay a whopping $100,000 in compensation to Real Slovak National Party (PSNS) Chairman Jan Slota. The paper reported that he had been seen drunk.

Vladimir Putin, Russia's president, encapsulated the philosophy of state interventionism neatly in an interview he granted to ITAR-TASS and other Russian news agencies:




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