:: E-merging markets ::

Wednesday, May 12, 2004

I added this to my del.icio.us linkbar, but I'd like to delve a little deeper.

Two Penn undergrads have analyzed price movement of various goods in a virtual world - in this case Final Fantasy XI: Online. I have no experience with FFXIO, nor Everquest, nor any other of the MMORPGs out there and, though they possess proven appeal (witness their millions of subscribers/addicts) and I scary levels of dorkitudeinality, I cannot tell the difference between them - but this is tangential. I digress.

Gathering the data proved to be difficult; it's not the kind of information FFXIO would give out freely, even if they were keeping tabs on it. The two lads, in a rocking display of sleeve-rolling-up DIY moxie, took periodic screenshots of game auctions in action, used OCR software (developed to convert images of scanned words into actual character data) to read the IM-style price notifications flying back and forth from those images and dump it into text files, and finally wrote a parser to interpret all that text and store it in a database. Then they took the data and went wicky-wild with Excel charts. That's awesomely subversive.

Also amazing and potentially lucrative is their discovery of price differentials. Identical items fetched notably variant prices depending on the location and time of the sale revealing a market rife with potential for arbitrage. This is no joke - there are already virtual currency exchanges and these denominations hanging in the ether correspond to real-world value. Everquest and Ultima Online users buy and sell their respective virtu-bucks (called, in dual strokes of creative genius, "platinum" and "gold") on Ebay for actual US dollars. The question arises: who will emerge as the John Meriwether of virtual currency arbitrage?

For more information on John Meriwether and a healthy dose of "Behind the Music"-style loss and redemption (albeit heavy on the loss), read When Genius Failed by Roger Lowenstein.

Posted by morland @ 07:37 PM

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