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The Swedish Wire is a media production company that provides high-quality text, image and video content for international clients.

How to earn real money on fake investment

Swedish internet game company Mindark's hyped game, Entropia Universe, is connected to the real world – and the real economy. 

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”There are users who make good western salaries each month by playing”, Magnus Eriksson, chief operating officer at Mindark, told The Swedish Wire. 

Last year there was an auction on Calypso, one of the virtual planets in Entropia universe. The item to be sold was a shopping mall and the initial bid was one US-dollar. A few weeks later, this virtual shopping mall, that only exists in an online game, was sold for 30,000 dollars. 

Just a few days ago a new record was set for the highest price payed for a piece of virtual property. The Crystal Palace Space Station in Entropia was auctioned off for an astounding 3,300,000 PEDs, the equivalent of $330,000 dollar.

“It's a real investment since the game has a real cash economy”, said Magnus Eriksson, who is responsible for the platform that Entropia Universe is based on.     

Inside Entropia the players use a fake currency called PED. But Mindark, the Gothenburg company that operates the virtual universe, guarantees that this currency can be exchanged into real money, at a fixed USD rate 1:10. That's how one can loose and make money by selling and buying fictitious goods. Like the buyer of the shopping mall. He later let the individual shops to other players and now he's collecting rent each month. 

Basically anything can be bought and sold inside Entropia and every object has a value. But the  business system inside the game is really like a mixture of a capitalistic market economy and a planned economy communism style. On the one hand, Mindark guarantees the value of each object and the player can always sell it to the company at a price that it decides. But every item also has a market value that variates with the demand from other players. 

”So depending on how well you make a product or promote it, there can be other players who are willing to pay much more than the price we guarantee”, said Magus Eriksson.  

To make the business system more credible Mindark has decided enter the banking sector and they recently got the necessary license from The Swedish Financial Supervisory Authority to open a real bank. The approval from the authorities was a big step for really integrating the virtual universe with the real world.  

”It works like a normal internet bank and we'll provide deposits, cards, loans, currency exchange to the public”, said Lennart Molander, chairman of Mindark. 

Of course it's not only the players that make money of the game, Mindark takes it's fair share as well. It doesn't cost anything to start an account in Etropia but in order to really participate and develop your character, the so called avatar, you need virtual tools. And those tools, that are created by Mindark, costs money. 

“Let's say your avatar wants to hunt animals, then you need a gun that you buy from us. And every time you fire it gets torn and eventually you'll need a new one” said Magnus Eriksson who explains the the major part of the profits come from the players buying virtual stuff. But they also make some money on advertisement, both from real companies that market existing products and from players who wish to highlight their virtual goods. 

So far, the profits have been limited though. Last year Mindark made a net profit of 9 million kronor, approximately 900,000 euros. However, the company has some new ongoing projects where partner companies will create their own planets in Entropia. Something that they hope will increase the number of players significantly, and thus also the profits.   

”These are companies from various sectors like media and architecture. Big companies that have a whole other network of contacts. We estimate that in an initial stage, the numbers of players will increase ten, maybe twenty times”, said Magnus Eriksson.

Today Mindark has 900,000 users that on average spend one USD per played hour. But with the new partners they also hope to make more money on new forms of advertisement. 

”Let's say a company like Nike made a 3-dimension shoe with which your avatar could run faster or jump higher. Maybe it would be produced in a limited edition so they are hard to find. That would create a high market value in Entropia but also strengthen the brand in the real world”. 

Andreas Liljeheden is a freelance journalist based in Brussels.

Last Updated (Tuesday, 05 January 2010 11:26)


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