Handbook on the Economics of the Media

Handbook on the Economics of the Media

Edited by Robert G. Picard and Steve S. Wildman

This Handbook explores the economic features of the media and its infrastructure to provide readers with a sophisticated understanding of the critical issues and their influence on companies, audiences and regulators. The contributors explore and explain the impact of underlying factors such as multi-sided platforms, advertising and industry structure. They assess the unique economic factors affecting print, broadcast and broadband-based media, and highlight how the economics of the media can influence policy making. Each original chapter introduces the reader to a specific topic, reviews the literature on the development of knowledge in the field, explores critiques of the approach, and provides an understanding of applying this knowledge and the implications.

Chapter 11: Video games, virtual worlds and economics

Isaac Knowles, Edward Castronova and Travis Ross

Subjects: economics and finance, cultural economics, industrial economics, innovation and technology, technology and ict


Video games have undergone a number of facelifts, transformations, and reinventions since the humble days of Pong and Pac-Man. The most advanced modern games are based in huge, immersive virtual worlds that are fully-rendered in 3D. Players interact with computer-controlled characters, many of them voice-acted by well-known celebrities and capable of the most minute facial expressions. The quality of music and sound production in today’s games rivals that of any contemporary big-budget film. Storylines can be as expansive as any novel, and may include tie-ins with real world events and references to political or social issues. The incredible graphics and sharply written stories of virtual worlds are impressive, but we believe that the most important development in games over the last ten years has been the dual moves toward persistence and massively multiplayer interaction, which have resulted in the emergence of complex virtual economies. What makes this achievement even more striking is that these dynamics were not designed into the game. They simply emerged as a product of persistence and massively multiplayer interaction. Games that were once single player experiences now feature complex, persistent social dynamics. Player to player trade is now a common feature in an ever-growing number of multiplayer videogames. This means that there are literally thousands of different virtual economies, of varying size and complexity, found in games across the world.

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