Games crackdown causes virtual inflation in Warcraft

Prices of some virtual items in online games, including World of Warcraft, have leapt more than 30 percent in China as the government prepares to restrict the amount of time gamers are allowed to play.

The trend appears to follow standard economic models that predict that regulatory attempts to prevent people consuming a resource will drive up its price, and will only limit, not prevent, consumption. The classic examples cited are the US prohibition era restrictions of alcohol consumption, and current anti-drug laws. In this case, the resource being restricted is online game playing time.

warcraft china prepaid cards“Some virtual items prices have already gone up. For example, the price of one kind of sword has risen from $40 to $50 in a week,” claimed a 'gold farmer' in Chongqing, according to a local press report (in Chinese).

Gold farmers are individuals or groups who play massively multiplayer online games purely to generate cash. A huge semi-legal market exists for virtual items and gold created by gold farmers.

New regulations to prevent players under 18 years old from playing more than three to five hours per day are being tested and will come into force this summer. Normally, as a player performs actions in the game, the character they control steadily gains experience and improved skills. Under the new rules, these improvements will be reduced once they pass a three hour limit, and completely negated after five hours.

Gold farmers typically operate their in-game characters around the clock, controlling multiple accounts simultaneously and working in shifts. However, the new regulations force them to leave some accounts inactive for 19 hours every day.

To cope with the new rules, some gold farmers in China have told local media that they need to register many more accounts than in the past, incurring higher operating costs. As a result, they have begun to increase their prices to cover this.

There is also a second source of inflation, the reports suggest. Because young players will now have less time available to play, it's likely that some will purchase more items to increase their status without wasting playing time. This is also predicted to lead to an increase in prices of in-game items on the real world market.

Updated April 25: Corrected errors in age limit and time for new regulations