Knowledge Map of the Virtual Economy: an Introduction


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Presentation introducing the World Bank virtual economy report, which is available at

Delivered at the FPD Forum, 7 April 2011, Washington D.C.

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  • Employs 400,000 people in China, Vietnam and a number of other developing countries
  • Outsourcing aimed at individualsRemote work, distance between customer and worker, facilitated by mobile technologyYouth employmentAdditional income
  • Knowledge Map of the Virtual Economy: an Introduction

    1. Knowledge Map of theVirtual Economy<br />Dr. Vili Lehdonvirta, University of Tokyo / HIIT FPD Forum, 7 Apr 2011, Washington DC<br />
    2. Contents<br />Introducing the Knowledge Map of the Virtual Economy<br />What do we mean by “Virtual Economy”?<br />What are some of the industries in the VE?<br />What is the development potential of the VE?<br />Mobile Microwork Challenge<br />Preview of an upcoming infoDev competition<br />2<br />
    3. KMVE: Research process<br />Assignment: “Development potential of the Virtual Economy”<br />August 2010 –> January 2011<br />Two researchers + research assistants<br />Literature review (academic, market studies)<br />13 interviews, one survey, data from a corporate database<br />Workshop at ICTD 2010<br />Peer review<br />3<br />
    4. The Demand<br />Users desire goods and currencies in online games, social networks, etc.<br />Brands are after Facebook likes, Twitter followers, Digg votes, etc.<br />E-commerce sites need digital microwork, such as tags on images, transcriptions of scanned forms, de-duplication, etc.<br />= “Virtual assets” that are valuable to someone, yet scarce<br />4<br />
    5. The Supply<br />For each of these virtual assets, there is an emerging industry that supplies it <br />The production, exchange and use of scarce virtual assets = the virtual economy<br />5<br />
    6. Sectors of the Virtual Economy<br />
    7. Sectors of the Virtual Economy<br />
    8. Professional gaming studio outside Beijing, China. Photo: Jared Psigoda<br />
    9. Third-party gaming services<br />Total revenues: $3.0 billion (2009)<br />Approx. 100,000 full-time equivalent workers<br />Involves negative externalities<br />Net social value can be negative<br />Legal status contentious<br />Game operator<br />Producer<br />Customer<br />Retailer<br />
    10. Sectors of the Virtual Economy<br />
    11. 13<br />
    12. 14<br />
    13. Sectors of the Virtual Economy<br />
    14. 16<br />Microtask Ltd<br />
    15. Microwork<br />Samasource workers in rural Kenya. Photo: Samasource<br />
    16. Microwork industry<br />Infrastruct. provider<br />Client<br />Microworker<br />Work aggregator<br />Work transformer<br />Emerging industry; some benchmarks for potential market size:<br />Paid crowdsourcing: $500 million (2009)<br />IT and business process offshoring: $92-$96 billion (2009)<br />No negative externalities: 100% positive contribution to society<br />
    17. Microwork vs. crowdsourcing<br />
    18. Current development impact<br />20<br />Third-party gaming services value chain<br />Infrastruct. provider<br /><30%<br />Client<br />Microworker<br />0-70%<br />Aggregator<br />10-30%<br />Transformer<br />20-60%<br />Game operator<br /><1%<br />Producer<br />70%<br />Customer<br />Retailer<br />30%<br />Microwork value chain<br />Compared to e.g. the global coffee industry ($70 Bn in 2002), the amount of real money circulating in the virtual economy is modest<br />But most earnings in the VE are captured by the producers -> significant development impact<br />in the coffee industry, producing countries capture less than 10% of total revenues<br />
    19. Future development potential<br />21<br />Third-party gaming services value chain<br />Infrastruct. provider<br /><30%<br />Client<br />Microworker<br />0-70%<br />Aggregator<br />10-30%<br />Transformer<br />20-60%<br />Game operator<br /><1%<br />Producer<br />70%<br />Customer<br />Retailer<br />30%<br />Microwork value chain<br />In the future, wage competition is likely to limit producers’ income (low entry barriers)<br />In the gaming services industry, developing countries have been able to move up the value chain towards customer-facing functions<br />Can developing countries achieve the same in the microwork industry?<br />
    20. Potential upgrading strategies<br />22<br />Important enabler in least-developed countries: mobile technology<br />
    21. 23<br />Converting the Virtual Economy into Development Potential: Phase 2<br />MobileMicroworkChallenge<br />Photo (CC) by whiteafrican<br />
    22. Mobile Microwork Challenge<br />Online competition organized by infoDev to speed up the development impact of microwork in least-developed countries<br />Challenge: develop new concepts for mobile microwork<br />What problem is addressed, who is the customer?<br />How is the problem addressed by microworkers using mobile (feature/smart)phones?<br />Winning concepts awarded support for implementation and piloting<br />Accepting submissions opens in fall 2011<br />24<br />
    23. 25<br />