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We cannot see the future, of course, but there are a number of technological innovations that are relevant to gaming, that are also fairly easy to see coming. Currently, access to gaming involves some sort of access to computing technology, and access to gaming that can earn money involves access to a shared, persistent, physical computing environment, specifically a virtual world . The technology supporting virtual worlds is advancing so quickly that it would be foolish to describe the next generation in any detail. Suffice it to say that there are large, lucrative industries working energetically on different dimensions of the environment that virtual worlds thrive in.
There are reasons to expect, however, that this market is not likely to be monopolized. First, there seems to be a great diversity of tastes for the different features of a world. Mr. Bird may want to be on Pluto, while Mr. Castronova prefers medieval Britain. One of the major attractions of life mediated by avatars is the anonymity it affords, and anonymity requires a person to have exit options: other worlds to escape to if one's reputation in this one gets unpleasant. Perhaps a savvy game developer could make a world so large and varied as to provide the essential minimum level of entertainment and anonymity to a sufficiently large number of people, so that membership in that one world becomes optimal for all. This seems unlikely, however, given that there is a marginal cost to creating and maintaining game content.
A second reason involves congestion. Virtual worlds are virtual because they are online, but they are worlds because there is some physicality to them. Avatars take up space. If a world has a certain amount of entertaining content in it, that content will almost always be subject to some kind of congestion effect.
A third reason that the market will probably not be dominated by a few companies can be found in the many competitive strategies that are available even now, but have not yet been exploited by new entrants. For example, the current set of developers have managed to impose huge switching costs on players by structuring gameplay around the time-intensive development of avatar capital. A player starts the game with a weak avatar, but gameplay gives the avatar ever-increasing powers.
A final argument against a monopolization tendency comes from the nature of the content itself. Games are art, for the most part, and markets for artistic output exhibit a great deal of churn due to herding effects and the star phenomenon (MacDonald, 1988). The distribution of populations in virtual worlds is perhaps less like a natural monopoly market than a club goods market. Populations will sort according to the services, ambience, and fees of the various worlds. Virtual worlds will compete, as clubs do, but their size will be limited by congestion effects and by the marginal cost of increasing the scale of the world.
This analysis allows a tentative answer to the first question of the study: in the medium-term future, the online multiplayer gaming market will probably consist of a number of large, densely populated worlds, with varying degrees of portability between them. Given the expected growth in connectivity, interface technologies and content, there is reason to believe that this digital capital stock may eventually become quite large.
These considerations then lead to the next set of questions: If virtual worlds do become more important, how will this affect the real Earth economy?
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