Could World of Warcraft be the world's biggest corporation?

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Ten million players. However you look at it, that's a lot. World of Warcraft not only dwarfs all other massively-multiplayer games, it dwarfs a good number of countries -- not silly countries like Monaco and Greenland, either, but perfectly sensible ones. Like Sweden, say, or Israel. But how do the holdings of this legion of players compare to the corporate giants of the world?

Determining what actually is the world's largest company is far from an exact science. Do you measure it by annual revenue, in which case it's ExxonMobil, which pulled in about $400 billion in 2007? Perhaps counting number of employees makes more sense, in which case it's Wal-Mart, which has 1.7 million blue-vested souls on its books. Maybe market capitalization, a measure of the public opinion of the value of a company, is what matters most, in which case it's probably ExxonMobil again.

No matter how you slice it, most of the same names come up time and again -- a cabal of the world's most powerful private economic entities. They include petroleum giants like BP, Shell and ExxonMobil and manufacturing powerhouses like Toyota and General Electric. Some, like HSBC and Citifinancial, are fiscal giants; others, like Warren Buffet's Berkshire Hathaway, have fingers in all kinds of pies. One thing's true of them all, however: none have very much in common with World of Warcraft, or its creator, Blizzard Entertainment.

Or do they? You may not be able to buy shares in your Warcraft server, but you can certainly invest in its future. Even continuing to play on a particular server is in a sense an expression of confidence. Unsuccessful online games, like floundering companies, are bound to have the plug pulled on them at some point. As you play, your character accumulates value via experience points, equipment, currency and commodities. What do you get if you total that value across the game's whole population?


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You don't really get a corporation, of course. Neither, though it's fun to play the relative-population game, do you get a nation. Here, Warcraft's users pay a monthly fee to Blizzard to be part of the world, like some kind of exclusive gated community, rather than being citizens, employees or shareholders. Nevertheless, the sheer scale of the trading going on across Warcraft's hundreds of realms certainly qualifies it as an economic force in its own right.

If you're part of the ever-shrinking majority who's never taken a step in Warcraft's world, you probably aren't prepared for the richness of the ebb and flow of supply and demand that's taking place every day in Azeroth. On each of the game's many servers, a system of auction houses lets between 15 and 30 thousand players trade goods they've acquired from killing monsters or manufactured from raw ingredients harvested from the world, all for the game's glibly-named currency, "gold." A casual network of barter and exchange thrives, filling players' screens with rapidly-scrolling want ads whenever they step into a major city. Player organizations, equipped with collective resources and shared goals, set up elaborate supply chains to funnel materials to experienced crafters for processing into ever more valuable items.

All this economic richness creates opportunities aplenty for the canny player. Commodities trading is a great place to start; the auction houses offer the perfect opportunity for wannabe day traders to play, away from the gaze of regulators and, of course, away from the risk of losing anything more than your virtual shirt. Assisted by custom-created, specialized user interfaces, the Warcraft trader pores over auction listings, watching price trends, studying supply levels and analyzing upcoming game tweaks in an attempt to be the first to spot a new opening.

Don't think that this has escaped the attention of the game's creators. Although Blizzard doesn't release much demographic or economic data about its server populations, they keep a very close eye on the stability of each server's micro-economy. After all, if one slips out of a cozy equilibrium -- inflation gets out of control, for example, or a wealthy player monopolizes a particular commodity -- someone has to tweak the game's knobs to restore normality and ensure the rest of the server's players a smooth experience devoid of the lumps and bumps of unfettered economics.

Interest from the academic community is coming, too. Back in 2001, economics researcher and author Edward Castronova (who's now a professor of telecommunications at Indiana University, Bloomington) published an oft-cited paper that ranked the economy of Everquest, then the most popular online RPG around, as having a GDP (Gross Domestic Product) per capita close to that of Russia, and a currency valued higher than the Yen.

Casual observers of the massively-multiplayer world could be forgiven for thinking this is all rather silly. It's just a game, after all. For all the assets your red-suspendered day-trader elf accumulates, he's still just a fictional entity, and his wealth is just a set of ones and zeroes in some hulking database somewhere, subject to change at any time.

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But how is that different from any of the more familiar financial holdings we know and love? Our bank accounts, investments and holdings have no more intrinsic value than the pile of gold coins in your Warcraft character's backpack. They're only worth anything as long as we trust the entity that's underwriting them, be that Blizzard or Bank of America. Even the loose change in your pocket only has worth because the Feds says it does, and it's just as much at the mercy of the ebb and flow of the country's economy as Warcraft's gold is to Blizzard's twiddling.

Setting a real-world value on this ten-million-strong enterprise is not easy. Compared to the largest companies on Earth, which have market capitalizations of appreciable fractions of a trillion dollars, it's eclipsed into utter insignificance. But, all the same, assume the average value of each player's virtual goods is $30 (less than the original face price of the game itself, for reference), and you're easily up into the ranks of companies like SCi, beleaguered owner of games publisher Eidos (and the Tomb Raider and Hitman licenses to boot). Assume more like $100, and our theoretical Warcraft, Inc. beats out high fliers like US Airways and gamer favorite Domino's Pizza.

Try using your virtual holdings to back up a loan, of course, and you'll discover that this back-of-the-envelope stuff is just for fun. When you decide to monetize your Warcraft gear, you'll face some major logistical challenges, not the least of which is that the game's terms of service expressly forbids such activity. Moreover, to whatever extent your virtual loot has real value, Blizzard claims it owns it.

All the same, it's one thing to say it, and another to actually make it stick. Top-specced Warcraft accounts have certainly changed hands for real-life four-figure sums in the past. There's money to be made out there, imaginary or not. Watching a bustling Warcraft auction house in action, it's tempting to wonder if the next Warren Buffet is already cutting his or her teeth selling copper futures in Azeroth.

Mike Smith holds shares of none of the companies mentioned in this article. His gnome alter-ego does have a holding of Essence of Air, however, which he's stockpiling in anticipation of the release of Warcraft's next expansion, Wrath of the Lich King. Consult an independent financial advisor before making any investments, the value of your Frostmourne may go down as well as up, and don't give your money to any unlicensed goblins.

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