( coin rattling )
( game sound effects )
Alex: I've been playing video games for about 25 years.
One of my first memories was begging my parents
for a quarter at the arcade just so I could get a little bit further
at "Galaga."
Games used to be simple.
You pay for the game, you play the game.
But eventually, that all flipped.
Instead of paying to play...
- ( machine gun firing ) -
Whether that's from streaming or e-sports.
Emcee: ( shouting ) He just made history!
Three million dollars in prizing!
Alex:
where players can buy in-game items for real cash.
This flaming mace is in "Echoing Fury."
In 2012, it was sold for roughly 10,000 real American dollars,
making it one of the most expensive video game items ever sold.
Which brings me to my question:
"Why would you spend money in a video game?"
( music playing )
( light buzzes )
Games have taken up years of my life. Literally.
I've spent more than a year on the games "Counter-Strike" and "World of Warcraft,"
and as you can see, I was a pretty serious gamer.
No!
Over the last 20 years, developers have made it possible
for you to spend more money on games.
I sold my first-ever Quest account on eBay for about a hundred bucks.
And years later, I paid my rent by playing "World of Warcraft"
and selling the gold I made.
( thunks )
What's up?
- Oh, are we doing this? - Yes!
Welcome!
So when we talk about a virtual item,
- in a video game... - ( laughs )
...these are a range of items and collectibles
that can be bought, sold, traded, all depending on
- the game that you're playing. - These are things like...
- skins and weapons and...yeah. - Yeah. Totally.
Sometimes they can make you more powerful, but
- sometimes it's just clout. - Mm-hm.
- Showin' off. - Yeah, exactly.
Take "World of Warcraft"...
In that game today, you can buy this.
This is Hogrus, a flying pig
that you can ride on.
- A flying pig? - Yeah.
Is this also $10,000?
This is only $25.
You can get the snazzy "Fortnite" dance.
It's called "Tidy," for about 500 V-Bucks.
That's "Fortnite's" currency.
And those V-Bucks can be purchased for 5 real dollars in the game.
I'm sorry. What-- what is the Tidy?
Uh...
it's like a window-wipe dance move.
- I haven't actually seen it yet. - ( laughs )
This is a skin in the game
and basically it's just like a--
it's a visual accessory that changes the way this gun looks.
And this particular skin sold for $61,000.
- $61,000? - Nuts.
It's just a commemorative, special version of a skin
that was very rare.
There are many ways to buy virtual items.
Free-to-play games like "Fortnite" allow you to buy
items directly from the game using an in-game store.
- ( coin rings ) -
usually run by the gaming companies.
In this case, players buy and sell items among themselves,
and the game company takes a cut.
But there's also another way.
And it largely exists beyond the control
of gaming companies. These transactions
take place on third-party sites.
They're unregulated and mostly against the rules.
But players still use them to buy and sell items.
Back in 2012, only some game makers allowed you to buy, sell, and trade items
in-game with real cash.
And the total sum of virtual items in the market
was $15 billion.
And some investors estimate that today
the total value of these goods could be as high as $50 billion.
- Wow. - To put that in perspective,
that is more than the global box office of the same year.
Why is this worth so much?
My guess--
I--I actually have no idea.
- ( laughs ) - I have no guesses.
Essentially, things are worth what anybody will pay for them.
So, if I have a fictional castle and you want it,
and you think it's worth $5, then it's worth $5.
So an in-game economy is the same as a real-world economy.
You've got a lot of people, you've got a lot of goods, and you've got currency.
What's the difference? Nothing.
Alex:
In some games, like "World of Warcraft," there are daily quests
where you have to log in and do the same thing
time after time after time. But in most games you just have
to grind and spend a lot of time to be at the top of the game.
On average, a player over 18 will spend more than seven hours a week
in these digital worlds.
I have a weapon in this game that took me 14 years to get.
14 years!
But what if you could buy a better experience
instead of just grinding out the game?
Then a new thing started to happen when developers offered items
that you couldn't even earn in the game.
I'm talking about flying pigs.
I'm gonna show you how to get one.
So, to get Hogrus, I'm going to go to the main town,
and I'm going to open up the store.
It's really easy. You just hit "Buy Now,"
it connects you to the shop.
Find my credit card.
And it says, "Thank you, you have just earned
Hogrus, Swine of Good Fortune."
I earned it, guys!
Oh, he's in a little gift box.
So, let's see what happens when I click him.
- ( mouse clicking ) - Hello? Are you there?
"Unwrap."
And there he is, he popped out.
( music playing )
So, he runs--oh!
Look at him.
Look at those wings.
So this is the joy
that spending $25 in a video game can bring you.
So this is pretty cool.
I'm going to go to a "Counter-Strike" tournament and see why
other players are buying virtual items.
I'm headed to Skokie to talk to some gamers
at the national championship series
for an online shooter called, "Counter-Strike: Global Offensive."
Today, we're gonna see players compete for $10,000.
- ( explosion ) - Yeah!
Whoo!
So we practice almost every night.
Those guys look kinda intimidating over there.
Player:
Anything that you're, like, prepared for, excited about, afraid of?
"MAC-1": We're not really preparing for anything.
It's kinda like, the skill-gap between us
and even the second best team is so, like high,
that we really shouldn't even draw up a map here.
Alex:
as most of these players have been alive.
But the latest version of the game only recently adopted
a new free-to-play model, where instead of paying for the game,
players are encourage to buy and sell their skins in it,
by using a marketplace inside the game.
( "Ride of the Valkyries" plays )
- ( character screams ) - Emcee:
Osee making his expense, knows where the remaining two players are.
He's going to force the issue. He's going for this.
If he pops one more head-- this is so deadly--there it is!
Osee can win this. The one-v-one--oh, he gets it! Osee!
Whoo!
So Osee just got a four-kill clutch play.
Basically he just killed the entire other team that was still alive, by himself.
- Alex:
So this is an AK-47 in the game.
And you've actually put stickers on it as well,
so that's like, Rosie the Riveter.
One player has an AK-47 that's got, like, gold foil on it.
Another player has a gun that looks like a water gun.
These are all different skins that you can get in the game.
Within the first two years of adding skins to the game,
the "Counter-Strike" player base jumped by 1500%.
I actually spend a lot of money on skins.
I spent like, 2,000.
- Like, dollars? Wow. - Yep.
And it just helps me stay motivated, I guess?
- Do those help you play better in the game? - ( laughs ) No.
- So, what's the point of it? - Uh, just to look cool.
- Okay. - You can always resell 'em.
It's not like an asset that you're not able to
invest into and then sell.
And, uh, if you do it correctly,
the price market fluctuates in a way, where like,
you can buy it at a low point and sell it at a high point.
If you're smart about it, at least.
So what that "Counter-Strike" player was talking about
was buying and selling items in "Counter-Strike" to make a profit.
Players have always found a way to make money.
And early versions of online trades date back to at least the late '90s.
Hello. Markee Dragon. Also known as Marcus Eikenberry in real life.
I got into business, buying, selling, and trading
of intangible goods.
I saw somebody that had like a sword for sale for $20 on eBay.
And I'm like, "Holy ( bleep ), I can do that?"
Then actually developed the website, Markee Dragon.
- Essentially operating as a broker. - Correct.
Most of the game companies didn't want it legal.
Four of the different game companies started getting involved, and then
you know, things went south.
Alex:
like Markee Dragon's, they began creating their own.
They formalized the exchange of real money
with virtual goods in currency and games.
But these developer-run marketplaces brought out a key concern
with these virtual economies, and that's risk.
I'm not sure if you're familiar with the "Diablo III" auction house.
Oh, my God, yes.
It was the wrong time to do it.
And everybody and their mother said,
"Oh, my God! I'm going to make some money playing a video game!"
But it imploded on them.
So this auction house represents the game "Diablo III's" auction house.
The only difference between this game and other games like it,
Blizzard, the creator of the game, decided that they wanted to experiment
with making the auction house connected to real money.
Now I'm going to give you some coins.
These are so cool! ( laughs )
- That's your face on a... - ( laughs )
...Glad You Asked penny. This is the greatest prop we've ever made!
So, Cleo, you've got 20 gold. Buy whatever you want.
- Let's get this started. - All right.
- I probably want a shield-- - Ooh.
for 10 gold.
And I really like curvy red one.
Ah, the scimitar. Great choice.
Now you're out of money. But you were only able to buy two items,
and that's really not enough.
But imagine for a second if somebody found out a way to create their own gold.
- I'd want to know how they did that. - Hey, Joss?
- Yes? - Alex: Yeah, come on in.
What's up?
- Money? - Yes. And pretty soon
- you're gonna have a ton of it. - Awesome.
- So in this case, Joss is a cheater... - ( laughs )
...who found a way to duplicate this gold.
And she's going to be able to buy everything she wants.
- How do I duplicate this? - So there was a bug in the auction house
that allowed their players to duplicate their gold.
And that's exactly what happened on May 7th, 2013.
You have all the gold you want, so you can buy whatever you want now.
I'm just gonna take it all. I mean, that's what you do, right?
And I'll leave two swords, how about that?
Okay. Since you just bought out everything of value,
even the middle quality items were highly sought after.
So, eventually, what happened was hyperinflation,
and those prices changed because people could spend anything on it.
The dollar values are just dropping so rapidly.
One area of it spins out of control, the whole thing collapses.
Nobody knew what to do because, remember,
you could sell this gold for real money.
Wait, wait, wait, wait. That-- you can sell that for real money?
- Yes. - Can I sell this for real money?
- Yes. - Oh, good.
Wait. I clearly want to sell everything for real money.
We want real money, Alex. Let's do this.
So Joss puts all of her items on the auction house
before the game maker can figure out what's going on.
Joss gets a boatload of money.
Joss does get a boatload of money.
- So that's for you. - Ha-ha.
( trilling )
Alex:
This whole thing only lasted a few hours.
But before Blizzard could go in and correct the bug,
a lot of damage had been done.
They couldn't go back and change or reverse
the real money trades that had taken place
because people like Joss had already gotten their money.
So, they deleted player accounts.
- Oh, my God. - Oh, no! I just got banned!
Some people who weren't even duplicating gold got caught up in this.
And I know that because it happened to me.
I had a lot of gold on one account, and it got banned,
and I lost an item that was worth about 400 bucks.
- 400 real dollars? - 400 real dollars.
- Alex! - Yeah.
The "Diablo" crash shows us how virtual economies
can be riskier than real ones.
They just don't have the same guardrails and protections,
and a simple design bug could cause a catastrophe.
So when people say that, "Oh, you bought something in a video game."
It's like throwing your money down a pit
that you'll never see again because you don't own it.
So is the popcorn you bought at the movie theater. It's the experience.
Alex:
Jared:
- Whoo! - You should be playing it to reach the top
and succeed and win.
There's probably no better example of this
than in the battle arena game "Dota 2."
It's annual competitive tournament, The International,
has the biggest prize pool in all of gaming.
$34 million in 2019.
I decided to come to this "Dota 2" tournament pub stop.
This is in New York. I couldn't fly out to China
where the game is actually taking place.
( music playing )
( cheering )
In "Dota," players could buy a virtual item
called a Compendium for the tournament.
It's a bundle containing numerous quests,
achievements, and earnable rewards.
25% of the sales went on to fund the prize pool
for the tournament, and that's right.
The biggest prize pool in all of gaming
was almost completely crowd funded by the fans.
People who actually watch "Dota" itself
feels like by buying the Compendium,
they're actually supporting the professional players themselves.
We all are, like, literally financially invested in this tournament.
It's kind of more about the social aspect of getting together,
sharing the passion for the game that we love.
all: Oh!
So at the end of this, why would you spend money in a video game?
There's so many reasons why, but it just really comes down to investing in what you love.
Boop.
We're gonna talk about other.
Beneath the surface. Okay.
Ow. ( laughing )