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  • ( 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 ) - ...you could be playing to get paid.

  • Whether that's from streaming or e-sports.

  • Emcee: ( shouting ) He just made history!

  • Three million dollars in prizing!

  • Alex: But there's another economy at work,

  • 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 ) - But other games use online marketplaces,

  • 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: Games are designed to give you a better experience the more time you spend in 'em.

  • 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: Singularity is number fourth in the U.S.

  • 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: "Counter-Strike" is a game that's been around for as long

  • 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: Well, okay,

  • 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: Oh. My. God. - Whoo!

  • 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: After game developers worked to end third-party marketplaces

  • 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.