MediaFile

Investing in the Internet… literally.

January 9, 2010

One of the Crystal Palace Space Station domes

The headlines were salacious, the scandal was set. This was going to be the water-cooler story of the week.

27 year-old Erik Novak from British Columbia paid out a record-breaking $330,000 (USD) for a digital space station. Let that sink in for a moment.

A digital space station.

In a video game.

Perhaps even better than all the jokes you and I could write all day was the argument from the company that this was a sound investment.

First Planet Company created “Entropia Universe” and then the “Planet Calypso” massively-multiplayer online videogame to act and feel like a real economy. It has a bank in Sweden with an ATM card and an exchange rate of 10 videogame “PED”s to $1 USD.

Blah blah blah, where’s the investment angle?

Apparently, the company says that this virtual space station will return investment within two years. Unreal! (literally) Apparently, he’ll make the money back by generally conducting the video game’s business like selling virtual ammunition, repairing virtual goods, and taxing virtual hunting parties for virtual monsters.

“He’s bought a city, basically,” the video game company’s spokesman, David Tractenberg, tried to explain to me, adding that the whole world for the video game has become its own civilization, not unlike World of Warcraft. Only, y’know, with a Swedish bank to boot.

“This is a stunning investment opportunity and I have complete faith I will recover what I spent relatively quickly,” Novak said in a statement after winning the auction for his new space station, adding that Planet Calypso is “one of the few safe investments in this economy.”

While Tractenberg said that most users will earn $50, $60 or even $200 if they put some effort in, what makes players like Novak rather special is that this game is his full-time job. In fact, the company said he financed his out-of-this-world purchase by selling a $14,000 virtual rifle.

So, other than generating returns, the company said that the sale is being considered for the Guinness World Records Book as the most expensive virtual world object ever sold. This company seems to have the market cornered on that one too, as it’s already been entered into the Guinness books in 2004 and 2008 for similarly priced un-real objects.

One of them was a virtual night club, which cost $100,000. That player made back his investment in five months, according to the video game company.

This is, of course, just an extreme example of a burgeoning trend in the online world of “virtual goods” in which companies like Zynga can create games like “Farmville” in which people can play for free, but buy specialized goods to improve their experience or help them overcome obstacles that would otherwise take more time.

Most notably, the virtual goods-based video game company Playfish was purchased by Electronic Arts for $275 million.

(Image of one of the space station’s “Biodomes” courtesy of www.entropiadirectory.com)

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