Presentation introducing the World Bank virtual economy report, which is available at http://www.infodev.org/en/Document.1076.pd. Delivered at the FPD Forum, 7 April 2011, Washington D.C.

1. Knowledge Map of theVirtual Economy Dr. Vili Lehdonvirta, University of Tokyo / HIIT FPD Forum, 7 Apr 2011, Washington DC

2. Contents Introducing the Knowledge Map of the Virtual Economy What do we mean by “Virtual Economy”? What are some of the industries in the VE? What is the development potential of the VE? Mobile Microwork Challenge Preview of an upcoming infoDev competition 2

3. KMVE: Research process Assignment: “Development potential of the Virtual Economy” August 2010 –> January 2011 Two researchers + research assistants Literature review (academic, market studies) 13 interviews, one survey, data from a corporate database Workshop at ICTD 2010 Peer review 3

4. The Demand Users desire goods and currencies in online games, social networks, etc. Brands are after Facebook likes, Twitter followers, Digg votes, etc. E-commerce sites need digital microwork, such as tags on images, transcriptions of scanned forms, de-duplication, etc. = “Virtual assets” that are valuable to someone, yet scarce 4

5. The Supply For each of these virtual assets, there is an emerging industry that supplies it The production, exchange and use of scarce virtual assets = the virtual economy 5

6. Sectors of the Virtual Economy

7. Sectors of the Virtual Economy

10. Professional gaming studio outside Beijing, China. Photo: Jared Psigoda

11. Third-party gaming services Total revenues: $3.0 billion (2009) Approx. 100,000 full-time equivalent workers Involves negative externalities Net social value can be negative Legal status contentious Game operator Producer Customer Retailer

12. Sectors of the Virtual Economy

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15. Sectors of the Virtual Economy

16. 16 Microtask Ltd

17. Microwork Samasource workers in rural Kenya. Photo: Samasource

18. Microwork industry Infrastruct. provider Client Microworker Work aggregator Work transformer Emerging industry; some benchmarks for potential market size: Paid crowdsourcing: $500 million (2009) IT and business process offshoring: $92-$96 billion (2009) No negative externalities: 100% positive contribution to society

19. Microwork vs. crowdsourcing

20. Current development impact 20 Third-party gaming services value chain Infrastruct. provider <30% Client Microworker 0-70% Aggregator 10-30% Transformer 20-60% Game operator <1% Producer 70% Customer Retailer 30% Microwork value chain Compared to e.g. the global coffee industry ($70 Bn in 2002), the amount of real money circulating in the virtual economy is modest But most earnings in the VE are captured by the producers -> significant development impact in the coffee industry, producing countries capture less than 10% of total revenues

21. Future development potential 21 Third-party gaming services value chain Infrastruct. provider <30% Client Microworker 0-70% Aggregator 10-30% Transformer 20-60% Game operator <1% Producer 70% Customer Retailer 30% Microwork value chain In the future, wage competition is likely to limit producers’ income (low entry barriers) In the gaming services industry, developing countries have been able to move up the value chain towards customer-facing functions Can developing countries achieve the same in the microwork industry?

22. Potential upgrading strategies 22 Important enabler in least-developed countries: mobile technology

23. 23 Converting the Virtual Economy into Development Potential: Phase 2 MobileMicroworkChallenge Photo (CC) by whiteafrican

24. Mobile Microwork Challenge Online competition organized by infoDev to speed up the development impact of microwork in least-developed countries Challenge: develop new concepts for mobile microwork What problem is addressed, who is the customer? How is the problem addressed by microworkers using mobile (feature/smart)phones? Winning concepts awarded support for implementation and piloting Accepting submissions opens in fall 2011 24

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