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THE IMPACT OF VIRTUAL GOODS:

THE IMPACT OF VIRTUAL GOODS MIS Group 3

Table of Contents:

Table of Contents Introduction What is a Virtual Good? The Players in the Virtual Goods Industry Survey Results Legal Implications Major Issues Present Canadian Law Legal Ramifications Ethics of Virtual Goods Case Study Conclusion

Introduction:

Introduction Virtual goods industry is a rapidly growing industry $6 B by 2013 $1.6 B in sales in US Virtual Goods Market in 2010 Estimated $2.1 B in sales in 2011

What is a Virtual Good?:

What is a Virtual Good? Item that is purchased to use in a virtual environment It only exists in the virtual environment

The Players:

The Players Zynga Creator of Farmville, Mafia Wars Blizzard Creator of World of Warcraft Second Life

Primary Research - Sample Survey Results:

Primary Research - Sample Survey Results Q: Do you play online games? (ex. World of Warcraft, Farmville, CafeWorld, etc)

Primary Research - Sample Survey Results:

Primary Research - Sample Survey Results Q: If you have played these types of games, have you ever purchased a virtual good?

Primary Research - Sample Survey Results:

Primary Research - Sample Survey Results Q: If you have or have not played these games, do you consider virtual goods property?

Legal Implications:

Legal Implications New industry without precedents in law Legal status of Virtual Goods is yet to be defined Difficult to regulate the unknown

Major Issues    :

Major Issues Tax Regulation Earnings from the sale of Virtual Goods go unreported Tax on Virtual Goods = increase in cost to customer Property Rights No law for intangible goods Do you actually "own" the good? =

Present Canadian Law:

Present Canadian Law One cannot sell something that does not exist A sale is a contract by which a person transfers ownership of property to another person  for a price of money

Legal Ramifications:

Legal Ramifications Legal proceedings already happening over ownership interests Status of the goods and tax effects will have a substantial impact to the firms that currently produce these goods

Ethics of Virtual Goods:

Ethics of Virtual Goods Taxation problems Those profiting from virtual goods don't always report their income Specifically targets children Can harm social development, interpersonal relationships, and the emotional growth of children

Ethics of Virtual Goods (cont'd):

Ethics of Virtual Goods (cont'd) Data Security Not aware personal information is being sold to other companies, which increases vulnerability Extinction of the intermediary Companies are reducing costs and increasing profits by eliminating long term, loyal employees

Case Study:

Case Study Second Life: Bragg v. Linden Research Virtual land ownership dispute. Bragg did not receive the land he purchased for $300. Jurisdiction issues and Terms of Service.

Conclusion:

Conclusion The Future of the Virtual Gaming Social gaming has irreversibly changed the way people will play games from now on Attracting new demographics The future of the virtual goods market Virtual goods have transformed the way business is done

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