Look at economic data closely and the trends arent pretty: People with elite backgrounds are hoovering up an increasing share of new income and wealth. Automation is obviating more and more jobs. In the years to come, well need new forms of employment. Lets crystal-ball this: Will there be a new way for the working class of the future to earn a paycheck? Sure. Playing videogames.
Thats the bold prediction of Edward Castronova, an academic at Indiana University who studies the economics of online games. In a white paper released last fall, he argues that within 20 years, playing games for money will come to be seen as a legitimate occupational choice for those whose skills are not valued by brick-and-mortar labor markets.
Sounds nuts, right? But Castronova lays out the trend lines. First, consider how online games have evolved. Fifteen years ago you typically paid about $15 a month to play. But in the past decade, game companies have devised the free-to-play model: It costs nothing to join the action, but if you want something coolspecialty armor, a mount for traveling fasteryou have to buy it. This model has been wildly profitable. A top-rated free-to-play title, like Clash Royale, now brings in about $2.1 million a day from such purchases.
Heres the thing, though: As with casinos, most of the revenue comes from whales, a tiny percentage of players who spend thousands annually. A study last spring by Swrve (a firm that helps companies market their in-game items) discovered that just 0.2 percent of players are responsible for 48 percent of all revenue. In effect, a small population of high-spending players is subsidizing the masses.
Castronova predicts that economic trends will force those subsidies to grow. Think about it: Automation will create huge masses of unemployed would-be factory workers. The superrich will number fewer and fewer and get richer and richer. Which means game companies will drift toward a virtual-world New Deal. Theyll have to soak their whales more and more to stay in business, but keeping them happy will require making sure their worlds are vibrant communities. So the game companies need those low-spending, poorer folks to show up. Rich players dont want to play with bots; they crave the social fellowship of real humans. And they also enjoy the thrill of lording their socioeconomic status over others. (Its casino psychology again: The big shots want to walk into a crowded casino and go into the high rollers room, Castronova says, walking past a guy like me playing craps.)
That means the game companies will have to underwrite poor players. In the next 10 years, the companies might issue reward cards, spendable in the real world. But eventually, 20 years on, the companies might find they need to pay to keep the proles alive and in the game.
Lets be clear. This would not be, as Castronova himself acknowledges, utopia. This would be game design via Marxs immiseration theory. Its not a good life, Castronova saysnot merely because of the likely-skimpy wages, but because of the isolation. Now, low-skill gamers with few other work options might be happy enough at this work; as economist Erik Hurst has found, when todays non-college-educated men drop out of the workforce, they mostly play games anyway. This feels like something that is going to happen, says Mike Sellers, a veteran of free-to-play firms and a professor at Indiana University.
And I have a sinking feeling that Castronova is onto something. Political leaders are doing little to prepare the US for automation-propelled job loss. In that absence, the market will chart its own path, and that makes schemes like this all too plausible. When it comes to the game of real-world economics, people have no choice but to play.
This article appears in the March issue. Subscribe now.