From Time Replacement to Gross Replacement: The Effect of Online Virtual Game on Real Economy

With the activities in the online virtual world becoming more and more complex, online virtual world seems to have developing into a virtual economy. This article develops a Gross Replacement Model to analyze the effect of online virtual activities on the macro-economy. We propose that virtual activities, which include in-world activities and inter-world activity, do generate economic value and affect the macro-economy through three ways: when game-players allocate more time in virtual world and replace their real-world activities with virtual activities, it could generate the replacement effect on real Gross Domestic Product and transfer effect on Gross Virtual Product in the virtual world at the same time, but also increase complementary effect on the real income generated by the network industry. Results from survey proved that there exists the replacement effect. We developed a method of measuring the three effects of the virtual activity on real economy. Data from Second Life demonstrates that the virtual game has positive effect on the real GDP. Finally, we propose the suggestion that virtual economic activities should be included into the Mega-GDP to reflect the effect of network on the whole economy.