Entropia becomes a bank
Ars Technica reports that Project Entropia and MindArk are in the process of getting an actual banking license.
…a Swedish video game developer has been granted preliminary approval for a real banking license by the Swedish Finance Supervisory…
…the game itself has proven to be incredibly successful, having generated over $420 million last year.
Now, though, MindArk’s going to be just like a bank in the real world: it will be backed by Sweden’s $60,000 deposit insurance, offer interest-bearing accounts for its clients, feature direct deposit options, let players pay bills online, and apparently will offer loans to customers.
And another long-standing prediction among virtual world watchers begins to come true: that virtual worlds would eventually become fiduciary institutions.
14 Responses to “Entropia becomes a bank”
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Wow. Just… Wow.
It’s going to take some time for the implications and possibilities of that to fully sink in for me, but this is amazing news!!!!
Which brings up the question: can you (or should you) resist the path to becoming a bank in Metaplace? (putting the ‘being a bank’ part on people who are more experienced in, well, being a bank)
Is it inevitable that you will need to?
Best part: this happens at a time when the global financial industry is looking more like a poorly played massively multiplayer game than a respected, professional activity. Anyone now who incredulously asks me “What kind of idiot buys virtual goods?” gets the answer: “Anyone who either directly or indirectly invested in unregulated credit default swaps”.
“having generated over $420 million last year”
Something’s not quite right there. Last I read they had 80-100K active users. I suspect they don’t have a $5K ARPU ;).
A different source puts it as $420m of economic volume.
Only a matter of time.
Next comes real taxation of earned interest and other such returns on investment. In the US, the bank would be required to send out 1099s on any interest earned. 1099s would link your social security number to your game account which is interesting in and of itself.
What I find even more interesting is that your personal identity moves just a bit closer to your online identity by having things like direct deposit and such. Without the VISA/MC middleman the account is connected directly to your game account.
Becoming a bank opens a huge Pandora’s Box for the company that does it. I know this from work in the gift card industry where every effort was maintained to NOT become a bank due to the increased regulatory requirements associated with becoming one. Can the security of a game’s account become stringent enough to meet banking standards? What’s the legal consequences? I wonder what the banking relationship contracts will look like. Lot’s of questions to answer and it will be interesting to follow it.
I thought they were already a bank?
csven, that’s a clever line, I need to remember that one 🙂
I wonder what the extra costs will be for getting and maintaining those licenses. How will SEC oversight work? I assume the same forms and regulations will be filled out and applied. It might be an opportunity to clean up some complexity.
Mindark is more adept at crafting compelling media events than they are at designing a compelling game. Entropia has the same addictive allure and and gameplay depth as the average slot machine.
That said, the banking license will probably alleviate some of the headaches inherent in an international game with a “cash-in/cash-out” economy, as well as getting MindArk some ink in the mainstream press. Whether it will revive the flurry of virtual property speculation that fueled the game in its heyday remains is another question entirely.
@Yukon, to be cynical, slot machines are actually pretty addictive to a great number of people, so that lack of depth may be quite intentional.
Entirely possible, Eolirin. My biggest beef with Mindark is that they gulled me into playing “invest just a little more cash and all your dreams will come true”. I really LIKE their mining/resource extraction system; I’d put it up there with SWG as best in class. But the slow drain on my bank account, never quite offset by prospecting or hunting, left me with a foul taste in my mouth.
After they’re licensed as a bank, they probably ought to register as a casino as well.
Actually, there are nearly 1 Million registered accounts at this point and the $420Million+ USD figure is indeed the total GNP. Total in-game transactions. And, MindArk already essentially comply with the stringent Swedish banking regulations so it is little difference to MindArk in that sense. For me, too, the implications are still sinking in… It is truly a fascinating time to be in the game industry, particularly the online segment. Rock on.
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