According to a joint release from China’s Ministry of Culture and Ministry of Commerce this past Friday, virtual currency (as well as “prepaid cards of cyber-games”) may no longer be legally traded for real goods or services.

The official statement from the Ministries states: “The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services.”

This decision, possibly influenced by the recent case in which virtual currency extortion led to three years of prison, is expected to affect millions of people in China who make part or all of their living through such means. Dubbed “gold farming” by many, a vast number of companies hire people to play MMOs for the sole purpose of collecting large sums of virtual currency and selling them to other players. In turn, however, those “farmers” inflate and usually adversely affect in game economies. While this is a significant win for many game companies that fight against these services, the reasoning behind the ban is not necessarily because of their complaints, according to the Chinese government.

The primary justification, as stated by the government, is that this will curb (at least to some degree) illegal online activities such as gambling. Unfortunately, this approach will put many Chinese citizens out of work. While the virtual currency trade industry is global, an estimated 80-85% of gold farming companies stem from China. In fact, last year, the industry totaled over one billion yuan or around $150 million within the country.

Of the game companies and platforms that provide virtual currencies for their players, Tencent.com has been affected the most. Its virtual currency, QQ Coins, has been the most popular online currency to be traded by these industries. With 220 million registered users, it is not hard to see why. Suffice to say, such companies have openly supported the new ruling.

How exactly the ruling play out depends on the extent to which the Chinese government will apply the new ban. It is doubtful that this will snub out gold farming and selling completely, but it is certainly going to drop it in droves.

Want to travel around the world and meet new people? Then you might want to check out a new iPhone game called Foursquare. Despite the name, it doesn’t deal with the schoolyard ball game. Rather, it looks at what’s hot in the world around you and the people who are involved.

In the past, we took a look at a similar game, Gowalla, that has players log-in from various locations using the iPhone’s GPS system. Users could earn rewards based on where they went. Foursquare is similar in many ways.

The developers describe the app as “50 percent friend-finder, 30 percent social city guide, [and] 20 percent nightlife game.” In the game, players “check-in” from a given location, and see which of their friends are in that area. Based on where you check-in from, you can earn points and achievement badges.

Unfortunately, you can’t earn points during normal work hours (no procrastination allowed), but you can earn extras for discovering new places, traveling (to more than one place a night), and checking-in multiple nights in a row. Unfortunately, these points and badges have no use beyond bragging rights. If you check-in from a place more than anyone else, however, you get a nifty “The Mayor” title for that location.

The game is broken up into two parts: The “Top 12” and the “To-Do” lists. The latter is what you are looking to do, while the former is where you’ve already been — complete with short, personal reviews.

Currently, however, there are only 12 available cities, limiting the amount of people who can effectively use the application. Moreover, some features within the game are only available through a full web-browser on your computer. What’s the point of having an iPhone app that encourages checking-in from new locations if you have to use a computer for some of the venues?

Foursquare is a good idea that hints at the potential of increasingly social location-based mobile games in the future.

Social networks have been growing around the world, but we spend most of our time talking about North America, Western Europe, and Asia. Less talked about is VKontakte, a social network based in Russia with 36 million global users and the most popular website in the country. Now, having seen the success of games and applications on social networks like Facebook, MySpace, and hi5, VKontakte is calling more developers to build for its platform as well.

Since launching its platform a few months ago, the company says over 50,000 applications have been added, with more coming every day. There’s no review fee, and VKontakte says it’s adding additional translation and localization services for developers, alleviating language barriers and cultural differences. Following the initial application upload, a translation can be completed in as little as a day or two.

For developers monetizing their apps and games through virtual currency, VKontakte has a virtual currency API like that of “social entertainment” site hi5. Dubbed “Votes,” Vkontakte’s virtual currency works the same way as hi5 Coins. Users purchase Votes through the social network itself. They can then use them to purchase goods and premium services within any of the applications that offer them.

While VKontake’s API information pages are only available in Russian for the time being, the social network says it’s currently working on English renditions. If you happen to know Russian, you can register and dive right in. If not, check back later at their upload and API pages.

Blizzard Entertainment’s World of Warcraft has dominated the massively multiplayer online (MMO) game market for more than four years now. During the course of its existence, the game has exceeded anyone’s expectations. Globally, it has more than 11.5 million users, and is available in five languages.

So can someone overtake Blizzard’s record breaking game? In a recent interview with VideoGamer.com, Ryan Barker, the lead designer of Warcraft forefather Everquest, gives his opinions on the matter.

Barker strongly believes the power of social networking — and Facebook in particular — could create an MMO like no other. One of the issues with Warcraft: As the game’s life goes on, it becomes harder for new players to catch up, which leads to a lack of new accounts. Despite efforts to mitigate the issue, it is a barrier that eventually all MMOs succumb to in their lifetime.

Barker feels an MMO on Facebook could ease this problem.

“Facebook doesn’t care how long you’ve been on Facebook,” says Barker. “You’re still going to go on and be just as much of a part of the community right away at day one and day 200.”

In the end, it’s the community and content that make MMOs so addictive. Granted, any game that has some form of individual character progression will experience similar problems (for example, in traditional MMOs a level 10 player cannot help a level 70 player, and in the reverse, the level 70 has no challenge when helping the level 10). However, this isn’t necessarily a bad thing. It merely requires designers to think of new ideas that are different from the standard experience.

While World of Warcraft is tremendously popular, Barker does not feel that it is untouchable. He feels that a Facebook MMO will take what Blizzard started and run much further.

“At some point someone’s going to do an MMO that really caters to that group [Facebook users],” he says. “And [they are] going to have a billion subscribers or whatever.”

An MMO on par with Warcraft, Everquest, or an older title like Ultima Online that makes use of Facebook could raise the bar in the market and surpass Blizzard.

Presentation still matters, however. The aforementioned games have an incredible style to them, both in terms of game play and visual effects. That said,  we do not expect any Facebook games currently available to be a WoW-killer just yet.

Thus far, some of the highest quality games have come from Playfish, Large Animal Games, and a few others. They all lack the production value needed to make Barker’s theories a reality. This isn’t to say it will not happen in the future, but we will likely have to wait awhile.

Internet security has always been a major issue for e-commerce. Often, it feels like it’s getting worse, as more and more hackers wage digital war on both organizations and individuals. Many users remain unprepared; they see hacking as something that will never happen to them.

According to an article by the Washington Post, the use of virtual goods is one of the highest security risks out there. In fact, the Post calls virtual goods one of “the most sought-after commodities in the general hacking scene.”

It’s true that there are some significant security challenges at hand for virtual goods merchants. Scores of malware is in use to acquire digital goods unscrupulously. Many hackers can acquire your passwords, license keys, user names, and other pieces of important data. Attacks have been built for thousands of different online games. The illicit acquisition of virtual goods and accounts has turned into a “multi-billion dollar market.”

While merchants are always fighting to preserve the integrity of their virtual economies and currencies, some do look the other way when it comes to how the goods were acquired. The recent court case that came out of China earlier this month serves as an example. A man was sentenced to three years in prison for the extortion of approximately $15,000 in virtual goods. If he hadn’t been caught, those goods most likely would have been resold.

Despite the danger, the situation could improve in the future with better user education. Many people lack firewalls, updated software, or even virus protection “because they find them inconvenient,” according to the Post. These “internet security best practices” alone are enough to deter most hackers.

As always, consumers should remember best practices like these to keep themselves safe:

• Install and use a firewall.
• Use up to date antivirus software and virus definitions.
• Keep secure and updated passwords.
• Update your computer with the latest security patches.
• Don’t open emails or download files from suspicious or unknown sources.
• Use anti-spyware software.
• Periodically back up your data.

[image via The Washington Post]

Not too long ago former Facebook director of business development Netanel “Net” Jacobsson joined the advisory board at OpenFeint.

For those unfamiliar with the company, OpenFeint is a social gaming toolkit that was launched for the iPhone back in March of this year by Aurora Feint (makers of the mobile MMOs Aurora Feint I & II). The platform is intended to provide iPhone developers with a quick and easy means to enable the sharing to Facebook and Twitter accounts from their mobile applications and games. It also for easy integration of social features such as leaderboards, events, and in-game chat.

However, the company’s recently launched version 2.0 aims at solving the problem of social discovery. As has been stated many times before, distribution has always been a critical issue when it comes to developing on the iPhone due to the thousands of apps currently in circulation. Nonetheless, through use of the social graph, the new OpenFeint will be more similar to the new Facebook application directory in the sense that it will show users what their friends are playing.

As stated by Jacobbsen in his blog, “the developers of Aurora Feint [have] taken every piece of OpenFeint and injected a healthy dose of Friends into it. Every page you look at, from a game’s iPromote page to your achievements list, has a social context.”

Seeing as how Jacobbsen all ready has significant experience talking with partners about Facebook Connect, he should be able to help OpenFeint right off the bat. Facebook Connect has already had significant impact on many iPhone apps and games. Thus far, over 3 million users have joined OpenFeint.

[image via Net Jacobbsen Blog]

Social game developers Hive7 and Socialsoft have paired up with Susan G. Komen for the Cure, the world’s largest breast cancer organization, with their latest Facebook game, Zen Garden.

Akin to many of the other recent titles that have players managing their own unique real estate, Zen Garden however takes a more realistic-looking approach. Users are able to create their own gardens atop rooftops or backyards and tailor them to the themes of their choosing. Currently, the game has over 75 forms of flora and decorations coming from all over the world, with more to be added in time.

Each day, players receive in-game currency, Zennies, to spend within the game’s market. Other game items can be purchased for anywhere from $0.10 to $1.00. Furthermore, the game has added social features allowing players to acquire what are called “birthstones” from their friends and trade those in for various garden products.

As the game is also connected to Komen, donations are also highly encouraged. Players that donate are granted a pink ribbon, which in time will be redeemable for weekly rewards. For now, players are simply featured as Top Contributors.

Thus far, the game has acquired $5,000 from donations towards its $10,000 goal, so it looks like they are off to a good start. Hive7 producer Rob Carroll says Hive7 and Socialsoft “will donate 10% of the retail price of all in-game money sold, with a guaranteed minimum donation of $25,000.00.”

However, we do have a few minor complaints. The placement of items is often awkward, and it can be difficult to select smaller objects when larger ones are about (especially floor tiles next to hedges), as you constantly select and move the bigger ones. A simple locking mechanism would be ideal in this case. Also, you can’t really place items all the way to the edge of the screen, so you end up with some unwanted empty space, but this too is an easy change.

Beyond these usability gripes, the only other issue we found is load time. Every single time you select an item to place it takes a few seconds to have it become movable. In a decorating themed app like this, it should be instant. In an app in which you place dozens, if not hundreds, of items for a design, even three seconds is too long. If you look at the image above, that garden is probably close to 100 items.

Nonetheless, the issues with Zen Garden as a game are more or less nitpicks. It is actually a pretty good looking game. It certainly has a lot of room to grow, but Hive7 and Socialsoft are off to a great start.

Cloning games has been a standard practice in the industry ever since Munch-Man started nibbling at Pac-Man’s power pills. But in the world of social, where the simple game dynamics, and high level development tools lend themselves to rapid cloning, it’s not only easy to make copies of other people’s games, it’s also easier to make different versions of your own games. If you had a popular game about organized crime, for example, you might consider making variants of that game using Vampires, Pirates, Fashion, and Street Racing…

And it isn’t just in the virtual world that you can get away with re-theming. Pepsi Corp owns KFC, Pizza Hut, A&W, and Taco Bell, and there are big savings to be had by dishing up different flavors of fast-food along with your soda. But it isn’t the only way.

Take a look at McDonalds. They may have flirted with some other restaurants here and there, but they also recognize that there’s a clear advantage in dominating the landscape. And if people are looking want a salad, some ice cream, or a decent cup of coffee, then they’ll serve it all under one roof.

The problem is that when you send your audience off to a new experience there’s no guarantee that you’re going to get them to ever come back. Worse yet, there’s no guarantee that they’ll even get to your new experience at all, especially as the other guys clones may be a lot like yours.

Inside the X-Wars games especially, trying something new seems antithetical to the core social elements of the game. After demanding that the user spam their friends, grind for in-game reputation, and spend actual currency to get an in-game advantage it seems like pushing them into another game, especially when the theme isn’t really different enough to generate a new demographic—the way that a game about sororities might, for example.

The other option is to go deep, and add more and more times to you menu. Expanding the choices that exist under the same roof may not only keep your audience coming back for more, but could also make them increasingly comfortable with the idea of opening up their wallets.

Andrew Mayer is a Social Gaming and User Experience Consultant with over seventeen years of experience in the games industry.

Competition continues to increase in the iPhone and iPod Touch app monetization space, and ad network optimization service AdWhirl recently announced that it secured $1 million in financing in a seed round led by Foundation Capital. Founded in April of this year, AdWhirl has become very popular in a short span of time. More than 1,000 iPhone and iPod Touch developers use the service, which servers over 1 billion impressions per month across 160 countries.

While the recession has been tough on online advertising, investors seem confident in the mobile advertising market.  Charles Moldow, General Partner at Foundation Capital, says that “mobile advertising has seen tremendous growth as more and more advertisers are discovering how to leverage the mobile medium. With AdWhirl’s unique mobile platform and growing lead in publisher adoption, we’re excited that AdWhirl will be well-positioned to lead the way as the mobile ad market continues to explode.”

According to statements from AdWhirl, there are currently more than 270 million mobile subscriptions and 224 million mobile phone subscribers in the US. Furthermore, based on data from Magna’s Interpublic Group, US advertisers are expected to spend around $229 million on mobile media during the course of 2009, a 26 percent increase from 2008.

In order to help developers, AdWhirl provides a platform that can manage ads from networks like AdMob, Quattro Wireless, Videoegg, and Jumptap. In addition, the company plans to add support for Millenial Media and Google AdSense. The platform also allows for the cross-promotion of apps with free custom ads in order to increase distribution and boost paid app sales.

“Our goal as a platform has always been to give developers full control over their ad space,” said Ra Roath, Co-Founder of AdWhirl. “In addition to adding new advertisers and optimizing ad revenues for developers, we intend to expand to other ad solutions such as offer-based rewards, so that developers have the flexibility to maximize revenues through multiple channels.”

Only three months since its inception, the ad platform is doing well. The company is looking to reach potential customers beyong Apple devices with the new funding as well. The company says it will be expanding soon to Android, Blackberry, and Palm Pre devices too.

As the iPhone platform grows, leading social game developer Zynga has made a number of its popular Facebook and MySpace titles available for the Apple device. These include Live Poker, Mafia Wars, Vampires: Bloodlust, and Scramble Live. Of the four, only the latter does not utilize a business model based on virtual currencies and goods.

However, during a recent interview with PocketGamer, Zynga CEO Mark Pincus expressed disappointment at what the platform has yielded monetarily so far.

“We’re super excited about the platform for its ability to get a whole group of consumers who we might not get to through the web and social networks,” he says. “But the part that’s below my expectations so far is that monetizing the platform effectively is still elusive.”

Prior to the release of OS 3.0, there wasn’t support for in-app microtransactions on the iPhone. This forced many games that would utilize these elements to sell multiple SKUs at different prices, compensating for the inability to sell directly to the consumer. With the new OS comes the long-needed micropayment support. As a result, iPhone app developers are hopeful for better monetization opportunities.

For his part, Pincus doesn’t believe that this will serve as a complete solution to the problem, however. In the interview, he points out another (and perhaps more prominent) issue plaguing iPhone developers today: distribution. While there are thousands of apps within the App Store, the basic directory navigation for iTunes makes it hard for users to discover games unless they know what they are looking for. This begs the question: How can a brand new game thrive, especially one created by a brand new start-up? The game could be worthy of awards, yet it will be lost in a sea of mediocre titles.

Pincus says Apple should make better use of the Facebook social graph to combat the problem, suggesting a more baked-in integration of Facebook Connect. This would allow for a greater outreach amongst the millions of Facebook users. It would also enable social developers like Zynga to send users back and forth more easily between its web and mobile versions.

Nonetheless, 3.0 is a step in the right direction. The support for in-app micropayments alone should do wonders for many of the applications currently in circulation. It is likely that Apple will see the need for greater social integration as well. Should such upgrades occur in the future, the monetization opportunities ought to increase significantly.

[via Virtual Goods News]