SONY ONLINE ENTERTAINMENT RELEASES STATION EXCHANGE™ ONLINE GAMING AUCTION SITE WHITE PAPER

SAN DIEGO, CA - February 07, 2007 - Sony Online Entertainment LLC (SOE), a worldwide leader in online games, today announced the results of a 12-month study of Station Exchange, SOE's online auction site which allows EverQuest II subscribers to securely buy and sell the rights to use virtual characters, items and coin for real money. Launched in June 2005, Station Exchange's first-to-market product marked the inaugural entry of an official, sanctioned virtual economy into a Massively Multiplayer Online game. The White Paper highlights data collected during a 12-month period covering June 2005 to June 2006.

The auction site, which has operated since June 2005 on specific EverQuest II servers, generated player transactions of $1.87 million during its first year, according to the White Paper published today. Players have paid as much as $2,000 for the right to use a single EverQuest II character and one seller earned $37,435 from 351 auctions, according to the report, entitled Station Exchange: Year One.

"The Station Exchange White Paper results demonstrate beyond a doubt that there is a significant demand for a secure, sanctioned online marketplace where players can enhance their gaming experience by spending real dollars," said John Smedley, President, Sony Online Entertainment. "We've found that Station Exchange is providing an excellent ancillary revenue stream for both SOE and our players. Some of our Station Exchange players are literally paying for their subscription to EQII, while others are making significant money."

Some of the study's other findings include:

Two players each collected over $37,000 from their auction activity in the first year. The top 15 sellers each took in over $10,000.

Characters were by far the most valuable trade category. The top 20 character auctions were each for over $1,000.

The highest valued character race was the Dark Elf, followed by High Elf and Human.

34-year-olds were the biggest buyers of virtual goods; 22-year-olds were the biggest sellers.

Auctions for coin led to a stable, real-money average exchange rate for the year of $7.35 for one piece of platinum.

In keeping with the EverQuest II player base as a whole, Station Exchange traders were predominantly males, who accounted for roughly eight times the spending of females. However, average spending by gender was roughly the same: $63 for men and $66 for women.

Close to 18% of active buyers and sellers were located in northern California. However, the zip code where the most buying and selling took place was Levittown, PA. Northumberland, PA came in second. Antioch, TN was a close third.

While a minority of players were able to derive a significant income from their sales on the site, many more earned between $200 and $500 per month after listing and subscription fees. According to White Paper author Noah Robischon, however, a least some players selling items on the site felt they got more than money out of their transactions: "The sellers who provide armor and weaponry feel they are providing a service to players while elevating themselves to elite status among fellow gamers."

The study concludes that the vast majority of players who earned money on Station Exchange did so through the sale of items they quested or crafted within EverQuest II, rather than by buying items at auction and selling them at a higher price.

Buyers appear to use Station Exchange for a variety of reasons, but the study shows that the vast majority of sales are settled through instant purchase at a set price, rather than through a traditional auction process. This indicates buyers are typically looking to fulfill an immediate desire, such as a particular type of armor needed to defeat an enemy in a quest. Interviews and anecdotal evidence suggest players also make purchases to stay aligned with friends who have attained a higher level within the game or to re-experience the upper levels of play from the vantage point of a different character.

Station Exchange was developed to provide players with a secure alternative to rapidly proliferating third-party markets for in-game characters, items and coin. These unsanctioned auction sites have given rise to scammers who often deliver different items than promised or fail to deliver at all. SOE constantly monitors usage patterns both inside the game and on Station Exchange to detect fraudulent activity among buyers or sellers.

"Station Exchange is one of the most exciting experiments in game design this decade. For the first time, we have reliable, verified numbers about the real-money trade phenomenon. Those numbers indicate that this market is driven by ordinary people, spending ordinary amounts of money, for ordinary reasons. In other words: as long as the game design gives people incentive to spend real money on virtual money, they will do so. The Invisible Hand strikes again. Moreover, the evidence suggests that making RMT an official part of the game has little effect on whether people do it. Customer service costs fall dramatically, though. There's just as much activity, but a lot less fraud," said Edward Castronova, an Associate Professor of Telecommunications at Indiana University, Bloomington and a preeminent expert on virtual economies.

Castronova also serves as director of the Synthetic Worlds Initiative at IU and is Director of Graduate Studies in the IU Department of Telecommunications.