The Decline and Fall of an Ultra Rich Online Gaming Empire

For a long time, maybe a year and a half, the game was pretty much what remained of Brock Pierce's life: He would wake up, sit down at his computer, log in, and play. Thirteen dollars a month bought him around-the-clock access to this imaginary world, a place of perilous dungeons and enchanted woods where online gamers came together by the thousands in a never-ending quest for treasure. Some assumed the roles of dwarves or lizard-people; some were humans. Pierce would play for hours—as long as 24 hours without a break—slaying monsters, wresting precious coins and jewels and magic weapons from their corpses. Later, he added extra computers to his setup and taught himself to play as many as six characters at once, one per machine. After that he'd sit there in the glow of half a dozen monitors, hands flitting from keyboard to keyboard, eyes shifting from screen to screen, yet still, somehow, not finding time enough for all there was to accomplish in the game.

"There were times I came outside," he says, "and the sun hurt."

Pierce was 19 at the time and hardly the first young American male to step away from the sometimes painful light of reality for an extended, free-falling obsession with an online fantasy videogame. But it's safe to say that the reality he was shrinking from in 2000 was not that of a typical teen. At 16, Pierce had retired from a career as a modestly successful Hollywood child actor; by 18 he was a dazzlingly successful dotcom entrepreneur, living large on a $250,000 executive salary and the promise of millions more in post-IPO equity. By his 19th birthday he had lost it all. Pierce's high-profile startup had flamed out in a blaze of scandal that included accusations of sex with minors, and he and his cofounders had found it prudent to leave the US. He lived now in a rented house in a strange country, on the dwindling remains of a crash-ravaged stock portfolio.

And he played the game. You could call it solace: a way to fill the emptiness of failure with the curiously convincing sense of purpose that comes from steadily amassing a make-believe digital fortune in magic staves and platinum coins. But in time it would be more than that. Much more. Soon enough, amid the daily grind of his obsession, he would see in the game itself a way out of the bleak hole he had fallen into. He would take a clear-eyed, calculating look at what he and his fellow players had been doing all those months—at the countless hours they'd given over to the pursuit of purely virtual but implacably scarce commodities—and he would recognize it not just for the underexploited form of productivity it was but for the highly profitable commercial enterprise it might sustain. He would spend the next half decade bringing that business to life. And though some people would hate what he was building, and others would want to take it all away from him, there would come a day when Pierce, eight years older, could look back on an accomplishment that was bigger than he had ever envisioned—and stranger than he would ever comprehend.

That day has come, and it's a Saturday: a bright, clean Saturday in the hills above Los Angeles, where the views from Pierce's $3 million house are impressive. From the poolside patio, you can look down across West Hollywood and Beverly Hills all the way to the rolling breakers off Santa Monica. In the living room, big canvasses by high-end contemporary LA artists hang on the walls. The views are also impressive in the kitchen, where a row of empty wine bottles includes a $5,000 1945 Domaine de la Romanée-Conti.

That Pierce lives the life of a former corporate mogul at the age of 28 is remarkable enough in itself. Even more so, perhaps, is that he got here by dominating an industry in which orcs, trolls, elves, dwarves, and minotaurs are major segments of both the customer base and the labor force. That industry is known to insiders as real-money trading, or RMT, and if I tell you now that I've made some money in it myself, that's not because I expect you to take it on my say-so that there are people who might pay as much as $1,800 for an eight-piece suit of Skyshatter chain mail made entirely of fiction and code. Or that there are millions more—players of World of Warcraft, Age of Conan, EverQuest, EVE Online, and other massively multiplayer online role-playing games (MMORPGs, or MMOs)—who have given other players real money in exchange for the virtual weapons, armor, currencies, and other sought-after items around which these games revolve. Or that despite the game companies' widespread prohibition of such transactions, their number has grown to support an estimated $2 billion annual trade, a half dozen multimillion-dollar online retail businesses, and an enormous Chinese workforce earning 30 cents an hour playing MMOs and harvesting treasure to supply the major retailers.

It's all true, but don't take my word for it: Just ask any of the world's 20 million MMO gamers, for whom real-money trading has become commonplace, despised by some as a form of cheating and a blight on play, accepted by others as a necessary shortcut through some of the most elaborate (and time-consuming) games ever made. I'm mentioning my own familiarity with RMT—I spent most of 2003 peddling virtual items on eBay and made, if you must know, a grand total of $11,356.70—only to establish that I was around before the virtual treasure trade got to be big business.

Which is to say, I was around before Brock Pierce and the company he founded—Internet Gaming Entertainment—made its mark on the industry. I was around before most people in the trade had even heard of IGE, let alone before it became a synonym for virtual currency sales. I was around when RMT as a profession was almost exclusively the province of small-timers like me and the very notion of a multinational, 500-employee virtual-items business doing over a quarter billion dollars in trades was practically unimaginable. And I was around three years later when rumors of a $60 million Goldman Sachs investment in IGE first broke and for a moment it seemed possible that Pierce had a handle on something deeper and more enduring than just a profitable business: the future maybe, not only of virtual retailing but of economic life in general.

And I am here today, admiring the views at Pierce's LA home, because I figure it's my best shot at an answer to the only question I can think of asking in the face of a story like IGE's: How did it happen?