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There bets online gamers spend for real

Virtual village spurted in beta; real test is now

SAN FRANCISCO -- Just like government officials here, the executive officers of There Inc. are struggling to reconcile the limited supply of housing with the burgeoning demand.

In January, 200 new houses released by There were rented in a snap. Another 400, offered at twice the price a few month later, went just as fast. People clearly desire more, so how can the firm meet demand without devaluing the price of existing houses too much?

When you're building a new world, these are the issues you deal with. The executives have become urban planners, developers, and Federal Reserve Bank to the 27,000 inhabitants of There, a virtual world in a computer game by a Silicon Valley start-up of the same name.

There, which plans to open the online game more broadly today after a yearlong beta test, uses a unique business plan.

In addition to subscription fees, There counts on players shelling out real dollars to entertain and equip their characters, known as avatars, with distinctive fashions, vehicles, and houses.

One real dollar buys 1,787 Therebucks, which can be used to purchase customized T-shirts, hover bikes for zooming through the vast world of There, drinks for their avatars to sip while schmoozing at the local watering hole, and tickets for entertainment events like paint-ball matches or hovercraft races.

Entrepreneurs are thriving. The more ambitious are creating and selling special-edition clothing, hover bikes, and entertainment events and then converting their Therebucks back into US dollars through the Bank of There.

There Inc., based in Menlo Park, Calif., introduced its game in January and hoped to receive a boost from the publicity surrounding the launch of the Sims Online, a highly anticipated virtual-world game from Electronic Arts. More than 180,000 people signed up for There's free beta test.

But sales of the Sims were disappointing and threw a shadow across the once-bright online game market.

"It's brought out some of the skeptics," said Andrew Donkin, There's chief marketing officer.

The start-up nevertheless pressed on with the beta test, and its executives were surprised by the results. Women have flocked to the game and have spent 50 percent more on Therebucks than men. Overall, the average user spent $7 a month to buy things for his or her avatar. Some people spent more than $1,000, Donkin said.

One memober of There, a marketing executive named Bruce Boston, set up the Bank of There. Using eBay Inc.'s PayPal payment system, Boston let members exchange Therebucks for real dollars. (His most recent exchange rate: $1 for every 2,200 Therebucks.)

Boston's entrepreneurship and his analysis of the growing There economy in member forums impressed the game's creators so much that they hired him as their economic analyst, the Alan Greenspan of There.

Starting today, the company plans to begin charging members to play, with a $5 monthly fee or $50 annual subscription. Donkin said that There hopes its members continue to buy Therebucks even when they're paying to play.

In the meantime, There is paying some of its bills with a $3.5 million contract to build training tools for the US Army.

Subscriptions are expected to get a boost through several partnerships scheduled to be announced today. Comcast Corp. will market There on its games Web portal and pitch it as a reason to buy faster Internet connections. Hewlett-Packard Co. will include sign-up links on its Pavilion line of personal computers starting early next year.

Schelley Olhava, an analyst with International Data Corp. who follows the video-game industry, said that online community games like the Sims, EverQuest, and Ultima have developed informal economies, allowing players to sell or trade virtual possessions and even well-stocked characters.

But most of the swapping goes on at message boards outside the game; none of the game makers have developed their own official currencies or have tried as hard to incorporate economics into their worlds, she said.

"They're bringing a new proposition to the market," Olhava said of There's creators.

The virtual world presents marketing opportunities for real-world companies. Levi Strauss & Co. is offering jeans and jean jackets for avatars, and players can buy sneakers by Nike Inc. that allow the avatars to run faster.

An operator of popular websites for women, iVillage Inc., plans to promote There and share revenue earned from members who sign up, said Stacia Ragolia, vice president of community and services for iVillage.

But There will also devote an entire portion of its world, perhaps an island or a cluster of houses, to iVillage members and people who want to chat with them. In that area, women can talk face to virtual face about some of the things they discuss on iVillage message boards, such as breast cancer and parenting, or they can simply hang out, Ragolia said.

But iVillage is also taking a crack at selling its services in There. For an as yet undetermined number of Therebucks, avatars can have their fortunes told at stands run by Astrology.com, an iVillage web property, and iVillage plans to discuss marketing promotions like the Levi Strauss and Nike ones with its advertising partners, Ragolia said.

"We'll be looking for ways to participate in the economy," she said.

Chris Gaither can be reached at gaither@globe.com.

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