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By Daniel Terdiman, 11 November 2005 08:20

NEWS

An independent film director has invested six figures in a virtual space station in the online game Project Entropia. Jon Jacobs imagines he can bring in more than $1.6m per year in revenue - all on a one-time $100,000 investment in something that exists only in the realm of ones and zeroes.

And while some might question the sanity of putting Ferrari money into an investment that would have no value if the game in question ever folded, Jacobs feels he is on safe ground.

After all, he explained, a Project Entropia island that famously sold for $26,500 last year has more than paid for itself.

Jacobs said: "There were eight other serious bidders [for the space station]. The guy that spent $26,500 was trying to spend $100,000 to get the next piece of property [too]. Why? He more than anybody knows that that scale of investment [and return was realistic]."

Project Entropia is an online game that has attracted more than 300,000 players into its "virtual universe with a real cash economy". Its players navigate the recently discovered planet Calypso and work to build a new society. Along the way, they spend time mining resources, hunting monsters and developing and managing real estate.

Jacobs said he plans to make his money by opening up his new resort to lucrative hunting of beasts like kingfishers, vicious bird-like creatures which can easily kill players but that also sometimes drop armour worth $500 in real cash. He also plans to lure hunters in with top-name DJs he thinks he will be able to pay with the proceeds from his hunter visitors.

And because Jacobs saw the quick financial return on the $26,500 island, he believes property in Project Entropia may well be a better place to park money than even real-life real estate.

He said: "I actually paid a deposit on a condo in South Beach [Miami]... [But] the hurricanes were coming. The first one came, and I got scared, so I pulled out of it. I lost confidence in the American economy and I felt there was more opportunity right now in a virtual economy."

Not only that, he said, but he also refinanced his real-world Miami home and used much of that money to pay for the virtual space station. The rest, he explained, came from $35,000 he'd earned in Project Entropia during the last few years from fees he'd charged hunters on a small island he already owns and from the sale of the game's virtual goods.

Project Entropia is not the only online game that has seen its members pay thousands of dollars for real estate. Second Life - an open-ended virtual world whose players can create anything they can imagine and who can buy and sell land, vehicles, clothing and the like - has also had its share of valuable terra firma.

But no game has seen the kind of money spent as has Project Entropia, and some have questioned whether the $100,000 purchase was even real.

In a posting about the sale on the virtual world's blog Terra Nova, a commenter wrote: "The buyer is named John Jacobs. This sounds like a fake name - there is even a children's song with this name in it. Is it possible that this is a publicity ploy for 'Project Entropia'?"

The game's publisher wasn't available for comment but in a statement he insisted the sale was legitimate.

Marco Behrmann, director of community relations at Project Entropia publisher MindArk, said: "The sale of the space resort, which met a final bid in just three days time, and the dramatic success of the Treasure Island show that the awareness of investing in a virtual universe has really exploded."

Daniel Terdiman writes for CNET News.com