Real Money, Fake Property: Live Gamer’s Andy Schneider on Bringing Item Sales in from the Cold

By Steven Crews | April 24, 2009 | | Filed under: Events, Features, Interviews | Tags: Item Sales, Live Gamer, RMT

The MMO Gamer: That covers the players, but there are developers out there, for instance Mark Jacobs from Mythic, who are vehemently opposed to any sort of RMT at all on a deep philosophical level.

Some believe that the real word and the game world should never come into contact, except via the players themselves.

What would you say to that argument?

Andy Schneider: RMT is there to fulfill a consumer need. The reason there are gold farmers out there, the reason why there is nearly a two billion dollar secondary market for virtual items, is because of consumer demand.

It’s not that gold farmers came and said, well we’re just going to create a market and hope they’re going to come and buy it, it grew organically in the eBays and Yahoo Auctions and Craigslists of the world. The demand grew from the consumers and players.

So, it’s philosophy. There’s never a wrong answer, and it’s a very volatile opinion on both sides of the spectrum.

The publisher who knows there is a demand and wants to do something about it offers their players a better experience by embracing legitimate RMT.

It’s not too dissimilar to other types of forms of media, when there’s no legitimate outlet players take action in their own hands. That is why it took a long time for the music industry to embrace digital downloads, it was disruptive to their core model.

And because there was no legitimate outlet, users, music fans, went and started engaging in black market trading. It is not too dissimilar to that in the game space. There is demand and there is no outlet, so players create their own outlet, or other people create an outlet around the publishers.

And that’s what happened. That’s why this is such a big business today.

The MMO Gamer: Just how big is it? Do you have any metrics? Some sort of a rough breakdown of what you believe is the percent of the players who are involved in RMT, versus those who are playing without it?

Andy Schneider: There was a survey that came out-I’ll have to get you the link-but it was about 33% of all users, all players of MMOs, that participated at one time or another in RMT.

If you read the SOE white paper that they wrote after the initial launch of The Exchange, they saw that 22% of their audience used RMT services, which is a pretty big amount.

The Exchange is only on two servers, but if you go onto any of the black market sites there is quite a following there for all servers.

The survey also said up to 60% wouldn’t mind participating in RMT, and a third were vehemently opposed.

I think the market is shifting, especially as games are designed with real world player-to-player trading and game design.

It’s only a natural outcropping of a well-developed market. If you’re selling items that have any sort of collectability, rarity, redeemable social value, there will always be a secondary market. So, we’re seeing the dynamics moving towards secondary markets rather than away from them.

The MMO Gamer: Despite those numbers, and despite IGE’s massive success, I think you said earlier they had sales of what, a billion dollars one year?

Andy Schneider: I think they stated a billion in gross transactions in 2005.

The MMO Gamer: RMT for many players is still a niche concept. But, this is more or less only the case in the West.

In the East, a somewhat different concept, micro transactions for item purchases, has been embraced whole-heartedly, and companies there seem to be making a tidy profit off of it.

Why do you think there’s this divergence between almost 100% acceptance in the East versus, to use your numbers, 30% acceptance in the West?

Andy Schneider: In Korea and China, item based business models have been around for almost a decade, and that’s just starting to happen here in the West in any meaningful way.

There’ve been fits and starts, but the indicator in what we see in people we talk to is that item purchases, and RMT, are becoming the new core model, here.

I think the item based model in Asia has been successful for a few different reasons. First, you had broadband penetration. Secondly, you had a really wide audience that was gaming as a form of mass entertainment and it’s been that way for awhile.

The item based model allowed people to buy into the game or pay for the game at their own discretion. So, you had very casual players who maybe didn’t want to make the big upfront commitment, but wanted to play once in a while with their friends. And that is happening here now, but in general we’ve got a packaged goods model that’s been well established in the West, and certainly there’s subscription MMOs that have done extraordinarily well.

But, we see that model changing to an item based model, and increasingly garnering a broader demographic who can participate at their own pace. That has been the norm in Asia for quite some time.

The MMO Gamer: I’m sure you’re slightly biased on this subject, but in your opinion will there come a day when the majority of the titles released in North America and Europe include legitimate RMT as an option for their players?

Andy Schneider: Yes, absolutely. I do believe that. I think as people place more emphasis and more value on the digital persona, and the achievement and the items that they acquire through their digital persona, there will naturally be a more robust secondary market, as well as a more robust primary market, for those items, and not to dissimilar to the real world today with EBay. So I think it will be part of MMO’s going forward. I think you need to design it for it. And there’s a lot of opportunities around for creative and community design for social engagement that legitimate RMT provides.

The MMO Gamer: To wrap things up, the real-world economy isn’t doing so hot at the moment. If there was ever such a thing as discretionary spending, I would think that imaginary items for virtual characters would fit the bill nicely.

Has the RMT business been hit by the recession?

Andy Schneider: Well, business fortunately is going along pretty nicely. I think, with the player-base that is in the MMO world, there is a deep attachment and affinity to the games that they play, to the social aspects of the game, to the communities that are formed, and that people are getting good value for money in the game space in general.

So fortunately again, while the macro economy is certainly hurting, we haven’t seen a downturn in the game market in general and particularly around the games we’re supporting. In fact, I think a lot of folks are happy to be distracting themselves with their virtual personas, and continuing to have those very real relationships in virtual worlds.

The MMO Gamer: Thank you very much for joining us, we appreciate it, and we hope we can do it again sometime.

Andy Schneider: Thank you.

Well? Would you buy a rusty dagger from this man? If so, head over to http://www.livegamer.com to see if legitimate, publisher-sponsored RMT is coming to your neck of the woods.