GDC08: Are virtual item sales the way of the future?

With the stigma associated with the term RMT -- or "real money trading" -- companies such as Live Gamer and Ping0 have an uphill battle when selling their legitimized RMT services to many gamers. At GDC recently, Live Gamer's Andrew Schneider and ping0's Steve Goldstein tried to explain to a skeptical crowd why their forms of RMT trading are the future of gaming.

Though you hear a lot about WoW gold, all online games have a large secondary market for currency. These services are all operated outside of the publisher's terms of service or EULA and are very inefficient, both for the player and the company. The RMT industry is littered with account and credit card theft -- and when a customer's account has been compromised, they don't call the RMT traders: they call the game's customer support line. It's an immense waste of resources for the game company and a huge hassle for the player involved. (Has your World of Warcraft account ever been stolen? If so, you know it can take weeks to get everything restored.) If game companies don't address RMT issues themselves, they're just going to have problems with black market RMT. Live Gamer seems to offer a, "if you can't beat 'em, join 'em" approach with their attempts to run a legitimate RMT business.
But why do players want to buy game currency in the first place? Advancement in games has become so difficult that people have to look for other means of advancement. Says Schneider, "I have a gardener for gardening, a housekeeper for cleaning the house, and now I need to outsource my gaming because I just don't have the time." There's huge customer demand for RMT services. Current analyst estimates suggest that the secondary market for virtual goods is over $1.8 billion. Well-known RMT traders IGE reported nearly $1 billion in gross transactions in 2005. ItemBay and Itemmania accounted for $974 billion in gross transaction volume in 2006. Economists project that there will be $5 billion in gross transactions by 2012. [Editor's note: These numbers don't add up, but they are the numbers we were given in the presentation. If ItemBay and Itemmania hit $974 billion in 2006, projections that the entire RMT market will hit $5 billion by 2012 seem silly, since we're already there. However, we've been unable to find sourcing for these numbers -- official numbers on RMT are scarce.]

As it stands, the publishers and developers don't see a dime of that -- though they incur huge customer support costs because of it. Legitimizing the RMT market, we're told, will allow developers to regain control of their game and prevent people from constantly breaking the EULA. Using Sony's Station Exchange as an example: before the launch of Station Exchange, 40% of SOE's customer support time was spent resolving RMT issues. Since Station Exchange lunched, they've cut that number by 30%. And, Schneider claims, it has no real impact on game balance: there's no discernable difference in the rate of character advancement between Station Exchange servers and ordinary servers. (And of course Live Gamer is going to be taking over Station Exchange's operation later this month.)

So what's the advantage of a legitimate market? You have developer consent -- so all purchases are legitimate, with no worries about being banned from the game or getting items confiscated. The transaction is secure, with no risk for account or credit card theft, and you're assured you're going to get exactly what you paid for. A legitimate RMT market is completely transparent -- allowing the developer to monitor and manage the economy. And, finally, legitimizing the market also encourages players trading with players -- cutting the farmer out of the equation.

Obviously, companies like Live Gamer and ping0 aren't getting into the business out of altruistic reason -- Live Gamer takes a 10% cut of transactions -- but to hear Schneider talk about this, there's no downside to legitimizing RMT. It's already in the games we're playing, and turning it legit just makes it a better experience for everyone: allowing easy access to RMT for those who want to participate while cutting out the farmers and account theft that annoy all gamers. Are legitimate virtual item sales the way of the future? The claims about Station Exchange (that there's no real difference between character advancement between exchange and non-exchange servers) are compelling -- but impossible to verify. In the end, we probably aren't going to learn how legitimate virtual item sales impact our games until (unless) the practice becomes much more widespread.