Senior Staff Writer Christopher "Pwyff" Tom sat down with Advisory Board member Gordon Walton to talk about GDC Online's Virtual Items Summit and how the market has changed for online gaming.

In the world of online gaming, no issue has divided the populace more cleanly than the concept of virtual goods and their relationship to real world values. To some, virtual goods are little bits of code, tucked away on some distant server, ready to be changed, rebalanced or even made obsolete at the whim of a bored content designer. To others, however, virtual goods can be just as tangible as any other real-world purchase, as the utility and entertainment a virtual purchase might bring in game can be equated to any real world hobby that requires some sort of monetary upkeep.

Regardless of where you or I stand on this issue, it's clear that the online gaming industry is on the move, as evidenced by the big free-to-play microtransaction shift that has swept the North American MMORPG industry, or Blizzard's recent announcement that Diablo III will feature a real money auction house for players to sell items, gold and even character accounts.

With all of these new monetization models being explored in online gaming, discussion on the topic has become more important than ever before, and this is why GDC Online (Oct. 10-13) is hosting a Virtual Items Summit to explore the ways virtual goods can help studios around the world. Recently, I sat down with GDC Advisory Board Member Gordon Walton, who is also a VP and Executive Producer at Playdom (previously the VP and co-general manager at BioWare), to talk about the monetization of social games, virtual goods, and MMORPGs.

Gordon will also be a part of two GDC Panels, one titled "Breaking into the Game Biz - Ask the Pros!" and the other with ZAM's Director of Content Cody Bye, BioWare's Erik Olsen and Curse Gaming's Donovan Duncan, called "Full Immersion: Taking Your Game Everywhere." Now, onto the Q&A!

ZAM: Getting right into things, you were originally with BioWare as Vice President and co-general manager, but in February of 2011, you made the move to Playdom to be VP and Executive Producer. How are you finding the switch?

Gordon Walton: I'm loving it. I'm really enjoying the learning curve involved with moving to social games.

ZAM: In the world of selling virtual goods, some companies are wholly embracing the model and really pushing boundaries, while others seem a little hesitant to fully invest themselves. Social games, however, have been employing the virtual goods model for quite some time now. Has your view of virtual goods changed much since going from BioWare, a very traditional game maker, to Playdom, one of the largest social game developers in the industry?

Gordon: I don't think it's changed all that much. It's clear that virtual goods have been a viable model for several years. If you were watching the markets in Asia, even almost 10 years ago, you could see it coming as the competition increased and people wanted to get more eyeballs while monetizing fewer eyeballs. I think we're finally seeing the full adoption of virtual goods in the North American and European markets, but it's been coming for quite some time. Either way, anything that lets us make money to make future games is a good thing.

ZAM: It's true that this revenue model isn't particularly new but, here in North America, we seem to be pursuing our own spin on the microtransaction model. You have Turbine's Lord of the Rings Online and Dungeons and Dragons Online doing a free-to-play program with premium dungeons and quest lines. There's also Diablo III with its new real money auction house. Do you have any thoughts on those?

Gordon: I don't think I'll have profound thoughts on what's going on in the industry, but all of that is really part of finding different forms of monetization. It's true that we're selling more than items these days, but at a more basic level we're really asking, "What do the customers believe is valuable? How can we make sure we're putting a good value proposition in front of them? How can we get more people to trial our software before they face those monetization decisions?" 

So that's what I think we're up to, rather than finding a specific tactic. It's really about value propositions for the customer while increasing the overall reach of our brand and software. Social games, for example, have a tiny percentage of people buying into the monetization model, but there are millions and millions of people playing. We're all looking for that balance.

ZAM: On that note, you mention that there are millions of people playing while only a small percentage are being monetized. Can this remain a viable model? Do you think that the current major platform of social gaming, Facebook, is a good place for social gaming to be at, or should people be looking into more ways to expand the technology?

Gordon: First and foremost, I think that social games are very viable. Clearly, our job as game makers is to give people the entertainment that they're willing to pay for, and I think we're succeeding in that. A specific platform, when you mention Facebook and the rest, is the same wherever you go; all platforms want to take their full value from games that are on their platform, and they're going to continue doing that. That obviously makes a business more challenging, no matter who it is. If you're making a game on Xbox Live, then you've got the same issue. 

I don't think specific technological problems have anything to do with this, I think the audience is evolving and the game developers are evolving. With any platform, you're going to see higher production value games over time, and as developers get better at it, the product gets more sophisticated. So I don't think it's about technological hindrance. I will say that I don't think the end game is that all Facebook players will end up playing 3D games like traditional industry gamers. I don't think that's the endgame. These are not the same audiences that we were selling games to before, and they're never going to become that audience. They've got different motivations, different values, and they're looking for different things.

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