SOE Prez John Smedley on microtransactions

We’ve both talked and read a lot about John Smedley over the years, and the Sony Online Entertainment President is rapidly becoming an outspoken voice in the microtransaction field.  Our friends over at Virtual Goods News recently had an outstanding Q&A with John, revealing some insight and thoughts, along with where Sony is headed with microtransactions.

John is credited as being one of the many people responsible for the current state of the MMORPG genre, thanks to his work on the original EverQuest.  In 2007 as President of SOE, he announced that the company would begin looking at and pursuing an interest in this up and coming business model known as microtransactions.

“We’ve been intrigued watching the Asian free-to-play model for awhile and got interested in that. The sales data we get out of the Denver studio is just shocking. People have money to spend and they want to spend it on something cool.”

John’ quick to point out the differences between the free-to-play, microtransaction supported business model, and microtransactions as an additional revenue stream.

“I think a lot of people are wondering if StationCash signals that we’ll make EverQuest and EverQuest II free-to-play, and that’s not correct,” says Smedley. “The reason for the StationCash store is very simple. It’s an additional revenue stream that gives customers something they want. The evidence of that is the sales numbers we’re seeing.”

Beating the critics to the punch, Smedley also comments on one of the most common complaints heard from gamers: microtransactions create an unfair game balance between those that have disposable income and little time, vs. those that have a great deal of time vs. little cash.

“So, we did some surveys of our players at FanFare 2008 – we got criticized for this – but we wanted to talk to our hardest-core fans and hardest critics. We got feedback that was very strongly “Yeah, as long as you don’t sell power, I’d give it a try.” We thought that the time was right.”

Speaking to SOE’s flagship microtransactions title ‘FreeRealms’, Smedley comments,

“FreeRealms has a StationCash store built right into it. The items include potions, outfits, pets. It’s designed with microtransactions from the ground up.”

And again addressing the ‘pay to pwn’ theory, it looks like there’s an option to buy ‘power’, but Smedley doesn’t see it this way,

“I wouldn’t call it power. We’re selling convenience. There will be some items there that you can buy. It’s primarily a microtransaction game, but it’s selling health potions and things like that.”

Over the past few months there’ve been rumblings about the anticipated upcoming spy based title ‘The Agency’ featuring microtransactions.  John sets the record straight with a simple “We’re not sure yet”,

“We haven’t made any announcements yet, but that’s because we haven’t made up our minds yet. It’s skill-based, so we can’t sell anything that confers player advantage. What that specifically means, I don’t know yet. We’re still experimenting.”

Looking forward, John is asked where he sees SOE in five years’ time.  Not surprisingly, he doesn’t see microtransactions becoming a core business model for SOE, but rather an additional revenue stream,

“I think we’re going to continue to expand virtual goods as part of our business, but it won’t be the core of our business. You’ll see it in new titles to different extents where appropriate.”

When asked his opinion on where the MMO scene in general will be in the next five years and where virtual goods factor into it, he comments,

“I think it is slowly but surely making its way in. It’s coming into everyday normal, MMOs. It’s just an ancillary revenue stream, a convenience for players, and I think people will gradually get used to it provided companies are careful with how they integrate it. I think over time it’s going to become a mainstream thing.”

To read the entire interview, be sure to visit Virtual Goods News.

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