At the Gamasutra-attended Virtual Goods Summit 2009 in San Francisco, reps from leaders in the microtransaction-based market, such as Nexon and IMVU, discussed the nature of a successful virtual goods market based on first-hand knowledge.

Attending the panel, which was moderated by Lightspeed Venture Partners' Jeremy Liew, were Nexon America (Maple Story) vice president Min Kim, Dai Watanabe from DeNA, which runs Japanese mobile games portal Mobage Town, Cary Rosenzweig of U.S.-based virtual world IMVU, and Akio Tanaka, of Japan's Infinity Ventures, which exclusively and globally funds microtransaction-based products.

The Product You're Selling

The first question posed to the panel was the nature of the items themselves. What makes a good virtual product? Says Kim, "Everything we sell is functional. Whether it's a piece of clothing for your avatar or it's an item that helps you earn experience faster, there's some sort of function there."

Rosenzweig notes that though certain items are popular, what IMVU's users crave is choice, and that drives long tail business. "The top 10 items for people dressing up their avatars... represent 0.2 percent of sales of items. Our users demand to go deep, deep, deep into the catalog."

How will the introduction of in-game transactions in free iPhone games affect the market? A Virtual Goods Summit panel including iPhone game notables ngmoco, SGN, Aurora Feint and Tapulous tried to find an answer.

Breen of SGN (F.A.S.T.) sees the change as profound and, essentially, immediate. "Every product that we intend to produce going forward will be a free introduction, and then you extend the product over time with transactions," he says.

Lacy with Tapulous (Tap Tap Revenge) already has implemented downloads in its pay games. "We have already been experimenting with virtual goods for the last month or so. We sell music -- that's kind of the ultimate virtual good, something people are used to paying for." He expects that the series' next game, Tap Tap Revenge 3, will be launched with a free version.

Young expects a sea change as well: "My sense is that the introduction of in-app purchasing is profound for the ecosystem." Rolando 2 has already been modified as an episodic title, but "we don't believe that the trial [version] with episodic content is going to be the dominant form."

Emeryville-based social games start-up Gravity Bear recently announced a partnership with SQLstream to bring real-time analytic technologies to social games.

According to their press release, SQLstream will allow for "real-time monitoring of virtual ecosystems and economies, placing Gravity Bear at the forefront of an all-new market opportunity that delivers game content to social networks faster and more efficiently than previously possible."

“Our strategic partnership with SQLstream will enable Gravity Bear to measure and understand how players are interacting with our games in real-time and respond faster than ever, delivering the online experience that players really want from social gaming," said Phil Shenk, co-founder and CEO of Gravity Bear.

It's great to see analytics used in this way, and I hope Gravity Bear will dedicate some time to following fan forums and blogs, in addition. Zynga and Playfish, for example, run very active forums, where players can ask, praise and vent about the games' features. Playfish's Pet Society forum has seen over 2.5 million posts, and even smaller forums begun by fans, such as Petsocietychatandtrade.com has over 2000 active members.

And the blogs... well, I may be a tad biased, but a new wave of fan bloggers really have the pulse on the games and the way people are using them in unexpected ways that surprise even the designers.

So fellas, if you really want to know what the players are thinking—yes, some gamers do think—go to where they're talking.

We at WorldsinMotion.biz receive mountains of press releases each week urging us to play the latest games. While we'd love to delve into each fantasy world, whether it be conquering a medieval kingdom or building a trendy cafe, we have limited amounts of time, especially since we're sneaking a few minutes here and there during office hours. How to choose what to play? Here's a quick guide to two of the latest offerings:

Alganon
Quest Online

A fantasy-based MMORPG, Alganon will soon be up for open beta testing before its official launch on December 1. A glance at their website shows a game dominated by commanding chests, deities, weapons, magic, and other usual fare.

Quest Online is betting that players will be drawn to familiar elements while gaining some new features over other MMOGs. The company is also putting a lot of effort into community-building through blogs and forums to guide new players. Already, the Alganon website has dozens of questions and answers.

Players wishing to participate in the Open Beta test will be able to join through numerous affiliate game sites including IGN via Direct2Drive/FilePlanet, MMORPG.COM, Curse Gaming, as well as the Alganon and MyAlganon websites.

WorldsinMotion Verdict: Play This! At least until the testing period is over. The artwork is worth a look, and it'll be interesting to see how robust Alganon's community will grow.

TinierMe
GCrest Entertainment

We admit, we were immediately drawn to the manga-style artwork of TinierMe. Who can resist big, watery eyes and long, rock-star hair? Plus, the game has over a million fans in Japan. But once we logged into TinierMe, we wondered if those million people were all under the age of eight.

The fun is limited to dressing up your avatar and waving hello to the guys and gals hanging out in the unfortunately named "Selfy Town." And while terms like this are awkward, the Engrish in TinierMe isn't nearly bad enough to be funny. Perhaps if it were, the game would attract a Western audience. As it is, TinierMe isn't any more intriguing than similar games such as Yoville, Sorority Life or even the static avatar designers in Yahoo.

WorldsinMotion Verdict: Skip This!

It's not all green lights for World of Warcraft operations in China after all. Regulators have ordered new operator NetEase to halt Blizzard's MMO and stop allowing new accounts, claiming "gross violations" of rules -- and highlighting a rift between two different government groups in the region.

The transfer of WoW's Chinese operations from The9 to NetEase meant two months' downtime and a long closed beta for the game during the past summer, as it underwent a new round of regulatory approvals and content edits. China's Ministry of Culture approved the game's relaunch in September, having taken over some of the relevant regulatory responsibilities.

But many regulatory responsibilities are still the domain of China's General Administration of Press and Publication, which has now halted NetEase's application to run the game and demanded it cease WoW operations. The conflict appears to be part of an ongoing power struggle between GAPP and the Ministry of Culture over who controls online content. The GAPP has reportedly been displeased that the game's relaunch was approved without its input.

Analysts told Reuters that Chinese regulators have become increasingly concerned over "undesirable content" in online games. Among the edits made to WoW to allow its launch in China were the replacement of bone piles with sandbags, and a color change of enemy blood from red to a vague black mist.

The lack of specific age ratings for games in the country makes showing bones or the undead a gray area -- especially in light of a Chinese media controversy that occurred over a WoW subway advertisement that included undead characters.

The Chinese government is also cracking down in particular on foreign investments in its burgeoning online game industry, which is expected to grow 30 to 40 percent to $4 billion this year. GAPP has stated that foreign companies "cannot control or participate in domestic game-operating businesses indirectly through another investment company, signed agreements or by supplying technical support."

GAPP has also said that "foreign companies are neither allowed to covertly control or be involved in domestic gaming operations by means of joint networks for user registration, account supervision or game card systems." Such a declaration could pose a major threat not only to the future of NetEase's WoW partnership with Blizzard, but to the aims of numerous Western companies aiming to operate their games in China's high-growth online industry.

Conflicts over online games are unlikely to affect the existing game operations of other major companies in China, such as Tencent and Shanda, because they're believed to already be in compliance with regulations.

In an official statement, NetEase claims it's seen the GAPP's website statement of notification that it's returning NetEase's approval application, and its suspension instructions, but claims it's yet to receive official notification and will query the request to a higher level.

"GAPP also notes in its statement that it is evaluating whether to impose administrative penalties on Shanghai EaseNet," says the company's statement. "As of the time of this press release, neither NetEase nor Shanghai EaseNet has been officially notified of GAPP's determination."

"NetEase and Shanghai EaseNet believe that they are in full compliance with applicable PRC laws and are currently seeking clarification from the relevant governmental authorities regarding this statement by GAPP. NetEase will provide further updates on the statement by GAPP as appropriate."

[UPDATE: The Chinese Ministry Of Culture has held a press conference [Chinese language link] disputing GAPP's statements, following the latest developments in the saga.

The Ministry Of Culture is claiming that GAPP has violated a higher-level State Council provision on the approval process for online games. It appears that a ruling by the State Council at some point in the future will decide the controversy.]

Social gamers are being scammed. So says Michael Arrington of TechCrunch last weekend, who wrote that the big three developers—Zynga, Playfish and Playdom—use "completely unethical" methods of making money off players who think they’re getting free in-game currency for filling out an I.Q. survey or signing up for a free CD from Video Professor.

Read the fine print, and you’ll see that you’re actually paying far more (in the case of Video Professor, $189.95) for in-game currency than if you just paid cash. Arrington urged Facebook and MySpace to police this arena, but also accused them of “turning a blind eye to user protection,” because they’re getting a huge cut of revenue back from the games.

In response, Zynga CEO Mark Pincus acknowledged the problem while defending his company's position:

"Most of these offers are good for the advertiser and user. There are many users who don’t have access to online payment methods who are still interested in making in game purchases. There is also great potential for large web players like Amazon, eBay and Netflix to leverage social media channels like facebook and zynga to acquire new user relationships."

Pincus also claims that Zynga has “worked hard” to remove scammy offers:

"In fact, the worst offender, tatto media, referenced in the techcrunch article, had already been taken down and permanently banned prior to the post. Nevertheless, we need to be more aggressive and have revised our service level agreements with these providers requiring them to filter and police offers prior to posting on their networks. We have also removed all mobile ads until we see any that offer clear user value."

Independent blogger Andrew Chen also weighed in on the controversy. According to Chen, things aren’t so black and white:

"The more I dug into the issue, the more nuanced I decided it really was – things weren’t all bad, actually. In fact, I’ve come to believe that there are plenty of advertisers where this is working for them, plenty of consumers who are happy as well, though these offer guys are leaving a trail of unhappy users."

Chen agrees that the user experience sucks and offers some solid suggestions on how Facebook can better regulate the lead gens:

"In general, I believe the key to thinking long-term on the offers industry would be to expose all sorts of feedback information, out in the open, at a granular level... I think a lot of companies would hate it in the short run, and a lot of dollars might be banned, but long-term, this would be better for the overall ecosystem."

Anyone who sells stuff on the Web knows that it's too easy to lose a potential customer somewhere between the clicks. PlaySpan, a developer of monetization solutions for online games has teamed up with PayPal to make payments of virtual goods easier.

No longer will users have to go the extra step of opening a new window and be navigated away from their games. Over 700 games on Facebook, MySpace and Bebo will be affected, including Playdom's Poker Palace, Playfish's Pet Society and RockYou!'s Speed Racing.

It will be interesting to see how this partnership will affect the conversion rate in social games. It's nice to offer convenience to existing customers, but will a shorter line at the cash register be enough to convert a non-paying player?

While virtual goods is big business, the vast majority of players do not spend a dime on social games. Recently, I conducted an informal poll on Pet Society Anonymous to see how much money players spent on their virtual pets.

Out of more than 1,000 respondents, 6% spent about $20 per month, and 4% plunked down more than $100, but 86% said they didn't spend any money on Pet Society. Just time, precious time.

The social gaming space is shaping up to be the industry's most major growth area in 2009, and Zynga is one of the space's frontrunners, operating some of the most popular games on Facebook.

Viral game mechanics that leverage the functionality of social networks are what drive the success of games like Zynga's FarmVille, Cafe World and Mafia Wars, which are currently the top three Facebook games for monthly active users. Cafe World alone has reached 28 million active users, 3 million of those in its first six days.

But the prevalence of social, viral games -- many of them thematically and functionally similar -- has industry-watchers concerned about market saturation. In today's feature on WiM.biz sister site Gamasutra, Zynga business development VP Hugh de Loayza addresses the issue.

"I'm sure that the audience reaches some degree of saturation. We all do, if we're spending a lot of time on there," he explains. "The trick for us is understanding new mechanisms that will inspire them to do that. It's also about good gameplay, right? That is a part of the gameplay, but it's also about building experiences that they want to share with others through the communication channels."

Companies like Zynga rival Playfish often criticize automatic-invite games that force users to send invitations and notifications to their friends, sometimes without prompting for consent. When asked about this, De Loayza says user response speaks for itself.

"If 18 million people are playing FarmVille, it's a game that they want to share with their friends, and it's an experience that they want to provide," he says.
"There are other opportunities for farm games, including [Playfish's] Country Story. It's a good experience."

In fact, Facebook gaming has solidified its own genres of gaming -- the "farm genre" among them. Many rival companies have similar but competing products, as with FarmVille versus Country Story. Given that these kinds of games are becoming so visible and so viral, is the similarity a problem?

"Our games are pretty distinctively different from the traditional Asian farm games. A shooter is a shooter, so a harvest mechanic is a harvest mechanic," De Loayza suggests. "But the story you wrap around it is different. The other thing to pay attention to is that you've got a service that you're running."

"The value is in that service, for the users," he continues. "If it's something that's constantly changing, you're in the same sandbox, but at the same time, it's a widely different experience all the time. It's the difference between Half-Life, which is basically a shooter, to Combat Arms, or whatever. It's the same shooting mechanism, it's just different services around it."

The full Gamasutra feature offers a thorough perspective from De Loayza on the burgeoning social gaming space and Zynga's position therein.

Game Developers Conference 2010 organizers have opened registration for the March 9th-13th event, confirming Social Game and iPhone Summits and revealing newly reduced price options for event passes.

The first two days of the San Francisco-based conference will feature a total of eight summits, two of which are new to the GDC lineup: the iPhone Games Summit and the Social & Online Games Summit.

New for GDC 2010 are reduced conference pass prices with the introduction of optional lunch packages. Attendees now have the option to purchase lunch provided by the Moscone Center based on their GDC week schedule, or to find their own lunch alternatives.

In addition, Game Developers Conference 2010 will see the return of the much-requested Audio Pass. This pass provides access to the Audio Bootcamp and all GDC Audio track sessions.

GDC 2010 -- produced by Think Services, as is Gamasutra -- will also play host to the GDC Expo Floor, the GDC Career Pavilion, the 12th Annual Independent Games Festival and the 10th Annual Game Developers Choice Awards.

"From year to year the Game Developers Conference continuously evolves its content to ensure that conference attendees receive the most current, relevant, and important insight into pushing the boundaries of what games can do," said Meggan Scavio, GDC event director. "We look forward to another eye-opening year of great content, speakers, events and awards, as well as sharing conference news and updates with the industry leading up to GDC."

Alumni registration for GDC 2010 ends December 17, 2009 and Early Bird rates end February 4, 2010. For more information on the 2010 Game Developers Conference, visit the official GDC 2010 website.

Music is often considered secondary in game design, but it's crucial to setting the mood of any environment. Who can forget the gobble-gobble sound of Pacman or the lush orchestral tracks in Final Fantasy?

With GameSoundCon approaching next week in San Francisco, it's a good time to think about how sound enhances one's enjoyment of games—and perhaps even contributes to a game's addictive nature.

"Melody is the thing that gets stuck in your head," says musician Aaron Walz, who recently formed The Casual Game Audio Alliance with four other composers. The group's mission is to raise the value and quality of audio in social games.

Walz cites many challenges in composing for casual games. The melody has to be shorter online, yet just as compelling. "You have to balance aesthetic with file size and avoid being boring in the shorter format," he says.

There's also the dreaded mute button factor. With many online games being played at the office, many users turn off the sound as they sneak in a few minutes of play. But even people playing at home hit the mute button, because the music is often repetitive and gets on their nerves.

So which games get the music right? Here's my personal review of the sound in several social games:

Playfish Cash Cards are now available at Walgreens in the United States. The next time you pick up your meds, shampoo or toothpaste, you can treat yourself to either a $10 or $25 card, good for buying virtual currency within Playfish's games, including Pet Society, the company's biggest cash cow.

This entry into retail stores is a huge step for Playfish and the social games industry overall, and signals the mainstreaming of virtual goods. Spending real money on an imaginary jacuzzi or a Halloween "mummy fish" will no longer be thought of as weird or fringe behavior. Clearly, you’ve arrived in middle America when your product is displayed next to Hershey bars and cards for Target and McDonald’s.

Initial reactions by fans are positive. Despite grumblings by a few who've nicknamed the company "Payfish," many gamers are rushing out to their neighborhood Walgreens, spurred by the cuteness factor of the pink and blue plastic. The cards also come just in time for the holidays—stocking stuffers, anyone?

In our latest employment-specific round-up, we highlight some of the notable jobs posted in big sister site Gamasutra's industry-leading game jobs section this week, including positions from 5th Cell, Insomniac and more.

Each position posted by employers will appear on the main Gamasutra job board, including positions from Sega of America, 2K Marin and more.

Each position posted by employers will appear on the main Gamasutra job board, and appear in the site's daily and weekly newsletters, reaching our readers directly.

It will also be cross-posted for free across its network of submarket sites, which includes content sites focused on online worlds, cellphone games, 'serious games', independent games and more.

Some of the notable jobs posted this week include:

Rainbow Studios: Senior Producer
"Rainbow Studios, a subsidiary of THQ, is one of the largest video game developers in the Southwest and develops premier original and licensed titles for current and next generation console systems. Rainbow’s video game history includes the critically acclaimed Motocross Madness PC series, the award-winning ATV Offroad Fury, top-selling Splashdown, the highly praised MX franchise, the blockbuster Disney-Pixar Cars titles, and the critically acclaimed Wii title Deadly Creatures, along with the soon-to-be-released MX vs. ATV Reflex."

Relic Entertainment: Environment Artist
"Your friends will call in the middle of the night, cursing you. When you see them, they’ll wear sunglasses to conceal their bloodshot eyes, and they’ll be alone, because their romantic interests left them without even texting goodbye. They won’t be able to stop playing. It’s a terrible fate, but I’m afraid it’s what we want. And we need your help."