The original Guild Wars turned the massively multiplayer online game (MMO) subscription model on its head in 2005. Up until that point, the standard practice across all MMOs, such as EverQuest, Lineage II, Final Fantasy XI, and World of Warcraft, to name just a few, required a monthly subscription between $10 and $20 to keep playing the game on top of the $40 to $60 already spent on just buying the retail package. Guild Wars dropped the subscription model all together, instead offering a comparable triple-A experience at a fraction of the price.

While it may seem trivial now in the age of free-to-play MMOs, Facebook games, and iPhone apps, Guild Wars was revolutionary for its time. ArenaNet’s long-awaited sequel, Guild Wars 2, is slated to release sometime later this year, so GamesBeat sat down with studio president Mike O’Brien to talk about keeping the game relevant (and financially sustainable) in a drastically different market than the one its predecessor inhabited.

GamesBeat: When you released Guild Wars in 2005, publishing an MMO without a mandatory subscription fee seemed like a very bold idea. Your original business plan was to generate revenue for ongoing operations by releasing new game expansions regularly, and microtransactions were only an afterthought. Can you summarize how the original Guild Wars model worked out for you and what lessons you learned from it?

Mike O’Brien: Guild Wars sales far exceeded our expectations, so we learned that there was huge demand for a non-monthly fee game. But we also learned that it wasn’t in the game’s best interest to release new expansions as rapidly as we had originally intended. I mean, we literally got to the point where we could release an entire new campaign — with a new storyline, new professions, and new game mechanics — in just six months. We released Nightfall exactly six months after Factions. That pace was great for the hardcore players who could consume content that quickly, but it left a lot of other players behind and didn’t give the world time to settle from one campaign to the next.

So we shifted the focus of our business model during the Guild Wars life-cycle from supporting the live game through constantly releasing new expansion packs to supporting the live game through microtransactions.

GB: Guild Wars has a large and loyal fan base, but the game was generally considered to be more of a niche product than World of Warcraft. It seems that you are now aggressively going after a wider audience with the increased amount of character levels and solo-player-friendly content.

What are your sales expectations for Guild Wars 2? How do you define your target audience? And what are your plans for platforms other than Windows PCs?

O’Brien: The original Guild Wars was a new and different kind of online [role-playing game] that was based more on the tradition of Magic: The Gathering than on Dungeons and Dragons with a really strong emphasis on storytelling. We thought players wanted to try something new, and I think we were right given that Guild Wars was a new franchise from a new company that went on to sell over 7 million copies.

Guild Wars 2 is now a full-fledged MMORPG, so our goal is to make a game that’s both a great MMO and a great RPG. We want to be best-of-class in both segments, and we hope the game appeals to both audiences.

As far as platforms go, right now we’re focused on Windows because that’s where our current fan base is. We’ve done some experimentation, and I think Guild Wars 2 can work well on other platforms, but we’re still a small enough company that we have to tackle one thing at a time.

GB: What are the key features that set Guild Wars 2 apart from free-to-play MMORPGs and simultaneously justify a $60 purchase?

O’Brien: It’s kind of a funny question. I usually get asked the exact opposite: How can ArenaNet afford to release a game that is this high-quality without monthly fees when our competitors charge $60 for the box plus a $15 monthly subscription fee?

The answer is we’re really focused on creating the highest-quality MMO, not the lowest-cost MMO.

I think Guild Wars 2 is one of the best values in gaming, period. Where else can you get this many hours of enjoyment, of content, of polish, of replayability for $60?

I’ll give a direct comparison. Guild Wars 2 is both a great MMO and a great RPG, so anyone who plays offline RPGs like Skyrim or online RPGs like Diablo III is going to love Guild Wars 2. Those games cost $60. Compared to them, Guild Wars 2 has at least as much content, world exploration, personal storylines, and replayability. And then for no additional charge, Guild Wars 2 gives you a fully persistent world where you can hang out with your friends online, lots of social features, a live team dedicated to introducing lots of new content into the game, and two integrated forms of [player-versus-player].

GB: How challenging is it to come up with desirable microtransaction offers that don’t upset your fan base, particularly in a game where PvP gameplay is so important?

O’Brien: Creating a microtransaction system that doesn’t upset or alienate your player base is straightforward once you clearly define what’s in-bounds and what’s out-of-bounds.

GB: To which extent will beta feedback help you determine what’s acceptable to users and what’s not?

O’Brien: I wrote a blog post to our fans about this very subject because I think it’s important that we’re open and honest about microtransactions with our players. Now that thousands of players have had a chance to play the beta and comment, I think they understand that we’re doing what’s right to create a healthy, well-supported MMO without taking advantage of our customers.

Guild Wars 2 isn’t one of those games that masquerades as free-to-play but is really designed so that you can’t get far without having to buy lots of microtransactions. We recognize that customers paid $60 for the game and they have the right to play the full game. So the microtransactions we offer are non-essential additions to the game and convenience services for players who want to trade money for time.

Once you get in that mindset, microtransactions in Guild Wars 2 are pretty straightforward, and it’s not as controversial as you’d think. If players need something to play the game, it’s part of the game. If something is a fun add-on or service, it can be a microtransaction.

We also have this cool system that allows players to trade gems, our microtransaction currency, with other players, so ultimately there’s nothing in the game that you can’t get just by playing the game. If you want a server transfer, and server transfers are a microtransaction, you can buy the gems directly, or you can trade with another player to get the gems you need.

GB: Are there any particular “hardcore” online games you see as positive examples for microtransactions done right — probably something like League of Legends?

O’Brien: Yes, there are “hardcore” online games out there that I see as positive examples. I think EVE did a good job with their PLEX system and deserves props for it. Just like we’re doing in Guild Wars 2, they allowed players to trade microtransaction currency, which meant that players who wanted microtransactions but were short on cash could earn them through the game, and players who wanted in-game items but were short on time could trade for them using microtransaction currency.

GB: Can users purchase in-game gold with real-world currency that can be used to buy items in the trading post auction house? Wouldn’t that give spenders an “unfair advantage” because they will be better equipped and can quickly purchase crafting materials, and so on?

O’Brien: It’s not that players can “purchase” in-game gold, but that they can trade with other players. So, as with EVE Online’s PLEX system, some players can get microtransactions without paying for them while other players can get in-game gold or other goods without having to earn them in the game.

GB: Trading items for gold might be less of an issue for team PvP — where all players get bumped to 80 with standardized gear — but what of the implications for world-versus-world?

O’Brien: Before even answering this question, I want to point out that in Guild Wars 2, being competitive isn’t all about having the best gear. It’s not like you’re going to go into world-versus-world and get smoked because someone else has a godly weapon that you can’t hope to acquire. We’ve always been against that kind of thing.

Here’s what we believe: If someone wants to play for a thousand hours to get an item that is so rare that other players can’t realistically acquire it, that rare item should be differentiated by its visual appearance and rarity alone, not by being more powerful than everything else in the game. Otherwise, your MMO becomes all about grinding to get the best gear. We don’t make grindy games — we leave the grind to other MMOs.

So once you realize that you don’t have to run on this gear treadmill to compete, then ask yourself whether you think it’s fair or unfair for players to be able to trade microtransaction currency with other players, which essentially allows some players to trade money for time and other players to trade time for money. I think it’s more fair to allow that.

I think that a super-fan of Guild Wars 2 who is short on cash should still have the ability to collect microtransaction items like town clothes and mini-pets. And I think that a Guild Wars 2 player who comes home late from work every night and can’t spend as much time playing as his friends do should also have the ability to collect those really unique in-game items. Letting players trade with each other empowers them to use whatever they have to make up for whatever they don’t have.

GB: In your blog post about microtransactions in Guild Wars 2, you cited the gold trading of unauthorized real-money trading [RMT] companies as one of the reasons why ArenaNet is offering an official way to trade gold and items. Do you really think that players will hate the practice of gold selling less when it is done through an official trading post? What is your plan B if the community balks?

O’Brien: Perhaps some players don’t realize at first how damaging RMT companies can be, but experienced MMO players certainly know. Do you think MMO players hate all the in-game spamming of advertisements? That exists because of RMT companies. Do you think MMO players hate all the botting going on in their games? That exists because of RMT companies. Do you think MMO players hate all the malware? The keyloggers? All the widespread attempts to hack their accounts and loot all the gold off their characters? Again, it’s all because of RMT companies.

It’s all because, in most MMOs, there is a real-world profit incentive to trading gold and items in the game. And where there’s a real profit incentive, someone out there in the world will lie, cheat, and steal to make that profit. And then the rest of us have to clean up the mess.

By letting players trade directly with each other, we take the power away from RMT companies and give it to the entire player base, and we do it in such a way that the profit incentive vanishes. A player can trade gold to another player to get something he wants from the microtransaction store, but he can’t trade gold to earn pure cash, so there’s no business incentive to trade gold. There’s no incentive for companies to spam the game, bot the game, or hack and loot accounts.

We’re committed to this. We’ve talked with our players about it every step of the way through alpha testing, closed beta testing, and recently in our beta weekend event with hundreds of thousands of players. So we know the reaction of players is actually overwhelmingly positive. They understand that this system takes power away from RMT companies and puts it in the hands of players. And, again, many of them have already used a similar system and appreciated it in EVE.

GB: Subscription MMOs like World of Warcraft and Star Wars: The Old Republic offer free content updates besides paid-for expansion packs. What are your plans for expanding and improving Guild Wars 2 long-term? Can customers expect any content additions for free, or will they only come in the form of expansion packs?

O’Brien: We’ll have both. Players can expect the same level of ongoing support from Guild Wars 2 as they would expect from any top-tier MMO.

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We hope you enjoyed the interview, and please look forward to more coverage of Guild Wars 2 as the game nears release. Also, if giant furries and half-naked elf chicks are your thing, why not check out GamesBeat’s massive TERA gallery?