J. Mark Hood is that rare thing in the game industry -- an executive who came up through the ranks. Beginning as a programmer at Sierra back when the company produced its own adventure games in-house, he rose up and up until eventually becoming a senior vice president during the Vivendi days.

Now, Hood is the co-founder of Reality Gap, which -- like many companies these days -- publishes free-to-play PC MMO games. In addition, Reality Gap has also launched a payment method known as MetaTIX which, like other virtual currency solutions, allows players to convert from free to paying.

However, there are claimed  philosophical differences behind the MetaTIX model and differences in execution, as well -- partially influenced by Reality Gap director and Atari founder Nolan Bushnell's experiences in the arcade market during its heyday. 

In this interview, Gamasutra talks to Hood about his background in the industry, the founding of Reality Gap, the concept of running a virtual economy in an MMO with no item stores, but only players purchasing from each other, and more.

How was Reality Gap founded?

J. Mark Hood: Basically, what happened was I was at a meeting at a bistro with Nolan Bushnell and Mike Williams, and we were chatting about a bunch of different stuff, and what would be cool things to do in the industry, and what the industry needed.

We started talking about tokens, and the way it came up was... Nolan was saying in the old days, he only released arcade games in an arcade when it was a new IP. He wouldn't release out just at 7-Elevens and that kind of stuff. It would go first into a big arcade.

I asked him, "Really? Why is that?" He said, "Well, it's real simple. For new IPs, having the lower barrier for entry by having people walking around with a big pocket full of tokens is really cool. They just go by and they see a new game, they're like, "Oh, I'll try that," because they don't really associate with money anymore. It's just a token. They'll put it in, and they'll try it. Whereas if you're at a 7-Eleven, and you have to go buy some quarters, you may not want to do it.

So, a lower barrier for entry for new IPs was something that really interested me a lot because I've been trying to do that forever between Capital Entertainment Group and helping the guys at Garage Games.

I think getting the barriers for entry for innovative product has been something I've been really interested in for 10 to 15 years. So, we decided that this is a really good thing to do and try.

So, we started by just trying to prototype it. We're really strong believers in "by developers, for developers," doing it in a game. Not just coming out from some ivory tower place of making a microtransaction system, but really trying to figure out what was needed in games, what was a nice, small, and tight API that would be easily used in any type of game no matter what the language was, and implement it that way, and then actually try and code it in a game.

Monato Esprit

So, that's really what we did. And in doing so, we knew we wanted to get a game first to start. It was sort of our demo place and really our laboratory for trying out microtransactions and how they work. We had a relationship with a company already in Korea called Gamasoft. They've done a game for Michael, our CEO, with a previous company called Risk Your Life. They had a game that we started doing some work on, and we basically redesigned the game from scratch to have a userbase economy in it.

So, we started with that game, just to try it out as sort of a test then. We ended up releasing that commercially a couple months ago. It's a real, virtual economy. There are no item stores in there. It's very different from most MMOs.

We took out their item store and replaced it only by consignment stores. So, the things that you pay for in the game are things like dungeons, where you can go get rare items. You can pay for repairs. You can pay for alchemy in order to craft new items and make them. But in order to buy items, you actually have to buy them from other people.

So, it's been pretty fun because we're seeing a lot of people that are just going in there. So, free players now become a part of the economy. Instead of becoming a drag on the economy as sort of a deadbeat kind of thing where they're just taking up space, they actually become an integral part of it. They have become the supply side of the economy.

So, they go in there. They may want their MetaTIX in order to visit a dungeon and get some rare ingredient. So, in order to get the MetaTIX, they go out and they mine, they get what they need, and they build it.

And then they put up this nice item they spent hours and hours building, and they put it up for sale in the consignment store, they get MetaTIX, and they now have virtual money to go in and buy whatever they want in the game. And the other people who are actually spending money in the game, they see it as a game because they don't want to spend three of four hours building this item. They'd rather just go buy it.

Do you only have cash-based currency, or is there in-game currency as well? Many games now have dual currency systems.

JMH: Monato Esprit is only MetaTIX. There is no gold in-game. You can buy [MetaTIX]. The only way you can earn it -- we never give it to you for doing anything -- is from some other player actually buying something. So, somebody always bought the money that's in the game. It's never made or created in any other way other than someone putting down a credit card.

So, in fact, the amount of money that can exist in the world is dependent on people purchasing money in real life.

JMH: That is correct. I don't want to confuse things. That's really our laboratory game. That's not necessarily something that we're saying is a model for MetaTIX. That's just what we did for our first game.

The number of publishers localizing MMOs has really exploded. I'm wondering, first of all, why you think there are so many. And secondly, do you think the market for Korean MMOs may become saturated here?

JMH: Yeah, I think it is saturated here, and I think there's a real simple reason why most people do it. And the basic reason is -- how do you compete with $15, $20 million budgets that Activision, Blizzard, and EA are doing right now? Unless you have a huge company and a huge amount of capital, there are not a lot of ways to do that.

So, the things that you see booming right now between the smaller guys, where I think a lot of the creativity is coming from, is either from the casual space, in the medium-section space that's a lot less expensive to do, or they're just porting stuff over from Korea or China.

Now, the problem with that is there are two ways to look at that. One is just to get titles over here. That doesn't work anymore. In fact, I'm not sure that it ever really did, except in a few cases. But what you're really trying to do is look for a particular type of title, a really unique, cool title. They do exist, but it takes a lot of looking. A lot of looking.

And I think you really should take a look at Battleswarm and see, because I think it's the first of its kind. And I didn't look at titles specifically from China or specifically from Asia at all. We looked everywhere -- Europe, Korea, Japan, and China. And we got Battleswarm: Field of Honor and published that game, licensed it -- not because it was cheap and easy to get over and localize, but because it was truly a brand new type of title, completely innovative.

It feels like to me, in a lot of these localized MMOs, that the original developer is somewhat de-emphasized and difficult to find information on. Just going straight from the game, you don't necessarily see it as much.

JMH: Yeah, I think that's a really shame. There are a couple reasons for that. One is sort of arrogance, and the other is that people, they want to take credit for something. I think it's a shame.

We prominently display [Battleswarm developer] Gameworld's name everywhere. Gameworld is a great developer. I've got them on the website, I've got them on the videos that went out everywhere. Their name is right after Reality Gap, just as if they were any one of the developers that I had at Sierra. They're pretty much listed the same way I would have listed Valve or Relic or Gearbox or Papyrus -- any of the groups that we published for at Sierra. I think that's important.

Battleswarm: Field of Honor

Speaking of Korea specifically, I interviewed Jae Yong Min, the marketing manager for Nexon. He was saying that free-to-play market in Korea is basically saturated -- perhaps super-saturated. As a result, are you finding more of these companies looking Westward as a way to try to actually get money in the first place?

JMH: Yeah, they absolutely are. I think we're seeing some consolidation there. I think we're seeing some big companies try to take the bull by the horns, make sure that it's focused on what's needed for this market here specifically.

I did read that interview. I think it's pretty much spot on. The Korean market is super-saturated right now. It's just crazy. I mean, free-to-play games there are ending up being mostly free to play.

Over here, it's a little different. I think you'll find, here, the same as it's always been here in the U.S. Good titles do really good, and bad titles don't do very good. I know there's been a lot of schlock where it's just sort of come over here.

It's not just schlock. There are some good games that have come over here, but they weren't good necessarily for the U.S. market. A lot of things we've found, you know, vanity items and things that are very, very popular in Asia -- just like accessories and things to make yourself look different -- aren't necessarily as popular here. Things that are more important here are actually how the game plays, getting yourself more advancement and skill. So, it is really different.

You probably wouldn't want to say if you had identified them, but what are those niches that still exist that you can try and get into a market with? I mean, Battleswarm is perhaps an example you can use. There's a lot of stuff that is out there, but there are some niches that still aren't filled. How do you identify those?

JMH: Yeah. It's funny. I'm a developer at heart. That's what I've always done. I started at Sierra as a programmer. So, I probably don't look for games the way that a lot of marketing-oriented game business people do. When I look for a game, it's really pretty simple. It doesn't necessarily have to fit a niche. It's got to be innovative and cool and new and do something different.

Maybe that's just because I got bored of doing lots of sequels and a lot of licensed titles, just trying to do the "play it safe and don't lose" thing. It's more just swinging for the fence. But the game has got to be exciting. Gamers, you know, we kind of know something when we see it, that's new and different and cool.

I've been talking about it with various people and thinking about it, RTS versus FPS, for years, but we didn't really picture it implemented in this way [in Battleswarm]. I think what they've done is pretty neat. So, in terms of identifying, I don't know. You're probably actually better off talking to a marketing guy who's not looking for products just as a product guy. I'm more of a product guy.

I was looking at your history, and it just kind of struck me. Not very many people stay at one company for so many years. just looking at your Mobygames page, it very much looks like the mailroom to head of company kind of situation, because you started as a programmer and you wound up as an executive vice president, right?

JMH: Yup.

How did that all come to pass? It's quite a tenure at one company.

JMH: Wwhen I started there, they found me because I was doing language design, and they happened to be doing a new language to create computer games with -- adventure games -- called SCI. And they were developing this new object-oriented development language, and there were very few people actually back then that were doing object-oriented [programming].

I had been doing work on the Amiga with a group at Chalmers University in Sweden to develop a language for the Amiga. And so, they wanted language development people. So, they got me there to start working on this new object-oriented system.

Well, it turned out that SCI was very good at making games really fast, and so I started becoming just in charge of running the object-oriented toolset and building up the class library. And in doing so, I ended up being the programming manager back before we had individual teams. I had 45 programmers, and then the art director had like 45 artists, and we sort of just managed it that way as one big sort of game house that worked on four or five games at a time.

And then we split up into teams. They put me on Phantasmagoria, and just one thing led to another. I ended up running up a studio in Oakhurst and got us up to about 250 people, I think, before I left. And then it was the best studio at the time, it was doing the most. We made the bulk of the revenue for Sierra at that time.

And as Sierra started growing, they just decided to pull me up to Seattle and start running the core games group. And so I had Papyrus and Impressions on the East Coast, and Dynamix and Sierra on the West Coast, and then 13 external developers who we had publishing relationships with, including Valve, Relic, and... Oh boy, I'm going to miss a few of them, I'm sure. Stainless Steel Studios, Gearbox, Troika Games -- lots of really good developers. And we found that in a normal way looking for good titles, looking for kick-ass titles.

So, yeah, I've worked with Ken and Roberta... I was [employee] number 87 at Sierra. We thought a lot alike about a lot of things. We always believed in swinging for the fence and that you would have some misses, buy you had to try. You had to try to do something really good and innovative and cool. Sometimes you fall on your face, but sometimes you get a really cool hit out there.

I don't know; I just kind of naturally moved up. I didn't really intend to ever do it. I've been a gamer at heart and a developer. So, getting back into small companies is kind of a lot of fun, too, because I get to actually do development work then, making videos and doing a little bit of programming here and there, just having fun.

Were you there for the end as well?

JMH: I was there through Cendant and Vivendi, a little bit through Vivendi. So, I wasn't there to the very end of Sierra. I think they went two or three years after I left. I basically left at the point when I realized that I was never going to have another Half-Life. It just wouldn't happen.

I mean, I started thinking about the process we had to go through it at Vivendi in order to get a new game approved, and it basically became sitting down a panel with eight people, probably three of whom were from the game industry, and the other five were either from a cosmetics company or hair color or water and power company, and they would be approving our games.

It was like the same questions would come up every time. "Well, how is this like Diablo? Tell me how this is like Diablo." "Well, it's not like Diablo. It's not at all like Diablo. It's completely different." "Oh, well, no. You need to give us a game like Diablo," for instance, or Half-Life.

And I started thinking about it and, you know what? When Valve came and said they wanted to do a game, a first-person shooter. In the world that came with Vivendi, it would have been absolutely impossible to get a game like that done because at that point, there was id... There were some great first-person shooters out, and to think that anybody was going to create a new game to compete with them just never would have flown.

So, I just started realizing that it's going to be like just running a big giant factory and trying to squeak out little bits of profit margin and marketshare. Like I said, I'm not a marketing person. I'm not a business guy. I'm mostly just a game developer who wants to figure out cool ways to make games.

It's funny how a lot of people don't seem to realize that non-game oriented bureaucracy winds up killing a company. It feels like that environment is impossible to have a hit in, except by complete freak accident.

JMH: Yeah, it is. It really is. It's a complete freak accident. It really became the line I used, and it's so true -- it became more important to not fail than it became to win. And everybody was trying to not fail. It became this political quagmire of people who were just all trying to one-up each other to get up the ladder and not have something that people could point at them for being a failure.

I was like, "In that environment, you can't win because you're going to have some failures." Ken used to say something to me that was awesome. I still remember it. I don't even remember what game it was, but I was so depressed because we had a game that we had thought was going to do really well, and the initial numbers were bad.

And I walked in, and my head was low, and Ken just looked at me and goes, "What's wrong with you?" And I said, "Oh, you know, it's just not doing what we expected." And he goes, "Dude, you had two hits this year out of four. That's 50 percent. Look at your profit margins. You need one out of four to make it. You did two out of four." [laughs] And it sort of put it in perspective. It's like, try it -- just try it. Try to do something cool. Try to do something new. You've got to otherwise it's just a job.

That's true. I guess that's why you decided to strike out on your own more.

JMH: Yeah, that's really it. That's what we tried to do at CEG. I had some great guys. I loved working with Seamus and Kevin and Gene. It was just a lot of fun. Just working with some really cool talented people and getting to meet all the game developers. I've met a lot of them through developers but boy, I had no idea all the developers in the world until I went around on world tours with Seamus and Kevin, who know just about everybody everywhere.