When it eventually releases, Diablo III will include player to player auctions of in-game items for real money. Blizzard's Rob Pardo introduced the unprecedented plan with four key motivations behind it. He said that players want it, and that if they [Blizzard] didn't offer it, outside companies would. Because this system will be regulated, he said that this then ensures a great experience both for buyers and sellers. Shifting focus to how it integrates with the game, Pardo explained that the random nature of getting items in Diablo perfectly suited having such an auction system. And finally, he said that they expect it to add a great deal of depth and fun to the game long-term.

The real money auction house will operate at an account level, meaning players can feed items into it from any of their characters. Much like other online auction services, Blizzard will take a fee from both the seller and buyer on every transaction. Listing fees will be a flat amount, with the threshold set such to encourage a baseline quality of items to be worth it to try and auction. A fee will also be processed at the time of sale to cover the logistics of handling the trade. To give players a chance to try it out, Pardo said that there will probably be a certain number of free listings to start with.

Sellers will face an important decision at the time of sale. Proceeds can be taken as an electronic credit to the seller's Blizzard account. Doing so, however, locks that money into the Blizzard store system and it cannot be converted to cash. A second option will be offered to receive the proceeds from a sale in cash. This payout will be handled by a third party payment provider who will charge a separate transaction fee for this service. Pardo said that they are close to announcing the company which will be handling the cash side of the system but the contracts are not finalized yet.

Diablo 3 will also include a traditional auction house using the in-game gold system. Like the real money version, it too will be at account level, allowing universal access for all the characters a player creates. Pardo also said that at this time Blizzard has no intention of creating a store to directly sell power items to players but cosmetic items have been considered.

From the financial perspective it's easy to see Blizzard's motivation for instituting an auction for cash system. Gold farming boomed in World of Warcraft, creating an extremely lucrative business that Blizzard didn't see a dime from. At the same time, combatting the efforts of those outside profiteers cost Blizzard valuable resources. From the player's standpoint, it's much more difficult to gauge the impact on the game. Pardo repeatedly said that the designers of the system expect it work smoothly because the large number of players and broad, random selection of items will work to keep the marketplace balanced. However, he admitted the team will need to monitor thing closely as it's something that's never been done before.

We'll have to wait for the final retail release to see how it works out. Due to the planned character wipe at the end of the beta, only the in-game gold auction house will be in the beta. Until then, though, there's certain to be plenty of discussion around this provocative decision.