As you might have heard, and if you weren’t living under a rock somewhere, you should have heard about it at least 10 hundred times, Alex Nichiporchik and online game reseller G2A have been having a heated battle in press and Facebook. Shortly after that TinyBuild website was hit by a large DDOS attack (which makes an awfully suspicious coincidence).
Nichiporchik claims that “game code marketplace G2A sold $450,000 worth of their products, many of them fraudulently acquired” (http://www.polygon.com/2016/6/20/11982544/indie-dev-says-grey-market-key-seller-cost-them-450k-in-sales). Interestingly enough this unfortunate accident happened right when the two companies were discussing ways they could formalise the relationship and allow G2A to resell their games officially. Which basically means that G2A was actually working without the actual permission of the developer & publisher. How is this even possible in this day and age of copyright infringement laws.
What is G2A exactly?
There are a lot of very good investigations of the reseller actions. So if you want to learn more about the ways people are reselling games, you’re up to a lot of reading. I have been working with video games publishers for quite some time now and I must say not a lot of companies actually want to get involved with these kinds of outlets. Everyone has their own reasons, but few big companies even consider partnering with small players like G2A, who actually make most of their money in Russia.
So how does G2A work? It’s not actually a store as you might have guessed from the advertisements. It’s more like a reselling platform that allows certain parties to sell game keys. So there’s no guarantee that game developers and publishers are selling their games. On the contrary - it could be anyone, who for some reason managed to get the keys. No one actually tries to verify those keys and figure out if they were obtained in a fraudulent manner. Though G2A does offer a special monetary service, which helps people to make a refund for the purchases, if the key seems to be blocked. Not a lot of clients actually want to be part of this service as it requires extra money, but one does not simply unsubscribe from it. (https://www.reddit.com/r/pcmasterrace/comments/4m63i5/my_experience_of_deactivating_g2a_shield_stay/)
G2A is positioning itself as the open releasing platform, but it’s business model is not entirely understandable. The lack of transparency and unnaturally low prices lead some publishers to believe that the company is actually using a big part of fraudulent keys. This closed ecosystem actually leads such developers as Alex demand a more transparent approach, so that game developers could actually manage and control the sales of their products on G2A.
Why even consider working with resellers?
It’ not really clear why would Nichiporchik even consider working with G2A. First of all it’s mostly a East European thing, which sells games cheaper than Steam (which is already pretty affordable in Russia). I know Russia is going through some economic problems and the local people tend to buy games even cheaper. Should be mentioned that only a decade ago Russia was no better than China in terms of piracy.
So even though Steam is popular there, torrents and unauthorised game distribution is booming in this region. So G2A is sort of a saviour here, supporting indies and selling games (not just giving them out), but man - where do they get them? It’s still a mystery for me.
Should you just stop working with these resellers? Hard question to answer. Obviously such platforms as Humble Bundle help a lot to push out more copies and promote your game. But at the same time they do present a huge risk for the developer, because they devalue games and open doors to such scams as G2A.
Selling your game keys online in general means that it can be devalued. However, it might mean bigger risks for your company. Selling games with huge discounts you will most definitely face resellers. They will buy your game at a cheap price and then resell the key somewhere else, using it for their own profit. This is a major problem, which was discussed by hundreds of specialists and gamers all over the world years ago. Yet it’s still relevant to this day. (http://www.gamesindustry.biz/articles/2014-09-10-the-devaluation-of-everything http://www.neogaf.com/forum/showthread.php?t=877409 http://www.puppygames.net/blog/?p=1574 http://www.gamefaqs.com/boards/916373-pc/71813838 http://gamepolitics.com/2012/04/12/gog-steams-discounting-practices-hurt-gamers-devalue-games/)
The other big risk is credit card fraud. You can lose thousands of dollars due to fraudulent transactions, performed with the help of stolen game cards. It’s essential to have a nice protection from such transactions as they can really hurt (and potentially) destroy your whole business.
TinyBuild is not alone
When TinyBuild did not get over 200k of its hard earned cash - this is a very serious problem. It’s not a new problem though. Back in 2014, 7 Entertainment was also under a lot of heat selling the Humble Bundle discounted keys for Red Shirt and Thomas was Alone. Those games were usually sold for $19.99 and $9.99 on Steam, but on Fast2Play they were available for $1.35 and $3.78, respectively.
Then there’s the problem of in-game goods, which are also being resold, without bringing any money to the developers. It can literally hurt the whole game economy. In October of 2015 Riot Games actually banned G2A from sponsoring professional e-sports teams, cause the reseller was involved in selling third-party products that violated its rules and terms of service. It also sells full game accounts, which is strictly forbidden in this game.
My general idea is that you shouldn't be afraid of places like Humble Bundle, Steam or GoG. Instead, you should definitely consider being more careful with the grey market of: G2A, Fast2Play and Kinguin. The worst thing is that there’s virtually no limits to control these resales, except just banning them, which may not always be the perfect solution. Having a way to have a more direct control of the pricing is essential in the digital economy.
So the final answers is simple: work with established and reliable distribution platforms, which can at least give you some sort of anti-fraud protection. Start selling games on your own, attracting the traffic your own website, which is much more reliable and transparent. But that’s a whole different story.