One of the largest differences in today’s world of gaming is the way digital marketplaces have flourished and made the market more accessible for developers and gamers over the last ten years.
But it’s also opened up a whole lot of grey areas, opportunities that third-party vendors have used to flourish. Some of those opportunities, however, can come at the developers’ expense.
In a blog post this morning, the developers of Punch Club accused major key reselling website (and other key resellers) of facilitating fraud and subsequently refusing to assist unless they were “willing to work with them”. The implication of the latter is that TinyBuild would end up undercutting Steam and their own retail partners, but we’ll return to that later.
The post, which was subsequently sent out to all media after TinyBuild’s website went offline due to a distributed denial of service (DDoS) attack this morning, starts by explaining how G2A and other key reseller websites function.
The idea’s simple: you have a key for a game you don’t want. Instead of just letting it sit there in your library or gifting it to a stranger, why not list it on a website and make a couple of dollars?
Here’s the issue.
The problem is that this business model is fundamentally flawed and facilitates a black market economy. I’ve spoken to a merchant on G2A about how he’s making $3-4k a month, and he outlined the core business model:
• Get ahold of a database of stolen credit cards on the darkweb
• Go to a bundle/3rd party key reseller and buy a ton of game keys
• Put them up onto G2A and sell them at half the retail price
Where things get additionally complicated is the fact that TinyBuild established a store on their own website. The developers wanted to offer discounts directly to fans, do giveaways, and undoubtedly have some sort of means where they could collect the maximum amount of revenue on their hard work as opposed to giving a cut of the money to Steam or one of their other partners.
Problem was, people started buying games through their store — by the thousands. The store would then get hit with chargebacks, because everything was bought using credit cards, and then TinyBuild’s payment providers would shut them down.
The shop collapsed when we started to get hit by chargebacks. I’d start seeing thousands of transactions, and our payment provider would shut us down within days. Moments later you’d see G2A being populated by cheap keys of games we had just sold on our shop.
Coincidentally, this is when we were having discussions about partnering up with G2A and how that’d work.
TinyBuild can’t prove anything at this point, and they stressed as much in their blog post/press blast. But they’re pretty certain about what’s going on: people are using stolen credit cards to purchase digital copies of games, which they then resell on websites like G2A to collect a handy profit.
An interesting part of all this was a copy-paste from an alleged email G2A sent to TinyBuild, which insinuates that the developer’s distributors were the ones reselling the keys in the first place. Here’s the relevant part:
So the issue you have pointed to is related to keys you have already sold. They are your partners that have sold the keys on G2A, which they purchased directly from you. If anything this should give you an idea on the reach that G2A has, instead of your partners selling here you could do that directly.
… Honestly I think you will be surprised in that it is not fraud, but your resale partners doing what they do best, selling keys. They just happen to be selling them on G2A. It is also worth pointing out that we do not take a share of these prices, our part comes from the kickback our payment providers.
It puts TinyBuild in a pretty crappy situation, as Ubisoft found out when they took a stance against unauthorised resellers flogging off copies of Far Cry 4. According to details provided to them from G2A, 26,658 copies of SpeedRunners, Party Hard and Punch Club have been sold via G2A for a retail value of just over $US450,000.
TinyBuild doesn’t get a single cent of that. And having their own store complicates matters too. Steam provides developers with a list of “retail activations” — users playing the game that didn’t purchase the game through Steam, basically. But there’s no way to tell whether someone activated a key by purchasing it through TinyBuild’s website or received it through a legitimate giveaway against whether they purchased one from G2A.
If they deactivated a bunch of keys carte blanche, it just results in a whole lot of pissed off users. And that includes gamers who purchased from G2A. They’ve spent their money purchasing a legitimate key for a game, probably unaware of the intricacies of the key reselling market and the implications it has. All they know is that they’re getting a game for cheap, and that’s good for them.
But it’s a crappy deal for developers. And it’s a terrible situation for TinyBuild.
I’ve sent off a bunch of queries to G2A about the situation, including TinyBuild’s allegations and what their opinion is on the legal status of key reselling in Australia. I didn’t receive a reply at the time of writing, but if anything interesting comes out of that I’ll let you know.