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Gaming’s Grey Market: Too Good To Be True?

Posted by on November 9, 2015.

Computer games aren’t just sold in a little corner of the video store any more; they’re one of the biggest businesses out there, and even physical retailers are growing outdated. Digital distribution platforms like Steam and Origin are leading the way, allowing gamers directly to download full games from their virtual library. This has also led to many alternative means of distribution, with sites like Humble Bundle offering collections of games for huge discounts over a limited time, with some proceeds going to charity.

It has also led to the rise of third-party merchants, who sell unused keys which gamers can activate on platforms like Steam, to access games. G2A and Kinguin are the foremost marketplaces for these keys, allowing merchants to sell keys, often at vastly discounted prices. When consumers make purchases on these websites, they are not buying a product key from G2A or Kinguin, but from an independent merchant operating on that website, much like eBay. These ‘grey market’ websites are trading legally, but are not authorised by the publishers.

G2A.com has a reassuring 8.8 score on Trustpilot, and Kinguin does even better with an impressive 9.5, yet discussion of these markets online always reveals a great amount of mistrust and uncertainty from gamers.

Game publishers themselves do nothing to discourage this perception, and sometimes act with outright hostility to these secondary marketplaces. At first glance, it may be easy to dismiss this as publishers simply disliking any game purchase that does not directly give them money, and given how some companies treat second-hand game sales, it would be easy to believe this. In mid-2014, Rebellion revoked thousands of CD keys that had been sold by third-party resellers, leading to accusations of trying to force gamers to pay the full, non-discounted price on Steam.

However, the concerns over grey market games are not always so petty. The reason for Rebellion revoking so many keys, it claimed, was that the keys had been stolen. It’s true that there are CD keys available for purchase which have been obtained illegally, and some publishers assume – perhaps correctly – that all instances of a particular game found on the grey market must have been obtained illegitimately. Devolver Digital, an independent game developer known for the cult hit Hotline Miami games, had a now infamous exchange with G2A on Twitter, stating it would actively cancel keys sold on that website and saying they were not legitimate.

An aspect of this third-party market that is often downplayed is symptomatic of a problem in the first party market itself. Video games are sold all over the world, both digitally and physically, and copies of games in poorer economies are often much, much cheaper than those sold in America and most of Europe. As a hypothetical situation, a gamer in a poorer country could pay €20 for a game that retails new in America for $60, and then offer it to American gamers for $30. Both the reseller and the player get a better deal this way and, even though it exploits a loophole in the global economy, there is nothing illegal or suspect about it.

However much these game publishers might dislike the grey market, they cannot change the fact that it offers consumers a better deal – and even if the perception of these sites might be that they are a little ‘shady’, they are offering a legitimate, legal means for the consumer to obtain a game. Whether the source of that game is legitimate, however, is not always so clear-cut.

The two market leaders in this field, G2A and Kinguin, both operate on a similar core principle. Just like other marketplaces such as eBay, neither G2A nor Kinguin directly sell any merchandise of their own. They provide a platform for independent merchants to sell goods – in this case, codes for digital activation of PC games. The websites make money from merchant fees and from selling their own buyer protection, either on a subscription basis or transaction-by-transaction.

However, there are some key differences between the two marketplaces, most of which revolve around transparency and customer care. On G2A, the merchants are largely anonymous, with a feedback rating and the country of origin being the only available information. Kinguin, on the other hand, allows users to access a more detailed feedback breakdown, as well as the option of written comments and reviews for each merchant and the ability to add trusted sellers to a list of favourites. The merchants have their own digital storefront, in a similar vein to eBay or Amazon Marketplace.

Kinguin and G2A also differ in the customer protection services they offer. Kinguin’s is a simple money-back guarantee, which promises that the support team will try to resolve any issues with a marketplace seller, and if they cannot do so then the customer will be refunded by Kinguin itself. G2A has a rather more complicated process as purchases made under the ‘G2A Shield’ program require customers to enter a screen-sharing session with a member of the support team in a potentially invasive process, in order to verify the success or failure of activation.

There is one obvious problem with both of these buyer-protection options; in most countries these days, consumers are protected by law, without needing to buy additional services from the seller. If someone buys a product which does not work as advertised, they are legally entitled to a refund or exchange regardless of whether they bought protection from the merchant or not. However, this is a difficult area when you take into account that the merchants are all independent entities operating from many different countries, and pursuing legal action against them may be completely infeasible. Kinguin’s buyer-protection and G2A’s shield programs ostensibly provide a guarantee that the websites will take direct responsibility for ensuring that compensation is obtained.

But the most important question is where these activation keys actually come from. The very fact that these marketplaces are not authorised by game publishers is cause for suspicion, and it would be easy to believe that many of these keys have, figuratively speaking, ‘fallen off the back of a lorry’. However, an investigation by polygon.com showed that it’s certainly plausible for these games to have legitimate sources. Game codes are often exchanged on steamgifts.com, and publisher-authorised sellers such as the Humble Bundle will often have games on offer for large discounts. Coupled with flash sales on Steam itself, it’s easy to believe that thrifty merchants can spot a good deal and flip it on the grey market for a modest profit.

But then where has the grey market’s dubious reputation come from? While it’s true that the underlying trading model is purely legitimate, it’s all too clear that not all games follow an above-board path on their way to the final user. The system is open to abuse, as was demonstrated during an incident involving Ubisoft in early 2015. Towards the end of January, many gamers suddenly found they could no longer access some Ubisoft-published games such as Far Cry 4 and Assassin’s Creed: Unity. Ubisoft claimed to be deactivating certain keys which they said had been fraudulently obtained.

It soon emerged that these deactivated keys had two things in common: Firstly, they were all activated on EA’s Origin platform; secondly, they had all been purchased from the gaming key marketplaces Kinguin and G2A. Ubisoft, EA, Kinguin and G2A were all subject to a large consumer outcry in response to this, as many gamers felt they were being punished for making a legitimate purchase rather than pirating the game.

Both Ubisoft and Kinguin were very active in investigating the source of this problem. Ubisoft quickly found that the original purchase, directly from Origin, had been made using stolen credit cards. Kinguin claimed than an unidentified Russian had offered the keys to merchants operating on the website for a price “so low that most merchants refused to buy the goods”. However, as every merchant and storefront on Kinguin operates independently, not every seller was so shrewd or scrupulous. Thirty-five merchants of varying size accepted the keys, allowing the stolen goods onto the marketplace. While it’s clear that no-one knew for sure at the time that the keys were stolen, the fact that most merchants refused to take the goods indicates that there was already cause for suspicion.

Ubisoft reinstated some of those keys before too long, but only those which had already been successfully activated. Keys which remained unsold, or which had been purchased but not yet activated on Origin, remained revoked. In a blog post after the fiasco, kinguin.net commented, “We do verify big or unusual purchases. We believe [Ubisoft and Origin] must have access to anti-fraud ecommerce tools that should raise alarm flags in such cases,” and expressed surprise that such a large purchase hadn’t aroused suspicion in the first place.

The fallout from this situation did nothing to improve the relationship between publishers and resellers. In a statement on Facebook, G2A denied responsibility for users’ keys being revoked, and said that those users who had not purchased the games with G2A Shield, the site’s customer protection program, would only be eligible for compensation, “if the corresponding merchant was responsible for the withdrawal of the code”.

Kinguin’s own, lengthier response to the situation accepted partial responsibility for the situation and admitted that it had happened in the past, but made documented efforts to ensure all affected consumers would receive refunds. They did suggest that, “Major platforms [should] implement more advanced early warning mechanisms,” but also that their own merchants, “must pay bigger attention to who their business partners are and avoid risk transactions with new entities”.

From Kinguin’s response to such difficult situations, it’s clear that at least one ‘Grey Market’ for video games truly wants to shake off the last of its suspect reputation, and seems willing to make the effort to achieve that. The kind of transparency shown by the company is sure to go a long way to reassuring potential customers, although publishers may never quite see eye-to-eye with them. G2A, on the other hand, seems much less willing to reach out to customers and engage with the media, which, in the long run, can only hold the market back.

There is still a long way to go, however. The sad reality is that, no matter how many keys on sale have been obtained through perfectly innocent means, there are offers on the marketplace which are morally or legally dubious in origin. Preventing these keys from being sold is the responsibility of all entities involved; publishers need to have more measures in place to detect suspicious purchases, merchants need to be very scrupulous about their sources, and consumers need to stay informed and careful about who they buy from. With transparency and care, these marketplaces have the potential to gain the legitimacy they want, but sadly that may never happen. Sites like Kinguin introduce a new link on the trading chain, and the more links in any chain, the less secure it becomes.


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2 thoughts on “Gaming’s Grey Market: Too Good To Be True?

  1. John, it really depends. I know a lot of people preferring to even buy stolen keys. I think that grey industry is growing, which I cannot say is good or bad, but I really think it’s just a fact.

  2. i think most users/players pay for their games, and dont use stolen keys. Game manufactures should er on the side of caution if they think a key has been stolen so they don’t hurt paying gamers.

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Submitted in: Expert Views, Josh Townsend |