Emergence of the online ‘grey market’ around video games in India

If you play games regularly or are vaguely aware of their existence, surely you can see that gaming is big business and is consumed world over by billions of people. Until the past couple of years retail was probably a big deal for those who consume games in India. Although in the recent past, the gaming market has evolved past it and started its trek towards the online world. Platforms like Steam have been gaining popularity overtime and along with that games are becoming considerably cheaper with the advent of smaller and independent studios starting to get into the mix.

Subsequently games are becoming more convenient to purchase in the digital sphere. Aforementioned platform steam isn’t the only one to offer games at a cheap price. There are a plethora of sites now part of this market. For instance, Humble Bundle, which started out as site that would club together some games titles and sell them as a bundle at dirt cheap prices. Further it would let you chose where your money would go, you could either give it all to charity or all of it to the game developers or to humble bundle. Since its start, the site has diversified with a storefront of its own and multiple other services. Then there are sites like GOG, largely dedicated to old games, but also acts like a general storefront for new games as well. These sites that I mentioned are only some of the many platforms out there in the international waters.

While in India, retail had a stronghold on most big budget games. Perhaps because of poor quality internet in India. For example some people were unable to download about 30 GB on an average big budget game due to a limited internet plan with fair use policy. Or perhaps it was due to the fact that the speeds just aren’t there, considering the national average speed is 2-3 mbps. This is why some people prefer to buy consoles like Xbox One or PS4, but with ever growing need for patches that fix the game on day one becoming a standard practice, it’s uncertain how much the retail market makes sense in India. Especially on the PC where publishers are cutting so many corners that they just ship out games with a key and a steam installer on the disc and then make people download the whole game from scratch as in the case of MGS:V. Eventually consumers in India would rather prefer to save some money and invest the time in downloading, I would guess, but this is a subjective matter and will vary from person to person.

That being said let’s look at how the division of the retail market for games works. The biggest retail players likely are Amazon.in, Flipkart and Snapdeal. The smaller players would constitute sites like Nextworld, Game4u and Gametheshop. Most of the retailers mentioned above haven’t migrated into the digital sphere, except for sites like Gametheshop and Game4u, which had a short stint in this market but since have stopped their operation in digital sphere.

Now before we jump into the next part I think we should first learn about what the term ‘grey market’ here entails internationally, then work our way towards India. The ‘grey market’ as we will refer to it, entails in it the sale and purchase of games that are sometimes procured through illegal means but not always. Sometimes people use the natural setup of recent free to play or free to pay games like Dota 2 or CS:GO respectively for trading on Steam. Games like these give players in-game items that can be sold on the Steam market and Steam market only. But, some enterprising individuals who want to turn these items of value into real world currency enter into the shady areas of the trade subculture. In this trade subculture, they try to get other people to give them real world money in exchange for a high value in game item. The exchange of money takes place through sites like paypal.

That’s only a part of the story though. There are some people that go a step further and set up sites like kinguin and G2A which act like a marketplace, enabling individuals to setup storefronts and sell their products in similar manner to a site like ebay, with sellers having ratings and such. On sites like kinguin and G2A people not only sell in game items but also sell actual games, sometimes at a fraction of the cost compared to legitimate online sites like steam. It’s not always the case that the keys sold are procured from what one would call illegitimate means. To be honest one can’t ascertain the legitimacy of these items, because some of these keys are just retail keys that these people got for cheap from dealers in countries that have a cheaper retail market price. This uncertain nature of these transactions leads us to employ terms like ‘grey market.’

There are people in this trade business that make very good money and have solely switched to this trading/re-selling as their main source of income. But when there is a highly unregulated market as such, there is bound to be fraud not far from it. This polygon article gives us a pretty good idea of how things function in this grey area of games trading online, internationally. The article talks of how people took advantage of platforms like kinguin and G2A to profit in both semi-legitimate and illegitimate manners. The former being the model of selling keys procured from essentially trading as stated above, while the latter being employment of illegitimate means, like credit card fraud, to purchase games from one of the legitimate sites like humblebundle.com during a sale. Further the reselling of said game on the ‘grey market’, and by extension, bringing out the ‘grey’ nature of the market and along with it the question of regulation or lack thereof. The aforementioned article focuses on the broader picture of this grey market, and I’ll try to focus on the Indian trade (grey) market from here on out.

The Indian trade market, much like the international one, is largely unregulated, but major players like kinguin and G2A don’t have much of a foothold in the Indian market. However there are small players trying to make a quick buck while the state of such a market stays untouched or unrecognized by Indian authorities. Most of the Indian traders are aware of platforms like kinguin and G2A, and are sometimes largely dependent on these platforms to provide them with a boost in their income. Some people in India try to focus on the Indian market as they see an opportunity. Let’s consider the poor infrastructure and red tape set up for the digital Indian consumer in India. Multiple debit/credit cards don’t work with major store fronts online due to the 2-3 step native verification systems that banks deploy to maintain security. Some of the banks block international online transactions by default and have an unnavigable customer service. Along with the above, we see a lack of other options like net-banking and the recent crop of wallet services that are present in the Indian sphere. It was only a matter of time before someone capitalized on this fact. That being said let us look at individuals that are functioning in this field, hailing from different parts of India and how they operate.

First up steamz.co, a site run by someone in their early 20’s who claims to have been running the site for about 6 years. He was selling retail copies internationally as the Indian retail games weren’t region locked back then and keys could be used across borders with ease. He claims to have started out by gifting a copy of a game to his friend, back when he hadn’t started online trading as the game was cheaper in India. The copy of game he gifted to his friend turned out to work. Soon after this, his friend asked him to procure more copies for more of his friends. Then he essentially thought he could make some real money out this stuff and contacted a distributor via skype and essentially started to delve deeper into the business. But since the keys started to get region locked, (In 2014 acc. to him) he switched distributors from Indian to Polish. He makes around (Rs) 20 lakh, (Rs) 10-15 lakh net profit (his claims.), and this is probably his main job, but he claims to help his family with their business when needed. He claims to know 7-10 people who do about the same work he does in India from different cities.

When asked about clampdown on the largely unregulated key market on G2A and Kinguin via publishers like Ubisoft, he explains why it happened and claims both site owners are prior customers of his who got shafted. Further when I asked what he thinks about what the developers think about his business, he says it’s better than piracy and they should stop complaining and focus on making good games.

Next up is reapershop.com. It’s operated by someone in his early 20’s, he has been at it for approximately 4 years, and he doesn’t really say much about how he got into trading. He initially states that he got into it for “fun” and “nothing specific” but later on in the conversation when asked about whether he has a day job or not, he reveals that he wanted to run his own business and that’s why he started this. He too thinks that his work is helping curb piracy in a manner. He says he knows about 2-3 Indian folks working in the trade business.

Upon being asked about his income a lot of different answers came forth. First a worst case scenario of (Rs) 15-30k per month which rounds out to be (Rs) 2-4 Lakh per year. Which is a lot lower than the other fellow I talked to claimed. I bought this fact to his attention asking who’s inflating the figure him or the other guy (apparently both knew each other too). After a bit of back and forth, and him jokingly suspecting me to be from Income Tax department, he tells me 4-8 Lakhs to be his combined income from selling to both Indian and international sellers. He tells me that the previous figure was for his dealings in India alone.

I further ask him about the clampdown on the largely unregulated key market on G2A and Kinguin a while back, he states there is a difference between the sellers in that instance and sellers like him. He further explains he buys legit retail keys from distributors (although doesn’t name any which is understandable) and then he states “till now none of my customers have faced any issues with copies (bought from the site) in past 3 years of my site”, but then adding that he also deals with trading steam gifts (essentially steam locked keys) internationally as there is a greater market there for trade and it is easier to make more money there, though he does reiterate that he is mainly focused on the Indian market. Lastly when I asked him about what the developers think about establishments like his, he states that their claims are false, and further adds that most of the regions which sold games for cheap in the retail market are now region locked and they (developers) are talking about losses? It’s not like sellers like him are stealing those games and reselling them. The developers are getting paid and selling copies through them.

Few things worth taking note are both these individuals are still part of the international markets like G2A and kinguin, as that is where most of the money is at the moment but they do manage to make a decent buck from their Indian endeavours. Both these individuals have a presence in social media especially on facebook, both having around 3-5k likes. Both individuals make similar amounts of money as compared to their international counterparts, as indicated in the aforementioned polygon article.

It’s not all sunshine and rainbows in the Indian sphere as well, as we find individuals who got burned during these transactions. An Indian user on reddit tells me how he got ripped off with his endeavours in trade for (Rs) 50k (approx.). He got into the trade sphere via a game called dota2, which was one of the first games to employ micro-transactions in videogames. The game was in beta for about 2 years prior to release, and to gain access to the beta, people were given dota2 invite passes via various means, and this was around the time when trading on steam started out. Dota2 invites where hard to come by initially, hence you found people selling them or trading them for goods and services, and this reddit user was one of them.

As he puts it “I sold one invite for a steam game that I traded for many team fortress keys, the other I kept with me. The invite was global one which was rare and had a high price as it could be activated in china. I traded the invite for huge amount of keys and started sharking new invitees to buy new invites for less and selling for a huge amount. I found a dedicated seller and he became a good friend of mine. I used to give him a dota invite (playable or non-playable in china) and get around 30-40 keys per invite. Soon invites became common and down went the price. I traded out the keys for around 5-6 dragon claw hooks and few Timebreakers (Dota 2 immortal items). After keeping the items for a year and getting fed of trading, I tried cashing the items to real world money and that’s where I made a VERY VERY big mistake. Being new to paypal and other methods of getting money for virtual items. I was added by many scammers but they were easy to tell, then a smart guy with good rep added me and he took all my hooks and breakers with an easy scam (not possible now). That was a sad day and for weeks I could not bring myself to the fact I’ve lost everything I’ve earned in past 2 years. I left trading. Steam didn’t help at all and brushed at it was my fault giving item to somebody. I tried creating multiple tickets (complaints) and still same response (from steam)…that we explicitly warn you before trading items and you confirm that the items you are sending are gift (The scammer made a fake profile of my friend) to the other party.”

The case presented above is quite an old one, as it happened around when steam didn’t internally put up safeguards. As thus it might be a one off case, but it does give us some perspective into the fact that people indulging in the trade business have to be on their toes all the time. Trying to suss out whether the person you’re dealing with online has a malicious intent or not can be a tough task. The chance of fraud is obviously high, for both the people who procure these games and navigate the muddy waters of online game trade, and those who decide to buy from them. Not to say the above mentioned sites have malicious intent or are actively against the law. I can’t be the judge of that. What I can say is that this is very much a ‘grey’ area that requires people with thick skins to navigate on all ends of the spectrum. So, think twice before you buy games from sites online that aren’t exactly running a legitimate business as say a Steam or Humble Bundle does.

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