LiveGamer CEO Andy Schneider describes his company as an attempt "to solve what had become a $2 billion problem in the virtual economy." He continued: "There was a massive amount of activity, mostly in the MMO space but not limited there, that was the illicit buying and selling of virtual goods for real money on the black market. We wanted to create a system that was endorsed by game publishers and would create a legitimate outlet for all of that consumer demand."
It sounds simple enough, but it says much about the game industry's attitudes toward real money trading (RMT) that LiveGamer is still viewed as a radical by the industry and with outright suspicion by players. LiveGamer was formed in 2007 with the intent of bringing game publishers a working and player-friendly secondary RMT marketplace that would allow for the safe traffic of virtual goods including in-game currency, equipment, and even entire character accounts.
Although there are only a handful of LiveGamer marketplaces currently active, the company counts Funcom, NHN USA, Instant Action, and Acclaim among its partners. The LiveGamer marketplaces currently active are for select servers in Sony Online Entertainment's EverQuest II, all servers in SOE's Vanguard, and RockYou's GoPets social game.
Schneider says that LiveGamer actually made its first deal with Sony Online by taking over an RMT service that the company had attempted to run itself shortly after the launch of EverQuest II. LiveGamer's remit was to help reduce the amount of charge back fees and customer support calls the company got hit with as a result of players getting ripped off while dealing with shady third-party RMT markets. Similar concerns over black market activity in SOE's Vanguard: Saga of Heroes title prompted LiveGamer to begin supporting that game, too.
"There was an incumbent black market for Vanguard and they wanted us to pro-actively address that," said Schneider. "We have a full plate of projects with Sony Online, this is just one of the ones on the road map that we could get out in a pretty reasonable time frame. The SOE guys have been super-focused on Free Realms, so Vanguard really made sense from a timing standpoint."
Schneider went on to mention that Free Realms would be the next SOE title to receive LiveGamer support. He also said that there was nothing specific to Vanguard that was making the game an especially pronounced target for black market RMT activity. He says that most subscription MMOs, where players can spend lots of time leveling up, inevitably attract black marketeers. The logic is pretty simple: players are always looking for shortcuts to cut down on the amount of time they spend grinding.
Supply and Demand
While Schneider says LiveGamer is sensitive to the stigmas players attach to RMT in online games, the fact is player demand for such services has kept black markets in business for over a decade. Schneider feels that as long as player demand for RMT exists, it's fitting for LiveGamer to try and create a productive outlet for it. He likens the situation to what's gone on with the music industry's attempts to fight piracy, which eventually lead to Apple developing a legitimate music downloading service.
Of the three active LiveGamer marketplaces, Schneider says that EverQuest II's tends to reach the highest price per item while GoPets attracts a very different type of gamer. Regardless of the size of a trade, LiveGamer receives a 12.5% commission as part of every transaction conducted through its servers. Schneider declined to comment on LiveGamer's profitability but did say that the company doesn't anticipate seeking more venture capital in the future. LiveGamer has already taken a total of $24 million in investment from Benchmark Capital and Charles River Ventures.
Perhaps the most important thing when considering LiveGamer's future is to understand why game publishers should partner with the company instead of building their own secondary markets, assuming they want to acknowledge player demand for RMT trading. Schneider believes that publishers will ultimately realize building their own marketplaces is going to be far more difficult and time-consuming than simply dealing with an operator who's already developed and deployed the right technologies.
"It's not that I think publishers don't have that capability, but it's a matter of where you spend your energy. Will it be spent on creating your game or making sure you have PCI compliance for your ecommerce system? Most publishers would rather spend it on their game," said Schneider. "We're here to do all of that with a real dedicated focus and expertise, building marketplaces and creating itemization strategies. It's a big economy out there and you really do need a dedicated focus."
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