The G2A controversy: What you should know

Source: G2A.com

Source: G2A.com

For close to a year now, game code marketplace site G2A has been among the most controversial topics in the games industry. To understand why we’ve arrived at this current state of affairs, let’s have a look at how G2A and other similar companies make their money.

Game code marketplaces operate on something called the secondary games market, also called the gray market. They function in a very similar way to eBay, but rather than new and second-hand goods, the sites sell download codes for games and digital items. Also like eBay, the codes themselves are sold by third-party users who are registered with the site. The controversy arises from the fact that many of these marketplace sites are not transparent about where exactly these codes come from, and who is selling them. In fact, mostly they don’t know and don’t seem to care.

Some of these codes may simply be spare. Some may be free codes, issued by developers to have them reviewed, tested, and given a wider audience. A vast part of the market is made up of legitimate codes that are purchased abroad in a country where they are less expensive, and then sold for a much cheaper price, but still for a considerable profit. The point is, there’s no way of knowing.

Although this may seem like a victimless practice—in fact, you may think being able to buy a game for much cheaper than the retail price is a great benefit to the consumer—it results in the large numbers of the game being sold for less money, which in turn ends with the publishers and developers benefitting less financially. It’s hardly a concern whether publishers make bucket loads of cash from a game, but the developers, who have put considerable time and effort into a project, deserve fair compensation for the work they’ve put in. And, don’t forget, a partnership between a publisher and developer may sour if their game does not raise enough cash once its launched. This can be especially devastating for small indie developers who have worked hard to reach a publishing deal, only to lose it because their game didn’t turn enough of a profit.

Whichever way you look at it, it’s likely the people who create the real value that is going to suffer. This is why, even in its most legitimate form, the secondary market is contentious.

Then there are the codes which are be purchased illegally. Developers and industry insiders have maintained for years that a large part of the market for game codes is made up of sellers who have obtained their codes using illicit practices, such as through stolen credit cards. Code marketplace companies, unsurprisingly, tend to play down the significance of this segment of the market.

But G2A isn’t the only company capitalizing on the secondary sales market without apparently much concern for where the codes sold on their site come from. So why has it gained the most negative attention, seemingly becoming the poster boy for the shady practices found in the industry? 

Well, there are two main reasons. The first is simple: they are by far the most recognizable of the companies dealing on the game code gray market. They spend a huge amount on marketing, sponsor gaming and esports events, and retain high profile partnerships with YouTube and Twitch celebrities such as PewDiePie, among others.

The other reason is the constant stream of controversies that have enveloped the company over the last year, beginning with the very public spat between G2A and indie developers TinyBuild in June of 2016. On their blog, TinyBuild CEO Alex Nichiporchik took a big swing at code-selling websites in general, but specifically G2A, calling them out for "facilitating a fraud-fueled economy where key resellers are being hit with tons of stolen credit card transactions…" He explained that TinyBuild attempted to establish their own online store to sell codes for their new game to fans directly, only for thousands of codes to be bought using stolen and fraudulent credit card details. "I’d start seeing thousands of transactions,” he went on, “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 in our shop." Nichiporchik, after purchasing one of the codes for the game himself from G2A’s site, was even able to trace it back to one of the exact fraudulent transactions TinyBuild had been hit with earlier. This all came at a time when G2A was really ramping up its advertising and sponsorship. They suddenly felt like a bigger target than ever.

G2A hit back with several defiant press releases (in a style they became known for), explaining they had offered to help TinyBuild if the developers gave them a list of the fraudulently obtained codes. TinyBuild made it clear they didn’t wish to share any more information with G2A, with Nichiporchik even stating “I believe they'd just resell those keys and make more money off of it."

Consequently, the International Games Developers Association, which had a previous commercial relationship with G2A, were evaluating their ties going forward, signaling a trend which quickly snowballed. Many of the YouTube and Twitch influencers who had taken G2A’s money to talk up the site in their content were starting to get edgy about associating their image with a brand that was quickly becoming toxic and began ending advertising associations. 

The feud rumbled on and intensified further when G2A demanded TinyBuild pass on the fraudulently obtained keys “within 3 days” so that they could purge them from their marketplace. TinyBuild threw out an ultimatum of their own in response, telling G2A to change their practices by tightening up their security, especially surrounding user accounts, which had been available to anyone with an email address—no identification or verification needed. TinyBuild also asked for a minimum cut to be given to the developers of any codes sold, and for a minimum price for codes to be put in place, set by the developers themselves.

G2A ended up acquiescing to TinyBuild’s requests and appeared to want to work harder at building a better relationship with developers. But in the end, the list of changes they said they were making at the company was pretty far from the broad strokes TinyBuild suggested, with the only concrete change being to give 10% royalties to developers for each code sale. But as Nichiporchik put it, “Unless they actually solve the main issue—fraud on their platform—this initiative invites developers to become accomplices”.

Since then, G2A has come out in defense of its practices multiple times and has beefed up its verification process, now requiring a three stage provision of information before sellers can use the site. Though an improvement, this is still a huge step from verification using legally accepted forms of identification and bank account details (as with eBay).

But that fiasco didn’t end G2A’s uncomfortable relationship with the media. In April of this year, Gearbox software, who had partnered with G2A to release Bulletstorm: Full Clip Edition’s special edition exclusively on the code seller’s website, teamed with YouTube influencer John ‘TotalBiscuit’ Bain (who had threatened to boycott Gearbox’s future releases) to issue a new set of demands to G2A. In another statement, G2A detailed why each of Gearbox and Bain’s demands were already part of G2A’s practices. Gearbox then began extricating themselves from the company, saying “Gearbox Publishing will be doing their part to not directly support a marketplace that did not make the new public commitment to protecting customers and developers.”

So, more than ever before, G2A is associated with disreputable practices within the industry, especially by the gaming media, with many of the indie developers who previously relied on the company for distribution now trying to extricate themselves from G2A’s system.

But is G2A suffering from the controversy? Well, there are some signs that G2A sees the effect on the company’s image as detrimental. Take their recent announcement of their latest single-priced ‘G2A Deal’ bundle. Gone is the combative tone taken by some of their previous press releases, in its place, direct references to the games coming “directly from the developers and publishers themselves, with no third-party sellers involved.” It shows a company perhaps taking baby steps towards reconciling their image in the eyes of a gaming public whose opinion may be beginning to shift away from them.

Whether they intend to clean up their practices or not, according to G2A, the company’s brushes with bad publicity have barely hurt business: "We are always looking to improve our processes," said the company. "Every day we get better. Every day we get faster. Every day we serve more customers. Every month 250,000 new customers arrive on the G2A Marketplace."