Game Marketplaces Survey

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Community Economics by Forte

13 min readMar 31, 2021

We’ve explored how traditional, centralized marketplaces work in the real world — and how and when they don’t work. We’ve also taken a look at how decentralized exchanges, marketplace platforms powered by blockchain technology, address some of the challenges faced by traditional marketplaces, while remaining vulnerable to certain kinds of abuse…at least for now.

But what do marketplaces look like in games? That’s the question that led us to conduct a deep-dive analysis of a sampling of 25 prominent and widely used game marketplaces, in order to better understand the different mechanisms they use, the flaws and potential evident in each, and their impact on players, developers and gameplay. Based on this audit, we were able to discern certain patterns in how game marketplaces are deployed and utilized, and ultimately, to identify some possible best practices, which we’ll share here.

Methodology

Our audit of game marketplaces took place in July 2020, and focused on 25 game marketplaces, cutting across different categories and platforms. We made our selections to ensure that key game genres were represented (Role Playing Games, Multiplayer Online Battle Arena, Trading Card Game, Real-Time Strategy, Player vs Player, Player vs Environment), as well as asset categories (e.g., single game assets vs multi-game asset marketplaces, et cetera) and platform mechanisms (order book, forum, chat-based). To draw parallels between traditional game asset economies and blockchain-based game economies, we also included selected marketplaces that trade in blockchain-based assets or use blockchain technology in their platforms. We conducted the audit using public-facing web pages for each of the different marketplaces, third-party reports and interviews on social communications platforms (i.e. Discord servers). Among the characteristics we sought to explore across these marketplaces were the types of fees they charged; their use and provision of historical asset prices; the transaction mechanisms they incorporated; and their overall visibility and performance.

Official marketplaces, third-party marketplaces and “grey markets”

The 25 marketplaces we audited broadly fell into four categories: Official marketplaces run by game developers ; third-party marketplaces run by entities other than game developers, but using officially provided APIs and operating with their formal acquiescence; a handful of open marketplaces for goods and services, like eBay, that happen to be used by players for game asset trading; and “grey market” exchanges, which can be described as marketplaces that are not officially provided by the game developers themselves, that support transactions outside of developer guidelines, and that exist primarily because developers have not yet enforced those guidelines.

For example, Valve Corporation is the developer of the Steam Community Marketplace, which is the official market for trading CS:GO skins. In 2011, Steam enabled trade of in-game items for all their supported games. This led to websites supporting marketplaces for skin and lootbox gambling, including Bitskins, c5game, and GM2P. These websites utilize Steam’s OpenID API for users to verifiably prove ownership of their Steam accounts and items. While these websites rely on Valve’s technology, using the OpenID API to run a gambling business is not allowed by the Steam Subscriber Agreement. Over the past few years, Valve has made several attempts to curb the gambling and rising instances of fraud occurring in third-party sites. For example, in July 2016 Valve sent cease and desist letters to 23 CS:GO skin gambling sites. This was followed by Valve implementing a seven-day hold between trades to limit the velocity of gambled skins in March 2018.

The CS:GO grey market developed in large part because of burgeoning demand for rare skins and the desire by owners of such skins to sell them for real cash — something that is banned on the Steam Community Marketplace, which only allows players to receive Steam credit for sales, which can only be spent on the Steam platform itself.

Other triggers for the emergence of grey markets include:

Lack of key transaction features in official game platforms (e.g., direct peer to peer transactions, real-time pricing, robust indexing or search functions, etcetera)
Desire to engage in transactions at lower costs, since many grey markets can offer items at lower price points than developers are willing to allow, or mediate transactions with lower intermediary fees
Shortage of high-demand items in official marketplaces, incentivizing players to seek them out via unofficial sources transact, or sometimes, across different geographic regions

While there are player benefits associated with grey markets, these benefits come with increased risks: Vulnerability to scams, incorrect activation keys, theft and resale of stolen items and even exposure to computer intrusion and identity theft. And because these marketplaces are not officially supported by game developers themselves, players who fall prey to these risks have little recourse for recovery of lost items or money.

Marketplace basics

The core features of game marketplaces are the same as for any other kind of marketplace:

Listing information: Marketplaces need to offer the basic information users require to determine what’s on sale, who’s offering it and at what quantities and price.
Matching and transaction tools: Marketplaces need to provide a mechanism to match buyers and sellers, and ideally, for transferring value in both directions — a relatively straightforward task on official marketplaces, where developers control asset and gamecoin transfer, and a more difficult one in third-party marketplaces and grey markets. (If fiat currency is involved, there’s another layer of complication, related to regulatory requirements — like Know Your Customer and anti-money laundering rules — and things like taxation, remittance licenses, and so on.)
Fees: Finally, marketplace operators need to figure out what revenue stream can support their continued maintenance. Official marketplaces may charge no fees, offering trading simply as a built-in game service. Third-party marketplaces generally will charge fees, either per transaction, or as a percentage of the transaction value, though some may have other business models, such as advertising, subscription fees or premium upsells, while still others may be fan-created platforms that subsist on donations.

Listings: Present pricing yes, past pricing no

All the marketplaces we examined offered listings of assets for sale, with current pricing, albeit with different levels of sophistication in how those listings could be searched, sorted or filtered. However, only just under half of them offered historical price data on assets.

That’s information users of a marketplace typically want to know, because it informs buyers and sellers of the directional trend of asset valuation over time. Is an item appreciating or depreciating in value? Is its value fluctuating in a volatile fashion, or is the price trend following a steady pattern?

All of this data gives marketplace participants a sense of whether they’re getting a good deal relative to past or projected future prices, and whether they’re timing their purchase or sale properly; it also mitigates against price manipulation by malicious parties. Finally, in circumstances where order books are shallow, with few buyers and sellers, or where there isn’t real-time liquidity — which would allow buyers and sellers to be matched instantly — historical pricing is essential to help buyers and sellers to set a baseline value for assets.

It’s pretty hard to imagine a stock market exchange that doesn’t offer historical pricing. The rationale for game marketplaces to not offer historical prices might be as simple as an oversight on the part of marketplace developers, or it might have been a conscious decision: Some marketplaces might wish to avoid sharing data that suggests highly volatile pricing, or that exposes a lack of liquidity in the market, in both cases because they could discourage participants from transacting.

Matching and transaction tools: When buyer meets seller

The two most common paradigms by which marketplaces connect sellers and buyers are the “list price” system, where sellers offer their items at fixed prices for buyers to scan and choose among, and the “auction” system, where sellers offer items for any interested buyers to bid on over a set amount of time, selling the item to the highest bidder at close of auction.

The majority of marketplaces we analyzed did not have an auction mechanism, opting instead for list price buying and selling. This is understandable, as mechanically, list price marketplaces are easier to implement and offer more certainty around the outcome of a transaction.

However, auctions were more prevalent in games with a significant amount of high-value, rare items. Auctions help centralize market interest, which can be useful for assets with difficult-to-determine values, or where there is a low supply coupled with excess demand. Because auctions generally produce higher prices than lists, they tend to benefit sellers over buyers, although this can be mitigated via policies like restrictions on maximum auction duration.

Fees: The cost of doing business

Most, but not all, marketplaces require some kind of fee to engage in transactions. Sometimes the fee is a commission exacted from the seller, and sometimes from the buyer; sometimes it’s a fixed fee to access the platform, or charged by transaction. Sometimes the fee is in real-world cash, although official marketplaces are more likely to use game credit or in-game currency. Zero-fee marketplaces are generally fan-run platforms like Animal Crossing’s “Nookazon,” which survives on player donations and premium upcharges, or official marketplaces managed by the game developer themselves. In the latter case, the objective is generally to use the marketplace to encourage a higher level of economic participation, with developers implementing other methods to pull currency out of circulation.

Generally, however, there were a few patterns in how marketplaces implemented fees.

The mean fee on transactions was 6%, almost always charged to the seller. Very few marketplaces charged buyer fees, and where there were such fees, they were at least 50% lower than seller fees.
A third of marketplaces had 0% transaction fees for buying and selling, but many of these implemented subscription fees, or, commonly, fees charged for currency withdrawn from the system.
The marketplaces that charged no fees whatsoever tended to be forum-based / chat-based marketplaces, in which users post messages offering items for sale and are contacted by other users who are browsing said messages. These marketplaces tend to have rudimentary tools for discovery, no transaction mechanisms (value transfer is handled independently by the users themselves) and minimal moderation, all of which should be expected given the zero-fee structure.

MARKETPLACE CASE STUDY: World of Warcraft

The venerable MMO World of Warcraft boasts an interesting auction platform called Auction Houses (source link). Auction Houses in WoW are the in-game system by which players can sell items to other members of their faction for WoW gold; posted items are searchable within the game, and would-be purchasers can bid for them until the auction duration runs out, or buy the item outright for the seller’s predetermined buyout price. Because the Auction House is deeply integrated into the game, it plays a vital role in gameplay, allowing players to secure rare items that are difficult to “farm” and enabling the gathering of materials across professions (players in WoW choose specialties like blacksmithing, mining and herbalism that allow them to generate ingredients that can be used for crafting and enchantment), as well as the sale of looted or crafted items for gold. The Auction House even serves as a mechanism for investment: Because it is a supply and demand driven marketplace, only carrying items that other players are selling, canny players band together to corner the market on a given type of material, pushing up prices, or speculate on a particular commodity when prices seem low, only to resell it for gold later when prices rise.

To use the Auction House, players must place a “deposit” in WoW gold that scales with the value of the item being auctioned and the length of time the auction will run. If a player decides to cancel an auction (because the item is going to be sold for too low a price, for example), they lose their deposit. The deposit also buffers auctions against flooding with listings of items with low value, since players also lose their deposits for items that receive no bids. In addition to the deposit fee, the Auction House also takes a cut of the value of each transaction.

While each faction has multiple Auction Houses, located in different cities, items listed for sale at any faction Auction House are automatically made available at all of the faction’s Auction Houses, creating a “global order book” that can take advantage of shared liquidity across all locations. However, each faction is limited to bidding on their own faction’s auctions, with an exception: Neutral Auction Houses exist in the game, and serve as the only way that gold can be exchanged across factions, since they are usable by every player in the game. However, the fees required by Neutral Auction Houses are considerably higher.

Players appreciate the Auction House system because it adds richness and complexity to the game, enabling a form of gameplay that has nothing to do with hunting creatures and completing quests. It also provides those who remain focused on hack-and-slash primary gameplay with a valuable mechanism to accelerate their progress, by selling lower level items and purchasing more powerful ones.

And for WoW itself, because of the costs associated with transactions and the critical role of auctions in the game, Auction Houses have become the game’s largest “gold sink” (e.g., they are the most potent mechanism by which the game takes currency out of circulation, even more so than selling items back to non-player character merchants).

This underscores the key benefits of a well-run game marketplace for both players and developers: It becomes a natural part of the way the game is played, and gives developers a way to continue to derive value from items that are being circulated from player to player, as well as those being sold back to NPC merchants.

While World of Warcraft does not offer a way for players to convert their item holdings into real-world currency, it recently implemented a novel mechanism to give active players a way to generate actual value from their in-game achievements: The WoW Token.

WoW Silver Tokens may be purchased from Blizzard, the game developer, for real money — at present time, these tokens cost $20. Once purchased, Silver Tokens can be sold at Auction Houses to other players for a fixed amount of WoW gold, algorithmically determined by the game based on the number of Tokens in circulation. A Silver Token that has been purchased at an Auction House automatically transforms into a Gold Token, which can be converted by the player buying them into a 30 day extension of their WoW subscription (a $14.99 value) or $15 in Blizzard Balance credit, spendable on any Blizzard games, services or digital artifacts.

In essence, the Tokens allow players who are willing to spend real money on the game to convert that money into in-game currency (the current fixed auction price for a WoW Token is around 128,000 WoW gold). Meanwhile, players who have spent a lot of time on the game, and thus amassed large amounts of gold can convert that gold into Blizzard credit, for which they’d otherwise have to spend real money. (It should be noted that Blizzard has made it illegal to “buy” WoW gold through any other means, despite it being offered for sale on third-party grey marketplaces.)

For Blizzard, the Tokens create another real-money revenue stream and a new mechanism for incentivizing players to accumulate gold. It also establishes a real-money conversion ratio for WoW gold (e.g., 128,000 WoW for $20 in U.S. dollars, at present time), which helps players benchmark the value of their Auction House purchases and sales in a tangible fashion. While it isn’t a full dive into community economics, Blizzard has dipped a toe in the pool, and its success in doing so may embolden it, and other developers, to explore the waters further.

Conclusion

Game asset marketplaces can serve a number of different functions within games: They can create incentives for players to earn game currency or spend real world money; they can turn in-game achievements (quests accomplished, items won, or materials crafted) into opportunities for players to more rapidly progress their game journeys, enhancing their enjoyment and engagement; and, in marketplaces where game assets can be converted into fiat cash, they can even convert games into full-fledged economies, in which players aren’t simply pursuing entertainment — they’re earning a living. However, for this last step to legally occur, and the promise of community economics to bloom, an array of regulatory and technical issues must first be resolved, as might be expected whenever the potential to earn real-world money is created. These issues can be challenging for developers. Those challenges are what Forte has been working on solving, in order to offer a simple way for developers to add ownable digital assets and robust marketplaces to their games.

Interested in contributing to our Community Economics series? We’d love to hear from you. Comment below or email us at cec@forte.io.

APPENDIX

Marketplaces Analyzed

(marketplaces for blockchain assets / using blockchain technology):

BitSkins — Third-party marketplace for Counter-Strike: Global Offensive skins. https://bitskins.com/

c5game — Multi-game third-party marketplace for CS:GO, Defense of the Ancients, Team Fortress 2, other games, based in China. https://www.c5game.com/

CSGO Shop — Third-party marketplace for Counterstrike: Global Offensive skins. https://csgoshop.com/

D2JSP — Third-party trading forum for Diablo II items. https://forums.d2jsp.org/forum.php?f=51

Decentraland Market — Official marketplace for Decentraland land parcels, assets and user names. https://market.decentraland.org/

DMarket — Third party marketplace for game assets from CS:GO, DotA and other games. https://dmarket.com/

eBay — Wide-ranging marketplace with many in-game items / virtual goods for sale. ebay.com

Epic NPC — Third-party forums for game asset trading (World of Warcraft, Warhammer, Genshin Impact, others). https://www.epicnpc.com/

Eve Online Marketplace — Official marketplace for Eve Online assets. https://forums.eveonline.com/c/marketplace

G2G — Third-party marketplace for assets from World of Warcraft, Rust, Rocket League, other games. https://www.g2g.com/

GameDev Market — Marketplace for reusable design assets, to be integrated into games by developers. https://www.gamedevmarket.net/

GM2P — Third-party marketplace for a wide range of games, from Animal Crossing: New Horizons to Z Day. https://www.gm2p.com/games/

Manatraders — Third-party marketplace for Magic: The Gathering cards (paper and online). https://www.manatraders.com/

MTGO Wiki Price — Third-party marketplace and pricing service for Magic: The Gathering cards (paper only). https://www.mtgowikiprice.com/

Nook Exchange — Third-party marketplace for Animal Crossing: New Horizons. https://nook.exchange/

Nookazon — Third-party marketplace for Animal Crossing: New Horizons. https://nookazon.com/

Odealo — Third-party marketplace for assets from MMOs. https://odealo.com/

OpenSea — Wide-ranging marketplace for NFTs. https://opensea.io/

Player Auctions — Third-party marketplace for a wide range of games (200+). https://www.playerauctions.com/

Runescape Oldschool Market — Player-run/developer endorsed marketplace for assets from the “Old School” Runescape MMO. http://services.runescape.com/m=itemdb_oldschool/

Second Life Marketplace — Official marketplace for assets from Second Life. https://marketplace.secondlife.com/

Steam (SCM) — Official marketplace for assets from CS:GO and other authorized Steam platform games. https://steamcommunity.com/market/

StoneFire — Third-party marketplace for CS:GO assets. https://stonefire.io

Warframe Market — Third-party marketplace for Warframe assets. https://warframe.market/

World of Warcraft Auction House — Official in-game marketplace for World of Warcraft. https://wow.gamepedia.com/Auction_House