IGE President on the Emerging Secondary Market for MMOs

May 10, 2005

The announcement of Sony Online's auction service stirred up quite a debate between SOE and Mythic Entertainment. We spoke with Steve Salyer, president of IGE (the leader in the secondary market), to get his take on the issue, as well as to find out more about the secondary market.

GameDAILY BIZ: For our readers who may not be familiar with IGE, can you provide a brief overview of your business?

Steve Salyer: IGE is a leading services provider to the MMOG community. We are best known for our virtual item exchange services, allowing gamers to buy and sell in-game currencies, items, and even accounts. We offer both trading platform services like PlayerAuctions.com where gamers deal directly with each other, and we offer direct buying and selling at IGE.com We also own OGaming, a network of approximately 40 premier MMOG content sites, providing editorial, community, guild hosting and database services to MMOG communities. IGE is a privately held company. We have approximately 200 employees and consultants, several of whom have enjoyed successful careers at companies such as EA, Ubisoft, Vivendi, Yahoo and others.

BIZ: Does IGE get any percentage of sales in the secondary market, and if not, where does the company get its revenue?

SS: IGE is the market leader in the secondary market in North America and Europe. We earn revenue in the open market by offering a secure network that includes an exchange platform site and direct buying and selling sites where independent buyers and sellers can engage in transactions. As such, we speak regularly with publishers and developers to find solutions to industry issues such as exploits, code hacking, fraud and abusive farming practices.

BIZ: Why do you think Sony Online Entertainment is worried about the secondary market?

SS: Thank you for asking this question. I'd like to make a couple of points: First, let's recognize that the secondary market was created by gamers themselves. Many gamers want the benefits it provides. That is why it has become so popular in so many games worldwide and why it can't be banned. Secondly, it has only been over the last 18 months or so that professionally managed and committed companies like IGE have emerged within the secondary market and begun seeking solutions to the issues. Prior to that, it was just gamers creating this new form of MMOG play, and there were few safe ways to conduct virtual item transactions. That led to a lot of abuse, so I think it's rather natural that historically Sony and other companies were unhappy with having to be responsible for increased customer service problems.

But with the launch of the Station Exchange, it's clear that Sony understands that a significant number of gamers like the secondary market. In fact, Sony's recently announced poll results confirm what IGE has been saying for some time...in Western markets, about one-third of subscribers are involved in the secondary market already, about one-third are neutral, and the remaining one-third don't like it. In Asia, the vast majority of online gamers participate in the secondary market.

[ "I sincerely believe the issues between the primary and secondary markets will be resolved and we will all wonder what the fuss was about." ]

BIZ: Mythic Entertainment CEO Mark Jacobs called SOE's plans to launch their own auction service for EverQuest II "one of the worst decisions in the history of the MMORPG industry." Given your statements above, I'm assuming you have no problem with SOE's auction plans?

SS: I applaud Sony's recognition of the secondary market.

BIZ: Jacobs also said he would rather see these games remain games rather than becoming "an entertainment version of day-trading." How do you respond to that?

SS: That's a nice sound bite, but it's inaccurate. Most gamers play the games for enjoyment. The secondary market is simply a tool that lets gamers play the way they WANT to play. If the existence of the secondary market turned games into entertainment versions of day-trading, it would have already happened. It hasn't.

BIZ: One of SOE's concerns about the secondary market has been security. They said that their customer service reps have had to deal with many "horror stories" about players getting ripped off. Is this a valid concern? What security measures does IGE have in place?

SS: Yes, it is a valid concern. If you aren't dealing with a reputable firm, you take your chances. IGE offers its customers complete and guaranteed transactional security. If you buy from IGE, you get the goods. If you sell to IGE, you get the money. We are very proud of the consistently high marks for customer service, which we receive from our customers.

BIZ: I noticed 14 different MMOs listed on your website. How does IGE decide which games to support with a secondary market?

SS: Our goal is to support every successful MMOG.

BIZ: Which game have you seen the most buying/selling activity in to date?

SS: Not surprisingly, buying and selling activity is driven by the number of subscribers in a game. The more subscribers, the greater the activity. It's also driven by the "age" of the game (the longer it has been available, the higher the percentage of subscribers who participate in the secondary market).

BIZ: Why do you think players are willing to spend so much real money on virtual items or characters? Doesn't it seem a little crazy to spend hundreds of dollars on a character?

SS: Not at all. These games have tremendous emotional importance to players. I'm guilty of still paying the monthly subscription fees on three MMOG's where I have high-level characters but which I haven't played in six months. I just can't bear to let them go! It's people being people. People spend "crazy" amounts of money on baseball trading cards and sports memorabilia too.

BIZ: How big is the secondary market right now and where do you believe it's headed?

SS: The worldwide market is approaching a billion dollars in annual revenues and millions of gamers are involved. I can't think of a more successful example of emergent gaming behavior. Regarding where it's going, I sincerely believe the issues between the primary and secondary markets will be resolved and we will all wonder what the fuss was about.

BIZ: Any final comments?

SS: I appreciate your thoughtful questions and the opportunity to express my opinions on these matters. Thank you.

BIZ: Thanks, Steve.

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