Effectively, Live Gamer is stepping into the role of "White Knight" for Sony Online's Station Exchange. Despite a white paper published roughly a year ago noting many successes, the SE service has been in trouble for some time. Says John Smedley, "We were very surprised at the amount of fraud that exists in this business. Either we were going to need to make a major change in how we screen for fraud, or we were going to have to close the Exchange down anyway." What Live Gamer is providing, primarily, is an out that will allow Station Exchange customers to continue using the service, while not penalizing Sony Online for the large amount of credit card fraud perpetrated by gold sellers. The topic of credit card fraud was one we touched on in our discussion with Mr. Smedley back at CES.
Mr. Smedley is tentatively optimistic, but is obviously realistic about the situation as well: "The way the deal works, if they screw up; if we find out they're buying from farmers, we're done ... These guys are going to be coming out with a code of conduct. There are going to be a lot of skeptics out there asking 'how can this be enforced?' We have faith in them. You know the old saying, 'Trust but verify.' That's the way that I would put it. "
Live Gamer President Andrew Schneider stresses how their background in the financials business will assist them with this monolithic challenge. "For the past year we've been working on a technology platform. Our technical services team primarily comes out of financial services, building trading systems for large wall-street institutions ... The agreement that we reached was to incorporate the best of what they had to offer as a game developer, and combine that what we had to offer from a Wall Street perspective to create a best-of-breed solution that would service a legitimate secondary marketplace independently operated by Live Gamer for the gaming community at large."
Becoming a 'legitimate' alternative to goldsellers seems to be of primary importance to both parties. Said Mr. Smedley, "They're putting their money where their mouth is in terms of not working on any game that is not sanctioned. That's a pretty big departure from anybody else. We could end up in the future where the secondary market is not dominated by foreign companies that are above the law here in the US. We could be dealing with a legitimate company that deals with real accountability." Mr. Schneider adds, "We looked at that market, and looked at the gross transaction volume flowing through the market, estimated at about 2 billion a year in gross transactions, it's unbelievable how there could be so much consumer demand and yet so many bad things in the ecosystem. Our goal was to create a company that would deal with all of those problems realistically ... Ultimately you've got a huge amount of consumer demand that has no legitimate outlet, and that's what we're aiming to provide. "
Collaboration with Sony Online is just the beginning of Live Gamer's plans. Partnerships have already been announced with Acclaim, Funcom, GoPets, Pingo, and 10tacle Studios, but both gentlemen hinted that the company has further publisher announcements to make in the coming months. It's an intriguing idea; muscle the goldfarmers out of their own marketplace through a combination of publisher support and safe, seamless credit card transactions. Ultimately, success will be measured in the adoption rate of existing Station Exchange players, and the response from the third-party RMT marketplace.
There will doubtless be more to discuss on this subject before the end of the year, and Massively will be sure to keep you updated.