Leasing VIP game accounts, a cheap alternative to experiencing high level/priced items
The current sharing economy is mainly limited to physical assets or time, such as Uber = cars, Airbnb = apartments, and some into services such as TaskRabbit = freelance work, Lending Club = Loans etc.
As society continues to progress and becomes more digitalized, digital assets will play an increasing significance in our lives. 20 years ago, people could not imagine online game accounts and virtual items made up of 1 and 0 to be sold for thousands of dollars, yet today it is common practice for people to spend thousands or even hundreds of thousands of dollars in a game. With the rise of F2P games and its addicting monetization model, it has created a significantly high proportion of in-game items that will forever be out of reach for majority of the players.
This gave rise to the peer-to-peer account trading market, whereby high spending players who stop playing a specific game can sell their account to others in order to recuperate a portion of the money invested. However depending on the in-game items available, some of these accounts can still cost up to thousands of dollars, and the purchaser cannot test out these items beforehand. With the birth of the sharing economy, this gave rise to another model, ‘VIP Account Sharing’, allowing players to borrow these VIP accounts and out of reach items by the hour.
A brief history
This niche market initially started with the distribution of pirated videos and digital content via cloud services and ecommerce platforms. Users who wanted to watch a certain movie or TV series simply had to buy the cloud account with the video for a certain period of time on the ecommerce platform, they were then given the account ID and password. After the rental period is over, the account owner would simply change the password (given the account is bound to their own email) and then place it back on the market for the next customer to rent. Now of course this was an extrmely inefficient and time-consuming process, but yet it was worth it to people who would otherwise have to toil away in factories 12 hours a day for a measly 1000-2000rmb back then, or at least it was an additional source of income.
There were a lot of issues with the above model, such as how to ensure that the users do not delete files in the cloud, the risk of giving out login information and the hassle of having to change it every time. Thus as the tech industry developed, the larger players in this industry began to develop their own software and app to streamline the rental process and minimize above said risks.
How it works
Taking games for example, players with high level accounts (owners) can list their accounts on these platforms to be rented by other players (users) just like any ecommerce store, however in order to protect the accounts, users must login to this account via the company’s client software or app, of which a few security measures are enforced:
Auto login system to prevent the users from knowing the ID and password
Anti-plugin detection system to prevent users from using hacks via rented account resulting in ban
Feature lock to prevent users from damaging important in game items or using up specific resources
In essence, this software is the ultimate plugin, it is able to block all other plugins and perform certain actions that were not originally designed into the game, thus at the moment, essentially all the anti-virus software still recognize this as a potential threat and must be disabled before using this service.
Pros vs cons
We have already briefly discussed the advantages and risks to account owners and users, this section will mainly focus on the pros and cons of this market, and where I think its heading.
Pros
The market exists – everyone loves a good deal, and now users can try out premium game items that they would never be able to or consider purchasing, even if only for a limited time only
Blue ocean with a (slight) entry barrier – currently this model only exists in China, and unlike ecommerce where people can simply register to setup shop, this requires a certain degree of technological knowhow in order to compete with existing products.
Cons
Platforms have no control – as a platform, this model eats away into the potential revenue of the game developers, thus if it gets noticeably big, the developers will find a way to prevent these platforms from continuing their business and there isn’t much that can be done. It’s a continuous game of cat and mouse, until a better win-win model can be developed.
Low unit price and profit margins – the key selling point of this model is ‘cheap’, accounts can be rented out at roughly 1-10RMB per hour (0.1~1.5 USD), with the platform taking a 10-20% (0.1-2RMB) cut, which is extremely low compared to some MMORPG games where an above average VIP player might top-up 500rmb+ daily.
Safety vs. necessity – earning money from lending accounts is like a side income, while renting VIP account is a want rather than a necessity, the benefits are clear but also minimal. All it takes is one minor issue to lose a customer forever, such as if the owner’s account has been hacked or ruined by the renter. Because unlike airbnb that can help house owners earn of thousands of dollars or Uber drivers that rely on it as their main source of income, the service providers have a lower tolerance threshold when it is purely a side income.
People get richer, need decreases - the jey target users are students, who have little money yet lots of time to play games, having high level items can let them boast to their friends etc. At the end of the day though, people prefer to own the items themselves, especially if you are going to boast to your friends but change a character every day. So eventually all users will grow out of this model as their purchasing power increases, and the platform needs to continuously acquire new young users.
Conclusion
All in all, I personally believe that there is a market for this service, especially outside of China where the market is still non-existent. It is also possible for companies to earn millions of dollars or even tens of millions a year if they are able to become the top in this niche, however due to various risks and restrictions, I believe that it will be very hard to build a billion dollar company with the current model, unless this expands into other offline sectors such as hairdressers, cinema or club memberships where it can cater to the general population; but these themselves have a host of other issues as well.
I personally believe it is a very interesting model, one that is taking the sharing economy towards a unique path, but whether it will persevere, I don't know. So do you believe that it will work or not?
_____________________________________________________________
If the China mobile gaming market may be something of interest to you, whether you are a developer, in operations, marketing etc. join the LinkedIn Group "Mobile Gaming - China" for more relevant posts in the future and a place to meet other likeminded individuals
Looking for mobile game publishers (SEA, Japan, South Korea, Americas & EU). Have a few games looking for overseas publishing. Please contact me if you are looking for mobile games (primarily from China)
Read more about:
BlogsYou May Also Like
.png?width=300&auto=webp&quality=80&disable=upscale)
