We are definitely not in Kansas anymore…or even in the traditional realm of what video-games used to be. With Nintendo’s Wii, Sony PlayStation’s failed Eye and now VR, and XBOX’s Kinect, video games have hit an entirely new level, with live-stream platforms like Twitch making gaming profitable for players.
Yet, third-parties have found a way to make gaming profitable all around, adding some serious worth to the players and developers. How? We are in the age of digital assets and in-game items.
Grit Daily spoke with Vlad Panchenko, founder and CEO of DMarket, who shares how third-parties like DMarket are helping to shape the gaming industry into a now multi-billion dollar industry. But before his adventures with DMarket, Panchenko’s first adventure started in the TV and sports industry.
“I used to be the director and producer of a popular TV sporting show in Ukraine,” Panchenko shared with us. “It was an amazing experience. I spent the majority of my time in the training camps filming professional athletes, like boxers and race car drivers (so much adrenaline!”
Grit Daily: What lessons would you say you walked off set with as you turned your attention to the gaming industry?
Vlad Panchenko: Their sheer stamina, dedication to hard work and persistence taught me to work harder and to never give up. These professionals became a driving force for my professional endurance, and I think in almost everything I do. My time spent on TV could really be a novel — so many ups and downs and, of course, invaluable life lessons.
GD: Can you give us an example of how you applied this in your day-to-day?
VP: One time we were filming the international rally championship in Karelia and accidentally found ourselves in Finland in the middle of the night. Well, actually a group of heavily armed Finnish troops who were protecting the border found us there. When your car is being quickly surrounded by heavily armed people in winter camouflage quietly stepping in from the forest, it gives you some surreal memories to carry on. Everything ended up okay when they realized it was an innocent mistake and they showed us the way back.
GD: How did gaming come into your life?
VP: I’ve been a passionate gamer ever since I can remember. Almost all of my business endeavors are gaming related — and I wouldn’t have it any other way. I got into this industry more than ten years ago and DMarket is my third major project (and company).
I started by distributing digital games within Suntechsoft Corp Limited. Today, it is the number one private merchant of digital games in the world. In 2016, my business partner and I founded Skins.Cash, a service that allows players to sell their in-game skins instantly. It’s still a global marketplace that generates more than 20 million trades annually. In all my businesses we rely on machine learning algorithms and we love to predict and squeeze data.
GD: So let’s transition to DMarket and its gaming exchange.
VP: In 2017, we started building DMarket, a gaming platform and exchange accompanied with tech which helps to unlock in-game items that are traded during gameplay. We raised more than $19 million primarily from the gaming community and the first million dropped on our account within the first few seconds. I couldn’t believe it. And definitely something that I will remember.
GD: How would you describe the past few years as DMarket continued to grow?
VP: The last few years were a real adventure. I remember spending four days and nights in a row on a plane to get to the conference and meeting in London, then Tokyo and right after, back to London. It might sound like fun, but it’s not — when you board a plane on Wednesday in London and exit to Tokyo on Friday. My subconscious was screaming “wait, whaaat?”
I am thankful each and every day that this is what I get to do with my life and appreciate everyone who helped to get me here.
GD: For the uninitiated, what does it mean when you talk about “third-party gaming skins?”
VP: In early video games, everyone looked the same: same character, same hair color, same outfit. Gamers wanted ways to differentiate themselves — thus the birth of customization options.
Now, my character can show up in a pink skirt, while my buddy wears green socks and my girlfriend can put on a leopard gun cover. That is what skin is about — to express yourself and to be different and just have fun while you play.
Essentially, a skin is a cosmetic item that doesn’t change the play balance. Nevertheless, it might change your behavior. For example, in real life when you are buying a new suit or dress it might make you feel better, it could add up some confidence in you. The same is true with a player in the game, as a result, the player might even start to play better.
GD: So, do these “virtual items” have value or are they “liquid?”
VP: Of course they do. The virtual items market is about $25 billion. Some skins are very sophisticated and are sold for thousands of dollars. For example, a Dragon Lore AWP from CS:GO was sold for $61,000, and the Ethereal Flames Pink War Dog from Dota 2 was bought for $38 000. There are multiple examples like that.
GD: How does the in-game market compare to our real-world economy?
VP: This market has a huge potential. Soon, we will watch the rise of two trends. The first one is the open-worlds with real-world economies where you are free to do whatever you want, be who you want. The second trend is the real multiverses where you and others are able to build your own worlds inside the game.
The gaming worlds will unite people around the globe, they will not only entertain but provide an equal opportunity for everybody worldwide. Place to live, to have fun, to earn for living and to be happy.
GD: What, if anything, has the gaming market when it comes to women?
VP: For many years, there was a stereotype that a typical gamer is a nerd sitting in front of his computer all day long. It’s really not the truth — and I don’t think it ever was.
According to a new study by games industry analytics group Newzoo, women account for 46% of all game enthusiasts. That’s huge! More research from last year said that women spend more on in-game content than men. For example, last year women spent $110 in Dota2 on average, while men spent $54, and in Overwatch it’s $91 vs $42, respectively. Unfortunately, some game developers still believe their audience consists of mostly males, so they’re missing a huge opportunity and do not have a grasp on their own community.
GD: We are watching other industries such as the fashion sector leverage gaming into their infrastructure. Why do you think this is?
VP: Gaming is becoming a global entertainment mogul and the biggest social network. Did you know 2.5 billion people or a third of of the global population play video games every day?
This number will increase to 4 billion by 2030. According to multiple sources of research, by 2025 gaming will be the number one entertainment industry with around $300 billion generated in revenue. This is more than the TV industry, music, and films etc.
Fashion is a part of the entertainment industry and it’s not surprising to me that many designer brands such as Louis Vuitton and Moschino are putting their footprint into the global future of entertainment and collaborate with the gaming.