What is the gray market? A guide for developers

Understanding what the video games gray market is has never been more important. As the global ecosystem of digital game storefronts opens up, the opportunity for business and revenue growth is vast.

There are now numerous authorized digital storefronts globally that let publishers discover and engage substantial new audiences. And then there’s the gray market, which can limit your profitability. Fortunately, plenty can be done to mitigate that threat. And it all starts with having a clear, universal definition of exactly what the gray market is.

The challenge is that the gray market isn’t a place, platform, or group of specific websites. It is a concept. In the plainest terms, ‘the gray market’ refers to the unauthorized selling of game keys intended for one region into another, taking advantage of pricing differences across the global market. Simple, right? Well, not quite.

Numerous misconceptions about the gray market persist. To establish a universal definition of the gray market, let's start by addressing those misconceptions.

Many assume that all selling of Steam keys outside of Valve’s platform is the gray market. That’s not the case. Valve allows Steam keys to be sold elsewhere. Publishers can even request up to 5,000 Steam keys to be distributed via alternative storefronts.

Another myth is that the entire alternative storefront ecosystem is a wild west. In reality, there are two types of alternative storefronts: marketplaces and e-stores. Marketplaces support both publishers selling keys officially and regular users and gray-market traders selling their unused keys. E-stores, meanwhile, only allow keys provided by publishers, offering a credible, reliable supply chain from a publisher through to the consumer, leaving no space for the gray market to thrive.

How is revenue lost in the gray market? Sellers buy keys in one region where the cost is low, and sell them in other regions where game RRPs are higher. The seller makes a profit, while the consumer gets a lower price than they would pay on Steam locally.

That is how we should all understand the gray market. It is a nebulous concept that exists in the gaps between official storefronts. It devalues games, eats into revenues, erodes business sustainability, and requires consumers to spend their cash with providers.

It’s tempting, then, to stop using alternative storefronts altogether. But that misses a huge opportunity.

Fortunately, there’s plenty you can do to seize that opportunity without risking gray-market losses. Follow Steam’s guidelines. Choose e-stores over marketplaces. Work with a partner that provides a key management system that lets you track and distribute key sales precisely.

Ultimately, a definition of the gray market doesn’t need to be complicated. ‘The gray market’ refers to ‘the selling of game keys from one region to another to exploit regional pricing’.

Understanding the reality of the gray market – as well as the e-store opportunity – doesn’t only let developers and publishers seize the alternative storefront growth opportunity. It will also help us significantly reduce the gray market's impact and shrink the space in which it operates. That’s a win-win for all!

The alternative storefront ecosystem brings together thousands of alternatives to Steam that let you sell game keys to new and untapped audiences across the globe.

Valve does let you sell Steam game keys beyond Steam. Valve provides up to 5,000 keys to be sold this way, and offers official guidance for developers and publishers looking to seize this opportunity.

‘The gray market’ is a concept, rather than a specific technology, platform, or group of websites. It refers to trading Steam keys to take advantage of regional pricing differences. Traders buy keys from one region, and sell them for a profit in regions where official game prices are higher.

Marketplaces let both official publishers and consumers sell and trade keys, enabling the gray market. E-stores only allow authorized publishers to sell official keys, keeping gray market sellers out.

Publishers and developers wanting to protect their revenues from the gray market should follow Valve’s official guidelines, use e-stores only, and work with a partner that lets you track how and where your game keys can be sold.

Rokky exists to support game developers and publishers looking to seize the alternative storefront ecosystem the right way, helping you protect and elevate revenues. We offer products such as our Key Management System to help game companies be strategic while protecting themselves from the gray-market threat.