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Tencent tells Chinese court it owns all virtual coins

Updated: May 5, 2021

Josh Ye

  • Tencent has sued, which runs an in-game item trading platform, for US$6.2 million in damages at the Guangzhou Internet Court

  • The internet giant argues that it is the sole owner of virtual goods acquired by players in its video games

The pending resolution of a lawsuit between internet giant Tencent Holdings and the operator of a virtual item trading platform in China could determine who really owns the in-game currency and various merchandise, including weapons and armour, that video game players buy and barter for online.

Shenzhen-based Tencent, which runs the world’s largest video games business by revenue and China’s biggest social media platform WeChat, has sued at the Guangzhou Internet Court to claim 40.17 million yuan (US$6.2 million) in damages for enabling players of Dungeon Fighter Online to trade virtual coins and other in-game merchandise on its site.

In a seven-hour trial that was broadcast live via China Court Trial Online on April 8, Tencent argued these in-game merchandise, such as potions that players acquire over the course of playing the game, have no material value in real life and that it remains the sole owner, based on the game’s terms and conditions.

The company, which is the publisher of Dungeon Fighter Online, said players can use the items in the game, but have no right to trade them. It also argued that virtual coins, which players buy with real money to exchange for other in-game items, are effectively service charges.

The Guangzhou court has not yet made its ruling. The trial has been viewed more than two million times online.

Tencent, which brought US-based economist Sun Su to support its argument in the trial, declined to comment. did not immediately respond to an emailed inquiry for comment. At stake in this landmark case is the entire virtual item trading business in China, which has long been an integral part of the playing experience in the world’s biggest video games market, and the country’s attitude towards virtual assets.

In China, many avid players hire full-time gaming professionals to earn in-game rewards for them. Tencent’s claim to have sweeping rights over gamers’ virtual assets has sparked a huge controversy, even as the court deliberates the issue.

“You broke your bank on this game, but now we learn that we don’t own anything, not even our own accounts. This is simply unfair!” said a popular comment on Zhihu, China’s equivalent to Quora.

Item-trading platform operator DD373 has traded virtual items worth more than 160 million yuan as the end of June last year, according to Tencent’s argument broadcast online. The company said its calculation of the claim for damages was based on the 5 per cent commission DD373 takes per trade.

Trades remain available on the site, however. A full set of 13 weapons and armours, for instance, is offered at 550 yuan, while 20 million gold coins in the game costs 40 yuan.

Dungeon Fighter Online – developed by Seoul-based Neople, a subsidiary of South Korean-Japanese game developer Nexon – is one of the world’s most profitable games. As of August last year, the game had grossed more than US$15 billion since its launch in 2005.

Xuxubaobao, one of China’s most popular video game live-streamers, with nearly 5 million followers on Chinese microblogging site Weibo, said he has spent 100 million yuan on Dungeon Fighter Online over the years. When asked by his followers about Tencent’s claim, Xuxubaobao said he believes the law will protect the rights of gamers and dismissed Tencent’s argument as “moronic”.

Still, he indicated that trading platforms like DD373 need to be reined in to check many fraudulent sales there.

Washington-based economist Sun, who specialises in antitrust and intellectual property issues, argued on behalf of Tencent that trading of in-game items would lead to “inflation” inside Dungeon Fighter Online and ultimately ruin the overall experience for users, especially those who play the game for free.

Sun said such trading has incentivised some people to become full-time gaming professionals, who sell in-game items earned through missions online.

DD373’s lawyers argued that Tencent’s suit effectively aims to destroy the in-game item trading business. They claimed that Tencent will have monopolistic power over in-game items and how these are priced in the market.

Still, Tencent is not the only video games company that reserves the full ownership rights to in-game items and prohibits users from trading items. US gaming giant Valve Corp, which operates the world’s biggest personal computer gaming platform Steam, said it owns all of users’ accounts, items stored in games and other data. Steam users are prohibited from trading accounts or in-game content.

This article appeared in the South China Morning Post print edition as: Lawsuit puts in-game item trade on trial

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