World's Largest Reseller Of Virtual 'Skins' Raises $40M With An ICO

Tyler Durden's picture

ICO Investors are about to experience something that’s almost never happened in the brief history of the $3 billion market: An offering by a company with an actual product.

Bloomberg Businessweek has managed to find the one ICO being launched to solve the rare problem that could actually benefit from decentralized, monetized tokens. The company is called OPSkins, and it’s the largest skins site in the $50 billion market. The company has raised $41 million in an ICO it launched last month, and hopes to raise another $7 million before the sale ends on Nov. 28. For those readers who aren’t avid gamers, Bloomberg explains that a “skin” is a decoration for the virtual guns and knives found in video games like CounterStrike: Global Offensive. While the concept of building a company around these products might seem silly, some buyers will pay thousands of dollars for the rarest skins.

The two-year-old company has raised about $41 million by selling what it calls WAX tokens, a virtual currency that will become the default way to buy and sell skins on its intercompany skins exchange, the Worldwide Asset eXchange, which will allow buyers to connect to dozens of disparate marketplaces. The idea is to simplify purchases for gamers from different countries and give everyone a clearer sense of what a particular item is worth, using the same kind of digital-ledger system as the cryptocurrency bitcoin.

Previously, the market for these virtual items was highly fragmented, and wealthy buyers would often play intermediaries a premium to root out the best deals on their behalf.

The company bets that making its exchange accessible to rivals, who can then make a broader catalog available to customers, will expand its audience beyond the limitations of an individual website, says Chief Information Officer Malcolm CasSelle, who’s helping lead the WAX effort. In theory, there’s lots of room for new skins buyers, says Chris Grove, managing director at researcher Eilers & Krejcik Gaming LLC. About 200,000 new people buy virtual items through OPSkins each month, but the site sells gear for online games with more than 125 million regular players.

 

“This could be the perfect on-ramp,” says investor Scott Walker, who helped fund the “initial coin offering,” or ICO. Early investors are getting more WAX tokens for their money, but their value will become another variable once the exchange goes live in December.

 

OPSkins doesn’t disclose its financials, but its revenue is growing at double digits annually, says CasSelle, previously chief technology officer at Tronc Inc., the former Tribune Co. Partly, he says, the WAX token strategy is a way to stave off competitors. Over the past few months, rivals including DMarket, KyberNetwork, and SkinCoin have held ICOs to launch or expand their services. So far, though, no other trader has the muscle to create the kind of intercompany exchange OPSkins is building. Starting next year, websites that install the WAX widget will get as-yet-undetermined fees for resulting sales.

However, before you rush out and buy WAX tokens purely for the sake of speculating, It’s worth considering the fact that OPSkins entire business is essentially at the mercy of the giant video game studio that produces many of the games whose wares Skins sells on the secondary market.

The volatility of the WAX token price may make it a poor place to hold money not being used for short-term item buying and selling. But OPSkins’ biggest potential roadblock is the maker of the games. Industry leader Valve Corp., which publishes Counter-Strike: Global Offensive and the other big hits OPSkins exploits, has the power to ban sites from trading skins. Last year, Valve sent cease-and-desist letters to 23 online gambling sites to prevent them from using skins as collateral, a move aimed at reducing teenage gambling on professional video game matches. “Valve has certainly left the door open to an action in the future,” says Grove, the Eilers researcher.

However, the company’s technology chief says it doesn’t need Valve Corp.’s cooperation to build a successful business.

CasSelle says that the new exchange can work without Valve’s help, including as a way to acquire other virtual goods, and that OPSkins is looking to raise an additional $7 million in WAX tokens before it finishes its ICO on Nov. 28. (The company initially sought a total of $63 million but lowered that goal because the flurry of interest around bitcoin and its spiking value has diverted attention from ICOs.) Alexander, the personal shopper for virtual goods, says he thinks the exchange will be good for people like him in the short term, swelling the overall market for skins. “It makes the entire process effortless,” he says. “It is a massive pain dealing with the payment methods available at the moment.” But he’s hedging his bets, having returned to college to finish his degree in economics. He says he eventually wants to get a job in finance or start his own business.

OPSkins doesn’t disclose its financials, but its chief technology officer - who was previously the CTO at Tronc Inc. - explained that the WAX token strategy is a way to stave off competitors. Over the past few months, some of OPSkins rivals, including DMarket, KyberNetwork, and SkinCoin have held ICOs to launch or expand their services. So far, though, no other company has the muscle to create the kind of intercompany exchange OPSkins is building.

If it succeeds in being the first platform to capture a dedicated customer base, maybe - just maybe - the WAX token might have a future.

Unfortunately for investors, most of the other 799 tokens trading on one of hundreds of exchanges scattered across the Earth, probably won’t.
 

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Feant's picture

Wow. I used skins on the game I played. They were free. They are still free. Here is the site. Amazing people.

http://www.lotrointerface.com

Laowei Gweilo's picture

this is how Bannon got his start lol

learned all he needed to about libtards from selling WoW gold to noobs o.0

MusicIsYou's picture

So basically gamers are buying nothing with nothing. The only people who actually own something of value are those who own the real life resources of which devices are built.

Feant's picture

Gamers are buying add-ons and UI interfaces.

People take time to make those UIs. They are not built from "nothing" they are built from ideas and time. How old are you? I am in my 50s and as a long-time PC gamer there are some really smart people in the gaming world. And they don't work for free.

I didn't play Second Life but a number of people became millionaires marketing themselves on that game platform. Not my thing but it worked for some people.

MusicIsYou's picture

Ideas and time are illusions until they're transformed into something people can touch and hold. So basically people who transfer ideas from their mind to a computer screen are transferring illusion to illusion.

stacking12321's picture

You seem lost in a notion of materialistic reality.

jeff montanye's picture

existentialism is important but putting your hand on it reminds me of the irishman who, when challenged by a leprechaun (genie?, witch?), farted and said, "paint it green".

Steve Scuba's picture

I'm making over $15k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...  http://disq.us/url?url=http%3A%2F%2Fwww.Jobzon3.com%3Ab8eR_DQLwGRPVGtFvv...

Feant's picture

Where the fuck have you been living? In a cave?

Do you realize you are using devices based on ideas? Do you understand that when you go to watch a movie that movie is not a tangible object? Same for music. Same for a computer game.

Gaming is a huge business. Illusions sell. Illusions make lots and lots and lots of money. People love paying for illusions. It is called entertainment. And people are willing to spend lots and lots of money on entertainment.

On the other hand, I never paid a dime for a UI skin. My game had people that developed them for free. They still do. Each dollar you spend is a vote for what you like and support. Same for clicks and downloads.

But go back to your dank little dungeon pushing buttons in the dark.

kochevnik's picture

So force, heat, light, charge, air, time space and electricity are fake?

BlindMonkey's picture

You might have missed how real the World of Warcraft online gold market was.  Just because you don't get it doesn't make it less real. 

Feant's picture

I agree. Same for LOTRO and Second Life. Non gamers don't get it.

PC gamers are hard core nerds. LOTRO taught me how to spec out and build a gaming PC. They taught me how to set up an audio board. They taught me everything.

Fuck, LOTRO in-game chat makes the people on this board look like pussies. In-game voice chat was the real deal. No whiners allowed. You either listened and fought or you got dumped. Period.

Manipuflation's picture

Have you ever ridden a motorcycle Feant?  I think you might not have.  Do you want to spend a day with me?  I have cash.  I just don't give a fuck.  Here is my email tkufalk2@gmail.com.  I could teach you a lot about life.  We could have some fun.   Are you female? 

Feant's picture

I rode a dirt bike as a kid.

I also trained horses. Nothing like riding a horse bareback when they take the bit in their mouth and gallop.

Had a guy in Germany that was terrified at the riding stables. He asked me if I was going to touch the horse. I laughed. German owned riding stable. Of course I had to touch the horse! Groom it, tack it up, ride it, untack, and cool down.

You wouldn't be the first dude I met that was terrified of horses.

Lost My Shorts's picture

You don't need to be a genius to make money.  You just need to know a greater fool with money.

kochevnik's picture

So true.  Unlimited potential.  Fools in market are real gold

Laowei Gweilo's picture

most services and entertainment leave you with 'nothing' after you view it o.0

is this reeaaaally still a thing in 2017...

 

BlindMonkey's picture

Let the haters hate but this is a real market that is not served by the traditional capital markets. ICOs and micro-finance is going to remain a high-risk and exciting space.  IMO, the next Jack Ma will be found here.

Manipuflation's picture

Alright, who has tatoos on themselves?  I have no tatoos.  Am I missing something?

Feant's picture

No tattoos. Zero. What was your point? Showing up and acting like a dick?

ShabbosGoy's picture

You already have a tattoo. The mark of the beast.

 

cheech_wizard's picture

Not a thing. I just have scars and some broken bones...

 

Manipuflation's picture

Come on man, I am a biker and have no tattoos.  I will not do that shit.  If I see you and have tatoos all up on your neck and such then I know you are a douchebag.  You think that tattoos make you look like a badass?  No, they make you look like a douchebag.  I am not sorry to say so.  I'll punch you in your face for being a fag. 

jeff montanye's picture

i was going to get my first, "existence precedes essense" but not anymore.

 

Moe Hamhead's picture

When I see a guy with tatoos I think he really, deep-down, wanted to be a girl.

Late onset ADHD's picture

skins an 'actual product'?... kill me now...

ArmaG3don's picture

No surprise here gaming is nor less addictive than markets but safer.

MusicIsYou's picture

I like games and other computerized illusions because they have the population spinning in place and diverging backwards intrigued with illusions while those who dwell in reality become the new masters.

stacking12321's picture

Ok, and what is reality?

Posting comments to zh while virtue signaling and telling everyone how down to earth you are?

ArmaG3don's picture

Reality is numbers and texts maybe some photos and some artwork.

chinoslims's picture

So the guy makes money by selling skins on fake guns to start a company that makes fake money?  

Aren't  cryptocurrencies skins for real money?

MusicIsYou's picture

Computers are great and it's like everybody is walking forward on a escalator going the other way. It appears they're going forward but if they could see outside their box they're really going backwards.

Feant's picture

Damn all the ZH Luddites crawled out of their holes to piss on gaming? WTF?

Go back to your dungeons! Assholes. People using technology that was developed by gamers. SMH. You just don't get it.

cheech_wizard's picture

I get it perfectly well. I'm a gamer, have been most of my life. You need an escape, everyone does... (Now try going a week without gaming, should be easy right?) Now ask yourself, are you an addict? Or do you have an addictive personality? Hell, I know I do.

Computers were invented as a tool, and the people that invented them were not thinking about how you would one day play a game on them. That was left to people like myself, who once came across X-Pilot on the Internet long ago, so i did the first port of the game to run on an Intergraph workstation, just so I could play it. But once I did it, I moved on. Of course to play X-Pilot, I first had to get a web browser up and running. So guess what, I ported Mosaic to run on an Intergraph workstation. Unbeknowst to me at the time, the parent company (in Huntsville) had 9 people working on a port. I beat them out by weeks and 5 revisions working entirely on my own. I bundled up my work, with some notes about where you had to comment out the crap code from Microsoft to get it to run.I did all this just to see I could do it. During my lunch hours.

Ultimately, the computer industry appears to have moved in the direction of being nothing more than the equivalent of a modern day arcade room. And the truly funny part is, they truly have figured out ways for you to put quarters into virtual slots. 

I don't disagree with one of your earlier statement. We all choose what to support with our fiat. If I like a product or need it as a tool to accomplish something else, then I'll purchase it. Items that don't fit my needs, I don't buy. In closing, virtual items are something I've found I don't really need at all.

 

Manipuflation's picture

Don't worry too much Cheech.  There are good people watching.

cheech_wizard's picture

Not to closely I hope. Back when I first learned about running cron jobs, I ran a script at night to ping out the entire Internet. Post-processed the files generated from the night before with a script. Had quite the listing back in the day. As I perused my findings one found little anomalies, like how all Internet traffic from the West Coast to Asia at the time ran through a number of servers at Stanford. How MIT had one of the earliest porn servers... stuff like that.

You might have guessed, I get bored easily at times.

 

Feant's picture

An intelligent comment. Thank you.

I haven't logged onto LOTRO in months. I do enjoy the winter festival.

It is a matter of discipline and control. Do you control the game or does the game control you?

Anyhow, billions of dollars are spent in the gaming world. Funny to meet people in this virtual world that seem to be clueless about that market.

RationalLuddite's picture

This Luddite feels microaggressed :(  Stop oppressing me with gamer privilege 

Don't you know that your rights (ALL!) end where my feelings begin !! I need to be told i am special and get from free skin cryptocoin now ...

Manipuflation's picture

I did pyschedelics.  MKUltra.  Never give them to females because they can't handle it.  Full on intense and females can't manage it.  They end up crying in the corner somewhere.

cheech_wizard's picture

Upvoted for psychedelics! Mrs. Wizard found some mushrooms. Going to be an interesting Thanksgiving.

To Hell In A Handbasket's picture

I was an avid Unreal tournament 2K4, Doom and Quake player in the 90's and early 2000's. In fact I stopped playing PC games competitively in 2007. I belonged to different clans, where we made our own maps and skins. We had clan vs clan matches most Sunday nights at 8pm GMT. It was always part of the being a P.C gamer. You just had so much more flexibility and scope. 

The learning curve was steep, but the skill level was high, then something happened. The pre-millennials came and had an aversion to the concept "learning curve". These fuckers didn't want to take 3-6-12 months to become really good at a game and wanted to be GODLIKE in 3 weeks, or they just gave up. It was this generation that caused the dumbing down of games. Their map making skills were rubbish, they hardly made skins and their skill level was atrocious. This was the market X-Box and Playstation exploited and cornered. 

Then blasphemy happened. They started porting all the best PC games to console and put a real dent in PC gaming. They made games where the skill level and learning curve was a gentle incline and narrow, where anybody could kill anybody after 2 weeks practice. That’s the reason the Wii was successful, because granny needed no skill to play a game, but I digress.

It was approximately 6-8 months ago a former work colleague was telling me how much his son is crazy about skins? I said "skins? WoW I didn't know your boy played PC games" Then he said his son spent £40 on different skins. I almost spat out my Costa Coffee. £40 fucking pounds on skins. Gaming has gone exploitative and it's all about extra money and fleecing the gamer. DLC and pay to win items, has become the norm for at least 5. I thought my son was fucking nuts when he spent £1.59 just to play in a Union Jack skin on COD. If you want to represent and show which country you are from, E.A charge you for the fucking privilege. In my day new maps and DLC was free. There was not concept of the season pass, which is the same price to purchase as the fucking game.

My final rant…I played my sons PS4 Battlefield 1 recently and I got Snipered and do you know what the game did? After I was killed the game showed me in infra-red, where the sniper was hiding? lol  TALK ABOUT DUMBING DOWN! In my day, after your 3rd bullet to the head, as soon as you spawned, you ducked down and hid, to work out where the sniper is hiding. You’d even sacrifice yourself once, just to work out where the sniper is hiding. But oh no, not for today’s gamer. That’s just to fucking hard, so the game does it for them. They should be called, generation I want it easy, generation wuss and generation no backbone.

 

Mineshaft Gap's picture

Enjoyed your post and recognized my misspent young adulthood in it. From Soho down to Brighton, I must've played them all, too. 

I loved a hard, hard game. Still do. In fact, they're the only kind I can fall in love with these days when the industry thinks you should get a participation trophy every five minutes.

While it's true gamers changed, they had help. Even the king of the FPS enabled this cultural shift. John Carmack, seeing the writing on the wall, stated that he wanted Quake 3 to be balanced differently from its predecessors so that newbs could get a frag here and there. Heh: the first FPS safe space!

As a sidenote on your comments about map making, every couple of years I look in on the old Quake mapping scene. I'm happy to see it still goes on, its artisans faithfully tuning out the present day like a kind of ancient monastic society of manuscript illuminators. Just as it was in the 90s, it's all free, too, and often exquisitely beautiful.

Debugas's picture

when people have no money to satisfy basic needs they will not pay for entertainment

DC Beastie Boy's picture

Virtual...like almost real