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This is going to be a different post compared to most other topics here in the Economics sections. If this doesn't belong here, feel free to remove it. I am talking about the economy of virtual skins/items for the game Counter-Strike: Global Offensive (CS:GO). I don't know if there's any interest about it here but imo it's nevertheless an interesting topic, especially its investment potential.

For those of you who don't know, CS:GO is a first-person shooter by Valve where you can customize your looks (weapons, gloves etc.) with different virtual items/skins. These are both tradeable between two players and can be sold on the Steam community market. It basically works like this: By playing the game you get a weapon case from time to time. These can be opened by spending money to gamble for a weapon skin. Stickers (and capsules, which contain stickers) however are directly purchased ingame and can then be applied to a weapon skin.

While the weapon skins itself aren't that interesting investment-wise, stickers, cases and (some) capsules definitely are. The reason for this is that stickers, cases and capsules get removed from circulation when opened or applied. Let me give a good example that shows that: Back in 2014 Valve introduced 2 sticker capsules for a limited time to celebrate the CS:GO tournament in Katowice. These were sold for around $ 0,85 ingame (don't know the exact numbers but I think it was 0,75 €) and are now worth $1800 - $2500. Some of the stickers from that capsules are now worth $10.000+! (According to this site: https://www.dexerto.com/csgo/top-20-most-expensive-csgo-stickers-in-history-1361385 There are hardly any up for sale). These are numbers usually only seen in crypto (and only very rarely!)

While this huge success of the Katowice 2014 capsules/stickers is mostly because the CS:GO playerbase was low back then and so the number of sold capsules was relatively low, the following tournaments with their individual stickers also would've been a decent investment. And I can imagine the stickers of the upcoming tournament in Rio to be also in high demand in a few years, depending on their looks and how many get sold during the time they are available. The profit margin however will be much lower.

Looking at cases, Valve releases a new one from time to time. This causes older cases to drop less frequently, eventually causing the supply to decrease when the number of opened cases exceeds the number of droped ones. So the prices for new cases usually drop to $0,03 - $0,05 on the Steam community market after their release but can go up $20+ when they are a rare drop (https://steamcommunity.com/market/listings/730/Operation%20Bravo%20Case).

The huge downside with this kind of investment is that you have to rely on the success of the game (CS:GO) and to rely on Valve not making some weird changes to the whole ecosystem. You also have to keep in mind that the prices shown on the Steam community market are not what you'll get when you actually want to cash-out. To get your money out of the Valve/Steam ecosystem you have to use third-party-sites. Prices on these cash-out sites are usually 20-30% lower that on the community market.

I think the examples I have given show pretty good that there is (there were?) good investment opportunities in the CS:GO economy. The reason I made this post is that it seems like there is currently a real hype going around with a lot of items being sold right now, Youtubers making investment videos etc. (Kinda reminds me of crypto 2017) So I was wondering what your thoughts are. Is it something completly new for you or do you also hold some CS:GO items already? Even though I play the game occasionally, I just recently realized the immense value these virtual items hold.

I think the problem with this type of "investments" and trading opportunities is that they are open to the whole world. So everybody is competing with 3rd world countries for any type of profit. At the end, I don't doubt you can make a profit, but the margins will probably be very low and people would be better off flipping burgers.

Well, some items are indeed cheaper in the community market when you pay with a weaker currency and don't have to use EUR or USD but can pay with INR or RUB, for example. This goes especially for cheaper cases. But otherwise I don't really see what you mean with competing with 3rd word countries. It's not the case that you can earn the items for your investment only by playing the game. There is only a limited number of case drops per account per week.

You earn them by playing the game, but their value will be fixed by offer and demand. Since a lot of people will try to play the system and only play to get the items there will be a lot of offer (1st and 3rd world players) for little demand (rich 1st world players/buyers). You can probably speculate and invest in some items and wait for them to increase in value, but farming objects or trading them hoping for a profit is in my opinion useless because like I said you are competing against people willing to work for 0.50$ an hour.

I have played this game and still playing it whenever I've got time but I don't focus to its skin economy. But I'm aware of the marketplace that they have and some players I think is treating this seriously. They've been able to make their living through it and those items are not just in game items but true digital assets.

And you know what, since it's Valve, even their dota 2 community is also getting a huge market from time to time. The number of players are increasing and stable to hundreds of thousands and the items that become rare, they become not just an in game gold but a real hidden found gold in life.

I know what you mean but that doesn't matter. Actually, you don't even have to actively play the game to get items. You can just go on an afk-server. But the amount of items you get per week is limited. You won't get rich just by the items you drop for yourself. And with prices of a few cents per case it won't make much sense for anyone to make hundreds of accounts, then to store the cases for (potentially) a couple of years, not knowing if all the effort was worth in the first place.

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Yeah, I know Dota 2 also has a huge playerbase and an interesting market. But because I don't play Dota I even know less about its economy.

The problem with this is that the stickers and capsules are only worth anything whilst the game are still being played. As soon as a new version of the game gets released or replaced by some super cool game, the price will plummet. We saw this happening with games like Starcraft I and also Broodwars etc.

Yes, the online games last a lot longer, because a loyal community are built around the game ....but as time goes by, new players stop playing it and the older players thrash newbies in the game as soon as they join.. and then they leave.

There are simply too many new games being brought to the market, so gamers are spoilt for choice. These skins/capsules/stickers should be ported to newer versions of the game and between different platforms for it to keep it's value.  :P

Both communities have made a huge marketplace although I don't follow the community of CS:GO that much. The userbase is huge too.

The economy of dota 2 is just the same as CSGO's. There were items in the past that's been priced as cheap item yet overtime it has increased. I guess your total net worth in skins is huge.

That's exactly the main risk I see here, too. Riot Games, the developers behind League of Legends, just recently released their new shooter Valorant. Could be another strong competitor to Counter-Strike. But on the other hand I totally think that Valve will do everything possible to keep the system running as long as possible (maybe even transfer the skins to a successor if they ever release a newer CS version?). They earn millions from the 13% commission due on every sale in the community market.

That looks like a fad/bubble to me, like when Beanie Babies were going for crazy amounts of money.  The interest (and willingness to spend such outrageous sums of money on trivial things) isn't sustainable IMO.

Coincidentally I was just watching a few documentaries that dealt with these online gaming economies, and I do find it to be fascinating.  I'm not a gamer, so it boggles my mind that people would pay so much money for what amount to cosmetics (if I'm not mistaken).  My mind shouldn't be boggled, however.  I've seen people go crazy for weirder things than CS:GO skins in the course of my lifetime.  

Yep, that's certainly something to beware of--and it's another reason why I don't think the high prices are sustainable.

Everyone has long known that Valve specifically drops the economy of trading platforms every time a certain stable trend of demand/supply and prices is formed. So far, only knives that are consistently worth big money are successfully selling, but that's all. I think that at one point the economy of cs:go will come to the same thing as in dota2 - a complete collapse and hundreds of super-rare things for the price of a cheeseburger.

Not only that but every other risk associated with centralized/monopolized market applies here as well. Valve could go bankrupt, get hacked, shut their servers down for any number of reasons, become greedy and implement "property taxes" in addition to the commission. On the other hand, if they were truly benevolent they could find a way to "migrate" those items into a new version of the game if it comes to that. Regardless, investing into something that 100% depends on one company's whim sounds like an extremely bad idea. Obviously a lot of people don't think so.

This is kinda how stock investors view crypto - they think it rises too quick and too much, and they see volatility so they say it's not a real investment, no intrinsic value, a bubble, etc. Ofc crypto has actual utility, but pure speculation plays a much bigger role in price discovery right now.

Especially right now I mean last couple months while all skin traders and crypto traders are active and trying to make best out of this lockdown situation.
People do treat everything here not like an investment

Counter strike skins market is a pretty huge one and a rich source of income for the company and they will do everything to protect that. That's the reason why gaming companies are so competitive in releasing new updates and they always listen to the player feedback as they know that it's the players that should be served, if they do good service then their players will also support the company.
Also many a times there are skins that are very cheap in price but when a streamer or pro player starts using it in their game then the demand for that also increases so does the price.

Yeah, wouldn't dream of spending so much money on an virtual item, either. But when you see that there were people paying thousands of dollars for other online items / collectibles, I stopped beeing surprised about what people spend their money for.

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I wouldn't see it as a classical kind of investment anyway. More like some kind of gambling money with high risk but a high potential reward. Fact is, that stickers from previous tournaments would've all left you with more than your initial investment. So I'll probably try my luck and spend a few hundred dollars on these limited stickers when the next tournament is around the corner. Then forget about the game again and be surprised when checking the prices later on. One way or the other ...

Right now I am just not sure if the current prices are caused by the popularity of the game itself and by players who buy skins to play with or if the price is driven by people who only see it as an investment.

Be very careful about collectible stuff and account selling for video games since it will be a temporary thing and the Steam and the developers generally don't encourage such business.

If I'm not mistaken, you don't actually own items or accounts since you are only granted rights to use, so technically you don't own anything.

I don't know enough about it so I'm talking out of my ass here, but if there is a way for someone to create scarcity by buying stuff up (i.e. limited supply, no limits on buying, etc) then I'm quite sure there are speculators driving the market or at least parts thereof.

I did hold a lot of valuable in-game items in several MMORPGs when I'm still in NA. Nowadays, I fancy CS:GO and Dota 2 item betting since it's really fun and takes your profit up there as there are tons of traders, buyers and sellers literally everywhere. I testify to the appreciation of value of some skins on the market, notoriously the Titan Holo Stickers, Emeralds, Rubies and Blue gems and the recently-released AWP | Gungnir which saw a massive boost in price over time. While there really is money to be made in hoarding valuable skins and selling them for later, I still think it really isn't a robust and bulletproof way to trade your way up to riches. Youtubers are making massive money for it because they are already known, and the issue of trust doesn't apply to them, take for example, Anomaly which is a known cheapskate in the trading business. Next, as you've mentioned, you have to be reliant on Valve for not making some foolish moves else your money will go down the drain. There are tons of trade-banned accounts even though they did not participate in a scam but rather bought scammed items, so there's also that.

tl;dr: CS:GO skin hoarding, trading and selling is good for a profit source but not really recommended as a main investment opportunity due to uncontrollable factors imposed by Valve.

World of Warcraft also has a huge player base and an economy. (or was, last time i checked it was dying)

You can sell the gold you farmed in game and convert it to blizzard euros/dollars directly without needing any third parties.

At some point you don't even have to play the game.

All you have to do is stay in front of the AH and buy low sell high stuff which everybody here has a master's degree at.

I played it for a while but it became boring quickly.

There are tons of games with this type of idea nowadays but counter strike skin economy is the biggest of them all. There is gambling going on just purely based on skin economy as well where you spend a certain amount and get it back if you are lucky with other skins and not money.

I personally enjoyed eve online for a while for example, and even though you can't really sell stuff in that game for real money, you could sell stuff for real money valued things such as monthly subscription could be bought with in game money and if you are good at what you do in the game, you would be able to never pay for it. Plus some people didn't cared about the rules and still sold big ships for real money as well, which was in thousands of dollars too, so game economy is actually something that is growing ever so limitlessly.

Interesting. You sound like you have some experience with the CS:GO market, already. How 'grown' would you consider the skin market? I mean, do you think the curret prices, in particular the ones of stickers from previous tournaments, are backed by real players who buy to apply them on their skins?

You also mentioned that there is the chance to get your Steam account trade-banned? That would kill the whole investment ... How likely do you think is it to get one just by buying cheap cases in the Community market and tournament stickers ingame? If there is real chance getting your account banned at random, that's an absolute no-go and then I wouldn't put a single cent into all of this. I think, I first played the game in 2015 but so far, I had no issues.

As you can see, I don't really have much experience at all. But it's funny, the more I dig into this, the more parallels to crypto are visible. From the hope that the Chinese pump their money into the market to P&D-like schemes where Youtubers suggest their followership the next best skin/item to invest in.

The main problem I see with this is more centralized than anything else.

Not only do they control the game, but they can also create items out of thin air, they can lie how many they've put to sale, they can destroy them at will but you also have to take into account how people are attracted to the game and pray nothing better comes out.
Only the last part is a bit related to bitcoin but due to the other main issues with this, I can't see and treat it more than a hobby.

The last game I played seriously that had some sort of this market was Diablo 3, I'm getting too old for those, but at that time, being on of the first players and a D2 addict, I had lots of items, managed to sell them for some real $, I was actually amazed I was getting real money for crap. I Understand that limited items are different, that there are people spending thousands of dollars for them in games but you have to consider the fad effect. It happened with every "collectibles" that went for insane prices, the drop is harder than the fall.

Items are created by the developers, therefore, users don't actually own it (only rights to use) and they are free to do whatever they want with their creations. I like to remind people about this since it gives them the illusion of owning something that doesn't exist. It's fundamentally different from crypto since we (actually) own it.

Moreover:
Source: https://store.steampowered.com/subscriber_agreement/

It's a risky game if you somehow trade with hacked or sold accounts. However, I know some people occasionally make money from this business (not that much though) just keep in mind with risks that come with it. Just don't get caught, lol

https://www.lifewire.com/sell-steam-games-4582610

The skins in CS:GO and most of the online games out there are just for cosmetic or aesthetic values, they do care about the rarity of an item but not much, the centralized economy is a good thing for this types of economy because things could go south real quick with this, I agree that this is not a good investment because prices drop real fast in this game economy and the chances of going up is very low, I do not like the system of cosmetics in most games because you are imitating a gambling procedure like CS:GO where a lot of sites are offering skins for gamble, this economy only prospers through physical trading where people could demand a higher price than their inherent value in the game market.

The whole system is build on cosmetic items, if they give you other advantages in the game, aka pay to win, I am sure the game itself wouldn't have become so popular. I know that for most of us here it sounds weird to spend that much money on virtual cosmetic items but there are definitely people out there that buy them as some kind of status symbol ingame and to play with them.

But something else that you mentioned, also came to my mind during my research. The whole gambling problematic with the lootbox mechanics. Players  from Belgium and the Netherlands already can't open lootboxes (since 2018). What could happen when Valve has to change the current system due to legal requirements for more countries?

Ah, very cool topic @Darkoth89. I was actively playing CS:GO from the beginning and buying CS:GO cases for years. And I actually was able to make some decent bucks within the last years. What I usually did, was buying cheap cases for less than 0.05 € and tried to sell them for higher prices a few years later.

Two examples which I bought a few years ago:

"Huntsman Weapon" case bought for 0,03€ in 2014/2015 and sold it last year for about 2€~ each.

"Operation Break Out Weapon" case bought for 0,03€ at the beginning of last year and sold in February for about 0,45€~ each.

Even if I made a decent profit, one has to point out that "investing" in those cases is very, very risky! There are several factors which you cannot control and which could lead to a huge drop in prices, e.g.:

• new games could lead to a huge drop in the playerbase, especially RIOT is creating a new CS:GO competitor.
• new laws/guidelines in several states to prevent online gambling in video games.
• changes in the steam market system.
• third party websites that charge a huge fee, since you cannot "cash out" from steam directly.
• way too many cheaters, which will scare off the regular player.

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On the other hand, one has to say that the current CS:GO playerbase was growing rapidly due the Covid-19 pandemic. So now there might be another opportunity to buy some of the newer CS:GO cases which just fell out of the recent drop rotation. But as I said before, an "Investment" in those cases is absolutely high-risk. If you choose to "invest", you should be ready to lose all your money.

Attached: CS:GO Playerbase:

https://i.imgur.com/z73ZGNa.jpg

Source: https://steamcharts.com/app/730

Ha, didn't know there will a day I'm talking about CS:GO items and skins economy on bitcointalk. But anyway, from my history with CS:GO so far (from 2015) and Valve's history, I don't think invest in CS:GO items and skins in 2020 would be a smart move. Mainly because CS:GO already at the very end of its cycle life and CS:GO 2 aka Source 2 could come out at any moment now. No doubt there are a few years for cs community to accept and transition to the next gen but one it has done, you literally holding items and skins from a dead platform. Very risky, items and skins value tied to cs pro scene with teams, players, and such. Did I mention about only one update from Valve which change drop rate could also f**k your items and skins up?

Wasn't sure if I should post it here at first. So i am glad that you guys are interested in this topic.

For me it were the Operation Breakout Cases, too where I first realized how big this market is. I earned (and traded) them a few years back when I was actively playing the game. And now when I reinstalled the game and checked my inventory, I saw that they are now worth around $100. Sure, that's not much but still quite remarkable considering I though they were trash back then. Putting only some small pocket money into these cases would've been great (retrospectively).

Did you buy your cases specifically as an investment? And you said you sold them already. Does this mean you sold-off your investment completely?

Have this kind of mindset but when CSGO was still starting to gain popularity or do make up some hype then thats the time you do consider to gamble out
on buying out some skins or items but most of the time i do make use of it for my own and then later on i do sell off when its not needed anymore.

This should how be done where we should only invest on the amount that we can afford to lose.Im also a heavy top-up player but can still able to profit out
when i do sense that a specific game would able to pass out or would lose its popularity(im talking other games specially mmorpg.)
When you do able sell out some trash wayback then thats a good thing as long you dont invest too much into these cases.

I was playing a lot some time ago and I bought new cases and skins from time to time. Concerning the cases, I would'nt say I was "investing", I guess "gambling" would be the better term. And to be honest, I opened several cases myself too within the last years (catched a few rare knives, yaaay...).


I sold many cases and I kept some until today, but I honestly don't want to go into detail here.

As per your attached picture, I see that the number of players is already going down, with most of the countries terminating their lockdown it means a lot of them would stop playing and the ones that kept would spend less money as they have outside activities they can empty their pockets for. In an extreme bearish case, you could also consider players trying to recoup some of the money by selling stuff so they can have some cash for the incoming summer season, and all the expenses that come with it, hotels, clubs, booze, etc.

Yeah, buy low sell high, when there is blood on the streets, but it just might be that this new low is higher than the future normal high.

Honestly this is not that much different than what we see in this market as well, a new coin is announced and this creates some hype, then many so called investors put their money in that coin hoping it skyrockets, the majority of the them pick the wrong coin or sell their coins for a loss with only a small portion of the people being lucky enough to pick the right coin and still keep their coins when it skyrockets, so anyone thinking on doing this kind of ‘investment’ regardless if it is in an ico, ieo or items from a game should do it at the beginning of the life cycle of the ico/game and not at the end of it where the chances of getting back your money are basically zero.