The way that game inventories and product sales are tracked hasn’t changed as much as we think it has, at least according to Vault Network’s Julian Migura. Despite the revolution that has seen gamers acquire their titles digitally rather than on physical media, the Dutch co-founder of VaultN insists that publishers and retailers are increasingly stuck in a past era dominated by game cartridges and floppy disks. We’re told it’s costing the industry billions – apparently the equivalent of 15% in global sales, by using inefficient methods that equate to pasting game keys from a spreadsheet into an email and hoping for an email back when they’re sold.
If you recognise something of that characterisation in the way you distribute and audit your game inventory, Migura is hoping you’ll take a serious look at VaultN, an in-development digital supply chain platform that allows you to control, manage and track your key stock in real-time. Recently announced after a successful period of closed testing, Migura is hoping VaultN will become established as the standard platform for digital sales; one that is at least more becoming of the way games are distributed in the 21st Century.
Why establish a new way of doing things if the old ways seem to be working just fine?
They still work to some extent, yes, but they definitely create a lot of friction. It was reasonable for reporting to be a little bit delayed, to be done on a monthly or weekly basis, back in the days when physical was dominant. But right now, the majority is digitally distribution and a digital product can move so fast.
It’s extremely important to have real time access to data and to also make sure that I know exactly where my digital parts are, who has access to them, and so on and so forth. That’s not the case with, let’s say, a traditional Excel file, emails from A to B, etc. You want to be able to easily scale your network and in order to do that, you need to have real time data access, real time reconciliation access, and you need to have a standardised system that makes it as easy as possible to connect with as broad a database of partners that you want to connect with.
How easy is it to make the switch to VaultN?
The nice thing about this system is that because it’s an open API, you can basically connect any existing system to it. You can still continue to use the same processes that you are using right now if you don’t want to switch, but you have the chance to automate them. So instead of, let’s say, having 50 price lists that I send to 50 different email addresses, or having 30 different Excel files with codes that I send from A to B, I can now automate this. By setting up a process that takes me the same time as sending one email, essentially, I can then have it automated for a limited number of partners. After setting it up manually, which cost me the same time as what I’m doing right now, every other step afterwards is automated, so I no longer have to deal with any of the overhead. It’s going to allow me to have a much broader distribution network and partner base if I want, but at the same time it also allows me to maintain the same network, the same partnerships, but make them a lot more efficient in the sense that I will need to spend less overhead.
You say the old ways are costing the industry billions: 15% in global sales. How’d you come up with that figure?
We basically made an estimation specifically on the PC market based on sales volume, traffic sources and so on that we see going into unauthorised sales. We see that those are eating into profits and into maintaining prices. It’s basically creating price erosion if you know you can go and pick up the title somewhere for a lot less on the grey market. Our aim is to provide control to the publishers so that they have the ability to understand where their products are. They have the ability to say ‘Okay, I want my product to go exactly here, under these conditions, for this net price, and I don’t want it to go elsewhere.’ That’s essentially what the platform allows.
You also say it’s impossible to cheat the system?
Essentially, it replicates the commercial conditions that you impose on any other partner. So if you’re saying ‘Hey, you can sell to UK individuals because that’s where your storefront is strong’, then I can enforce that. That’s the only place that you are allowed to sell. And I can enforce, for example, that you cannot take keys out in bulk. If I have another partner that is doing physical distribution in a place where I need them to be able to take out in bulk, I can assign those rights to them as well. So it depends on your commercial partnership, but you can enforce both regional controls, but also other conditions that apply to a specific partnership. Those have to be compliant with regulations, so I would have problems limiting that within the EU, for example, for reasons of regulatory compliance, but I could in theory give you European keys, but only allow you to sell them in Benelux, as an example.
At a later stage we’re looking to add more and more layers, together with the publishers and storefronts, in order to protect the business and to ensure that a user is going to get a genuine product, is going to go to the correct licence key, the right fees are paid to everybody, and it’s going to be delivered at that moment, in real time, correctly, so that the user has a great experience and can start playing their title whenever allowed.
What stage are you at with development?
We’re currently in MVP stage, we call it, so we’re working on the initial product. We’ve done an API-only based release, where we’ve worked with different partners from the publisher, distributor, retailer, e-tailer, storefront side, and we’ve gotten a lot of feedback from them. We’ve transacted about a half a million licence keys during that process. And then at the same time we’ve started to build out our own front end for the platform.
The API functionality is great and it’s important to have it because large companies will want to continue to use their existing systems and to connect them in a way that does not create any additional work. But smaller publishers may not have the systems, so they will have to have a platform that they can use where they can set up these items without requiring API access or API functionality. So that’s essentially the idea. And that also means that the shift from being a small publisher to going to a large scale enterprise is not a problem within the system, because it’s able to handle everything either manually with the platform itself, or, fully automated to API, or anywhere in between.
Who is signed up?
We’ve been, as I said, working with a bunch of different partners that includes publishers, distributors and storefronts. We’ve had very good discussions and we’re now looking to demo and provide sample access to a lot of these partners to really play with the system. Some of them have been playing with it during the API stage. Some of them will now start playing with it. And some of them we’ve already had very in depth feedback and that’s been very helpful. We’re hoping that by the end of Q3, early Q4, we’ll actually see them transacting on the live environment, with real partners and real traffic. Before then, at gamescom specifically, we’ll be providing access to our sandbox environments so that we can do tests with these guys on a larger scale.
In terms of the partnerships, it’s really a big range. We’ve had a bunch of different triple A publishers, smaller publishers and a few indies as well. We’ve been having discussions with a lot of different storefronts.
What is it that VaultN doesn’t do at the moment that it might be able to cope with in two, three, four months from now?
So what we’re looking to expand in the future is the capability of DRM. So allowing publishers to manage DRM better inside the platform, even without requiring a specific DRM solution that they have in place maybe already. We’re also looking very specifically at mobile and we believe that with mobile slowly opening up, with the walled gardens of Apple and Google slowly being regulated, this will provide a lot of opportunity for third party distribution in the coming years. We’ve seen this already in play in Southeast Asia, to some extent in Japan and Korea.
But for now, the first part is to get the product to market, to learn from the feedback. And then, based on the feedback from all of our partners, work very closely with them to understand what they need, why they need it, how it’s helping their process so that they can maximise the use of the platform. That will really help them to automate and standardise their processes and distribution and thus grow their revenue.
Finally, your LinkedIn profile says that you are “building a standard for NFT and blockchain game distribution across metaverses”. Why is there no mention of NFTs or the metaverse on the VaultN site?
When we started the project we thought it would be a good chance to be based on NFT/blockchain technology, but realised that it’s not the right time yet to launch the service based on those components. There have been scams and dubious practices with the technology that’s left a lot of people doubting it, ruining the potential advantages. We still believe blockchain might play an interesting role in distribution (e.g. to enable decentralised en/decryption), but we believe the core benefits of VaultN for our users and partners are making their life easier and that’s what we focus on: bringing digital B2B distribution to the 21st century.