South Korea Bans Virtual Sales Of Items

Written by: (Twitter @winterinformal - ) | June 15, 2012 3:50 pm

28 Comments

Here’s another blow to Diablo III‘s real-money auction house — if you live in South Korea, that is.

The South Korean government has taken the exceptional step of banning trade in virtual items, as well as botting. Starting next month, violators will face a fine of up to five million KRW, which is equivalent to about $4,000, or a five-year stint in prison — where the download speeds are so low, you’ll actually welcome an Error 37 to break up the monotony.

According to the head of the country’s content policy division, the new law will be enacted because:

“The main purpose of the games is for entertainment and should be used for academic and other good purposes.”

Other statements say that sale of virtual items leads to increased time-wasting (duh) and teenage crime. Maybe they’re talking about PK-ing?

For arcade games, game providers will be unable to list in-game items in their accounts as property, or handout gift certificates for item purchases. In 2007, the then popular arcade game Sea Story handed out certificates that were quickly exchanged or sold for cash, and the government is concerned that a similar incident may reoccur.

I’m not sure how you get from “arcade game handing out tickets” to “selling virtual items from PC games” — could it be that South Korean lawmakers are even more daft about video games than their American counterparts are?

Of course, D3 isn’t the only game where people will buy and sell virtual items for real money — it’s just the one where it’s most legal under the terms of the EULA.

But what do you think about the government taking this kind of step? And do you think it could ever happen in North America or Europe?

South Korea Bans Virtual Sales Of Items

  • http://twitter.com/Luke_Malcolm Luke Malcolm

    Sacrilege !!!

    • TheBlank

      Lol calm down Imperius.

  • DerKomp

    Since this is a reaction to D3, I understand the story gravitating around that, but I would be interested to know how this will affect GW2. It’s entire business model is based on selling in-game bonuses, but would that be different because it is 100% taxable in their income taxes and not dealing with thousands of sellers?
    Another thing is that Arenanet is owned by Korean company NCSoft, correct? Will NCSoft have problems collecting income for those transactions in countries where GW2 is released? Still, I don’t know the particulars of how much NCSoft would get, because I heard on this site that they get a whopping cut of box sales.

    • jayremy

       NCSoft is a Korean publisher, while GW2 is being developed in America for mainly a “western” audience. It may only matter for Korea client itself.

    • Old Ben

      >  I would be interested to know how this will affect GW2

      It won’t. Those “in-game bonuses” are simply software made by Arena Net, and as such it’s perfectly legal for Arena Net to sell them. But players can’t sell in-game items to each other because they don’t actually own those “items”, they just have a license to use the software.

      • Imtabca

        With D3 at some point the player is being paid for an item they don’t actually own. Even if it is Blizzard which is paying them it would still be in violation of the law.

        • Old Ben

          Blizzard has full control over the software, which makes it perfectly legal for them to charge for added services or pay back players for their contributions to the game.

  • http://www.facebook.com/people/Brandon-Evans/1603660859 Brandon Evans

    Isn’t that the model for every Free to Play MMO – Selling items? S

    • Old Ben

      No. In those cases, the maker of the game is selling you a real service (access to a game element).

      The law (presumably) only applies to people selling possessions they don’t actually own, or services that aren’t being provided by them (in-game items don’t really belong to you, and aren’t tangible property; you’re just re-selling access to a game element).

  • http://www.facebook.com/people/Evan-Iwerks/712235 Evan Iwerks

    Microtransactions from a company to players is just another form of content delivery (arguably). All Free-to-play games use this argument. Player-to-player transactions, meanwhile, are a way of exchanging money for content without going through a developer. Essentially, it’s a double standard where the developer can establish value for its products, but the players cannot.

    GW 2 is skirting this problem with the ability to convert developer-provided gems into player-provided gold with their own cash. I’m not sure how this will pan out. The article is way too nondescript in what is actually allowable and restricted (if it’s as restrictive as can be, Korea will go into recession with the number of companies that will be outlawed as a result – over 1500 companies in Korea are using the tactics that are said to be illegal). It’ll be a big headache for lots of game developers. NCSoft and ANet should have plenty of support from the US, at least.

    • http://profile.yahoo.com/ITHF7XKYGVXFAPCDMDJTKHLBBU Lian Wan

      What I am wondering is just how broadly can this be applied? In my mind all digital distribution would fall under this as well. I am assuming that was supposed to be “sales of virtual items” rather than “virtual sales of items”, not sure what a virtual sale is supposed to be.

  • http://twitter.com/ajutine Kylamiis

    derp erm, “virtual sales” or sales of “virtual items” ?

  • http://www.facebook.com/dominick.talerico Dominick Talerico

    It sounds like you guys don’t understand sales tax. There is no federal sales tax, period. Sales tax is only collected if items are sold and taken delivery of within the borders of the same state. Interstate commerce (in which goods/services cross state lines from the point of origination to the point of delivery) is not taxable by a state. So, Jason, you should NOT be paying sales tax on Amazon.com if you do not live in a state in which Amazon is based out of and you are taking delivery of that item via interstate shipping. They only way in which Blizzard would be required to charge sales tax on RMAH transactions is if the buyer is located in the same state in which Blizzard has a corporate base.

  • http://www.facebook.com/dominick.talerico Dominick Talerico

    Sales tax is only charged when a sales transaction is originated and delivered within the same state. There is no federal sales tax. So, Jason, unless you live in a state in which Amazon has a corporate base, you should not be paying sales tax if the item is shipped across state lines.

    • http://profile.yahoo.com/RC2Y257VBE4XN6IG6EC233LLAQ Jay

      Federal income tax still applies

  • http://twitter.com/Nathiest Nathiest

    South Korea starting to sound more and more like their communist brother to the North. Proof 1 that America has zero influence on the countries their military occupy.  

    • WESTPORT1963

      Absolutely the dumbest thing I’ve ever read.

      • http://twitter.com/Aoewin Maxime Beaulieu

        Agree… 
        This has nothing to do with communist. Some people just trow around words they dont understand just to look smart..

  • Noxdus

    Lets look at the bright side. This is a blow to gold sellers, which is great. It sucks for koreans, but its great for everyone else. 

    • http://profile.yahoo.com/ITHF7XKYGVXFAPCDMDJTKHLBBU Lian Wan

       Why does a blow to gold sellers suck for Koreans?

      • http://twitter.com/TuxPants Mamoru Chiba

        I think his point is that anyone in South Korea won’t be able to legally run gold selling operations.

  • http://www.facebook.com/profile.php?id=21003660 Keith William Gretton

    What’s a ‘virtual item’ I mean Music files are virtual, pdf/books are virtual, this law is crazy! 

    • Old Ben

      You can sell music if you’re the music’s author or publisher, but you can’t sell someone else access to your iTunes account, for example.

      This is basically what this law is about: You can sell software if you make it, but you can’t sell an item that doesn’t really exist (and which you don’t actually own) to another player. An in-game “item” is just a software service that exists as a result of the contract between the player and the company. It’s not an actual item owned by the player, and as such he cannot sell it.

  • Krzysztof Kotarba

    This is stupid… maybe they should ban all kind of work… 8h farming in diablo is worse than 8h work in macdoland?I don’t think so.

    • Old Ben

      Aware of the fact that I’m going to sound like a 15 year old girl: That comment was totally random.

  • http://www.facebook.com/profile.php?id=100002866191912 Hawaiian Shirt

    Look up the legal fiction of a “tax nexus” and its judicial usage between states, my friend.

  • http://www.facebook.com/davidallmighty David Cohen

    IMO this is a great thing. It is awesome to see a government making changes to help its people. It is a waste of a life if you spend most of your time in a game and not living your life. There is so much more out there. Spend a few hours playing games, but it is much more fulfilling to do many other activities in your life as well.

    • cordell bonnieux

       you fucking kidding me? Governments should NOT be able to tell people what to do with their lives, if anything this is an insult. Maybe you shouldn’t play games 24/7 i agree, but if someone wants to do that it is no one elses business. This goes for everything anywhere, governments can all fuck off, I don’t want them anywhere near me (i know what that implies save the lecture) and I’m sure many Koreans are right pissed about this and rightfully so. If you wanna be told what to do go join a religion or the army leave everyone else alone.

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