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Game Retailers Hurting Themselves With Digital Distribution
GameBiz recently had the chance to speak with Brad Wardell, CEO of Stardock, about pricing and distribution within the games industry. Wardell follows up a bit on the Demigod piracy fiasco from a few days ago, and mentions that retail outlets may be on their way out.
"Retailers need to be careful about this stuff. They're kind of signing their own death warrants once they push digital distribution at the store. Once you have the thing set up — once you've experienced how to purchase the game or deal with it online — why would I go back to the store for the next purchase? Especially if the store isn't providing added value. If you're a retailer, you're killing yourself. If I can't get a game off Impulse, I'm going to Steam. I like stores, but I'm really lazy."
Online distro favors devs / publishers for several reasons:
The last is the huge one. Adobe and Microsoft have tried all kinds of tactics to supress consumers' ability to re-sell software. The game companies no doubt hate seeing used game transactions taking place without them getting a cut. With online distro, the re-sell market is crippled.
Seth
$5 / month hosted VPS on linux = awesome!
I liked Stardock before they went all Impulse crazy.
But now:
- Maybe the game wont activate in the future
- Who knows what kind of spyware is in Impulse
- No separately downloadable patches
I bought Sins but was rather unhappy when they switched the patching system to Impulse. So you could no longer play online (game versions must match between players) unless you installed their spyware.
No thanks, if I wanted Steam I'd go with Steam.
Is it so wrong to want to buy a truly DRM-free game?
On a DVD (which I can backup), with no passwords/serials to forget/lose?
How is it that "Game Retailers" are hurting "Themselves".
Shouldn't the headline read "Online Game Distributors killing Game Retailers"?
I haven't seen any actions on the Game Retailers part that is hurting themselves except for existing. I suppose you could argue they should have become what steam is. But that's passively letting yourself die out.
Books don't run on a computer. You can "download" a book, but using a laptop to read a book is inconvenient, and an e-book reader is expensive and clumsy.
But software needs to run ON the computer. There's no real benefit to the packaging and/or CD itself once it's installed, other than you can get $3 selling it back to (ahem) the local software/games store.
Used games is what the local software store makes money on, anyway. I bought GTA 3 for PS2 at the local store for $7, and I doubt the the original guy got more than $2 for the game.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
You need a small lesson in Economics 101 my friends:
1) The cost of a product is NOT equal to its cost of manufacture, storage, shipping & profit. It is much more complex. For instance store display: Shelves are pricey. If you do not want your Game to be relegated to the corner, you better be prepared to give the Retailer a larger share of your take.
2) The cost of in-store advertising, banking costs (LoC, and other bank costs), add up to your margin; Seriously you are not thinking of shipping 100,000 copies of Tales of Valor to Gamestop without buying insurance against their bankruptcy, not to mention getting their banker to issue you a letter of credit, accounting fiascos, etc. Its not just production+marketing costs. (FYI marketing is NOT selling. Marketing includes everything).
3) Storage space, warehouse rentals, insurance, shipper costs, insurance, finances, banking lines of credit, etc., take a bite out of your profit.
Getting a DVD manufacturer to press 1000 DVD at 30p is the start of your troubles. The maker will charge you for shipping to/from his factory, you need space to store it till you ship it to shops/retailers/direct purchases, money to tide you over until then, etc.
Which is why CDs cost $19.99. (all of the money does not line up the RIAA pockets. And NO, am NOT a supporter of RIAA/MPAA. I buy my music from Russian websites).
So, there goes your arguments.
Being Digital involves a different set of troubles: You need to purchase bandwidth and in this age of throttling, double-dipping by AT&T, you need the clout of Google and the bank balance of Bill Gates to muscle in on a online store like Impulse or Steam. They handle your troubles for a fee. And that is not cheap.
You need to tie up with PayPal or credit card processors who take a a cut.
You need to make sure your latest fixpacks or updates are shipped via the same media.
You need to make sure your online support is available 24x7x365. And NO, you cannot set timings like 9AM-6PM Central. You DO NOT sell at BestBuy. The customers fix your timing. And according to them they ARE calling you at 9.30AM their time. NO they don't care if its 10.30PM your time.
You need to make sure that if you want to sell a second Game you better be prepared to make sure your planned downtimes are PLANNED. No unscheduled downtime. If its down for 10 mins, its down for 10x1,000,000 mins (1,000,000 users).
Above all, prepare to have DVDs ready for shipping when somene wants the physical copy and is willing to pay for it.
"Doing what i can, with what i have." ~ Burt Gummer
A good mobile phone can be used to read eBooks. And that is not at all expensive and clumsy.
I know it is off topic but I hate amazon for breaking the mobipocket idea of "read on the device you already own" to push there Kindle thingy.
So stupid - got the whole infrastructure for platform in-depended eBooks when they purchased mobipocket and they broke it.
A business owner should not allow sentimental opinions about the method of marketing or delivering the product to limit his business. The business owner should seek to implement the model or models that maximise the profit of the company. Or someone else will, be able to thrive with lower prices, and then put the sentimental business owner out of business.
Social considerations can be difficult to balance with the need to maximise profits and be lean.
From time immemorial man has had the tendency to acquire for free if he could get away with it. .license file which embeds the user's email ID, hardware ID and a few random details is quite hard to break yet not too costly.
Stealing Electricity when it was introduced was a BIG problem. Big enough for many companies to die. Eventually it got straightened out.
Same was with Telegraph. The number of times codes changed in Telegraph is too numerous. Since telegraph companies charged by word, companies had exotic dictionaries with vast number of definitions for each word: Long sentences for single meaningless words.
So was it with Telephone. People still steal phone talk time through pranks, tapping, etc.
Internet stealing through WiFi...
You can't prevent stealing.
You can only control your own costs so that a stolen Game did NOT result in adding to your costs. Like DemiGod is doing now for Stardock.
A
No, DRM would not do it. Gamers get mad when their PCs are hacked legally.
If your Game is stolen, and exchanged for free in torrents, but it does NOT add to your running costs, forget worrying about it. What does not cost you, should not worry you.
Of course your lawyers will argue that each illegal install is money stolen from you: that's not entirely true. A 11-yr old kid may want to play, but does not have the money to buy it. He will somehow steal it. You can't get money from him. But you can bet that he will praise it to his friends, some of whom will buy it.
Other crowd is the earning well-to-do crowd. They will the latest. And they will yours.
Others are professional hackers. They thrive on challenge. They WILL crack the most hardest Games, even BioShock. You can't control them.
Some, like me, will buy out of loyalty, or will crack it if it can't be bought in my country, or play a hacked version to see if its Good and buy it to keep my PC free of Trojans. And yes, i buy every Game stardock makes: Why? NO DRM. I don't even play their Games. I just buy and that's it. I play Company of heroes ONLY. Not even Crysis. But i still buy Political Machine, Gal Civ II, DemiGod, etc. Why? NO DRM, plus i like Stardock.
Their support is cool and their CEO seems to have realized that DRM a la, BioShock hits them back.
Thier only slip up was online resources. This is where they pay costs.
If yours is not online gaming, then you are good to go.
People who steal your Game may buy, may not. But as long as they don't cost YOU in server time or resources, why worry?
Its a Business Risk. Much like CISCO doesn't care if clone copies of their routers are sold in China. Why? They don't incur costs on such cloned copies. So no worry.
Think about it, but consult with a lawyer. IANAL. So beware. I talk from my experience only.
"Doing what i can, with what i have." ~ Burt Gummer
Only for the excessively rich. The rest of us wait until the game hits the $19.95 bargain bin.
you might be incredibly wealthy and thinks that $69.99 for a game is nothing, but 90% of us think it's insane and wait for it to become affordable.
Digital distribution allows them to keep the price high as hell forever if they want, It costs nothing to make more copies for them and they dont have the stock of CD's or DVD's out in stores getting dusty over the course of a year forcing the price down.
also it helps game companies by destroying the used game market. If I have to buy all my Wii and Xbox360 games online, I cant sell them used or buy them used...
and the Game publishers are salivating uncontrollably over that idea, they desperately want the used game market to go away.
Do not look at laser with remaining good eye.