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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."
If you go into Dymocks or Barnes & Noble or some other book store, you don't really expect them to say "go buy it from Amazon.com", do you?
This applies even more so for digital media where the entire product can be downloaded (barring shiny manuals and soforth that rarely happen these days anyway). Isn't a physical retailer becoming irrelevant anyway?
Rampant carbon sequestration destroyed the Dinosaurs' tropical paradise. I'm here to help repair the damage.
With music, the stuff that really matter to me, the musicians I really like, e.g. U2, Def Leppard, etc. I still buy the physical CD even though I could just as easily buy the digital versions from the comfort of my room. Not only am I a completist, I am a fan of those bands. My "B-class" bands or one-hit wonders, yeah I do buy the digital versions.
Same principle with games. I've been waiting for StarCraft II, Diablo III, etc. Even if I could get them digitally (if offered), I'd still buy them from the local store when they come out. I've gladly paid a premium for the physical copies of the games I really like over the years. Not just for the nostalgia, but also to support our local store.
It's a highly inefficient operation in terms of getting a good return from the shelf space. It's taken up by giant empty boxes that don't do anything.
Here's an idea. Tear down these remaining stores and turn them into arcades with every game loaded on a server with terminals all around. You pay-for-play and if you decide it's something you'd enjoy pay for a copy on a USB stick. Now you have instant gratification and avoidance of downloading of 3 gigs of shit on Steam.
It seems to be popular opinion that downloads cost are so close to zero that it does not matter. Well after pricing bandwidth deals for servers and minimum bandwidth cost, since you need enough bandwidth for peak demand not average. I was surprised that pressing DVD's and posting could easily be cheaper.
I can get 1000 DVD pressed for 30p including art on the disk and a 4 page slick. 10000 is much cheaper since it can use the same master. Its not much more for a box. Postage is pretty cheap if your not using amazon pricing as a guide. Now for bulk distribution to shops, I would estimate that is cheaper to sell box sets that online copies.
Really the price of infrastructure is the killer here. If you could get away with average bandwidth rather than peak it wouldn't be so bad.
The Grey Goo disaster happened 3 billion years ago. This rock is covered in self replicating machines!
The problem was not caused by piracy. Demigod automatically polled an update server with HTTPS to check for updates, and the update server was hosted coincidentally with the actual game servers. They were brought to their knees by a large number of requests, and it would have happened even if they had sold 100,000 copies. The means by which those 100,000 clients got into people's hands has nothing to do with it.
Books are easy to replace, cheap and require no electricity to operate though.
Ease of use is still a lot higher than ereaders or computers.
Make a man a fire and he will be warm for a day, set a man on fire and he will be warm for the rest of his life