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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.
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?
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.
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.
This is actually not a bad idea. I walked into my local EBGames store to get a classic old fashioned Joystick to play X-Wing vs Tie fighter as my current computer doesnt have a MIDI port to pulg my old joystick into. Where they used to stock hardware like this there were a couple of racks of Wii Controller covers, DS and PSP "Skins" Bargin bins of empty boxes and shelves lined with more empty boxes and Collectible Card Games behind the counter.
The only Joystick they had was under a bargin bin out of sight. I had to ask a staff member did they still sell them. The staff member had to ask the manager who asked another assistent where they moved the old stock to. The second assistant pulled out this old Logitech box (circa 2005) and said it was the only one they had. Ironically is that it comes with a 12 month warrantee that as I had just bought it is only now coming into effect.
With MMOGs, the PS3/Xbox360/Wii marketplaces and things like Steam what role does the game shop serve now? If not this one of demoing the game to get you to want to buy it then what?
The MyTh - I am a figment of the Imagination - [Im Probably even not here]
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.
Right, because before Marx, there was no government intervention in economies. I'm guessing you're from the USA by the casual way you throw the term "Communist" around.
With no more used game sales, the publishers can finally have everyone buy new copies and be rid of their number two complaint.
It'll be a slow transition, but we'll eventually see them discount games down to factor this in, right?
Government as referee is different from government as boss.
Most of the games I buy are through online retailers. I prefer to own a physical copy. I don't like spending over 20 euros on something I cannot touch. (That, and I'm a sucker for collectors editions.) And I don't mind waiting a few days. Offline retailers usually suck, because it's a big mess. It's not easy to find stuff or browse through the whole collection.
Well, the person they're interviewing is in fact a representative of the Demigod company, so of course they're going to ask him about it.
Also, they took responsibility for the pirates hampering the game for the legit users... but didn't exactly say that the server problems weren't the fault of the pirates. They said that they shouldn't have configured their game so that the large number of pirate copies (which they say they should have anticipated) affected the gameplay experience of the paying customers.
In short: they state that the problem was caused by pirates, but that they shouldn't have allowed the pirate copies to fuck up the experience for their paying customers; piracy is inevitable and should be planned for; and that pirate copies are usually not lost sales. Their biggest regret was that some customers who pre-ordered were left feeling like chumps when the pirates got copies first thanks to Gamestop. All in all, a very astute and correct analysis of the situation, I think.
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!
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.
Okay, then make it bribing the local functionaries of the mob or whoever else managed to get the firepower advantage first.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
EB/GameStop have a very small store and almost no hardware, you'd have been better off asking at an electronics retailer, they have entire shelves of joysticks with unpacked ones placed on the top of the shelf so you can try them out before picking one.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
People still buy stuff at stores? Meh, Amazon and Tesco.com forever.
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.
Introduce an enjoyable, playable game with many hours of playable/mod-able content, and you will strike it rich.
You forgot the "make it appeal to the masses" part there.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
But I don't. I am in Australia and I have a 12GB/month download cap (after the 12GB my speed is slowed/shaped/capped/whatever to 56k). I am not gonna use up all my bandwidth downloading ONE game. This is aside from the fact that it'd take me longer to download than drive to the store and grab the boxed copy. Maybe we're behind the rest of the world in AU (I dunno), but at this point in time I sure aint in hell gonna download something as big as a game (or Fedora... except that my ISP mirrors Fedora and it's not counted towards my monthly limit, so I do that).
If game companies go the online route only, then they will lose a customer.
Pity us poor fools who don't know the exchange rate between our local currency and the Nippenny.
Let me Google that for you: 3000 yen in usd
If you attend the concerts
A lot of bands play in bars and in other venues that are legally classified as bars, shutting out their fans under age 21. By the time a fan is old enough to attend a concert, the band will likely have broken up.
If you buy in a retail store, you can play the game now.
No; you have to wait days for shipping when the retail store has to special order the title you want.
Hmm. They obviously didn't account for the actual load; I had thought it was due to failing to account for piracy, but now that you mention it, I suppose 100,000 legitimate copies is not an unreasonable number for the opening month of a new game (although probably far higher than what they actually expected). Having that load arrive earlier than the game's actual street date probably didn't help matters, either.
I guess my point is that it's not hard to imagine that the architecture they had *would* have handled the load of all the reasonably expectable sales. So I think it's hard to say that the 9 pirate users hitting the server for each actual paid-for-copy had nothing to do with its inability to handle the load. You're absolutely correct that 100,000 legitimate sales would have been just as bad for the infrastructure, but that seems a high number of early sales for a frankly small-fish game to my ignorant self. You're likewise correct that they should never have set up their server architecture that way, and they agree.
you'd have been better off asking at an electronics retailer, they have entire shelves of joysticks with unpacked ones placed on the top of the shelf so you can try them out before picking one.
I tried a Best Buy store in Fort Wayne, Indiana, and it had two PC game controllers on display: an Xbox 360 USB gamepad (compatible out of the box with Windows XP Service Pack 1 and newer, but apparently not Ubuntu Hardy) and a Logitech gamepad. Conspicuous by their absence were arcade-style PC joysticks.
Why are digital copies of games bought online via Steam, Direct2Drive and so on nearly always the same price (if not sometimes more expensive) than a retail box version?
It can't be a bandwidth thing, not for Steam at least, since retail versions activated on your Steam account can be downloaded without the media as well.
Why the big swindle? This applies to digital music as well I've noticed. iTunes charges 99p or more for a song in the UK, which equates to 10-15 pound an album depending on the amount of inspiration the writer had at the time. When you can buy a new release at 9.99 in your local food store, why bother with online purchases?
It does make me believe that some people may have genuine intentions to legally purchase digital products without leaving their homes, but pirate them instead when they realise they are being conned.
A 11-yr old kid may want to play, but does not have the money to buy it.
In practice, you're saying:
A 11-yr old kid may want to play, but her 35-yr old mother does not have the money to buy it.
But why doesn't she?
Introduce an enjoyable, playable game with many hours of playable/mod-able content, and you will strike it rich.
But console games sell despite the lack of mods.[1] Why is this? Oh, it's because four people in your home only need one console, one TV, and one copy of the game for a game in a split screen (e.g. Mario Kart Wii) or a shared camera (e.g. Super Smash Bros. Brawl), not four PCs, four TVs, and four copies of the game.
[1] Apart from token moddable efforts like RPG Maker and Fighter Maker.
No matter how horribly broken the game is that they sell you, they don't take refunds.
Why are you letting these clowns ruin our country?
I'm a casual gamer who bought a PS3 mainly for Blu-Ray. There are two ways I buy games:
Although the main reasons I don't shop at game stores are price, convenience and practicality - I do my research online, so why not buy online - I also hate the following things about game stores:
You know, despite the general public's movement towards digital distribution, I am still torn as to whether this is the best way to do business. Granted, the game industry isn't really there to suit every gamer's needs, but still...
On one hand I'd like to have the physical copy of the game - but that isn't my deepest, darkest fear when it comes to digital purchases. I am afraid that, per the EULA, I'll someday get screwed due to some random errata or possibly lose everything if the service shuts down.
Say that a company buys out Steam (Valve, etc), and decides that it was a poor investment and closes Steam altogether - everything I purchased on there would be gone. It'd be interesting if they could at least guarantee steam-free ISO downloads of each game in this scenario, or even, perhaps, allow you to download the ISO WHENEVER you wanted to.
Granted, they'd never do this because the point of the digital distribution is to help counter piracy, and releasing untouched ISOs into the wild would essentially be giving the games away. I do find a quote from the article interesting, however:
"Piracy is more of an annoying thing. It's an ego thing. You put your heart and soul into a game and you see someone playing it online who stole it. It pisses you off. You're just really mad. You have to take a step back and say, "if you had stopped them from pirating it, would they have bought it?" The answer is probably no."
It's pretty unfortunate that executives at companies like EA never realize this. I completely understand that this thought-pattern alone isn't enough to quell the rage felt by everyone who helped to develop and produce the game, but then again this is the mindset that prevents game makers and distributors from implementing obtrusive and obnoxious DRM.
I guess my point is that digital distribution is somewhat of a scary thought - no guarantees, no control, no "freedom" - if you read the EULAs, you essentially paid $50 to "rent" the play time from the game makers.
In addition to all of this we have companies like Time Warner Cable that want to implement bandwidth caps - imagine a future with complete digital distribution of operating systems, all software, and all games - but then you have a bandwidth cap, so you end up paying ridiculous sums just to access the products and services that you paid to have access to; you end up paying for the program and the bandwidth to download it. Don't even get me started on cloud computing.
Blah, after that rant, all I can say is - I hope that games are never completely taken off the shelves and distributed digitally exclusively... even if GameStop is overpriced, or a pain to deal with, it's at least a fun place to stop and browse, occasionally pre-ordering a hot title (there's nothing like walking in with a receipt, ahead of everyone, and asking for your brand new pre-order... digital distribution doesn't provide you with that feeling, or the smell of the new case/manual/disc)!
Reading the previous article, GameStop released the game early. So everyone that was chomping at the bit to get the game that didn't know it was available at gamestop, (or that had already put down money to preorder the game elsewhere) had an easy option to get on board early, pirate and play it while waiting for the game to come in at their local shop.
I'd do that too given the option. Not surprising in the least. They can't call this any kind of impartial representation of how piracy affects sales. In this respect, piracy does no more to hurt sales as does releasing a trailer. ("well, that had a lot of SUCK to it, good thing I didn't preorder")
I work for the Department of Redundancy Department.
Mod parent with a couple (+1, Informative)s for his trouble. GP raises a question which is partially addressed in TFS: retail stores are actively promoting digital distribution.
I remember the first game I got: it was a wack-a-mole game for the VIC-20. It came on a cartridge. The cartridge contained a ROM chip. It was digital.
Later I started buying games on floppy disks. Those were digital too.
Then some came on CDs. (Digital, of course.)
At approximately the same times that CD ROM drives became affordable, distribution over the internet also started gaining popularity. The internet is digital.
Now retailers are saying that the profits from the last 3 decades of software sales were illusory, and that they were actually hurting themselves? Wow. What is the alternative to digital distribution? Are these people going to bring back laserdisc, or analog tape? I just can't believe it.
;)
People, do you have any idea how incredibly stupid you sound, when you use the word "digital," not to describe, but to contrast(!!?!) networks with digital media?
Since this is Slashdot, I'll use a car analogy. A manufacturer comes out with a new car. Their ads say, "Don't drive a car! Drive a conveyance!" and it has a picture of their car in the ad. And people buy into it and act like it's not ridiculous. That's you, people who use "digital" as a secret code word that means "download."
"Believe me!" -- Donald Trump
Perhaps something like a linked article!
Fuckwit.
Except the only "retailer" mentioned in the story was sony. And to me Sony is nothing more than a distributor not a retailer.
He talks about hypotheticals in the article. "If game companies were to start selling online then they would be teaching their consumers that there is an easier way."
But from what I've seen Game Retailers seem to feel that way already and are content to slowly fade into oblivion.
So as I said before. It's a pretty misleading headline to imply that Game Retailers are actively working to right now to undermine their business with online sales--since the only example provided was the Microsoft/Sony online store type arrangement.
All true. Put my point still holds as Amazon Kindle uses a slightly changed Mobipocket format which is even more restricted. Of course if you break DRM they are both the same again.
Instead of all readers apart from Sony it's only Kindle and nothing else. That is certainly not an improvement.
Besides: why am I not surprised that the Sony reader won't read Mobipocket? Well obviously, because it's Sony, the company which brought us the memory stick and atrac3.
So long as there is a need to keep the people sedated and distracted, there will be video games. The manner of distribution hardly matters. Though while dedicated video game shops at the mall may change or vanish, (un-likely, given the reality of console games), I certainly doubt we'll stop seeing physical game packages any time soon.
Since racks of video game packages are shiny and alluring with all their colors and public profile, I suspect, like magazines, they'll remain in the public perception even after they stop making immediate sense. Mind control works best when you saturate awareness from multiple vectors.
Think of it this way: If I were a huge game manufacturer, I'd be sure to want a highly visible rack of my game packages standing a few feet away from the wall of new lap tops at the local computer store. --If you think of every game box primarily as an advert rather than a product conveyance, then it not only fits into the budget, but if I sell enough of them to cover the printing bill, then the advertising pays for itself directly. --While every laptop consumer is a potential game customer, not all of them read game magazines. The video game rack for many is probably the most important way of getting product awareness into their heads.
Yeah, it's cynical, but so is the whole concept of advertising. Heck, most magazines stopped earning any real money from their point of sale cover prices long ago. They exist because they are good advertising vehicles.
-FL
No, your mom has to special order your adult diapers because they don't make them in your size! Because YOU'RE OBSCENELY FAT AND INCONTINENT!
How does that taste, fancy-pants? I just burned you to a crisp!
(-1, Raw and Uncut is the only way to read)