Slashdot Mirror
Game Retailers Facing Digital Distribution Transition
This editorial at Eurogamer examines how the games industry is dealing with the growth of digital distribution — a transition they're handling better than other entertainment industries, but not without a few stumbling blocks of their own.
"The examples from other industries undergoing this transition are not promising, since they tend largely to focus on metaphors involving creeks and a distinct lack of paddles. Bricks-and-mortar retailers of music and movies have largely sat back and grumbled while their businesses were hijacked, first by online retailers of physical product and then by digital distribution services. ... Specialist games retailers who follow that model face little more than a decline into insolvency in their medium-term futures. Worse again, they face competing with far bigger companies to retain their slice of an already shrinking pie — as boxed game retail sales fall off in favor of digital distribution, supermarket chains are increasingly seeing high profile games as a worthwhile loss-leaders."
Something tells me that it will be harder to download the game hardware itself. And yes, you can buy it online, but there is a huge "I want it NOW!" market that online and shipping will never satisfy. But the margins will have to come down on many things, and value (Expertise perhaps) will have to go up.
Record stores are dead. Video rental stores other than a few major chains are dead. Why should game stores stick around? The only one near me is a tiny one next to a Cartridge World (ink, not ammo).
The A titles may still justify some shelf space at WalMart, but I don't see any remaining need for standalone game stores.
...I'm not buying.
The Digital download would have to really, really cheap (less than $10) to make it worthwhile for me to participate in this new economy. Why 10? Because oftentimes I buy a game on DVD for $20, play it, and then sell it used for $10-15, so my actual out-of-pocket cost for most games is less than $10 overall.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
I prefer to use my bandwidth for Porn. I was taught not to waste sacred resources, 99% of my bandwidth must be used for porn related activities and the rest for /.
Digital downloads need to be loads cheaper because of the following reasons. They can't be: 1) Borrowed 2) Rented 3) Returned which means that if someone wants to buy a game, they have to get it straight from the publisher. Plus, our broadband infrastructure isn't really equipped to download GBs of data as the primary way of purchasing games. And then you have to factor in the cost of bandwidth that we'll probably pay for in one way or another and you begin to see that the real benefits are only for the publisher and not for consumers. I'll stick with discs, thank you very much!
Uggh. I've had some HORRIBLE experiences with digital distribution for games (EA Download Manager, Steam).
Give me a hard copy over digital any day.
"The difference between genius and stupidity is that genius has it's limits" - Albert Einstein
All this means is that the business model put forth by Steam on March 22, 2002 won.
I use it and it works great, with nearly a thousand games, sale prices on older games, and the option to either play it off-line in case Steam ever dies(just turn off updates and "keep this game up to date" for every game, then kick it into offline mode) or on, and also whether you want it kept patched or not(one game I have I've modded to a silly degree and so I've got that off).
It just works and I can get a game in an hour or two most of the time. The only physical games I buy any more are for my son's PS3 because Sony hasn't fully implemented this yet.
I'll use Steam as a good example of digital game distribution because they are very good at it, although have room for functional improvement. Steam is a good thing, but I didn't start out feeling that way. Even now, I have issues with not being able to grandfather (aka register and seamslessly update) in my old retail games that Steam currently offers the same downloadable version of. They have a limited list of retail games you can do this for, but it's not nearly extensive enough. I priced my retail game collection and to replace it all with Steam version of the same games, I would have to spend a couple hundred bucks. There are a number of ways Steam or the original distributor that has a presence on Steam could handle this migration, but it's still disappointing to some degree. An observation I have with Steam is the failure to provide a premium option (ie you pay extra for it) to have Valve burn and mail a physical copy of the game(s) you want, default-configured for off-line play, that is still part of your profile of games.
On the other hand, I give Steam a huge tip of the hat with regards to being one of the first to stake claim and set up shop on the new digital frontier. It's obvious they are serious about providing a fair service for their downloadable content and return customers are their lifeblood. As a bonus, there's some quality free stuff on their site, so you can download the client for free and play games for free, or load up on "bargin bin" games on the cheap. Plus Valve and their partners are aware that with the new digital download sales model, there's room for hefty discounts and weekend promotions.
I think the old model of a distributor swallowing up developers to become "in-house talent" like EA or Vivendi or Zenimax is a fading concept. Distributors want to purchase more developers so they have something to sell, because the costs of retail operations and marketing are expensive. With digital distribution, the game distributor doesn't have to tie up it's money with talent acquisition, they just have to create lots of partnerships to promote and sell the games as inexpensively as possible and return maximum revenue to the developers so they can make more games so the cycle can continue - no development employees to lay off, no cost overruns due to protracted development cycles.
I keep coming back to Valve as a great example, since they offer so many services under one umbrella, but they also are very accomodating to game devs that just want to sell games and make some money while maintaining their independance.
And buying games for $20 is just a matter of waiting for the pricedrop.
The pricedrop happens roughly when the game's publisher turns off the matchmaking server for online play. After that point, all you get when you try to play online is "DNAS Error -103: This software title is not in service."
The brick and mortar stores helped grow steam, at least for PC users. Their extremely poor selection of PC titles as they chased the console market, their focus on second hand sales and their lack of interest in competition forced people to depend on services like steam. The actual change-over though will happen when companies focus on on-line distribution and don't limit how competitive steam can be for fear of angering the retailers. You can already see this with a lot of smaller titles (which would probably not get any retailer presence anyway) who are free to offer great prices and special deals on steam games. In turn this experimentation and possibility of smaller titles making some cash is widening the number of games available. In comparison there's things like Call of Duty where steam was forced to near double the price to preserve the ability of retailers to rip off Australian customers. That sort of thing leaves a pretty sour taste in the mouth.
Then look at something like Killing floor. Somewhere between a mod and a full game. Chance of getting it into EB without it already being huge (eg. counterstrike) near zero. However list it on steam, do things like this weekends free trial (easy to do on-line, impossible via retail) and maybe they'll make some money out of it.
Oh, and all my downloads cost me no quota. My ISP (iinet) mirrors steam's files and allows fast (1Mb/sec) and free downloads.
tl;dr. The sooner the game retailers die the better for gamers. Can buy the huge titles at regular stores and for anything specialised better it's on steam.
Personally, I got very angry about Steam when they decided to change their online shop pricing to local currencies for some European countries - of course not without some juicy price increases. Basically, one Dollar then was transformed into one Euro now. (One Euro currently equals to 1,5 Dollar)
Of course, this created a HUGE uproar among the community, with a notorious thread residing on page 1 of their general forum for several months now, currently at 449 pages despite heavy censorship: http://forums.steampowered.com/forums/showthread.php?t=770231
The wave of complaints meanwhile caused many Steam sellers to demand price adjustments, since they were affected as well by all this negative publicity among European customers. Nowadays, the price situation varies from game to game for continental European customers who are forced to pay in their local currency - may be a fair deal, may be a rip-off when compared to US prices. And surprisingly, UK Pound prices are often even cheaper than US Dollars.
Okay, one last topic for my rant posting: The price issue in general. I mean what the hell?! As an Austrian citizen, it is far cheaper for me (like 30% cheaper!) to order a boxed game at http://play.com/ and have it shipped to me from the island of Jersey than purchasing a mere digital download on Steam. Yet Steam is very successful - they must be swimming in money. What infuriates me is that our economy/politicians/whatever created this bizarre situation, and are doing nothing to change it. It is an ecological nightmare! Producing DVDs and shipping them all over Europe by land and sea is less expensive than sending a few GB of data through some glass fibre? I want to see the person who's responsible for this. No, actually I just want to punch them in the face.
Hey this might actually become my first 5-star posting *hopes for the best*
Steam might be great (though count me as one who's had very bad experiences with it)
But, on consoles, as cool as XBLA, PSN and Wii Shopping Channel are, they are not doing well. There are a few games that have done okay but they aren't even at 1/20th of retail levels for any comparable game.
Of course eventually it will happen that e-distro will take over retail but except for iPhone it's far from there yet.
CDs and DVDs are digital, you fucking douchebags.
When there are still regions of the country without affordable broadband, games as digital downloads are a long way off. I don't think any of the console companies are ready to ignore significant chunks of the country because their residents can't afford to pay for expensive broadband plans solely to justify their shiny new console.
Goo goo g'joob.
Posting as anonymous coward, I don't want karma, only people who read.
Like it, love it or hate it, Digital Distribution Format (DDF) is the future. Fewer costs associated with manufacturing, distributing and controlling loss. With faster internet connections, this is where the industry is headed.
The game companies are businesses, they want to maximize profit. The costs of stamping a DVD for the game, boxing it up and shipping it vs. the cost of servers to distribute the game will eventually land everything towards digital distribution.
Myself, I like a hard copy, but honestly the last game I bought was Super Mario Galaxy, so I could play it with my kids. My kids love digital distribution and prefer it to going to the store, they like having a game in a matter of minutes without having to drive to a store and *hope* the copies aren't sold out. Remember that problem with popular games (and the pre-order BS), a thing of the past with Digital Distribution.
Most people here can complain, but you're only remembering the past with rose-tinted glasses. When a game had problems, patches were hard to get (Masters of Magic?) if at all possible. Now you get patches immediately online.
Reselling games? How much do you really get for those old games? A pittance of what you paid for them. And the only old games people really want to buy are the old popular titles for the PC (X-com, Diablo, Warcraft II, etc.) or cartridges or discontinued systems (NES).
As for brick and mortar stores. Most will go away. The good small ones, the really good ones (that have knowledgeable staff, and a good selection) will stick around. You will have stores carrying old games for old systems (the NES, SNES, Genesis, Atari 5200, etc). Just like there are good record stores that carry Vinyl albums still. They just won't be on every street corner.
Now, I'm done with my ramblings. You can ignore as you see fit, but I'm going to play some X-Com UFO defense. I have the original disks, but I use the newer, less buggy version I downloaded off of the underdogs.