Does digital distribution future doom game shops?
By Dave Parrack
Digital distribution of all types of media is on the rise, with video games being one of those industries embracing the new method of getting content from developer to customer. But if the future is digital distribution, and the PS3, Xbox 360, and Wii certainly suggest it is, how will game shops survive the revolution?
This generation has seen all three home consoles able to connect to the Internet. While online gaming may be the main use of this capability, another important development is the trend for offering retro or user-generated games for sale via download.
The PS3 has the Playstation Store, which offers gamers the chance to buy game demos, PSN games, and emulated retro games. The Xbox 360 has the Xbox Live Marketplace with game demos, and Xbox Live Arcade which includes classic arcade games, games from older consoles, and simple games created by amateur developers. And the Wii has the Virtual Console which includes games from retro consoles as diverse as the Nintendo 64 and the Neo Geo.
At this point in time, most of these services are limited to retro games and small demos due to the limitation in transferring and storing massive amounts of data. So being able to download Grand Theft Auto 4 isn’t currently a possibility. However, there will likely come a time when new games are available for download in their entirety.
It may be a while away, but it’s coming whether games companies want it or not. Which is a problem for game shops, as they are going to face extinction when physical media finally gives way to digital distribution.
Are they worried? Apparently not, as GameStop CEO Dan DeMatteo recently spoke of his confidence that digital distribution will not kill off game shops business. He told Game Daily:
The first digital distribution was Napster and it was illegal. Let’s just start there. The software publishers are afraid to death of piracy. Once a full game is lying on a hard drive, there’s the potential for piracy. Aside from the games, the bandwidth, etc., our studies have concluded that the network won’t be in place to do digital distribution of full games until 2020 to 2025.
Microsoft and Sony are the gatekeepers for their consoles. And if you’re a third party that should scare the hell out of you because that’s the only way to get to your customer. They’ll take 10 to 15 percent. Video game publishers sell me games today for $48 wholesale. If they go direct to the customer they’ll probably get about $30 for them. They’ll get less for the game if they bypass retail.
Is Dan DeMatteo right to be so confident? Or is it just wishful thinking to believe game shops will play any part whatsoever in a digital distribution future?
I can see digital distribution increasing in popularity in the years to come, especially as consoles get larger hard drives, and Broadband speeds increase with it. While physical media isn’t likely to disappear in the near future, it will become a much smaller part of the overall market that it is today.
In the same way that retailers who specialise in selling music CDs have seen their business suffer thanks to the increasing popularity of iTunes and legal music downloads, so will game shops find it hard to compete when full console games start being distributed in digital formats. Instant death? No. But a slow decline? Quite probably.
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September 11th, 2008
So too tired to respond but heres 2 tidbits from his quote there…
“Once a full game is lying on a hard drive, there’s the potential for piracy. ”
Ooooooooooookkkkk and physical media stops this how exactly? Haven’t game publishers been bitching about piracy causing lost sales for month now? I don’t think I’ve seen a PC game that has not been cracked.
“the network won’t be in place to do digital distribution of full games until 2020 to 2025.”
But it ALREADY exists.
So NOT debating whether its good or not, but just saying
September 11th, 2008
The game shops have a limited lifespan. They’ll be deemed unnecessary in the future, similar to how music shops are now.
September 11th, 2008
To have an all Digtal Download service you need this.
1. Enormous reliable hard drive you wouldn’t wanna lose any data for HDD corruption.
2. Good full length games like the one the PS3 store provides like Warhawk GT5 Siren Ratchet & Clank and many more
3. A great high speed connection.
3. Piracy proved.
I don’t see any video game store doom most games for PS3 has more than 30 GB in size image downloading that much data it will take for ever. Plus most hard drive don’t last really long with mass use. The future of games is Blu-ray Disc or the PLAYSTATION Store.
September 11th, 2008
Yeah and when ISP’s like Rogers calling the customers saying your over the bandwidth cap your going to have to pay a lot more for your internet. That is one big problem for video and game downloads.
Fu@#kin Rogers D%@k weeds.
September 11th, 2008
HDD corruption is not a problem because Sony and Microsoft have your purchase history. On 360 you can download again and agian as long as you bought it because Microsoft keeps a record under your profile. I personally don’t see how Gamestop could figure that game downloads won’t affect their business. Just look at the music industry. The games would be cheaper though with one less level of retail to add to their profits. Microsoft just said that the Star Wars the force unleashed demo just release a few weeks ago generated over a Million Downloads in 8 Days. Imagine if it was the whole game. I wonder if the same effect would have happened considering there would have been a fee. Also I was just wondering do you PS3 People really have to pay for demos like Dave said in the article?
September 11th, 2008
Norm
Everyone in Canada Hate Rogers. It’s a shame their the Best though. But I have never reached my limit so I don’t think it will affect me. You must download alot.
September 11th, 2008
@ CAD
No, we don’t have to pay for demos, at least I haven’t seen a demo we’ve had to pay for. Besides everything you guys have already said. This definitely mirrors the problem the music industry has, and their’s is even worse. Downloading a whole cd is way easier than a game. But guess what, artists still put their music onto cds. Disc’s will not go away until replaced by another medium.
Also, that would piss me, and others, off, if I had to carry my whole console, or harddrive, over to another’s house just to play my game. You know what computer games also still come out on discs. So it isn’t going away by digital download.
September 11th, 2008
Good morning!
I don’t think physical media will really be going away any time soon, BUT I think its silly for him to say that DD is not available yet, when it is and then also to harp on about piracy issues.
You can already dump 360 and PS3 ISOS (altho the latter you can’t really use) and the Wii was cracked a long time ago and guess what? They all use physical media. In fact it took way longer to actually be able to rip Wii ware (DD) games.
Like I said, I don’t think physical media is going away just because of some of the issues raised here already (portability etc.).
We do however have internet speeds that are capable of delivering games in a decent time frame. Take for example Shaw Extreme, a 10mbps service (they also offer 25mbps in select areas, and I’ve seen that the same services in the US) - that’s 50gig in 14 hours (or 8 gig (your standard 360 ISO size) in 2.2 hours), which I find fine considering MOST games at this point don’t use that kind of storage.
Whether the ISP & the distributor has that kind of capacity tho is another story. I’m quite sure that if DD kicked off in the mainstream overnight that your isp’s lines would set on fire and melt a hole down the earths core, or just go really slow… Anyone who’s tried steam or direct2drive when a game is released knows how painful this can be.
Oh and Ivan, a 500gig hdd now costs about $70 (probably less if you shop around) thats 10 games IF IF IF IF they are using the full 50gig. I don’t think it would be too hard to couple that with something like firewire or USB3.0 (if it works as advertised which I am sure it won’t!) and you could easy add 1 TB external drives for a couple 100 $ Canadian. Or fuck, give us a few hard drive bays or something.
All that needs to happen now if for Sony to not use those stupid notebook hdd’s and for MS to cut the crap and allow us to use off the shelf hdd’s instead of MS stuff.
September 11th, 2008
Oh and I hit you all for 10,137 with my wall of text
September 11th, 2008
Not all console sales are in areas that have, or can have, fast internet connections. There are LARGE areas of advanced countries like Australia that don’t have better than dialup.
By the time you can cover most of Australia, as to not lose many console sales there, its very possible third world countries now will be fairly good video game buyers but not have the fast internet connections to make it possible to download games.
By the time those countries get up to speed with their internet, the most advanced countries like Japan and America will have internet so much faster that games that could be reasonably downloaded now wouldn’t be worth it.
And so round and round it goes.
Interesting little thing, though. It seems many people are predicting that the LHC will lead to a big boost in information transfer, due to the massive amount of information the scientists are getting from it. Though if this would help digital distribution (with faster downloads) or hurt it (with a larger gap between the richest and moderately rich countries) would be an interesting topic.
September 11th, 2008
That’s if the LHC doesn’t open a black hole first!
lol 
Sucks to be in a dialup area tho
I remember trying to get the latest half life patch, blistering 4.5k/s if i was lucky 
*hugs cable*
September 11th, 2008
Once we all have the neuronet installations of the Apple Wii Station 72,000, the orbital updaters will be able to send terabytes of data directly to our heads from anywhere on the globe.
For sure, by then the hard copy sales of games will be dead, maybe.
September 11th, 2008
Jofamang,
But then the AIs we’ve created will become sentient, rebel against us, and abruptly cut off all access to that information, causing riots, pandemonium, anarchy, and the death of human society as we know it.
The future looks bright.
-Arvis
September 11th, 2008
But will the AI use us as batteries or just ‘terminate’ us all?
September 11th, 2008
Nows a good time to embrace Luddite philosophy.
September 12th, 2008
Damn Skynet!!
September 12th, 2008
You are all in luck. My real name is NEO. I will take down those machines. No worries.
September 12th, 2008
There are large portions of the US that don’t have anything better than dial-up. You can’t loan a game to a friend if it resides on your hard disk. You can’t re-sell an old game or buy a used one without physical media and as anyone who’s lost data to a HDD issue knows, you need everything backed up to physical media to really be safe. A back-up HDD drive can become compromised as can a flash drive. Not to mention that 100+ full games ain’t going to fit over on a 1TB disk and what about people that use their console for videos, music and photos. Physical media isn’t going anywhere.
September 12th, 2008
Burned physical media degrades also.
I’m sure pressed lasts alot longer however.
September 12th, 2008
Wylie,
By “take down” do you actually mean “make peace with via shameless and obvious allegory?” Because if so, I may have to punch you.
-Arvis
September 13th, 2008
specialty stores, gaming or other lines of business, will always struggle against big box retailers. the move to digital distro will, undoubtedly have an impact, both in new and used game sales. an impact gaming stores don’t need.
personally, i think they should ALL go out of business. I’m tired of being talked to like an idiot by a teenage gamestore clerk who makes 1/5 the salary i do, simply because HE doesn’t have the same game tastes as i do…
and i’m tired of being lied to; “if you don’t preorder (insert game name here) you prolly won’t get one”. while they ignore the fact Target and Walmarts are close by and have ALWAYS had the game i was looking for.
my only concern is if they go digi distro on games, they had BETTER cut the price of the games substantially as it’s a negative equity position with trade in opportunity.