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Another One Bites the Dust

by Chris Remo, Dec 14, 2005 2:30pm PST
Related Topics – XBLA, Steam

A guy named Eric Grissom ran an independent store called Red Devil Games for a few years, but it seems that that style of retailer doesn't really jibe with the way the games industry works, and for a variety of reasons he had to close the store. Grissom wrote a piece about it for Next Generation. It's not too encouraging, to say the least. While independent bookstores and music stores can survive based on an audience of enthusiasts looking for certain things they can't find in mainstream retailers, it doesn't look like the games industry or its audience is as conducive to that.

There is no room in this industry for empathy. You certainly don't get anywhere steering people away from product that you've overstocked, since you know it sucks.

Sure this will build you a great reputation and loyal customers. And it's a good thing you have loyal customers too, because you'll need them to help out when you're packing up your wares and closing for good. This industry demands volume, and it cares for little else. The mark-up is razor thin so you need to sell that game yesterday. Everything needs to be turned over quickly or else sold at a loss. And looking forward things are only getting worse, not better.

It's not all doom and gloom, though. Grissom thinks the larger chains have it coming too, but that all of us--developers, publishers, gamers--will see plenty of benefits from a move towards online distribution. He goes so far as to claim that those saying "Retail will always be around" just aren't correct when it comes to gaming. As a medium, gaming is inherently digital, and it makes sense for it to be distributed through digital means. Its audience is the type who already has access to the internet and feels comfortable using it to make purchases. There's certainly been a big movement in that direction lately, with Steam, Xbox Live Arcade, Nintendo's planned service, and more. Grissom has a point, but it's still difficult to imagine game retail completely disappearing. I certainly lack the insight he has from his experience, but even if the specialty gaming shops go belly up (which is something that actually wouldn't surprise me too much) companies like Best Buy and Wal-Mart still have enough pull that you'd think publishers would stick it out for them.




Comments

16 Threads | 51 Comments






  • From an American perspective, I don't see purely online distribution for consoles or PCs happening anytime soon.

    Sure, there are many benefits to exclusive online distribution: developers can completely circumvent the publisher-developer relationship and reap the majority of the profit themselves, developers would no longer need to live in fear of the publisher's bottom line, and games could be released as soon as the gold build is certified.

    Cutting out the publisher would be a major benefit to the developer, as many publishing companies are more and more becoming a hindrance for a developer (in less polite terms: a greedy, money-sucking abstraction that only acts to reap profit, inconsiderate of a developer's vision or product quality).

    Online distribution would allow for many great games, games that would normally not see the light of day, to get into players' hands. Players get good games and developers make money, everyone benefits.

    However, in America, there are a lot of potential drawbacks, even ignoring hardware limitations on the console side of things (limited storage capacity or complete lack of storage capacity being the biggest bone of contention).

    First and foremost is the lack of robust broadband in many areas. Sure, you may be able to get a 5mb/s connection on the cheap in NYC or LA, but some places don't even have broadband yet. Some cities (such as my own) have extremely limited broadband connections that would make downloading (or redownloading) multi-gig games prohibitive.

    Some people don't even have internet connections.

    Another problem is that many publishers currently own popular development companies outright, or if they don't own the development company itself, they own all intellectual property rights and publishing rights to the games their developers produce.

    If these publishers don't switch to an online distribution model, brick and mortar game retail is here for the long haul, even if the business becomes so cutthroat that it shuts out any independent entities. And unless hard copies of games suddenly outpace their sticker price, Wal*Mart, Best Buy and others will be around to sell games for a long while.

    Then there are smaller factors, such as piracy prevention (people are going to pirate the game no matter how hard you try to stop them) which runs the risk of encouraging the inclusion of restrictive DRM. This risk is especially high if the current publishers switch to online distribution. I don't like the idea of needing to phone home every time I want to play a game I have legally purchased.

    Then, of course, some people simply demand a hard copy of their game (I'm one of those people, a physical disc and a physical instruction manual are great, PDF instruction manuals can bite me).

    I'm sure I'm failing to address other concerns as well, but I haven't really given online distribution a thorough analysis.

    Still, I do see online distribution on the PC platform taking off in the next few years, many of the pros far outweigh the cons, especially for independent or start-up developers. In fact, we're already seeing online distribution start to (slowly) take off through Steam (re: Darwinia, Sin Episodes). Though, not everyone likes Steam. Then again, they might need to learn to like Steam if retailers start pushing the PC games off the shelves to make room for the latest piece of shovelware.

    Consoles are another beast. With my game collections, one hard drive is laughably inadequate to support online distribution, especially at the current sizes for the Xbox, 360, and PS2 hard drives. It works for games like Geometry Wars and Smash TV, it wouldn't work for Project Gotham Racing 3 or Call of Duty 2.

    Online distribution works well in Korea were every computer owner and every internet cafe have access to high quality, high speed broadband. It can work in America, too, once we all have good internet connections.

    Of course, in Korea, piracy is so rampant that if developers want to make a profit, they need to release the game for free and charge a monthly fee to play. That has its own shortcommings.






  • Retail outlets will never go away, and to even entertain the possibility of an industry dominated by digital distribution is just fanboy fantasy. The people who imagine a world where brick and mortar outlets have vanished are not living in the real world. Most consumers want some hard copy of their purchases and there will always be people who prefer to shop in stores and like to buy used copies of games. There will always be a market for stores that sell you hard goods.

    Digital distribution is just going to be one aspect of an expanding market.