Will 2007 Be The Year of the Downloadable Game?
Several years ago I predicted - quite boldly, even to my own ears - that by 2010 digital, broadband distribution of games would replace retail as the dominant means of distribution of games. I claimed (and still claim) that retail, brick-and-mortar sales of games at places like Wal*Mart, Best Buy, and GameStop would still be around, but they'd diminish in importance to direct downloads.

As far as PC games are concerned, I think I may have been a bit too conservative.

Now Available - As Downloads
I recently discovered that many of my most eagerly-anticipated games are not likely to be available at the local Best Buy. If I really want to have the game in a professionally packaged backup disc, I may have to order it online and have it shipped to me. Or, in most cases, a downloadable option will also be available. I can burn it on my own discs.

While looking to find the release date for a DVD-ROM version of the upcoming IL-2: 1946 flight sim (upcoming for us here in the U.S. - most of the world already has the game), I discovered that the older versions of the game are still available from GameStop... as downloads. We're talking a seven-year-old game, in the case of the first game. It's one big download, but it's possible to make it available now. This is something that was effectively unavailable in retail stores several years back. Could it be possible that the life cycles of games can be extended indefinitely this way?

Steam Cleaning
There's a lot of talk amongst mainstream press about Valve's Steam. In spite of its troubled beginning, it's achieved enough penetration due to its high-profile offerings that it's now a significant distribution channel for games. In fact, there's at least one game I avoided due to it's nasty copy protection (X3: Reunion) which I am far more interested in as a direct download. As of tonight, there are 111 games available for purchase via Steam - from fairly current, full-retail price offerings (Dark Messiah of Might and Magic, Civilization IV, Prey, Medieval II: Total War), to games that did poorly in retail that are enjoying a second lease on life as "long tail" downloads (Dreamfall: The Longest Journey, Psychonauts), to older games (Gun, X2 - The Threat), to completely indie offerings (Eets: The Hunger, Rag Doll Kung-Fu, Defcon).

In fact, one of the game category tabs in Steam is labeled, "Indie." Completely separate from the "Casual" category. How cool is that?

Casual and Mainstream
And since I mentioned casual games... an estimated $713 in revenue two years ago, and that figure is continuing to climb. And the primary means of distibution for casual games is direct downloads (I *think*, though I know the sales of boxed versions at Wal*Mart remains pretty significant).

Mainstream PC gaming magazines are beginning to devote more and more of their (unfortunately slender) page counts to casual and "indie" games available via downloads. It's the fastest-growing segment of the industry, and they can see the writing on the wall.

Many massively-multiplayer games don't require players to purchase a boxed version of the client. In fact, some don't even have a boxed copy available --- you sign up online, download your client online, and pay for it all online. Even if you do buy the client in a box at GameStop, within a year the bulk of your client's code and content will have been downloaded over the web.

The Long Road To Overnight Success
The revolution started years ago, but continues to gather speed. Based upon my guesstimations last month, we may have already come to the point where the less than half of the PC gaming industry's revenues are being generated from traditional brick-and-mortar distribution.

Part of the problem is explained by Greg Costikyan in his recent article, "Are Retailers Actually Screwed?" What it comes down to is that retailers - like many web sites - make the bulk of their profits not by selling games, but rather by selling advertising. They've got deals in place that mitigate the risk of unsold merchandise, too, so they actually have little to gain or lose from the actual game sales themselves. In fact, they have so little to gain or lose that many stores have turned to used-game sales as a major source of revenue --- actually competing against the manufacturers that make their products!

In my opinion, that's a busted model. When an industry is dependent upon a piece that is not rewarded by behaviors that benefit the health of the industry, either the industry will die, or it will have to replace that "broken" piece. With online distribution finally becoming a viable channel, the replacement is inevitable.

My guess is that my 2010 prediction will have been off by about three years, as far as PC games are concerned. With the number of PC games dissapearing (to the point where many stores I've seen only offer a single, forlorn shelf in the back corner for PC gaming fans), and with the increased awareness of online distribution in the minds of the consumer, it seems like evolution at work.

And To Further Console You...
And consoles have gotten into the act, too. All three of the major consoles this round seem to have some kind of downloadable content system in place. LiveArcade has become a huge success story for Microsoft, and Nintendo and Sony seem to have followed suit. The opportunity to buy older "emulated" games for earlier consoles has many old-school Nintendo fans salivating.

The limited storage space on the consoles will prohibit downloads from becoming a dominant form of distribution with the current generation. We'll have to see about the next generation of consoles, which we should expect somewhere around 2013. So I'll miss my projection by at least three years in the opposite direction for console games.

But I think change is coming, like it or not. But with GameStop now offering downloadable games as well, it looks to me like they are planning to evolve with it.

These are interesting days to be a gamer. But haven't they always been?

(Vaguely) related ruminations:
* Why the PC Game Industry Figures Are Baloney
* PC Gaming Is Far From Dead
* Videogaming On The Decline (Again?)
* Alternatives to Front-Loading Games Sales
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Labels: Biz, casual games, Indie Evangelism, Mainstream Games

- posted by The Rampant Coyote @ 12:38 AM (Permalink)