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Digital distribution is an inevitability. The popularity of Xbox Live Arcade and the arrival of the PSPgo herald an age where physical media is no longer required and gamers can get the titles they want delivered straight to their console of choice in minutes. The digital age is coming, and that's something we have to get used to.
It's something I've actually been looking forward to. The PSP's potential as a download platform excited me for many months, to the point where I grew impatient waiting for that potential to be realized. With the PlayStation Store offering more and more PSP games, not to mention the arrival of PSP Minis, we're getting one step closer to a time where discs and retail chains are out of the equation, and publishers take full control of the market.
I was once a proponent of the digital age, but that age has not even happened yet, and between them Sony and Microsoft have already made me dread what's to come. Their actions in the field of downloadable gaming lately have made me worry about what's in store for gamers when they no longer have alternative means of obtaining games, and publishers get to pull every string in the market.
I don't like the glimpse of the future that Microsoft and Sony have shown me, and I now worry that the digital age of gaming will be a dark age for consumers. Read on to find out why.
Microsoft's announcement of Games on Demand was a bold step, a significant leap toward the digital age. Full retail games are now available for download, direct to the Xbox 360's hard-drive. In terms of console gaming, this is absolutely huge, and its impact on the future of the industry cannot be denied. Freedom from the shackles of GameStop are already within the industry's grasp, all it needs now is for mainstream consumers to catch up. However, while Games on Demand looks good for Microsoft and third party publishers, it doesn't look too good for the customers.
Despite the lack of physical production, packaging and shipping costs, you can still buy most Games on Demand titles for cheaper at a brick-and-mortar retail store. What's worse, some territories like Australia have to pay over and above the RRP, with Mass Effect controversially being sold for $100. Essentially, gamers are expected to pay more money for less content. Publishers make the same amount of cash they always did, but expenses are decreased, subsidized by gamers gullible enough to download a game instead of buy it at a store for less.
Sony is pulling a similar move. The PSPgo looked incredibly promising as a download-only platform, but the recent confirmation that PSP games will cost the same whether they are a UMD or a download has diminished the potential of the system drastically. As with Games on Demand, costs are reduced while the amount of money charged is identical. It'll cost $39.99 for both Gran Turismo and Persona, regardless of whether you're buying a nicely packaged UMD or downloading a simple file.
In a way, the PSP situation is worse than Games on Demand, because those buying a PSPgo will have no choice whatsoever, unless they keep an older model of the system lying around. Sony wants to push the PSP primarily as a digital platform, but if it can't offer a reduced price, what real incentive is there for customers? Convenience? Paying $39.99 for a file is not worth it for sheer "convenience" alone, especially with the automatic refusal of refunds and lack of ability to trade the game in, should the $39.99 get spent on a bad game.
What's worse, something like Persona has a special edition UMD set, that comes with fancy packaging and a bonus soundtrack. You can actually buy the special edition for $36.99 on Amazon, making it cheaper than the downloadable file, which comes to you with nothing. How exactly can one justify releasing special editions of games that can be bought for cheaper than a game that doesn't even have a box? The simple answer is that Sony doesn't have to justify it, because Sony is in control.
This is the major problem with digital distribution. The consumer will lose any sense of power and control, while publishers will gain total domination with no accountability whatsoever. Having eliminated the used game market and binding its consumers to EULAs that refuse refunds or any sense of recompense should games be buggy or simply sub-standard, the industry will have carte blanché to act as it pleases, regardless of the harm it will cause to consumers.
The market will no longer determine price. The publishers will. And who's to say that when publishers attain full control of the gaming market, they won't raise prices even higher? Activision is already trying that at retail of all things, and CEO Bobby Kotick has publicly expressed his desire to hike up costs if he could. You think he's the only CEO who desires that? They all desire that, they just don't have the gall to admit it. When digital distribution finally becomes the primary way of purchasing games, price hikes could be instigated without retribution. The games industry will set its own price at whim, and without any more alternatives, consumers will have no choice but to pay whatever they're told to pay or simply stop buying games altogether.
It all sounds very dramatic and I'm making myself look like a prophet of doom. However, Sony and Microsoft have already made steps toward proving that this potential future could happen. They've already revealed their hand and shown us how they will act when they have total market control. They will act with impunity, and damn the customer in the process. Just look at how Microsoft raised the price of Braid and Castle Crashers, allegedly without the blessing of the developers themselves, just because the games were popular and consumers, at the time, had no choice over where to buy them. XBLA was the only place to get these games, so Microsoft charged what it wanted. If you don't think Microsoft won't charge what it wants when we no longer have retail games, then you have are a more innocent and optimistic man than I'll ever be.
I am not going to state that this is anything more than a possible future. It's something that might happen, not something that will happen, and is merely an outlook based upon the current situation. One potential theory for the high cost of digital games at the moment is that Sony and Microsoft are afraid of angering GameStop by undercutting their prices. Perhaps when GameStop is out of the equation, prices can be safely lowered. But then, who's to say that Sony and Microsoft won't just keep prices that away, if consumers are shown as willing to pay that much.
After all, if you knew someone was willing to give you ten bucks, why would you ask for only five?
Fortunately, there are some publishers already offering digital distribution that aren't planning to gouge us any time soon. Valve has won many dedicated fans thanks to Steam, a reasonably priced digital distribution model on PC that constantly offers deals and rewards customer loyalty on a regular basis. This is definitely the example that Microsoft and Sony should be following, but I fear that they won't. I worry that instead, they will act with arrogance, knowing that console gamers have no alternative. They have already set this precedent.
Whatever the future holds, it's a while away yet. The mainstream market is so slow to embrace technology that physical media will be required for quite some time. However, my disappointment with Microsoft and Sony over their shameless downloadable offerings leaves a bitter taste, and where I once was excited for services like Games on Demand and the PSPgo's digital offerings, I am now wary, and a little bit worried, over what this means for the consumer.Right now, we have options. We have choices. We have recourse if we are dissatisifed with a videogame. Refunds exist. Trade-ins exist. Prices drop. All of these things, all the weapons we have as consumers to protect our own interests will vanish, and every last card will be in the industry's hand. We'll be at the mercy of companies who do not believe in mercy.
Many publishers have proven over the years that if they feel they can get away with something, they will do it. Publishers don't care about how the consumer feels, especially if they know the consumer has no choice. The digital age will offer these companies the freedom to get away with practically anything, and I sincerely hope that their newfound freedom to act capriciously will not be acted upon.
Things could go several ways, but in the most likely possible futures, all I can foresee is our wallets getting raped. This is a new age that I should be excited about, not fearful of. The fact that I fear what could be a brilliant new era of gaming is criminal.
Contest:
4:00 PM on 09.08.2009
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And hey, there's not-pirating if the price point is ridiculous.
Not that I condone such actions but...
Another issue I have with digital distribution is that, if your console or whatever breaks for some reason, you'll just loose every game you own. Yay!
I guess we'll just have to wait and see, because at this point, there not much that can be done about it. I'll say this though: although one of the reasons digital distribution is good for publishers is because it sort of avoids piracy, I'll give it a day or two before the whole system goes down because of torrents.
"I now worry that the digital age of gaming will be a dark age for consumers."
"Despite the lack of physical production, packaging and shipping costs, you can still buy most Games on Demand titles for cheaper at a brick-and-mortar retail store. What's worse, some territories like Australia have to pay over and above the RRP, with Mass Effect controversially being sold for $100."
Agreed 100%: I've been fortelling our doom for months. In fact, we are the crazy prophets in the corner who say "we DON'T want to tell you 'I told you so'".
My problem with the digital market is paranoia of what is to come when businessmen get a firm grip on it. I feel like a lot of other publishers will follow suit with what some PC companies are doing: limiting your purchase to “5″ activations (a glorified rental).
If this catches on, and the marketplace is entirely digital, our games will have no value after purchase. Additionally, what if we want to sell them? This only means more margins for the developers/publishers who actually make the games, which is great news in a sense, but we still may or may not actually own our goods.
"You want this game? Well, you can’t buy it used anymore because we own the digital rights, so make sure your computer doesn’t crash 5 times! Also, that’ll be $100, you you 'aint gettin' none!"
I heard a rebuttal recently towards my fear of DRM in the digital marketplace, saying Blizzard is working towards having unlimited copies of your key-stored game available for download. It’s true that only a few publishers are using extreme DRM measures now, but my contention is that when digital distribution really catches on, publishers will make everything with DRM on it in the future, forcing you to constantly re-buy games.
And how would you stop them from doing that if the game was released only in digital form, and you could only buy it from their “Steam”-like service?
Fool proof plan to make money:
1) Do not release a demo of a game, so you have to “buy before you try” (PSN)
2) Make sure users can only download/use it several times before the license expires, and cannot sell it secondhand (Spore)
3) Charge ludicrous amounts of money as you are the sole provider of said game (Games On Demand in the future)
4) Charge up the yin-yang for pre-developed DLC that are really just unlocks built into the game (Katamari Forever)
4) Profit (Effectively, after buying unlocks, you could pay upwards of $100 USD for a glorified rental!)
If we’re currently being charged for cheat codes, I don’t see why they wouldn’t try this in the future. As you can see, I gave current examples: all they need to do is get together for an epic money hunt!
Think about it this way: all of the situations I listed above are happening now on a small scale, including the price jacking. But unlike how you think it’s going to play out, people are buying it anyways; just look at Modern Warfare 2’s prestige edition in the UK.
All in all, Jim, it's nice to see that someone else is as batshit crazy as I am regarding digital content.
--Pappadukes
Also, holy shit, up until the moment I read this article I was under the impression that Braid was a 360 exclusive. A million billion thanks for inadvertently enlightening me. I'm going to find it on Steam ASAP, hopefully it'll run. :P
I'm all for the occasional $10-15 download if it's worth the money a la Braid or Shadow Complex, or classic PSX games for my PSP/PS3, but for "real" games, I want a box, a disc, and whatever cool bonus shit comes with it. My game shelf isn't electronic.
I realize it's more complicated than that, but I don't feel a driving need to always be playing the latest thing, so I'm not that concerned about feeling pressured to buy a game for more than I'm comfortable with.
Also, as the technology to make games becomes more streamlined and ubiquitous, I think we're going to be seeing more indy games tackling genres that have been mostly left to the professionals until now. If Sony pisses enough people off by charging $500 for Madden 24, some dude who's selling a home-brewed football sim for $4.99 might suddenly find himself to be very popular.
They can definitely take some consumer options away, but I don't believe they have the power to take all, or even most of them away, and that makes all the difference to me.
2R$(Brazil) = 1U$(USA)
Games like Mass Effect cost R$160 in retail market(our corrupt government charges insane taxes) so if we bought it by 25 bucks via XBL, it's a great deal.
...but i still like having a pile of boxes in my room.
Also, the prices of DLC is bs. Nothing ever goes down (unless I own a gold subscription) because there isn't a competitive market. So everybody foams at the mouth whenever a Deal of the Week happens. its ridiculous.
I do hear how Steam is awesome though.
This is my biggest beef with Microsoft's XBLA and their moonbucks system. A game like Band of Bugs is released slightly over 2 years ago, debuting at 800 points, or 10 dollars. Two months later, Blue Dragon is released, debuting at 60 dollars. In the 2 years that have passed, Blue Dragon has slowly dropped to 10 dollars, whereas Band of Bugs hasn't moved an inch. Now both games are competing in the 10-dollar, 2-year old game range, which one is more likely to get a sale, a full retail game or a much smaller, much shorter Arcade title?
I'll try to translate/summarize his post:
He says, that it's totally logical that most people would rather use digital distribution if they could buy their games cheaper than in retail. But reality is, that a company can't pull this off, as long as they still are greatly dependant on retailers. Which Sony and Microsoft do. In terms of selling their software, but to an even greater extent in terms of selling their hardware.
(That's the point where their position differs greatly from Valves, as someone mentioned steam)
So if they would sell their games below their recommended retail price, they would immediatly have the retailers standing on their doormat, demanding the same discount.
Simply put: As long as they don't find a way to sell their hardware in other ways than retail, digital distibution won't take over retail sales.
What would digital-only distribution do to the game rental market?
I know it sounds like a convenient excuse to for a MS and/or Sony to make even MOAR money, but every manufacturer that sells both direct or thru a retailer has the same issues with pricing. Lame or not, that's a major reason why they can't sell it cheaper.
Certainly didn't forget it, in fact I brought it up in the article. Sure, it's a somewhat valid excuse for the time being, but once MS/Sony have established that people will pay that much money for a file, what's to say they won't keep that rate fixed when retailers are less important?
Sony and MS are certainly limited by the existence of stores like GameStop, but I cannot see them becoming generous and loving once they have unbridled market power.
Well, it's so much better now where console makers set prices at an obscene $50-$60, and then places like GameStop sell used games for a measly $5-$10 off for six months following the launch. :P
Jim raises some valid concerns about Games on Demand and PSP minis, I think those problems stem, in large part, from the ghettoization of downloadable games. They can't directly compete with the major retail disc-based games (which is also a side effect of Sony, Microsoft, and Nintendo becoming overly dependent on third party retailers for selling their consoles and games).
In contrast, PC gaming has largely moved to digital distribution through places like Steam and look what happened—far better deals on big name franchises. And the App Store is even better at keeping prices affordable because ALL iPhone/iPod touch software is downloadable and Apple is primarily a hardware company, thus they have little incentive to inflate SDK, licensing and price tags as Microsoft, Nintendo, and Sony (despite being a hardware company, they sell their consoles at a loss, as if they're a software company) do.
When all the console makers go download-only, if not in the next generation then surely the one after that, they'll also be in direct competition for developer support. This is especially true in the increasingly popular mobile system market, where the PSPgo and Nintendo's next handheld (and their current DSi) have to compete with the iPhone/App Store model of high volume-low margin software. If/when Apple opens up the Apple TV to third party software developers, it could put pressure on dedicated home consoles in a similar fashion to the iPhone/App Store.
I also hate the argument "Well, if the last company causes a problem and there's NO ONE left, THEN we'll worry." Uhm, deal with problems before they start!
Rawr, rawr, rawr, digital distribution. No thanks. Rawr, rawr, rawr.
Again, the idea that they will start doing whatever they want with no accountability only stands when the entire market agrees on not compiting with each other, something that I don't see Sony and MS doing in the near future...
Again, the idea that they will start doing whatever they want with no accountability only stands when the entire market agrees on not compiting with each other, something that I don't see Sony and MS doing in the near future...
I'm not convinced the market will bear digital-download market gouging as you describe. CEOs like Bobby Kotick believe that consumers will put up with $130 games ($80 base, $50 DLC) because they've put up with games at $60 for years, but I think he overestimates our desire for the renewal of the Neo-Geo price point.
Oppressive price gouging will only occur if we decide we're willing to part with any amount of money to play our games.
For such a well written article, this line sounds like is was written by a 4yr old.
This has played out time and time again in other supply constrained monopolies, why would this one be different?
What if the PSP Go fails because no one is stupid enough to fall into the trap mentioned in the article above? What if core gamers simply leave gaming because of all the milking of gamers?
Digital Distribution is what the INDUSTRY wants the future of gaming to be, but the CUSTOMER disagrees. Whenever such a conflict occurs, the customer must always win, because the customer is the source of income for the industry; if the industry does things customers do not like, customers will simply depart, and the industry will lose money. The way to advert the travesty of digital distribution mentioned above is to stop being customers. I'd say Nintendo made the motion plus device just in time for the customer base Sony and Microsoft are trying to milk to flee to the Wii system; 2 Mario games and a Zelda from first party with Monster hunter from third means the wii is just starting to attract enough third party attention and possess enough consecutive core first party games to satisfy anyone who truely feels they have had enough of Microsoft and Sony.
If us gamers are being disappointed in Sony and Microsoft's decisions, then there's no way the two companies are attracting outsider. With the way they're speeding to milk customers for all they've got, it's not a matter of "if" Microsoft and Sony fail, it's only a matter of "when," and a question of which one will fail first.
I think the PSP Go will be the first to fall. Digital Distribution only will likely kill it before it ever had the chance to catch on - partially because the distribution system limits itself to people who can connect their systems to online networks regularly, and partially because of the huge skepticism about the digital distribution future the industry calls inevitable but the customer considers undesireable.
Although I find it very scary that if the industry continues in the direction it is going, the best hope for the core gamer is the wii.
Oh, what the heck am I doing? I Don't even have XBOX Live yet. I am a fool.
"The consumer will lose any sense of power and control, while publishers will gain total domination with no accountability whatsoever."
Ultimately, it's all about supply and demand. If a publisher thinks they can make more money by selling a game for $30 to 7,500 people than $15 to 10,000 people then they will. But if consumers say no because it's too expensive and their not getting the box, extras, etc, then the publisher won't.
That's why when Apple released the new iPhone they charged a sick amount of money for it...because they knew that dopes would still buy it. Basically, any company will do anything that consumers let them do. But it is still the consumer who has the power to not buy.
My guess is that the video game industry will be surprised by how much video game sales will go down if they adopt the pricing strategies that Jim talked about. The question is, will the publishers still make more money with less sales? Because ultimately, they care far less about # of sales than they do about net profit.
But yes, I predict doom and gloom as well. I fully support Steam and others like them because of their approach. I know that I will, however, cut back on my video game buying if companies do follow Microsoft and Sony's idiotic examples.
http://www.gametrailers.com/video/sdcc-09-dc-universe/53578
Watch @ 2.55