How fast will plastic and cardboard game distribution die out?

I had a go on here at Michael Pachter, analyst at Wedbush Morgan, when he said that downloads would become 20% of the market within 5 years and peak at 50% in 10 years. To me that is incredibly conservative and I expect there to be no physical media at all in 10 years time, online distribution will be 100% of the market by then.

Online distribution confers huge advantages over plastic and cardboard distribution. Instant global distribution, ensuring that the customer has the latest version of the game and massively reduced product costs for starters. Physical distribution is cumbersome, slow, inefficient and expensive. In fact it is amazing that we haven’t switched over sooner, another example of the platform holders stunting progress.

So it was nice to see Wonderhill CEO, James Currier supporting my position. “My money is on the Web people to take the lion’s share of the gaming world by 2013″ is a sentiment I can understand. And it comes in an interesting  interview.

But the console platform holders will not be left behind. Microsoft are offering their older 360 titles as downloads on Xbox Live starting with about 30 titles. And now Michael Pachter thinks this will be extended to new games, with hard drive size being the limitation.

Personally I think that once publishers and customers have experienced good downloadable game distribution they won’t want to go back to archaic plastic and cardboard. So we will very soon reach a tipping point. After which plastic and cardboard will very rapidly be consigned to history.

And to see exactly what I am talking about you have to look no further than the iPhone App Store.

4 comments ↓

#1 Steven Leicester on 06.24.09 at 8:23 am

This is a fine balace for me as a consumer. On one hand Bruce you state that removing plastic and cardbaord distribution will cut costs.

I certainly hope this is the case, as if game producers keep charging £40 for new titles as downloads then my game buying power will decrease massively. At least now I know in my own mind when I go to spend that sort of cash I will be able to trade the game in at a future date for half its value means that games at present are really only £20.

So for downloads to be attractive to me, they would have to be around this price point to make up for the denial of trade in value.

I also rent a lot of games, where they have been reviewed as fun titles, but with a very short lifespan (5-6 hour main storyline in some cases these days!). Any digital distribution model would also have to offer a ‘rent’ option where the game would automatically delete from your HDD after say a week.

One thing I would like though with digital is perhaps the option to pay a couple of pounds for a day’s trial, so you can dip your toe in the water before committing. Sometimes demos don’t have enouygh scope.

#2 Mark Buchholz on 06.25.09 at 6:50 pm

Steven, i think your concern is fair. But i believe with digital distribution the business model will also change to not let the customer pay in advance but on demand for additional content. That’s how we handle it: let the user pay for what he consumes.

#3 Jurrie on 06.26.09 at 6:11 am

I agree with the enormous potential of tapping into online distribution. On the other hand I also have a firm belief in people wanting to hold stuff, build a catalogue, show(off)their products to friends etc… (not in the last place with great limited edition with nice artbooks/packs/goodies)

I also believe in ‘shopping’ staying in people’s habits and go out and see games in all their various packs etc leads to (more) sales (impulse buys?)

Third point is for the gifts, it is much nicer to give a game in a nice packaging than a download coupon code.

I firmly believe that when well done, these markets will grow eachother and make the total entertainment consumption (share of wallet) bigger.

#4 Robyrt on 02.24.10 at 7:04 pm

The lion’s share, sure, but there will always be a niche market for boxed games, just as iTunes shows no signs of utterly destroying CD sales.

Also note that AAA games’ digital distribution is more problematic because of their sheer size. Most Xbox owners must pay $100 for a new hard drive if they wish to go digital, and there is no instant fulfillment as there is on the App Store or PC.

online poker
SuperSignupBonus