Bill Gates famously said that most people overestimate the effect of technology in the short term and underestimate the effect in the long time. This is easy to see as progress in technology is cumulative and incremental.
With this in mind it is interesting to see what Michael Pachter, an analyst from Wedbush Morgan has to say about downloaded games. He reckons they will be worth $400 million this year, just 2% of the market. He goes on to say: “Downloads will become 20 percent of the market within five years, and probably peak at around 50 percent of the overall market in 10 years.”
In ten years time we will be enjoying the Sony Playstation PS5 and the Microsoft Xbox 1440. I really cannot see these devices using any physical media for distributing games. Progress over 10 years is immense. Ten years ago my internet came over the latest, red hot, 56K modem technology, now, even in low technology UK, I am cruising along at 10 Mb/sec. And in more advanced South Korea 100Mb/sec is the norm with 1 Gb/sec rolling out soon. Ten years is almost forever when it comes to the evolution of digital telecoms.
So not only do I think that Michael Pachter is wrong, you can also clearly see why this should be the case.
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yeah here in the USA we have the development of BPL (broadband over power line). It has been many years in the making. one hurdle was interference with hand radios. That has been solved. Currently we have a upstart that is still a emerging comany called Ambient (ABTG.OB). It has two models x-2000 200mbs and 2007’s x-3000 400mbs, and a rumored x-5000 1gb as the next set.
This all before it gets the first penny of the billions of stimulus dollars as the communication part of the ‘smartgrid’. If the government is behind it. It will happen. In fact the CEO of Ambient and a few others where in the ‘white house’ the headquarters of our government, on a leadership meeting. This technology will allow cell phones to provide cheap internet connection ANYWHERE there is a power line. Also wireless (non cell phone) connections. Our government has set a goal of 1.2gb for all by 2014. Plus smart houses. Now I say all that to say this:
If you had 1gb a second that means that it will take literally less than 1 minute to download a 50GB blu-ray disk that is FULL!
No need to pay a preorder for GAMESTOP (a chain of stores here). No more guessing about how many copies to make for a publisher. No more not having supply on a surprise hit. Most games are nowhere near that size, even with three hour movies. It will take you less than 10 minutes to download a 400gb blu-ray (if they are actually released). If the next systems go all download it will solved the piracy problem. And the used games competition problem(even though us consumers tend to like that problem).
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Unless the the peak 50% figure has nothing to do with technology and everything to do with people’s buying practices.
For example the technology to buy books on-line has existed for over a decade (Amazon) but brick and mortar bookstores are still doing fine. Why is this? Many if not the majority of people prefer buying at retail than on-line.