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DP ServBot
09-09-2008, 07:30 PM
Filed under: Business (http://www.joystiq.com/category/business/)

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Building upon assurances (http://www.joystiq.com/2008/08/22/gamestop-not-concerned-about-digital-distribution/) delivered several weeks ago, GameStop COO Dan DeMatteo continued his utter disregard for the impending retail crisis as the gaming industry steadily shifts to digital distribution. "The first digital distribution was Napster and it was illegal. Let's just start there," DeMatteo began his lesson to GameDaily (http://www.gamedaily.com/articles/news/gamestop-digital-distribution-wont-overtake-retail-until-2020-at-earliest/?biz=1). "The software publishers are afraid to death of piracy. Once a full game is lying on a hard drive, there's the potential for piracy. Aside from the games, the bandwidth, etc., our studies have concluded that the network won't be in place to do digital distribution of full games until 2020 to 2025." And by then, well, it'll be too late. Even conservative projections place GameStop in control of the global marketplace by 2017.

The important thing, DeMatteo reminds publishers, is to keep selling your games to GameStop (http://www.joystiq.com/tag/gamestop). After all, he claims, Microsoft and Sony take a big cut when you go direct through consoles. Plus, GameStop guarantees it'll sell a single copy of your game at least three times. Er, wait a minute ... you're not supposed to hear that part.
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heybtbm
09-09-2008, 08:26 PM
You can almost taste the fear, can't you?

Anyway, I've been saying the same thing here for years. The big retailers simply will not let full digital distribution happen. Walmart, Target, Best Buy, Gamestop...will utterly destroy any entity that crosses them. This has been the reality of 1000's of companies for years. Why would the video game industry be any different?

Another crucial item that the digital distribution people always overlook is the required infrastructure. It just isn't there. I can count on one hand how many people in my family have access to anything other than dial-up internet. None of these people live in the back woods or remote areas either. Yes, in 2008. No cable, no broadband. Satellite and cell phone internet at their current capabilities won't cut it either. It's going to be YEARS (2020 - 2025 sounds about right) until we see 100% digital distribution.

neuropolitique
09-09-2008, 08:59 PM
iTunes Game store.

TonyTheTiger
09-09-2008, 09:49 PM
Besides all the technical needs of a 100% digital distribution world, there's a psychological barrier people will have to climb over and I believe it will be a while before that happens. You can already buy almost anything online and often times it's cheaper to do so. Yet, despite that obvious benefit, people still go to stores, malls, chains, etc. We're hard wired to like people. We like being in social environments and the act of shopping, consciously or subconsciously, attends to that. It's therapeutic.

Ever since ancient times the market places were the center of town. It would take a lot to convince people that they no longer should go browsing at the local mall. Is it a change that could eventually happen? I suppose. But it won't be an instantaneous transition.

fpbrush
09-09-2008, 10:15 PM
Good point TonyTheTiger, I have thought about this same concept too--as I, like I'm sure many others here feel, that nothing can replace having something. Holding it in your hands, feeling it, owning it. But, maybe it's the sci-fi nerd in me, but I think it is very possible for us to be a society using soley digital distrobution.

I think it largely begins with now, when we see digital distrobution happening--for the first time at a large scale--through things like itunes, virtual console, and steam. It isn't as important how we feel about these things as it does the generations after us do--that will be what decides what will happen. That "psychological barrier" is very real, but do kids growing up listening to ipods and playing games downloaded on virtual console have that same barrier? My guess is not. There will surely be a time where we say "when I was young, you could hold an actual videogame". Today, the device is the thing that is "owned" and satisfies that innate human craving of possession--the ipod or wii system is what is important, not the game.

Any digital media can be digitized, its only a matter of time. If it's more profitable for companies, it will eventually happen, regardless of the reservations we hold today.

I always love this conversation though...very interesting...


edit: my 100th post! Only took me a little over 3 years, hehe :)

Overbite
09-09-2008, 10:22 PM
Digital distribution is good for PC games. Steam makes everything easier.

I wouldn't want to have to download a full xbox 360 game from the marketplace though. Even 120gb wouldn't be enough space and you couldn't buy used or trade games with people.

TheDomesticInstitution
09-09-2008, 10:34 PM
Another crucial item that the digital distribution people always overlook is the required infrastructure. It just isn't there. I can count on one hand how many people in my family have access to anything other than dial-up internet. None of these people live in the back woods or remote areas either. Yes, in 2008. No cable, no broadband. Satellite and cell phone internet at their current capabilities won't cut it either. It's going to be YEARS (2020 - 2025 sounds about right) until we see 100% digital distribution.

I agree with this 300%. Having moved into an area where broadband services are nearly nil, this "digital distribution" is quite far off. And it's a good bet that if an area doesn't have wired broadband, they don't have a lot of cell phone towers around either. In order for digital distribution to happen before this date, the country is going to need a massive technology overhaul. Of course, the internet sort of exists in a technology bubble, where people believe the entire country has HD and a T1 connection.

chrisbid
09-09-2008, 10:55 PM
gamestop needs to worry about paying off the debt they used to aquire EB and Funcoland. the gaming industry will not be immune to the upcoming economic turmoil.

josekortez
09-10-2008, 04:15 AM
Personally, I'm glad that digital distribution will be staved off for a while. It ticks me off that I need to have Xbox Live or Wii Channels to download certain shoot-em-ups since I don't bother to pay for my own internet. It sucks. At least I'll be able to buy new games through retail channels.

Ponyone
09-10-2008, 07:29 AM
Besides all the technical needs of a 100% digital distribution world, there's a psychological barrier people will have to climb over and I believe it will be a while before that happens. You can already buy almost anything online and often times it's cheaper to do so. Yet, despite that obvious benefit, people still go to stores, malls, chains, etc. We're hard wired to like people. We like being in social environments and the act of shopping, consciously or subconsciously, attends to that. It's therapeutic.

Ever since ancient times the market places were the center of town. It would take a lot to convince people that they no longer should go browsing at the local mall. Is it a change that could eventually happen? I suppose. But it won't be an instantaneous transition.

Even the dead still go to malls

gepeto
09-10-2008, 07:32 AM
Well I must say I am totally impressed with MS ability to download over a gig worth of game in under 20 minutes. 173 megs games take too long on the ps3 network and that is hard wired. Even though I am impressed I still love the ability to have a hard copy.

Andred
09-10-2008, 10:07 AM
While I do agree that 100% digital distribution is still a long way off, I also feel obligated to point out the areas in which this man is deluding himself.

First of all, there was nothing inherently illegal about Napster, just as there is nothing illegal about today's P2P file sharing software. It was shut down because it's users were sharing copyrighted music and Napster refused to remove it from their service. Whether that was a technological, financial or intelligence limitation, I'm not sure. Regardless, the service itself was not illegal.

Secondly, the speed of a T1 is irrelevant. The only reason to have a T1 is to upload AND download at significant rates. Both the incoming and outgoing transfer speed of a T1 line is 1.5Mbps. The download rate (which is the only thing that matters when DOWNLOADING a game) of my DSL line is 6Mbps. That's 4 times as fast! I can download a 30GB file in a little over 11 hours. 72 hours is a ridiculous number.

Also, this jackass seems to think that having the information on a hard drive is somehow more open to piracy than having it on some other form of disk.... That's moronic. It is exactly the same thing.

Finally, how does he think that the developers/publishers will lose money on this deal? Sony and MS may take a cut of the profits to cover bandwidth costs but guess what... you won't have to manufacture and distribute MILLIONS of copies of the game! Also, MS and Sony aren't dumb. They aren't going to alienate developers by making it less profitable for companies to support digital distribution.

I pretty much disagree with EVERY point this guy makes except for the one about digital distribution being a long way off. The U.S. is simply too spread out. We don't have the infrastructure to support 100% digital downloads yet.

monkeychemist
09-10-2008, 12:40 PM
While I do agree that 100% digital distribution is still a long way off, I also feel obligated to point out the areas in which this man is deluding himself.

First of all, there was nothing inherently illegal about Napster, just as there is nothing illegal about today's P2P file sharing software. It was shut down because it's users were sharing copyrighted music and Napster refused to remove it from their service. Whether that was a technological, financial or intelligence limitation, I'm not sure. Regardless, the service itself was not illegal.

Secondly, the speed of a T1 is irrelevant. The only reason to have a T1 is to upload AND download at significant rates. Both the incoming and outgoing transfer speed of a T1 line is 1.5Mbps. The download rate (which is the only thing that matters when DOWNLOADING a game) of my DSL line is 6Mbps. That's 4 times as fast! I can download a 30GB file in a little over 11 hours. 72 hours is a ridiculous number.

Also, this jackass seems to think that having the information on a hard drive is somehow more open to piracy than having it on some other form of disk.... That's moronic. It is exactly the same thing.

Finally, how does he think that the developers/publishers will lose money on this deal? Sony and MS may take a cut of the profits to cover bandwidth costs but guess what... you won't have to manufacture and distribute MILLIONS of copies of the game! Also, MS and Sony aren't dumb. They aren't going to alienate developers by making it less profitable for companies to support digital distribution.

I pretty much disagree with EVERY point this guy makes except for the one about digital distribution being a long way off. The U.S. is simply too spread out. We don't have the infrastructure to support 100% digital downloads yet.

As you are saying, the guy is completely full of shit. The only reason why he is trying to instill fear into gamers is because when we have 100% digital, no one will go to gamestop when they can get it straight from the source at the comfort of your own home. Also, a big thing for that company is the sale of used games...especially these days when some games are only $5 cheaper than their new ones...ridiculous!!

After we go 100% digital, MS, Sony and Nintendo should set up a forum in their respective networks where people can buy/sell/trade their games. That way users can do their own transactions without getting ripped off with EB's 40% cut. (i made up that percentage, but it seems right)

Andred
09-10-2008, 01:11 PM
Hard to believe, I know.

j_factor
09-11-2008, 01:21 AM
If anyone tries to come out with a console with 100% digital distribution for its games, they may find that no traditional retailer will carry it. I predict that digital distribution won't happen until it becomes feasible for the units themselves to be sold exclusively online.

TonyTheTiger
09-11-2008, 10:05 AM
Good point. What would end up actually being sold separately? Extra controllers, maybe a small memory card solely for transferring saves between consoles, high end wires maybe? There would be essentially nothing to sell or profit off of as far as the store is concerned.

We're talking about something that requires a lot of balls. Being the first on the market with a 100% digital console is a ballsy move because there is a chance it'll crash and burn. Wasn't that Phantom console from Infinium Labs supposed to be 100% digital? Putting aside the fact that the Phantom was textbook fraud, I highly doubt it would have been even remotely successful. I think a lot of companies who might be toying with the idea today are still not willing to be the first to take the plunge. If everyone is waiting for someone else to be the first then we're going to get nowhere fast.

Though, I was thinking...considering that many Wii games are smaller in both physical size and scope than the competition, wouldn't it be ironic if Nintendo were the first to do it?

Rob2600
09-11-2008, 12:00 PM
you couldn't buy used or trade games with people.

I remember in the 1990s, the used CD market was huge. My friends and I would go to a local CD store and browse the giant used CD section all the time. We'd also trade in CDs for store credit.

Now that iTunes is one of the top three music retailers (both online and brick-and-mortar), I imagine the used CD market has slowed down significantly. The industry has evolved. As far as I know, nobody really complains about that. Would video games be any different?

Besides, which is better? Buying a new video game for $50 and being able to trade it in a few months later for maybe $15 store credit? Or, downloading the same new game for $30 and not being able to trade it in later? One way costs less than the other, which people normally think is a good thing!


Being the first on the market with a 100% digital console is a ballsy move because there is a chance it'll crash and burn. Wasn't that Phantom console from Infinium Labs supposed to be 100% digital? ... I highly doubt it would have been even remotely successful.

I think the Phantom would've failed, not because of downloadable content, but because nobody has heard of Infinium Labs. People usually buy what they know (Nintendo, Sony, Apple, Panasonic, Dell, etc.).

gum_drops
09-11-2008, 01:19 PM
Besides, which is better? Buying a new video game for $50 and being able to trade it in a few months later for maybe $15 store credit? Or, downloading the same new game for $30 and not being able to trade it in later? One way costs less than the other, which people normally think is a good thing!


What about buying a popular used game for lets say $35.00, beating it and then selling it back on trading boards/ebay for $25.00 to 30.00. Many of us savvy DP'ers do that on a regular basis.

Also, I am not so sure how low they will go on new release downloads. The standard has been set at $59.99 for major releases on the 360/PS3. So if it goes to an all digital format, maybe they will only drop it down to $39.99 to $49.99? But without an option to trade the digital game once you are done with it, thats a tough price to swallow for many people.

Sean Kelly3
09-11-2008, 05:42 PM
Interesting topic....and one I've thought about many times over the past few years.

One thing I'm kind of surprised I didn't see anyone touch on is RESALE. If you've just plunked-down $60 for a game that you quickly realize absolutely sucks ass, the ability to re-sell said bad game and recover some portion, any portion, of your 60 clams means the world in my opinion.

The whole "tangible goods" thing has been one of my main arguments against digital distribution for years. The problem with that argument, as I've come to realize of late, is that most people aren't like me (or "us" as the case may be for most people reading this forum). I've always thought (and still do in my case) that I wouldn't be satisfied just knowing a game has been downloaded and is sitting on my hard drive. I want, or even NEED, to see that package on my shelf along with my other games. A trophy of sorts perhaps? I really don't know why, but if it's a cool game and I enjoyed playing it, I want to see that box and be able to pick it up from time to time and remember how much fun I had playing that game. Looking at it's filename in a list of dozens or hundreds of titles on my hard drive just doesn't cut the mustard for me.

It's become obvious to me, however, that I'm in the minority in this regard. Digital distribution of music is here to stay and has pretty much destroyed the CD industry. I had always thought that a least a decent percentage of people would need to have the actual CD in their library in order to be satisfied - I was wrong. People don't seem to care all that much and are only too happy to download that new album from iTunes or Limewire for that matter. I think most people see games a little differently though.

Games cost 4-5 times as much as a CD which makes that whole "something tangible" thing just a little more important to people. It also has a huge impact on the resale factor. Where you might have been able to re-sell your used music CD for a measly buck or two if you're lucky, a used $60 game might net $15-$25 if you re-sell it quickly enough. Most people wouldn't care much if they lose-out on their buck or two, but $20 is a completely different ball game.

Another huge difference between a game and a music CD is the fact that a CD is comprised of multiple tracks whereas a game is just one game for the most part. You're going to either like the game or not, but in the case of a CD, it's highly likely that you will only like a portion (a song or three) of it. You have the option through iTunes or an equivalent to purchase just the portion that you like. Not so with a game....you have to pay for the entire game and if it sucks you're outta luck in the case of a digitally distributed game.

What about the replay value of games? Let's say I download a game, beat it, and find my hard drive lacking space six months down the road and I delete it to make room for something new. A year later, I'm remembering how much fun I had playing that game and decide I'd like to play it again. I personally just did this with Diablo II. Hadn't played in a couple years and decided to re-install it and had a blast re-playing it. With digital distribution, would I have to purchase this game again? Maybe, maybe not. It's possible game companies would keep records of what games you have purchased and allow you to re-download them again for free. Or perhaps they're going to charge you a small fee for the bandwith? Who knows, but it's ENTIRELY up to them. If I have the original disc I paid-for, I have control over when or if I ever decide to play it again.

What about bandwith? What about storage space? As games become more complicated and graphically intensive, they're taking up exponentially more space. A Blu-Ray disc holds what? 40 gigs? Even at the fastest speed readily available to home users, that's going to take forever to download and it's going to take about 20% of the largest hard drive available for the PS3.

Digital distribution does scare retailers to some extent but the immediate threat it poses is minimal at best. Even if by the year 2025 all new games are digitally distributed, which I still think will be a stretch, there will be plenty of room for the niche stores like Digital Press and Videogames Then & Now. Then again, I'll hopefully be retired by then so it can all go to hell as far as I'll be concerned in 2025. :)


Sean Kelly
Videogames Then & Now

TonyTheTiger
09-11-2008, 05:50 PM
Also, I am not so sure how low they will go on new release downloads. The standard has been set at $59.99 for major releases on the 360/PS3. So if it goes to an all digital format, maybe they will only drop it down to $39.99 to $49.99? But without an option to trade the digital game once you are done with it, thats a tough price to swallow for many people.

Plus, we'd also be backed into a corner with pricing. Presumably older games will gradually drop in price so instead of $39.99 a year old game might drop to $29.99. But the market no longer factors in to the pricing. Now the only place to get the game is the single download service, barring any piracy going on. Something tells me we probably won't see many games dropping down to less than $10 because why would they have to? You can't just go to another retailer/Amazon/Ebay/etc. and get a copy. That's also assuming every game ever released will remain available. It would not be cool if, for whatever reason, there were absolutely no way to get a copy of some older game outside of piracy.

TheRealist50
09-11-2008, 06:08 PM
the second games go to digital downloads I'm done with modern gaming. Like someone mentioned, the fact that your paying 40-50 bucks for a game that you cant trade or sell once your done is stupid. What will people's game rooms look like? or media room? all their CDs and DVDs will be on the computer and the games will be on the console. It would just be a white room with nothing but a TV and computer. Its cool to set up a room and have a nicely organized stack of movies, games and CDs.

I hope the digital downloads wont catch on. I had this same topic come up on this DVD forum and people say the same thing. Hard copies are more worth having then a file on a computer. Will i be able to buy a used copy of Semi Pro digital download for 5 bucks? no, but I can get a 5 dollar used hard copy.

monkeychemist
09-11-2008, 06:29 PM
One thing I'm kind of surprised I didn't see anyone touch on is RESALE.

um... I did a few posts back. Here is my solution:


After we go 100% digital, MS, Sony and Nintendo should set up a forum in their respective networks where people can buy/sell/trade their games. That way users can do their own transactions without getting ripped off with EB's 40% cut. (i made up that percentage, but it seems right)

TonyTheTiger
09-11-2008, 06:32 PM
the second games go to digital downloads I'm done with modern gaming. Like someone mentioned, the fact that your paying 40-50 bucks for a game that you cant trade or sell once your done is stupid.

I think, if anything, it'll just encourage piracy even more. At least nowadays companies can be thankful that there are at least a good number of people who are willing to pay for the "more" that they get with a retail copy of a game as opposed to just burning a disc. But if pirating a game gets you exactly the same thing as you get should you buy it...well...it'll be a harder sell.


What will people's game rooms look like? or media room? all their CDs and DVDs will be on the computer and the games will be on the console. It would just be a white room with nothing but a TV and computer. Its cool to set up a room and have a nicely organized stack of movies, games and CDs.

To be fair, there is a benefit there. You never have to worry about running out of shelf space or even organizing anything. You never have to worry about scratched discs. You never have to deal with any kind of harm coming to your collection, in fact. Well...unless your HDD crashes. Or if someone steals your console. In the end, though there are some benefits and detriments, it will have a genuinely negative effect on collectors simply because there won't be a whole lot to actually collect. You buy the console, a few controllers, any all the accessories and you've got everything there is to display. The "hunt" will be rendered obsolete.


I hope the digital downloads wont catch on. I had this same topic come up on this DVD forum and people say the same thing. Hard copies are more worth having then a file on a computer. Will i be able to buy a used copy of Semi Pro digital download for 5 bucks? no, but I can get a 5 dollar used hard copy.

Digital downloads will become more commonplace. I'm just skeptical over how much they'll replace the system we have now. Some people are hardcore with the "we will be 100% digital in 10 years." I'm extremely skeptical of that for various reasons.


After we go 100% digital, MS, Sony and Nintendo should set up a forum in their respective networks where people can buy/sell/trade their games. That way users can do their own transactions without getting ripped off with EB's 40% cut. (i made up that percentage, but it seems right)

As cool as that would be, no way in hell do I see that happening. Unless MS/Sony/Nintendo are taking a 40% cut of their own on each sale, they'd have nothing to gain from it. And, even then, they'd be daffy to do it when the same games being traded are simultaneously available on the downloads page.

j_factor
09-12-2008, 01:34 AM
I remember in the 1990s, the used CD market was huge. My friends and I would go to a local CD store and browse the giant used CD section all the time. We'd also trade in CDs for store credit.

Now that iTunes is one of the top three music retailers (both online and brick-and-mortar), I imagine the used CD market has slowed down significantly. The industry has evolved. As far as I know, nobody really complains about that. Would video games be any different?

I still buy used CDs all the time. Overall selection isn't horrible, but it's not what it used to be. I strongly prefer CDs to downloads, and I'm definitely not happy with the shift that's taking place. However, I don't think downloads will actually eliminate CDs for a long, long time. After all, there's still a market for vinyl out there.

That said, I do think games are fundamentally different. Music is much easier to independently produce. And with music, if no major label likes my stuff, there are tons of indie labels I can try, or I can always start my own label. Almost anyone can start right away -- you don't need to learn a programming language or anything to make music. I can burn my music to CD-R's, or if I get enough money, I can go down to a pressing plant and get a run of CD's produced. Even if I knew the programming, I can't just up and make a Wii game and start burning discs. I can also gain exposure from live performances, something not really possible with games. I know there are people making indie games, but it's a much more difficult and complicated endeavor, and there are far fewer people doing it.

GameDeals.ca
09-14-2008, 01:59 AM
If anyone tries to come out with a console with 100% digital distribution for its games, they may find that no traditional retailer will carry it. I predict that digital distribution won't happen until it becomes feasible for the units themselves to be sold exclusively online.

Umm... iPhone. (and iPod Touch). Here we have a handheld "gaming" gadget that some are comparing to the DS/PSP and games are selling like mad on the iTunes app store, and there is no shortage of retailers selling them.

I remember downloading MP3's on Dial-up, and people said it would never replace CD's because bandwidth was slow and hard-drives were small... 10 years later and CD stores are almost extinct. Movies & Games are next whether we like it or not, it's just a matter of time... and 10 years seems around right... but it'll be a gradual shift.

j_factor
09-14-2008, 02:31 AM
Umm... iPhone. (and iPod Touch). Here we have a handheld "gaming" gadget that some are comparing to the DS/PSP and games are selling like mad on the iTunes app store, and there is no shortage of retailers selling them.

That's different. Lots of mobile phone games have found success outside of the iPhone as well. True, there's no shortage of retailers selling cell phones. But they're not primarily game systems, they're just devices that happen to be able to play games. Unless you're saying that dedicated game systems are going to become a thing of the past... which I think is believable, but I'm not so sure.


I remember downloading MP3's on Dial-up, and people said it would never replace CD's because bandwidth was slow and hard-drives were small... 10 years later and CD stores are almost extinct. Movies & Games are next whether we like it or not, it's just a matter of time... and 10 years seems around right... but it'll be a gradual shift.

Everyone knew that bandwidth and data capacity would catch up. People said it wouldn't replace CD's because people prefer to have physical copies. I don't know why some people on the internet seem to think CD's are dead. The format is past its peak but it's very far from dead. Even vinyl is very much alive.

swlovinist
09-14-2008, 12:02 PM
Digital Download format is coming, and it is coming sooner than we all think. While I personally like to have a CD format game to collect/play, I think that it is a matter of econimics with third parties and high development cost of games that will ultimately decide whether or not this happens sooner. I think that Gamestop is scared because it is a model that they are not ready for. If game companies are hurting for business, it does not matter what the retailers think. I agree that itunes is a perfect example of how digital downloading can work. Like music, I dont see physical gaming going totally away, but it is going to change dramitically in the next 10 years. There is a whole generation that has grown up with digital downloads(music), and they are perfectically fine with it.

smork
09-14-2008, 12:26 PM
I'm a tech savvy guy, and I like buying things online. I've got a 100Mb connection and love how quickly Xbox Live can distribute a demo or patch to my system.

That being said, I won't buy digitally distributed games unless a) they're cheap or b)I get the same rights I do with a physical copy.

I don't spend nearly as much as I would on Live Arcade games because I don't have the same rights I do with a store-bought game. I can't lend it to a friend, I can't remove it from my system and reload it without being connected to the network. I can't sell it to anyone.

None of this is so bad for a $10 game, but I won't spend any more than that for a digitally distributed game with these restrictions.

I won't buy music online for the same reason -- I get low bitrate, heavily DRMed tracks that aren't even cheaper than buying a full CD (assuming I want a full CD). Give me FLAC (or other lossless), give me no DRM, and yeah, I'll do it.

The average person doesn't buy that many games. It's not that onerous to go to the store and buy a game a few times a year.

RadiantSvgun
09-14-2008, 12:30 PM
I simply like having a physical copy. If I pay for a game, I want the box, the book, and whatever else it comes with.