Game Retailers Hurting Themselves With Digital Distribution 167
GameBiz recently had the chance to speak with Brad Wardell, CEO of Stardock, about pricing and distribution within the games industry. Wardell follows up a bit on the Demigod piracy fiasco from a few days ago, and mentions that retail outlets may be on their way out.
"Retailers need to be careful about this stuff. They're kind of signing their own death warrants once they push digital distribution at the store. Once you have the thing set up — once you've experienced how to purchase the game or deal with it online — why would I go back to the store for the next purchase? Especially if the store isn't providing added value. If you're a retailer, you're killing yourself. If I can't get a game off Impulse, I'm going to Steam. I like stores, but I'm really lazy."
Seems kinda obvious. (Score:4, Interesting)
This applies even more so for digital media where the entire product can be downloaded (barring shiny manuals and soforth that rarely happen these days anyway). Isn't a physical retailer becoming irrelevant anyway?
Not necessarily (Score:4, Interesting)
With music, the stuff that really matter to me, the musicians I really like, e.g. U2, Def Leppard, etc. I still buy the physical CD even though I could just as easily buy the digital versions from the comfort of my room. Not only am I a completist, I am a fan of those bands. My "B-class" bands or one-hit wonders, yeah I do buy the digital versions.
Same principle with games. I've been waiting for StarCraft II, Diablo III, etc. Even if I could get them digitally (if offered), I'd still buy them from the local store when they come out. I've gladly paid a premium for the physical copies of the games I really like over the years. Not just for the nostalgia, but also to support our local store.
Game retailers are antiquated (Score:4, Interesting)
It's a highly inefficient operation in terms of getting a good return from the shelf space. It's taken up by giant empty boxes that don't do anything.
Here's an idea. Tear down these remaining stores and turn them into arcades with every game loaded on a server with terminals all around. You pay-for-play and if you decide it's something you'd enjoy pay for a copy on a USB stick. Now you have instant gratification and avoidance of downloading of 3 gigs of shit on Steam.
Online is not really cheaper... (Score:4, Interesting)
I can get 1000 DVD pressed for 30p including art on the disk and a 4 page slick. 10000 is much cheaper since it can use the same master. Its not much more for a box. Postage is pretty cheap if your not using amazon pricing as a guide. Now for bulk distribution to shops, I would estimate that is cheaper to sell box sets that online copies.
Really the price of infrastructure is the killer here. If you could get away with average bandwidth rather than peak it wouldn't be so bad.
Re:Online is not really cheaper... (Score:3, Interesting)
I didn't add all these thing because they distract from the point and they exist on *both* sides of distribution as you said. Really We had full quotes including insurance, storage, legal (a big one) and cost of credit (we don't need much we have cash) but only door to door. Not to a shop. I was not much extra. Once you hit the 100000 copy mark things get cheaper per unit not higher.
And *lot* of extra cost too. First is the costs of SLA and associated legal fees, no to mention that already you have to pay a pretty penny and are on a 2+year contract for this end of the server market with expensive termination options. Now you need a merchant account or to out source online transactions. Again this is not cheap and again its expensive if you want a SLA. This gets even more complicated in that its generally a pain if you can't really predict the transaction volume.
Yet you mention all that and then claim I'm wrong. We priced it up. It was about the same to cheaper with shipped DVD's than online. Both is worse of course. The claim that online distribution mean the cost of a copy is nothing is simply not true.
And yet there is even more. One of the big headaches is ratings. In some countries is fine to sell without a rating if you are not based there, in others you must get the game rated first regardless. Legal fees are a bit of a killer since its all international.
However there is another option. Bit torrent. But i don't know if that will really work with paying customers. I think a full download option would be needed at a minimum.
Re:Not necessarily (Score:3, Interesting)
The small artists I see seem to charge more for their CDs at a show than it would cost me to get them from Amazon.
For instance, I saw Zeromancer [www.last.fm] a couple of weeks ago. They wanted £14 (or more? can't really remember) for their latest album, but it's available for £9.25 on Amazon marketplace. Admittedly, that's from the USA, but I don't mind waiting a couple of weeks for CDs to arrive.
I'd like to support local independent record stores, my favourite is Resurrection Records [resurrectionmusic.com] in Camden, London, since they're the only specialist industrial/gothic store I know. The CDs are mostly £14-20, but they're £2-3 less on Amazon, and another £3-6 less on Amazon marketplace.
Apparently, I can get music recommendations from the record store. I've never asked though, I just go to last.fm and click "Similar Artists", or go to a gig and remember what the support acts are called.
Re:Surprise Surprise (Score:1, Interesting)
The problem was not caused by piracy. Demigod automatically polled an update server with HTTPS to check for updates, and the update server was hosted coincidentally with the actual game servers. They were brought to their knees by a large number of requests, and it would have happened even if they had sold 100,000 copies. The means by which those 100,000 clients got into people's hands has nothing to do with it.
Re:Not necessarily (Score:3, Interesting)
Re:Seems is all there is. (Score:2, Interesting)
Books are easy to replace, cheap and require no electricity to operate though.
Ease of use is still a lot higher than ereaders or computers.