To what extent are video game retailers threatened by digital distribution? #promotional #codes

#video game retailers


Video games are a unique medium, and in today s market big box game retailers are not hurting to the extent that bookstores, video stores, and music stores did when everything started to move toward digital. That isn t to say they haven t been affected at all, but several factors come into play which insulate games from being overtaken by digital distribution, at least for the next few years.

1. Movies and music can be streamed, and in fact that business model dominates their landscapes today. Since they re passive (you listen or watch, you don t interact), they can be buffered, which means that the user experiences continuous, uninterrupted playback (assuming network conditions are good). Games can be streamed, too, but the experience is far from ideal. To interact with a game that is being run on a machine located somewhere far away, the network speeds need to be very good, and since it s an interactive medium, the data transfer has to happen in near instantaneous time (no buffering). Many people today still don t have fast internet connections, or aren t being provided access to faster speeds. To compensate for a poorer connection, the game resolution drops (less data to push), resulting in artifacting and poor image quality. Also, since you re interacting with it, your button presses must be sent over the network to the server to register an action in the game. Under ideal circumstances, this results in tens of milliseconds of input lag. Under normal circumstances, it s usually much higher, resulting in certain genres of games being nearly unplayable, such as shooters and fighting games. Imagine trying to play Call of Duty and having your inputs delayed a half second. For a series that thrives on twitch response times, it would kill the experience. Also, trying to render 60 frames per second consumes extreme bandwidth, so there s yet another roadblock to unlocking the full experience.

2. The major consoles price themselves out of competition. Digital should be cheaper since there s less overhead, but physical disks thrive on the new and used market. Often, a game can be had for 50% cheaper or more versus its digital version. Even with major sale events, it s almost impossible to find a current game priced less digitally. Why this is, I have no idea, but you don t have to be a financial guru to understand that people want to pay the lowest possible price for a product.

3. The launch of the Xbox One was a bit of a debacle not because of Microsoft s lack of focus on games or even it s higher price, but because they were effectively pushing a digital only, internet required platform. The people spoke with their money and bought the PS4 in droves, leaving MS scrambling to catch back up. In a sense, both consoles are already digital only, since all the games are installed entirely to the hard drive and not run off disk. MS quickly removed the internet requirement (which is going to be necessary for a fully digital ecosystem). Given how turned off consumers were to an internet required system, it s unlikely we ll see a major console maker try it again soon. If one did, their competitor would simply pull a Sony and offer offline, physical discs and watch the money come in.

4. This is to say nothing nothing of PC games, which are basically all digital now. Retailers barely have a PC presence anymore, if at all, so it really doesn t apply to the topic at hand.

Digital streaming is neat tech, but impractical with today s bandwidth. Digital versions of games are often more expensive than physical copies. Microsoft tried to usher in a console to lay the groundwork for moving to exclusive digital distribution, but consumers spoke with their money and bought the PS4 in record-breaking numbers at launch, causing MS to backtrack. It will require massive bandwidth upgrades and more competitive pricing before retailers are truly threatened by digital game sales.

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Shawn Freeman. Working on the next generation of digital retail experiences for the best Ame.

I m biased of course, but I think we have a real chance to be a significant player in digital. We have great relationships with millions of core gamers (as evidenced by our highly successful PowerUp Rewards program with over 10M members in less than a year) and we are making great investments and building the right technology to deliver digital games to those customers.

Meanwhile, the retail business is strong and we don t expect physical retail sales to go away anytime soon. the fact is that AAA titles continue to grow in size and at current average bandwidth can take over 10 hours to download.

Having said that, we don t have our heads in the sand and we do believe we can leverage our existing customer relationships and brand to become a meaningful player in digital games.

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