digital-download posts

For the past few years we have seen the PC game industry make the transition from nearly all PC games sold in retail stores to having a large portion, perhaps a majority, of games sold via digital download. This week Electronic Arts' CEO John Riccitiello, in a chat with IndustryGamers.com, states, "At the end of [2011], the digital business is bigger than the packaged goods business, full stop. No questions in my mind."

One of the ways EA is making that happen is with a slate of free-to-play online games and according to Riccitiello, "Our highest ARPU (average revenue per user) are free-to-play games among paying users." One example is with the sports game FIFA Ultimate Team. Even thought its free Riccitiello claims some players pay as much as $5,000 a month to microtransactions to play the game.

The big advantage of PC game download services is convenience; you can purchase and download legal copies of PC games directly to your PC hard drive with no need to hold onto a disk. The problem is that you also cannot resell or trade in those games as you can with a boxed PC copy or boxed console games.

Now a newly announced service called Green Man Gaming is claiming to offer a way for gamers to trade in PC game titles they had downloaded and purchased. The UK based site says it will launch near the end of March and will have 400 games to purchase with over 2000 games available by the end of 2010. Unfortunately the press release announcing the service doesn't go into much detail, saying only that they will use "leading edge technology" to facilitate the trade-ins and adding that they will "pay significant royalties to the publisher each time the game is traded in perpetuity." We hope to get more info about this service including if it will be made available to US customers.

PC game developers and publishers have been preaching for a long time that digital distribution is becoming a bigger force in the sale of PC games versus selling them at retail stores. Now Gamasutra reports that a financial analyst has said PC game retail sales in the US are way down in year-over-year revenues.

Analyst Michael Pachter of Wedbush Morgan stated that according to NPD Group figures, revenue from PC game retail sales came in at just $27 million in October, down a whopping 38 percent from the same period a year ago. While he doesn't address the situation further it's clear that people are less and less inclined to buy a PC game at a brick-and-mortar retailer and are instead using download services and also playing free-to-play online games with in-game item purchases.

Peter Moore, the head of EA Sports, has been vocal in the past about how he feels PC gaming has not been successful for his division, saying, " . . . shipping a physical disc for the PC, simply isn't working for us." Now Moore has expanded on those viewpoints as he states, " . . . the concept of physical packaged discs and the core business model that is video games as it currently stands is a burning platform."

Moore made those remarks at a panel during the recent PLAY Digital Media Conference. According to IGN, he still feels that disc-based games will be around for a while, saying, "As an industry, I still think we may be as many as a decade away from saying goodbye to physical discs." However, he feels that slowly the digital download business model will win out, saying, "More content will be delivered daily, weekly, or monthly, and less will be of the old model of cartridges and discs." Certainly for PC games the digital download model has been leading the way for the industry in the past couple of years.

Much has been made of the growing trend of digital distribution of video games. To some it's an increasing threat, to others it's the future of gaming. As is so often the case in life, the reality lies somewhere between the two extremes, and it's very much a question of audience. Who stands to benefit from the digital download revolution? Who stands to lose?

It seems like PC users have everything to gain by this still-evolving method of retail transaction. Physically, it means a lot less of a burden -- no disc, no overly-large cardboard box, no need to throw away a lot of unneeded material. Everything exists as bits of information, and information is easy to manage. It's readily copyable, can be compressed to save storage space, is a snap to cart around, and once you've decided you no longer want it, disappears at the touch of a key.

We've been talking about how the PC game industry is transitioning from a retail store business to a digital download model for some time now. However, it's never been totally clear how much revenues digital downloads of games from places like Steam, Direct2Drive, Impulse and others have generated. Today Gamesindustry.biz states that a new report claims revenues from PC game downloads from various sources will generate over $1 billion in revenue in 2009.

The report comes from GfK Chart-Track which says that such downloads created just $600 million in revenue in 2008. If true that means this part of the industry is exploding. GfK Chart-Track director Dorian Bloch admits that they would like to include such data in the total sales numbers of individual games. However, they are unable to do so without "without a wider selection of data from multiple publishers."