I wholeheartedly agree with the argument of this article. I was a higher up within the video game retail business for years - EB before the buyout and Gamestop afterward. Retail is never going to have the concerns of developers on their radar. Their focus is on marketing (and the selling of their marketing tools to their clients in the form of "game informer") and used game sales. As long as developers deliver new products in a timely fashion, they will remain unconcerned with their issues. It will be up to developers to move themselves away from the table and take a bigger piece of their pie with them. I loved Thomas Grove's idea of "content delivery portals"... it sounds catchy at least. Would be interested to hear more details on its structure and whether such a system could support resource hungry AAA titles with tons of content. Thanks for the toughtful piece.

Downloads work with casual content because people won't freak out too bad when the platform they bought the content for vanishes (either because the company decides the servers are no longer "needed" or because of corporate failure). The amount charged per game doesn't fall in the "I want this for the future" category of expenses, but simply an short term impulse buy.

There has been some hoopla about some of the new "full size AAA titles" coming with phone home authentication, because many people are like me: they want to play the game when they get around to it and not have to hope the activation servers still live. It just seems to be a different level of decision making to buy a $9 throw away casual title and $60 for a locked down product: especially considering the time commitment to enjoy it is far higher and thus less likely in any given moment to exist.

Of course, I doubt busy adults are the market this kind of product delivery. A vast number of gamers devour new games and resell the discarded husks. Sadly, in the world described by this proposal I doubt I would buy even half as many games simply because I'm no longer a member of the hard core. After people get burned by the first major melt down of a distrubution and authentication platform, perhaps there will be more who value the box, manual and shiny disk that works without having to beg the mothership for permission.

The Content Delivery Portals is a great idea. I have to think thought that the retail companies would threaten not to carry games to try to monopolize the market. It would take a brand name company with a brand name game to force them to comply. Best bet is a company with a lot of cash to back them up in the start.

It’s difficult to take this article seriously when the author employs propagandist techniques to paint Gamestop as a nefarious entity while completely ignoring other prevailing factors regarding the online business model. His assertion that Gamestop purposely doesn’t stock enough new copies of games is flatly wrong; I’ve been doing business with Gamestop for years and they always have an abundance of software on the shelf, both for preorders and for general inventory. Furthermore, Gamestop carries a far wider selection of titles, including more obscure games, than larger retailers like Wal-Mart and Target. I also fail to see the validity of comparing the inventory of a large retailer like Target or Best Buy to Gamestop given the fact that larger retailers operate (and receive discounts) on bulk. The truth is that a game like GTAIV will be stacked to the ceiling at the local Best Buy but smaller games, assuming you can even locate them at the larger chains, are usually only available in limited quantities.

As to the download solution, what this author fails to grasp is that not everyone, especially console owners, is willing to surrender physical media in favor of digital distribution unless prompted to do so by deep discounts, a proposal I haven’t yet heard from those who advocate the elimination of physical media. As a consumer, the notion of paying the same price for a game without the physical disc, packaging and instruction booklet isn’t at all appealing, especially considering that I fancy myself a collector. I like owning a copy of the media I purchase, especially when the average cost for a game is upwards of 50 dollars. By owning that physical copy, I don’t have to worry what will happen if my hard drive perishes or the company that made the game goes under. Also, with a physical disc, I can take my copy of a game and play it on my friend’s PS3 or XB360, an option downloading a game doesn’t give me.

That of course isn’t to say that I’m entirely against digital distribution; as a point of fact I have downloaded a considerable amount of software from all three console’s respective online stores. I also understand the frustration for developers and publishers in regards to the revenue generated by used games but that really is more the fault of uninformed consumers than Gamestop. People seem happy to save a paltry few dollars on a used game when just an extra five dollars (and sometime less) would get them a factory sealed copy.

All of that said, I’ve been lucky in that I’m friends with a Gamestop manager and he and his employees treat me very well. While my preferential treatment is no doubt predicated upon the amount of money I spend on my hobby in their store, this does nothing to negate my pleasure at being a valued and satisfied customer. Even with a fast connection speed I’m not looking to give up physical media anytime soon unless the financial benefits outweigh my own desire for tactile affirmation.

The question of circumventing the middleman by way of digital distribution isn’t just for the developers and publishers but also for the customers, who matter most of all.

I'm against online distribution, because after you've spent a night downloading something, all you have on your PC are those files. If they get corrupted you have to redownload everything again. If game companies wanted to, they could force you to save your profile only on their severs, like most MMO games. I prefer to buy a game, then I have an actual physical object I own, and if developers are too lazy or stupid to release enough copies I can benefit by selling it at Ebay. I can also keep the game in good condition, and when it gets rare enough if I want to I can sell it. I think the whole system is garbage, because you pay $60.00 for a game, and if you're lucky it's really worth half the price you paid for it if you sell it used. It's worse for things like CDs, DVDs, and Blu-Ray movies. If I have to pay $30.00 for a Blu-Ray movie I should be able to get at least %80 of my money back if I sell it used, in the same condition in which I bought it.

No, I'm against online distribution. I need an actual physical object from my purchase. Plus the online thing fails all the time, as on Xbox live where if you system crashes and you fix it you can't play any of the content you had on your previous system, since it's registered to that system, your Xbox live account, and the old system's hard drive. I wasn't able to play the new Halo 3 maps for a long time unless I was online, and I only bought them to play them offline, because I took my hard drive over to a friend's and used my account to buy and download the maps. But nowhere does Microsoft tell you that this won't work. I see nothing but issues if game developers register a download to an account you create on your current PC. What if you change the PC's hardware, hard drives, or OS?

No, digital downloads are too slow for games as they get larger and larger, they provide you with nothing to can earn your money back on, and they mess up all the time. In short they put too much power in a game developer's hands. Not a good idea, but then again neither are the practices of Gamestop and GameCrazy as outlined here.

Hope someone finds a good solution -
- Deathbliss

Well, deathbliss, first it's somewhat odd to bother being anonymous and then sign your post. Whatever though, hardly the point. You make some valid points about how online content can fail, however you're being a little bit torch and pitchfork about it.

First, about your comment on things getting corrupted and having to redownload. You're right this can happen. Much like you can scratch a disc and destroy it's data to the point it's unplayable, or a friend can do it while they borrow your game. The diffrence here being that with the download it's easily replaced and with the disk quite often if a disk doctor won't fix if you're very well screwed.

Next up, your agument about companies putting the profiles with various games you downloaded up on their servers for ease of use. Well I hate to break it to you, but they do. Specificly the wii is set up so you can delete games and redownload them whenever you like after your profile has the proper info.

Now then, liking having a physical object? That I can't argue with. With bigger games I too love having a disk of it. But your saying about selling it if supplies are low on ebay I have an issue with. Half the point of buying a game is to enjoy and play it right? So why would you really care if you can sell it on e-bay. The only thing this practice in the way I think you're refering to it does(take a look at the inital release of ps3) is cause a lot of frustration and anger in gamers who suddenly find they need to shell out double cost or more for a game they wanted to try. Most of my friends in a case like this would simply say the heck with it.

As for the arugment on ah 'used' items. Well obviously you don't understand how the price marketing works. Companies selling games in stores and doing the whole used thing end up with a LOT of used copies, their prices on the games, on the whole, usualy represent a combination of the age of the product as well as how many of it they have in stock. If a game's old enough and common enough then obviously no one's going to buy it since the other 200 copies they have havn't sold. Looking at it that way why should they offer you 20-50 bucks for the game you bought at it's height when they probably couldn't give the damn thing away.

Now then, as for the failing thing. I would wonder here if you bothered to contact microsoft about this. Granted it's usualy slow but I'm fairly sure they must have some system set up for a migration of data like this. Even if they dont, this is only one system. Claiming all forms of this screw up when you only have the Xbox to draw on is somewhat flawed. I've never heard of the wii messing up a download and I personaly wouldn't know about the ps3 since I don't have one, but I have downloaded games onto my pc though systems like this and never really had any issues whatsoever. Infact a lot of people continualy download patches and updates to games usualy downloaded off the net and payed for over websites, I believe they'er called MMORPGS. Which while a lil diffrent granted use the same sort of distrubution we're talking about here.

As for the hardware change/software change thing, if you can't puzzle out wether or not your new hardware will work with your software before you install it or if a new os will work with your games, then maybe you should go seek some help before doing this sort of thing. No upgrade I've ever done to my pc has caused this sort of problem and if you have a little foresight and look into what you're doing before hand this shouldn't really be a problem.

The slower download argument is only sort of acceptable. Yes bigger games take more time to download. I'll admit that. But when you compare this time to say driving out to your average game mart, looking through the shelves if you're not sure what you like or not sure they have it, and the possiblity of hitting more stores to find exactly what you're looking for (Which I have done. 4 stores in one day once ugh.) then really that download isn't THAT much of an inconvience now is it?

Too much power in the developer's hands. Ok I'm not even bothering here this one's silly.

Now then, now that I've gotten all that out, some positives. I do happen to like physical media a bunch still for a lot of reasons that have already been listed. I like game shops because I can go in and look around, it's a reason to go out, and it's fun to find the occasional suprise if you ask me. I also like being able to talk to the clerks as more often than not with a lot of these places they are gamers and have some decent knowledge of recent titles and what they'er worth for buying. I also like being able to get old games I loved or always wanted to buy for cheap. Sometimes I get a lousy game doing this but you know what? That's my responicblity to own up and go "oh well, I bought a so so game and likely it can't be returned." and often I'll sell it back if I can, even at a low price, to put it back in circulation for others. I guess my main point is nether system is 'bad' despite what people might think. They have their own advantages and nether is likely to go away any time soon. At the same time trying to prove one 'better' than the other is usualy just silly as it's like looking at two diffrent kinds of soda. So they'er diffrent, people like one for one reason and another for another, can't we just leave it at that?

To anonymous @ 3:19,

It seems your judgment of online distribution is limited to Microsoft's execution. I've had experience with Steam and I'm pleased with the service. I was weary of using it when Half-Life2 was released so I bought the retail version for the game and its goodies. But since then, I've grown up! I'm starting to get sick of having so many game boxes that I don't know what to do with them.

I woke up one day and decided that I wanted to buy The Orange Box. I walked over to my computer, and a few clicks later I was downloading it. I have a standard cable connection and I downloaded HL Episode 1 in something like 45 minutes, less time than it would've taken to take a trip to a local Gamestop. A convenient ability of downloaded games linked to accounts -- as Steam is -- is that my computer can explode and my house could burn down but I could still find solace in being able to download and play my game on any other computer. So yeah, you can go over to your friend's and show them your cool new game even if its downloaded.

To address the article, digital downloads are the future! haha In a perfect world, there would be a portal that's best interest would be in the developers. All the portal's that I'm familiar with operate in the best interest of themselves. Are the costs too grand to keep a "non-profit" portal running?

Digital downloads are convenient but there's always going to be a need for physical copies. Those make good impulse purchases when out and about, presents, and the like. Physical copies don't necessarily have to disappear with digital downloads though, I remember that game The Gish has a physical copy available that you can order even though it's not available in stores. Having an option to upgrade your download to a packaged copy would be sweet.

Bill Boggess, does make a good point about Gamestop boosting a market for niche titles. You used to have to rely on the mom & pop stores to get those sorts of games... Too bad Gamestop gobbled them all up!!

Developers/Publishers should fear GameStop. They do have a strong opinion in the industry. When people go there to pitch to the buyers I'm sure - They really have to sell their product and push forward enough marketing spend dedicated to GameStop alone for them to consider it.

I'm sure they won't buy copies if nothing is laid out their during that initial pitch.

At the same time GameStop controls 25% of the market share. To have GameStop drop one publisher completely would be disastrous to that company. Yes customers have the choice to go to other retail locations that may carry that game but at the same time thousands of people walk into these stores a day and notice the title on the shelf or on a sign and may be attracted to them. To have them completely removed from the mix is disastrous.

Publishers are being smart as of late and keeping relationships strong by asking for GameStops input on these things because of the above factors. At the same time I'm sure they partner with them on some of those used "Trade" programs to help increase preorder numbers toward their new product. I bet they Activision would love for people to trade that old EA game in for that new Activision game coming out so they probably partner with GameStop to create those "trade" offers I see every once in a while.

It's odd to say that a retailer has power in the industry but when it comes to GameStop and how much marketshare and advertising is done in their stores for these products... it completely makes sense.

Yes Used games exist but publishers I bet are being even more creative and attempting to work that system to build hype for their own games. Digital Distribution is a factor but even in their own conference calls they say it isn't leaving much of a mark on sales. They have for the past 2 years given record quarterly earnings... It is crazy.

I'm not entirely sure that GameStop is something to fear; that's a bit strong but it really does hurt the industry when the resale of games has zero effect on the bottom line for a developer; that does seem unfair. On the same note, all businesses that produce a product suffer from this cycle so I can't sympathize too much with games alone. Head out to your local Flea Market or hit up some yard sales and watch the dollars fly; most of it not even reported in their tax forms. Certainly Lazy Boy isn't making more money every time someone sells that dusty couch to it's next owner. Mikasa doesn't make a dime when some one buys that old China set or pots and pans.

People notice single conglomerates like GameStop because they are a more organized form of the common yard sale. As developers all we can do is make better games that keep the customer buying. Yes, money is lost by not capitalizing on the resale of used games but don't forget that money was still made from the first time that game was purchased.

FYI - You can have a downloadable game for PC and request to have a CD shipped to your house (for free / nominal charge). If this doesn't already exist; congrats, I just gave you a million dollar idea =). I'll be accepting my donations by mail.

Just because a game is downloadable does not mean it's fragile or it can be lost if the company goes out of business. Get a hard copy; done. I do see how it could be an issue for server-validated games though... not a fan...

> On the same note, all businesses that produce a
> product suffer from this cycle so I can't
> sympathize too much with games alone.

This is completely true of course. However when was the last time you saw a used sofa (even one in good condition), originally purchased for say £699.99, resold for £679.99 by the same retailer which initially sold it. The point here is not the reselling of products, but the utterly deliberate, calculating undercutting perpetrated by game retailers such as GameStop. Many times I've been in a Game store here in the UK and seen second-hand copies of relatively newly released games shelved next to new releases with as little as a 15% mark-down on price. (Mass Effect, several months ago, in one particular case I recall distinctly because I almost bought it... the new game was £44.99, second-hand £39.99). At least Tesco's/Sainsbury's/Walmart don't do this, ya know?

I think it's pretty clear that there's a _massive_ distinction between games and just about any other product in this respect. It is in fact basically theft. So if you're defending places like this wrt their attitude to developers, or 'championing' smaller releases, don't bother - they don't give a shit.

Sorry my point in there with respect to mark-downs was basically to point out the shameless profiteering that goes on. Obviously as a developer it's just as bad for me if they resell my game second-hand with 10% off the retail price or 90% off.

"It is in fact basically theft."

I thought it was the doctrine of first sale in action, not theft.

Calling it *theft* is shrill rhetoric that in the end undermines the argument. Following it with a claim it is somehow different from any other product ignores the movie, music and book trade, a significant blind spot to say the least.

Nevertheless, I would argue there are two ways to eliminate the used market. One is to do something like Dix tried, with self destructing disks (they used DVDs with a material that interacted with the air, making them unreadable after a period of time). Boy, that was a market success. http://www.wired.com/science/discoveries/news/2000/01/33781

The second way is to bind the title to authentication servers. In effect, this is the same thing, just higher tech: eventually the servers will go away and it binds the title to a single machine/account. However, this at least can be somewhat fair to the purchaser if a model like Tell Tale uses is engaged: after the end of a years content, a DVD with all the games unlocked is sent to owners for nominal cost (http://www.telltalegames.com/store/samandmax-season1-disc).

This seems a reasonable compromise: a temporally lock down during the "hot" period of the title, while rewarding the purchaser with an unlocked version they could fire up years from now and still be enjoyed, regardless of Tell Tale's servers being on line.

I don't see the harm in offering both to people we all have our games where it would be considered a Sin to not have a copy in your stacks. Many games as for those who collect do just that however they collect and just sit there and if it was a game where i just want to dominate the game once I would be perfectly happen to download while i sleep at a much lesser of a cost ( said games to own would be Earthbound, Zelda link to past to name a few :)
Point in case if you don't like downloading your games then don't take advantage. I however see no difference between this and downloading music.

Me again... I'm posting anon. because if I don't my real name is plastered here on the internet for everyone to see. Call me an overly-cautious, but I don't think that's a good idea ;)

Wanted to clarify what I said... I used to play Everquest back in the day. Granted back then I had a 56K modem, so things were a bit different, but only slightly. As I understand it, it's still the case that if you want to play any MMO you have to store all your character details on the developer's server. You have to download updates occasionally, and now that MMO games are larger, even though the speed has gone up the time it takes to get everything running is still roughly the same. Unless you have a really fast connection, and the average gamer doesn't, you will be spending 4-8 hours downloading stuff occasionally. If your system dies, you have to not only spend that 4-8 hours, but also any extra time needed to get to the point where you only need that 4-8 hour update. I've been through all of this with Half Life 2. Until everyone can download 1 gig in an hour online distribution really isn't practical, or desirable.

Let's take this to the next level. Say a game developer decides to release their game online only to save costs. While this has the advantage of allowing a game company to release a game that doesn't have to go through all the hoops that companies usually have to go through with publishers, it also has the disadvantage of giving the developers too much power. What if they say, that in addition to paying for this game that you have to create an account on their site? What if they say you have to pay for updates? What if they constantly update the game, and if anything gets messed up on your system, you have to spend hours getting stuff again? What if they say you can only download a game or an update a limited number of times in order to relieve stress on their servers? What if they make your download "expire" after a limited time, and you have to shell out some more money for the game to "renew" it? What if they say you have to, instead of paying for the game all at once, pay a monthly fee for the title for as long as you play it? What if they code into the game some system that registers your current PC configuration, and if you change anything at all, you have to repay and then download everything again? Do you see where things could go sideways yet? I'd like to have faith in humanity, but we're not dealing strictly with humans here, we're dealing with humans in the role of businessmen (and women) and what is the first and foremost rule of business? PROFIT! What is the same attribute shared by every human on the planet, and which often goes hand in hand with profit? GREED!

Here is what I propose... Someone needs to start a publishing company that has no say over the games it publishes. It needs to merely be able to be contracted out, at a reasonable rate, by game companies. Then game companies can make any game they want, and can contract the publisher to put it on store shelves. But since the publisher is contracted out, they have no say in how the game company distributes the game. So a game company could sell copies of their game right from their site, and take Gamestop out of the loop. The only flaw here is that someone has to tell game companies they can't charge more than $60.00 for a regular edition of any game; otherwise they might decide a game should be sold for $3,000. Something has to stop them form overcharging for their game, because gamers are too stupid to merely boycott them and not buy it. Show any gamer some pretty pictures and they become an instant devoted fan-boy most of the time.

Hopefully by now I've explained why I said what I said earlier and painted a clear picture of the issues with online distribution. Essentially someone has to be able to keep an eye on game companies and protect the public from unethical practices. Until that happens game companies simply can’t be trusted, because until someone can keep them in line, they can do whatever they want. Once everyone’s speed has gone up high enough, and a system of regulation is in place, then online distribution will be an excellent alternative choice. But I for one will still be looking to buy the thing on a disc.
- Deathbliss

oh, good. someone else from the games *media* who doesn't know anything about the business of developing, selling, OR publishing games decides that they've gotten so angry at the same cocktail party conversation ringing in their ears that it's really time for them to speak out. to ring in with a long winded and demonstrably undereducated opinion about a topic that obviously eludes them, almost entirely.

everyone in the development community is wary of harming their relationships with their retail *partners* because they do not wish to hock their wares by the side of the road in an applecart, nor to go back to the days of mailing their own wares out in zip-loc baggies.

publishers (not developers) fear gamestop because they control 25+% of the NA video game distribution channel. they also fear wal*mart, for similar reasons (27%, last I looked). the reason to fear gamestop *more* than you fear wal*mart, though wal*mart generates far greater revenues as a total entity, is because it is entirely possible for small, innovative developers to create new ideas in their software, court gamestop via their publisher, and bring their ideas to the hands of their consumers in a very large and lucrative way. wal*mart, on the other hand, is not so useful. you ever tried selling something new in Bentonville? look up the back story of Rob the Robot some time, see if you learn anything. call the desire to have people see your work (and maybe even put food on the table) shameful all you'd like. all you have to do for a living (though a meager one, i'll wager) is kvetch.

gamestop runs 27% of SG&A (look it up). they run 33% retail margin. new games sell at 20% margin. if they only sold new games, there would be no gamestop, nor any other specialty, and then you'd be stuck trying to hock innovation in Bentonville. Good Luck There, Tiger. big boxes would still live on, because they also carry things other than games which generate greater margins.

you then argue that gamestop limits it's stocks of new games in order to increase purchases of used games. that's absolutely unfounded speculation on your part, and a speculation that makes little to no sense at all. what gamestop *does* do is irritate the crap out of their customers by demanding that they preorder. they do so so that they have rock-solid indication of what their purchase and allocation patterns should be. they have to do *that* because without that read on their consumer's intent to purchase, they jeopardize their entire enterprise by risking overpurchase or misallocation of (again) 20% margin goods. you paid $60. they paid $48. if they overbought one piece for one store, they'd need to be right 4 times in another store, just to *hope* to break even.

further, you're either ignoring or entirely ignorant of this study (reported on in *your* site) that indicates that the new games distribution channel owes at least 6% of it's combined revenues to trade-credit... which comes from those horrible, evil used games you so despise.

while you're on the topic of Target, have you been to a Target recently? have you watched them liquidate the entirety of their stocks and go marvelously shortstocked on most games because they're so horrendously over booked? do you know anything at all about the subject you're speaking on?

you go on to argue for digital distribution. obviously, if that was all that was needed to keep the lights on at your development house, then your friend Mr. Newell would have distributed Orange Box exclusively via Steam. but he didn't. this is because he knows something you don't. he knows (at least) that limiting his distribution channel to online-only would net out only those customers who could access broadband, and had patience to download several gigabytes to enjoy his game. while the day will most certainly come for such a channel to be mature enough to merit such course, it is not today. look up stats on saturation of broadband by % households in the US and get back to yourself on that one.

is anything at all that comes out of your mouth even remotely informed or credible? have you *heard* of research?