We're a long way from the point at which digital distribution will change everything for game makers, according to David Edery. He's principal of consultancy Fuzbi, and the former worldwide games portfolio manager for Microsoft's Xbox Live Arcade service.
In a keynote speech delivered at the Develop Conference in Brighton, UK, Edery cited NPD estimates that currently only 18 percent of Xbox LIVE Gold users download content regularly, while only 10 percent of PSN users download either free or paid content.
Although some developers stand to make good money from digital download games, "there's no question that digital distribution is neither as big nor as significant [to game consoles] as it's been cracked up to be," Edery said.
The idea that digital distribution and the "long tail" -- content upgrades and enhancements extending the life of games -- will fundamentally change the way that platform holders, publishers, and developers do business is a common one. Edery thinks it's true, but not in the ways that many people think.
It's conceivable that a shift to a digital download system will help make niche titles wildly profitable, or replace marketers with recommendation engines -- but according to Edery, there are "two sides to this coin."
The PC- and web-based side of digital distribution has fully come into its own, he concedes, with 14 million active users for titles like Mafia Wars and 11.5 million for Farm Town. Numbers like these are "eclipsing anything that the digital console services will be able to achieve anytime soon," Edery said.
"When GameStop says there us is no addressable market for digital distribution 'til 2014, that is in fact wishful thinking," he added.
However, that’s not to say that there aren’t considerable benefits to the digital distribution model. "By far the best way to make successful and profitable games today is by releasing early and releasing iterations often, something that the downloadable game model explicitly encourages," said Edery.
Additionally, this new way of supplying games to consumers allows providers to try something web-marketers have been doing for years: AB testing.
Developers can test their assumptions, seeing whether a game sells better when it’s presented on a blue background or a red background, for example, or when the main character’s sword is called the "Sword of Death and Destruction" or the "Sword of Doom and Dismay." AB testing is an old science, and developers and publishers lose out if they don’t do it.
Digital distribution also allows developers to target niche groups in a way that would be impossible with traditional retail games. "For example," explained Edery, "a niche sport with only around one million worldwide fans becomes workable subject matter when your platform is Facebook and you can directly target these and capitalize on the niche."
The biggest benefit of digital distribution for Edery is the opportunity to build perpetual cross-promotion into one’s games. This way, every game you release can be used to promote all of your future games in some shape or form.
Nevertheless, there are downsides to digital distribution for developers. The model doesn’t do away with the gatekeepers of a platform and, if your game doesn’t meet their requirements or match what they are currently looking for, then it can be hard to succeed.
Likewise, digital distribution platforms are kingmakers in that the products they choose to promote are often the ones that become the biggest sellers. For example, XBLA title Kingdom for Keflings was expected to be a modest, niche success. However, as its development coincided with the introduction of avatars to XBLA, the developer was able to introduce full avatar compatibility to the game, gaining massive exposure on the Xbox 360 Dashboard when it released.
As a result, the game became one of the highest-selling titles on the service. "For the lucky few who earn this kind of promotion, the benefits are gigantic," said Edery. "But for those developers who, one week before their game releases see a competitor ‘king-made’ by the platform holder, the effect can be devastating."
As for the idea that the long tail will signal the end of hit-driven business -- "Bullshit," Edery claimed. In fact, he asserted hits are what drive the long tail -- for example, he said 75 percent of Amazon’s income derives from just 2.7 percent of its products. "If the hits went away," he argued, "Amazon would collapse in an instant."
Success is in fact more concentrated in a digital distribution ecosystem, he said. For example, the original remake of Worms on XBLA is still one of the highest-selling games on the service.
Granted, without digital distribution, this would not be possible: had the game been released at retail, sales would have long since dried up. However, the fact that consumers are spending their money on Worms only means that they’re not buying other titles on XBLA. "The hits get bigger," Edery said, "but the pool of money remains the same."
Consoles are currently missing a lot of the long tail enablers, he continued. Without an Amazon-like recommendation engine, user ratings, ease of search and more dynamic pricing functionality allowing selective discounts and bundling, the long tail on digital download services will struggle to grow.
Additionally, the long tail is incompatible with many multiplayer games. "The number of players in an ecosystem is crucial to a real-time multiplayer game’s success," he said. "There are too many multiplayer games and too few players populating them. Why would a user buy a real-time multiplayer game from the long tail if they won’t have anyone else to play it with?"
To combat this issue, Edery suggested a viral invitation scheme, where players can invite friends to join in a game for free. Then, as soon as the user stops playing the game their friend must also stop, or alternatively purchase their own copy in order to continue.
Another strategy might be to provide better matchmaking information to players, giving users an estimated time to a multiplayer match rather than the current prevalent system of "wait and hope." Finally, he suggested that developers might want to consider scheduled playtimes for their games, in a similar vein to Microsoft’s weekly 1 vs. 100 matches.