The latest Question of the Week asked: “Are digital downloads going to become the predominant way of purchasing and playing PC or console game content in the future, or will physical game copies continue to be the conventional distribution method?”.

The consensus of the responses we received indicated a marked interest in the potential of digital distribution. Some commented on Valve's Steam 'contest distribution platform' and indie game distribution as the front runners of a possible digital distribution revolution, but others remarked on the emotional and physical reassurance of having a hard copy. Another valid point raised was the state of the secondary or used games market should digital distribution come to pass.

Digital Distribution is the Future

By cutting out the middleman, digital distribution could streamline the flow of money and reduce other constraints for game creators, though promotion, publicity, and marketing are still vital for games to become known. Thus, quite a few of our respondents were bullish on the prospect of digital distribution becoming the dominant, if not only means of videogame distribution eventually.

	Illustration by Erin Mehlos

It's about time we have access to digital downloads. Today, game studios are getting bullied and censored by the big retail stores such as Wal-Mart. The process will only get more democratic once the gaming industry is able to manage and supervise its own product distribution.
-Jean-Sebastien Campagna, Ubisoft

The publishers and of course the retailers will continue to hang on to physical distribution for as long as they can, because it offers them the greatest control over the products and makes piracy a little bit harder. However, in the long run, the cost benefits of direct electronic distribution will be unanswerable. As soon as one major game publisher does it, they will all be forced to do it - just as they were all forced to switch from cartridges to CDs. Companies that do digital distribution of consumer software are already starting to charge extra for sending the customer a CD. Sometime in the next 15 years or so, the software retail shop will become as obsolete as the telegraph office.
-Ernest Adams, Ahenobarbus Ltd.

As more and more gamers have the Internet bandwidth to download large game files, the need to spend money on retail boxes diminishes. The price may not drop but the profit margin increases for the developer and publisher, depending on their publishing contract. The idea and potential of buying add-ons will sustain the game beyond the traditional play period. Sending bug fixes to the gamer is much easier and benefits everyone. The same will hold true for the consoles of the future as well.
-John Nelson, Atomic Design Laboratory

Undoubtedly, unless there is some worldwide disaster, digital downloads will become the predominant way of purchasing *any* digital content, *some* time in the future - when high bandwidth connections are cheap and commonplace. The real question is, how long will it be before this happens? My estimate: Longer than 10 years, less than 30 years.
-Chris Wood , Victoria University Wellington

It depends on what kind of game you are making and what platform it is on. Most console and handheld games will most likely stick with traditional distribution for now. While mobile phone games are already predominantly a download-only service. PC games are primed to make a full switch soon too, but how soon is anybody's guess. The traditional retail market for PC games has been constantly shrinking over the last few years, while online distribution has been growing. Online distribution for PC games has been around for quite a while, and it's finally starting to really take off now with wider broadband availability.
Some have claimed that the PC game industry is going to disappear, but since the PC is just about the only feasible platform for small/independent developers, it's not going anywhere. You may not see many big name companies developing for it, but there are hundreds of small companies that only make their games for PC and they sell almost exclusively through the Internet. The cost and manpower necessary for an online distribution service is much less than physical distribution. And with more and more companies, like Valve and their Steam service, switching to a downloadable distribution model, this will cut out many of the traditional middle-men, and put more of the money back into the actual developers' hands. Even with things like the Xbox 360 marketplace, the big guys might not be ready for such a power shift, but the independent game community has already been selling their software this way for years.
-Derick Eisenhardt, EMH Games

I think digital downloads will have to become more prevalent if the industry wants to avoid total stagnation. With the ever rising team sizes and budgets needed to create so-called "AAA" titles, and the massive marketing spends needed to ensure they sell well enough in their month-long shelf life to make the whole venture worthwhile, publishers have become ludicrously conservative. Online distribution gives the opportunity to remove a huge amount of the marketing budget and manufacturing costs, and means a bigger cut of the profits goes straight to the developers. Smaller budget-priced games and episodic content become viable, meaning developers are less likely to bite off more than they can chew - releasing 8 episodes of a game over 2 years seems far less risky than investing all that time and money in only one game.
Indie games have been available for download for a while now, but both the numbers of sales and the budgets have been tiny - enough for indie companies to survive and keep producing games, but not big enough for them to make any lasting creative impact. Valve made the games world sit up and take notice with Steam, and people are starting to realize that the distribution model can apply to "big" games as well. The real breakthrough will be if the next-gen consoles also provide some infrastructure for downloading content, because that will bring the games to a far wider audience than just the PC market. The shop shelves will be full for a good few years yet, but I'm looking forward to seeing online distribution blossom, and hopefully provide a springboard for those really cool projects which the publishers were too conservative to green-light.
-Anonymous

I think it's primarily a matter of bandwidth and cost. Technologies such as Apple's iTunes Music Store and the incredible popularity of file sharing services (legality aside) is a sign that people are definitely ready for digital distribution. Many users already download Linux distributions and other very large downloads rather than pay for a CD version (as they can cheaply burn their own). Granted, the Linux/Unix elite may not represent the majority of game players, but if integrated support for such technologies is more tightly built into future consoles with a broadband connection, then why won't people go digital?
Perhaps you could argue that, like e-books, some people just want something real that they can hold, and so your standard retailer will never go away. But I'm not sure gamers (other than collectors) necessarily feel that way about software. Especially since the days of finely detailed color manuals, cloth maps, and other cool extras are nearly gone, what motivation is there to buying a CD in a jewel case, which is then packaged in a big box? So, if the bandwidth is there, and digital distributors can offer competitive prices (due to the inexpensiveness of reproducing digital content), then the consumer will follow in time. Let's be honest - is there any more primary reason that file sharing services have been successful, other than cost? People are willing to take risk of viruses, spyware, low-quality downloads, etc., if the price is right.
-Jeff Lunt

A good way to look at this is to see what is happening today in the music industry with models / services like iTunes. Once high bandwidth prices drop and become common place, there's definitely room for digital downloads. The problem is that as processors become faster (i.e. Cell processors) and developers can do so much more, the game file sizes themselves will become larger and larger - spanning entire DVDs. And so, bandwidth will again play a very important role and will have to really become commonplace / cheap for an iTunes type model to work in this industry.
-Vishal Lamba, Chakra Interactive

Digital downloads will be the norm in the future. Video games used to depend on physical media to help standardize control and distribution. But now, physical media is starting to actually limit control and distribution. By 2030, all video games will be distributed online. Physical media offered advantages for selling games as products. But in 30 years, video games will be services, not products. Players will gladly pay a small entrance fee each week or each month to join up with virtual friends to play cards and chat, or immerse themselves in a virtual reality and chase aliens in their spaceships with their virtual crewmates. Game companies will profit from creating and maintaining consistent, reliable online interactive experiences to which players contribute. Branding will be one of the most important properties video games will have, as the reputation and word-of-mouth which players give a game company will determine whether more players join and bring their friends with them, or whether a service stagnates and dies in the face of competition from other companies. Game design involves a fusion of hardware and software, and as the Internet supercedes physical media for control and distribution potential, players can look forward to much more proactive, personal, social roles in the games they play.
-Adam Yulish, Ohio University

For the foreseeable future, conventional “bricks & mortar” distribution will continue to drive the fragmented PC market, where the local Electronics Boutique is the closest you can come to a unified games portal. The shift to digital distribution will be more pronounced for expansion packs and other ancillary content where the website of the original game's developer or publisher, if properly managed, can become a logical unified portal for the intended market. In the console market, unified portals are inherent. Coupled with the inherent online capabilities of the next-gen systems, this makes a very persuasive argument for a significant digital shift on the console side of the equation. The primary lesson that will be learned from the upcoming generation of consoles is that the lucrative digital distribution of demos, rentals, and fully owned titles is now limited primarily by the storage media. The shift to digital distribution is coming to all platforms and we now find ourselves at the start of that lengthy transition. It will be complete within a decade. The big players in the Digital Distribution Era will be those who own the unified portals that will serve as the digital marketplace and those who own the big-budget games that will serve as development platforms and delivery mechanisms for future content. That said, new opportunities will open up at the micro-studio level where small teams, both casual and professional, 1st-party and 3rd-party, will be able to develop, market, and sell compelling gameplay and new intellectual properties within the frameworks created and supported by the larger players.
-Rob Bartel, BioWare

This is definitely the future we're talking about here, but it might arrive sooner than expected. Without question, in the near future gaming will be dominantly download-based, as it allows developers to adopt a B2C (business to consumers) model for selling their work instead of a B2B (business to business; developer to publisher to consumer) model that currently churns the market. Cutting out the middleman by using the available technology is the next logical step, allowing higher revenue/reward and creative control to developers. It also allows a much greater opportunity for new developers to put their independent titles to market in the same global sales arena that multinational publishers achieve. Wider selections, more creative talents, more titles, more competition between product quality, easier distribution, and larger revenues are all results of download/streaming game content distribution. This is a proven model for digital products, as shown through the success in Valve's Steam and Apple's iTunes. The gaming industry will certainly see a shift with its console titles and its PC titles towards this model, and my studio is exploring a new high-end web-game niche that we intend to pioneer and evolve in the same fashion.
-Alexander Davis, Dreamseed, LLC

It's a Great Idea BUT…

While expressing that digital distribution is a positive development, there were those of our respondents that see it as a complement to physical distribution, or as a viable option but ultimately non-threatening. But even those who replied more pessimistically saw the value of digital distribution to independent developers, and its potential to serve as a testbed for the more risky but creative games for larger developers. The feasibility of digital distribution also has the possibility of forcing publishers to add more extras to physical copies for added value.

Digital downloads, being more convenient and cheaper, will begin to erode market share from physical products sold in the game space as well as other forms of entertainment. Will it entirely replace it? No, absolutely not. However, publishers will need to get more selective and creative in adding/selling more value through the physical channel. Special edition titles, compilations and collector's copies will need to be marketed in order to keep a compelling value proposition to the gamer.
-Howard Koval, Managing Partner, Hit Start

I think that digital downloads will be a great option for next generation consoles. But that it will only remain an optional aspect of the gaming market, made for smaller games that may not need to use as much storage as some of the larger High Definition games coming out. Hard drive space may also be an issue, with 40GB being the largest hard drive that I have seen for the next generation systems, that could fill up really quick considering one Blue-ray disk can fit up to 25GB of data. Not all games will be able to fill 25GB of space, but with high definition and enhanced graphics capabilities I'm sure they will get close. I personally would prefer to buy all of my favorite games, and download games I was interested in but didn't care to keep...how about downloading rentals? I think Nintendo has the right idea; buy downloads of the older, smaller games and buy actual copies of the new ones.
-Mike Madden

In some of the forums I belong to, this has been discussed. The consensus seems to be that people want a hard copy of their games. After a crash or getting a new PC, we may want to reload a game without the hassle of verifying a license with a website, and downloading it again. Game downloads are huge, and even with broadband, this can take considerable time. I don't see this changing in the near future.
-Marilyn Nelson, Mysterymanor.net

I believe that physical copies will always be required, and remain the dominant form of distribution. Having an actual, tangible box sitting on the shelf of your local store allows your product to be noticed by casual, impulse buyers who might not have even known the title existed. Whereas, in order for someone to obtain the software via electronic distribution they will have to actively search out it out on the web... thus creating a situation where you could seriously limit the number of copies sold. Many people enjoy having a physical product in their hand and have a "need" to have something they can hold on to no matter if the products contain the same data. And the "casual" user is easily scared by all the horror stories floating around about online scams and viruses. Granted, online distribution will always benefit independent developers and serves them as a way to effectively get their product out there, but if the same product were placed in a retail box on a store shelf I think we'd see a huge increase in sales as it would reach a whole new, broader market.
-Michael Cooper

Digital purchasing will grow in the future, but it'll take a while. That method of distribution has some major hurdles to conquer:

* Having a physical box grants your company credibility with consumers: you look more like a "real" game company. There is a perception (true or not) that any talentless hack can put together a lousy game and sell it online.
* What if your computer crashes? With a physical box you can reinstall on your new PC. With online download, you need to remember that you had it, where you got it, and what your username and reg code are.
* There's no major press coverage (yet) of most online-only games. There are some truly remarkable online-distributed games that most of my gaming friends have never heard of. We need better methods of marketing, and coverage in reviews.
* Cost of entry for consumer is still high (from a consumer's point of view). I don't mind trying out a music artist I've never heard of from iTunes, because a track costs me all of $1, which is pretty negligible. But a $20 purchase for a game takes a bit more of a commitment. Maybe if someone released a game where I can buy one level at a time for a buck each? Maybe if that cost structure became the norm, and we had the online-distribution equivalent of iTunes where you can order levels for any game?
* Some people, even now, just don't like buying anything online. They feel like there's a greater chance of getting ripped off, or getting their credit card stolen. (This will fix itself in time, as a new generation of people who were born online grow up.) I can see it succeeding anyway because it's such an efficient delivery method for games, but it will take awhile to overcome the downsides.
-Ian Schreiber, Cyberlore Studios, Inc.

What I'd like to happen: Developers group together to form one or two major download distribution channels/portals, giving them a much more effective form of distribution. They in turn use the profit gain from using these direct channels to help them stay competitive in the harsh environment of today's industry. What will probably happen: Every developer creates their own piece of software to do exactly the same thing. Consumers turn away from the silly notion of having to install two applications for every game, and because of download problems each developer has to solve again for themselves. Normal retail distribution is predominantly unaffected.
-Borut Pfeifer, Radical Entertainment

Downloadable game distribution has to be seen as an additional distribution channel rather than direct competition to the conventional retail distribution method, at least for the moment. However, this distribution method is opening the doors to independent game developers who want to release their mini-games without the huge overhead and tedious process of going through a traditional publisher. These independent game developers will most likely rely on proven middleware to develop their games, be able to ship titles in record times and with very limited resources, in order to keep the costs down and therefore maximize their potential ROI.
-Virgile Delporte, Virtools

I think for now, which includes the next two generations, physical game copies will continue to be the primary means of distribution for game purchases. Most publishers and developers lack the financial resources to create the long term server-structure to manage and maintain a viable means of content distribution. For some game genres, FPSes and MMORPGs, it makes sense to have a digital delivery system because the draw is playing online. But there are other genres that will not require digital distribution. The primary reason for publishers wanting to distribute content digitally is control. I have Half-Life 2 and it is a good game, but I hate to play it because it is a time consuming experience. I am inconvenienced because I need permission form Valve/Steam to play "my" game. This is a good reason for me to leave gaming altogether. I do not want anyone controlling my legally purchased products. I personally think that the best way to deliver content is with disc and the experience should be enhanced with online delivery. Many problems arise when consumers are forced into a purely digital delivery method. For the PC, what happens if you have to reinstall the OS or you purchase a new system or when the game itself is corrupted and you have to reinstall it? I don't want to wait 5 hours to reinstall my content. Also, what happens when the distributor's server doesn't allow you access to your legitimate account for any of the above reasons. You potentially lose a valued customer. I prefer to keep hard copies of all of my games.
-David Shepherd, Deltak.edu

Until the majority of the world has the means for extremely high speed Internet service, hard copies will be here to stay.
-Jason Frederick, University of Baltimore

I love the feeling of getting a nicely packaged game that comes in a box with a manual and everything. The problem with digital download is that I feel like I'll lose it if my HD fails or if I need to uninstall it for space. If digital download can give developer more profits and lower the cost of the game, that'll really be great. Hopefully, as digital downloads pick up momentum ,we'll see more creative games.
-Anonymous

I personally like to be able to have something tangible for what I purchase with my hard earned money. But I'm getting used to buying music off iTunes, and when Half-Life 2 came out I opted to purchase it via Steam. I don't think digital downloading will be the predominant way of purchasing PC and console games at least not until the broadband infrastructure widens its reach. Still I think most consumers will still want "something" tangible that represents their purchase. These could be limited edition items like an art book or action figure. The used games trade is probably looking at this closely, because without actual products then the idea of trading in games goes out the window.
-Carlo Delallana, Ubisoft

I think the conventional method will be the way the majority of developers and publishers will distribute games for the near future, but I do think digital distribution will start to appear as an option for PC gamers in particular, tempted by developers offering lower prices for downloading the game rather than buying a hard copy... I think the idea will take off, and digital distribution could eventually equal the conventional method... but I doubt whether this will ever become a serious option for console game developers. Digital distribution could revolutionize not only the way we pay and obtain games, but also how we play them... Imagine being able to download and pay for 1 level of Call of Duty at a time for example! I think it opens up a lot of options to smaller developers in particular, and hopefully a way to distribute "smaller" games without huge budgets. Other benefits like: Developers could also release a "test" level on the consumers to see what people make of their game idea before investing in a whole game... or the game could be distributed as a series with a new playable level released every month continuing the story like a soap opera! I think it's really exciting, and could entice more people into playing games, and could help create completely new markets for niche gamers rather than every game having to be a mainstream hit. Overall, I think digital distribution will be a winner for punters and developers, but publishers will have to rewrite the rules in order to reap the benefits.
-Alistair Langfield, Matinee Sound and Vision Ltd

I think that there are a number of people who like having physical copies of a game; myself included. Once the copy is in a gamer's hands, it's theirs and that's a pretty comforting feeling. I also like looking at printed manuals and having them next to me in order to learn the game as opposed to flipping between tutorials and actual gameplay. Games are getting bigger and bigger. I don't think our broadband structure (U.S.) is really ready for digital downloading for most games. Most games are in the gigabytes and that's a day or two of downloading on most DSL and cable connections. While prices for broadband have come down, I haven't seen any significant improvements in bandwidth. I believe that physical copy distribution will move towards allowing people to distribute a game themselves. I'd like to let buyers of a game burn as many copies of the game they want and give it to their friends. Let their friends have a free limited time trial to enjoy the game and then give them the option to purchase a CD key. The fairly recent popularity of "limited edition" packages in the United States further suggests that not only can physical copies of the game be desirable but people enjoy the music outside of the game and so forth. Physical packages probably won't be phased out for a long time unless some major changes are made.
-Christa Morse, LucasArts

I can't imagine that the majority of gamers have Internet connections capable of downloading today's games. Plus, games continue to increase in size, making downloads further and further out of reach for many - not to mention the general unreliability of the servers that provide such content. Perhaps we'll get to this point in a few years, but not anytime soon. Besides, there's an inherent value in the experience of browsing a store with products you can pick up and compare. And let's not forget the common practice of trading in used games which can't really be accomplished online.
-Anonymous

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[Article illustration by Erin Mehlos. Please note that the opinions of individual employees responding to the Question Of The Week may not represent those of their company.]