At the MI6 video game marketing conference in San Francisco, a panel of carefully-selected game industry minds, including Gaikai's Dave Perry, reps from GameStop and Direct2Drive, EA and Capcom, tackled the question of what game distribution might look like in the year 2015.
Retail vs. Digital
GameStop senior vice president and general manager of its Digital Ventures offshoot, Chris Petrovic, allowed that retail will change in the next five years -- moving to something "more experiential, like the Apple Store", an environment designed for "creating awareness and discovery."
He said that GameStop has been developing new and different types of retail models. "The mix of what you'll see in our stores may change, but retail is a destination to discover, educate and learn."
There was a lot of debate over whether games can be delivered digitally to a wide audience -- while Capcom's VP of strategic planning and business development, Christian Svensson, described current bandwidth issues as "a short term problem", EA's chief creative director Rich Hilleman dissented, saying that bandwidth increases in the U.S. have essentially frozen for the time being.
Gaikai CEO and founder Dave Perry pointed out that you don't need to download full games anymore -- for example, with World of Warcraft
, Blizzard has "massively reduced the download you need to get started," pointing to optimization as the way forward. However, he also said people are getting less patient in general.
Svensson pointed to production costs as a reason games will not get massively larger -- "it's very very costly for us to make bigger and bigger games and we're already pushing the limits there," he said. And Hilleman allowed that bandwidth might catch up, because he agrees: "there is nothing on the horizon that is going to redefine those expectations."
Sutton Trout, VP of digital content for IGN's GameSpy technologies, which operates Direct2Drive, has an obvious stake in the digital download space, and sees it as taking over. "I think that physical element, just like has happened in music, is going to dramatically decrease in five years."
While Hilleman agrees that retailers are at a disadvantage in a digital future, it's not as bad as is painted, since the publishers don't know their clients. "My opinion is that Target or GameStop or Best Buy or Amazon has nothing to worry about, digitally, because they understand their customers really well, and they know things we don't know."
Said Perry, echoing statements made by Sony's Peter Dille
earlier in the day, "digital's going to happen as fast as that's the best thing for the consumer."
The Platform Mix
Like many other executives, Hilleman reiterated a belief that there will not be a console transition anytime soon; he also sees a "PlayStation 3.5 and an Xbox 540 between PlayStation 4 and Xbox 720," as a distinct possibility.
Hilleman doesn't see the current and evolving state of platforms (which Svensson described as a "free-for-all") as problematic for EA, but rather an opportunity -- "what we see is that the larger franchises now have the chance to be everywhere," he said. "That seems like, to us, a future that's pretty interesting."
However, says Hilleman, "As long as there's a demand for [high definition] content we're going to continue to build that content."
This, he said, despite the fact that EA is "the leading publisher on the iPhone in dollars. How we achieve that is good brands, good marketing, and intelligent development." In fact, he said, "what we're seeing is the evolution of new kinds of development to meet these needs... That's good news in general, there isn't the stratification that there was before."
Svensson agreed, saying "there are appropriate price points and business models for everybody," noting that the Xbox Live Arcade and PlayStation Network $5/10/15 split works well, and that he expects a "very viable" $20 price point to join the market soon.
When it comes to piracy, the group agreed that server-side authentication, even for single-player games, is the future. Perry sees this as an opportunity for making more money from gamers -- identifying those who make purchases in games and then, at a platform level, selling that information on to other games. He sees a future where these gamers are enticed to buy by gifts of free items in competitors' games.
And speaking to Future US president and panel moderator John Marcom -- his company publishes Nintendo Power, The Official Xbox Magazine, GamesRadar and more -- Perry said "I see you becoming a partner, less of a media outlet."
Calling what Future does "promotion", he sees possible partnerships in which media outlets steer gamers directly to preferred retail channels like GameStop. "You're really moving the sales of the game and it's all traceable," said Perry. "That idea of everything being tracked is going to be critical to marketing going forward."
There needs to be an iTunes Music Store of games, argued Petrovic, and it's possible that it could be GameStop. The point of having a channel like that is "about raising awareness." There needs to be a "neutral curator" of game content. Though some developers will have a direct relationship with consumers, many more, says Petrovic, will need "access to content creators' audiences who come in to look at a competitor's product." As consumers generally have "loyalty to gameplay and the game itself", rather than publisher brands, this is the best solution.
Direct2Drive's Trout warned that Valve's Steam is in the position to become the de facto source for games as iTunes Music Store did for music -- which is a situation that put the record labels at a disadvantage, warning that the publishers would be "giving your users and your content to that behemoth."
However, Hilleman sees an obvious difference between the ITMS model and Steam. "The PC business is a big business... The Sims
customers and Steam customers have about nothing in common. I think that's really what we're talking about. People group themselves into groups that they trust and like."