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As hard drives of both computers and gaming consoles increase in size with many more gigabytes per dollar, it seems that our storage space will be seemingly limitless in the future. There is also discussion regarding remote storage for multimedia, in which music, games, and video will be streamed to us automatically. Both of these involve digital distribution, or the providing of multimedia and entertainment over the Internet instead of a traditional retail format with physical objects. The music industry has begun to fully embrace this format, and television networks and movie studios are officially trying to break into this market amidst the video streaming sites of YouTube and similar services. Amazon has taken an initiative toward eBooks with their Kindle, and most software is available through download today.

Digital content has always been available for computer games; the 1990s brought Doom modifications and popular online games like Half-Life: Counter-Strike and Day of Defeat. Most of these, however, were fan modifications and not commercial releases of these titles. This is changing as publishers are expanding more into digital distribution, including consoles and handhelds as well. The PC market is ruled by several different distributors including Valve’s Steam service and TBS’s GameTap service. Microsoft offers DLC (downloadable content), games, movies, music videos, and more through its Xbox Live Marketplace for the Xbox 360. The PlayStation 3 (and soon the PlayStation Portable) enables gamers to purchase similar content through the PlayStation Store. Nintendo, lastly, provides retro games and original titles with the Wii Shop Channel and WiiWare for the Wii and DS systems. Of course, nearly all of the content here costs money.

Specifically for video and computer games, there are more or less six online distribution models. We have:

• Full games
• Full games and a subscription (mostly applies to MMOs)
• Full subscription based model
• Free games with in-game advertising
• Microtransactions
• Episodic content

Services such as Steam and the major console manufacturers are offering full games for arguably cheap prices. Major publishers are flocking to Steam for release of major budget titles such as Grand Theft Auto and Civilization IV. Amazon may even take a crack at the market of online game distribution. It’s clear that with increasing hard drive spaces (of 500GB and 1TB slowly entering the mainstream), the selling of blockbuster titles and large budget games is the next logical step for online distributors. On the console front, every manufacturer is selling older titles from back catalogs as well as new content, but it is Sony that has pushed a major title out on their store with Warhawk, a third-person shooter that was released on both the PlayStation Store and Blu-ray disc. It is possible that game releases will gradually shift to these dual-format releases, and eventually the physical medium will be phased out.

MMOs (Massive Multiplayer Online) are known for their subscription based models, with popular titles such as World of Warcraft costing $14.99 a month and The Lord of the Rings Online: Shadows of Angmar has several different subscription options, ranging from $9.99 a month for pre-order customers to $14.99 for post-release customers. Usually these titles require an initial purchase that includes a free month, and then any further playing demands monthly payments. Some people are immediately turned off by the idea of constantly paying for one title, but MMOs have proven their success, especially Blizzard and World of Warcraft.

Similar to subscription music services, there exist full subscription-based gaming platforms. A prime example is GameTap; for a monthly fee of $9.95, customers have access to their entire library of games with no extra fees. A customer can pick and install however many games they please that will cease to work only when the subscription expires or the account is closed. Thus, customers don’t actually own the games but rather “borrowing” them. Unfortunately services like GameTap are subject to game removals due to contract expiration with the companies.

Other than websites hosting Flash games, I have never seen or heard of a game or service supported solely by in-game advertising. Usually free games are tied with the option of microtransactions, evidenced by Asian-market titles like Nexon’s Crazy Arcade and Kart Rider. Since in-game advertising is gaining a larger presence in games and the industry today (SWAT 4 introduced dynamic in-game advertising, Microsoft bought Massive Incorporated in 2006, etc.), it is no doubt that high quality free titles are on their way, with EA leading the way using their upcoming Battlefield Heroes. The title is cost-free with the exception of micropayments on avatars.

And what exactly are microtransactions (or micropayments)? They are small downloads of new characters, stages, items, vehicles, or non-gameplay related content that usually cost under $5. Microsoft’s Xbox Live Marketplace is the best example: New Halo 3 map packs, weekly Rock Band songs, The Elder Scrolls IV: Oblivion’s overpriced “Horse Armor.” The PlayStation Store offers them as well, and Nintendo’s WiiWare service may have microtransactions for some of its titles. There is heavy debate in the gaming community regarding microtransactions; some content already in the game is locked until that content is purchased. If a gamer has already bought the game, why must he or she pay more to unlock content from something he or she already paid for? Developers, on the other hand, have the ability to rake more cash for future development, and gamers don’t seem to mind plunking down a few bucks for these additions.

Episodic games are a series of games that are tied together by story, content, characters, or themes. They are often much shorter than full-length titles, ranging from a few hours to eight hours. Some may cry foul, but many gamers do not have time to spend a lot of time with their gaming systems. For them, episode games may be best because they allow short parts of a much longer experience, and they can also invoke the feelings of accomplishment. Longer games may remain unfinished for a while, and gamers may be frustrated by their length. Episodic content may be the future of gaming, and that is no overstatement. Valve was the first major source of episodic gaming (although the slowest as well) with Half-Life 2: Episode One and Half-Life 2: Episode Two. Currently the greatest exhibitor of episodic gaming is Telltale Games by releasing a new episode every month for the Sam & Max Season One series.

So what does digital distribution as a whole actually offer for developers and consumers? Well, it offers developers to directly generate revenue instead of receiving it through publishers. Since manufacturing costs are near non-existent, game prices may be slightly lowered as well. Gamers can also immediately play the games at their release without the hassle of waiting for stores to open or standing in lines. Word of mouth and Internet discussion can lead to easier and quicker sales of games when compared to sales of retail copies. Games of previous generations can still be offered without ceasing production of copies. With certain systems (Steam and GameTap), consumers are able to access and download their games from any location without installation discs. So basically this is all money, money, money for developers.

And what exactly is bad about digital distribution? The need for large hard drive space and a broadband Internet connection limit the potential audience and therefore the potential customer base. For consoles, hard drives are still rather small and Microsoft would be very hesitant in releasing a full-scale title that takes up 4 to 9GB of space; most Xbox 360s have the 20GB hard drive. Not everyone has broadband, and some people are tethered down to connections that offer perhaps download speeds of less than 100 kilobytes a second. There is also talk of Internet congestion, which may severely limited these companies’ digital distribution efforts. Many people will also feel uneasy about their purchases being in a non-physical format; services like Steam provide the ability to burn the game to a disc, but they are still binded to a Steam account and cannot be played without one. Technically for most of these services, gamers are highly limited by the EULAs (even for regular retail games and software) and are considered as authorized users of a company’s product instead of rightfully owning what they purchased. Publisher funding also disappears; it’s unlikely that Valve would financially assist developers outside of specific titles that really stand out; an example is Portal. The vast majority of titles do not fit under this category, though.

That more or less covers digital distribution in a nutshell. It is media and content delivered through the Internet instead of a traditional retail format. Could digital distribution permanently replace retail stores, making stores like GameStop and the music and game departments of larger stores such as Target and Wal-Mart completely extinct? Those are topics to be explored in future articles. Part 2 will discuss what other industries are doing in their efforts to utilize the Internet for their business. Subsequent parts will follow as well as an article of digital distribution of anime.

This post is tagged Digital distribution, Download, Gaming, Industry, Internet, Music, Steam

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