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What has digital distribution done to the gaming industry?

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Steam, Origin, the App Store, Gamers’ Gate – it’s hard to think of a gaming world where these titans of digital distribution weren’t there to ease gamers away from the trusty CD-ROM. In this article, we’ll discuss the changes in the structure of the gaming industry that have come about through the operations of these giants. From enabling tablets and tablet PCs to play games through to facilitating the rise of online gaming, what has digital distribution done to the gaming industry?

Before digital distribution kicked in, the only media for software distribution was physical. Floppies gave way to Zips, which moved to CD-ROMs, DVD-ROMS and all that Dual-Layer stuff. Blu-ray kicked in right at the end of the physical media period, offering a paradigm shift in mobile data storage. Driving these increases in storage requirements were bigger and more complex pieces of software – including games – as well as higher and higher resolution video. As a guideline for the gaming industry, sales of physical music media declined by 46 percent in the ten years between 1997 and 2007.

As a result of this orderly and controlled physical packaging of products, games were highly polished before release. Any ‘downloadable content’ was small and limited to updates. The first disruption came with ‘direct2drive’ websites (concurrent with Steam’s beta period in 2004), who were able to offer expansion content via digital download. Of course, relatively narrow Internet bandwidths (at least, by today’s standards) limited the size, scope and market impact of these.

Game studios were therefore focused on creating a ‘finished product’. Games development periods were longer than is standard today (years as opposed to months), and thus offered a more immediately rewarding experience out-of-the-box. Emphasis on replay value was high, with difficulty curves often steeper and additional content available via in-game ‘unlock’. The unlocking of additional material is something that has clung on to games even today – more content is unlocked by completing special features – but at the time, such elements were often vast, game-changing components (like ‘multiplayer mode’) or at least of novelty value to the player (such as unusual hats). There were often quick, cheap methods to unlock large quantities of game content: cheat codes. Companies such as Equalizer even successfully carved out a niche as physical media containing a host of ‘pre-game’ hex hacks.

Updates and patches were naturally digitally distributed, and thus were kept to mainly bug fixes. Of course, with the rise of direct2drive and some games companies’ penchant for retailing expansions as digital downloads (we’re looking at you, Bioware), the notion of digital distribution had started to slowly seep in. Games studios could create a product safe in the knowledge that they could later provide ‘unlockable’ media for a price.

The advent of DRM (Digital Rights Management) hastened the onset of web-focused distribution. Many CDs (such as Half-Life 2) required extensive patching before they could be played, and even then needed to periodically connect to the Internet to verify the content as bona fide. In 2008, Mass Effect consolidated SecuROM for DRM authentication via a server as standard. Consumers gradually became used to a slew of downloads accompanying a game. The emergence of Steam as the pre-eminent digital distribution system from the release of Half Life 2 (mid-2004) and the gradual increase in user-end bandwidth removed several barriers to widespread user adoption. EA believes that digital distribution will be the pre-eminent form of games sales “in the coming years”.

So where does this leave games development studios? Because most users on digital distribution networks have authenticated financial details with the vendor (i.e. debit or credit cards), studios can monetise their products in a variety of unique ways. ‘Free-to-play’ games have been around since the mid 1990s (Neopets, anyone?), but notable MMORPGs such as RuneScape have seen limited success in upselling users to some sort of fee-paying membership for additional content. The App Stores (and other digital distribution portals) provide a quick and instant way to upsell from Free-to-play to paying membership without further subscription. It’s very easy to spend your money, especially when playing games in your spare time on your tablet or smartphone.

This means that increasing numbers of games have social elements – which benefit from friends’ recommendations, a secure sales technique – or offer entry to the game at a ‘free’ point. Some games require a small initial investment but use competition to move players to pay for items that will allow them to act on a par with their online peers.

An offshoot of this is the emerging presence of tablets and tablet PCs in the core gaming market. Without digital distribution in place, this could never have happened – there are no mainstream tablets with optical drives necessary to engage physical installation media. Some companies chanced USB key distribution of their product, but this is inevitably inferior to on-device purchase. Tablets, with their ecosystems of App Stores full of ready-to-pay consumers, self-marketing and self-selling sales portals and networks of media coverage offer a much richer retail opportunity than distributing games via physical media. Of course, as a result, smaller studios can create and release more niche titles with minimal overheads.

For some gamers, the experience of digital distribution amounts to nothing other than frustrating hours on the phone with their ISPs’ ‘help desks’. Admittedly, there are potent disadvantages and valid philosophical criticisms of the digital distribution system. Although I do sympathize with gamers who do not have access to reliable internet service and do acknowledge the validity of some of the criticisms, upsides of digital distribution outweigh its downsides. For example, gone are the days when gamers had to search through several stores just to find a decent copy of an old PC game – platforms such as gog.com offer games from years long gone. Furthermore, providing small indie studios and ambitious programmers space to operate and grow is a worthy cause and is a good enough reason for this lowly writer to argue for them.


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