Digital Distribution Can Go Jump in a Lake

   The inexorable march of our beloved industry towards an all-digital means of distribution continues unabated. (1) Analysts are regularly confirming as much, though it does not require heeding the call of the modern day bird-watchers known as "video game analysts" to realize this. One need only take count of the major names entering the arena of digital distribution, hoping to achieve dominance or at least get a cut of the profits: Microsoft, Gamestop, and Amazon to name a few.

   There are always two potential groups of beneficiaries when an industry (more or less homogeneously) makes major changes to the way it functions -- the businesses that consist of the core of the industry and/or the consumers themselves. Thus, the question is begging to be asked: Who has benefited most from the rapid and ever-accelerating transition to an all-digital video game industry?

The purpose of this article is to tackle this question head-on by analyzing the effects of digitalization on two major facets of concern for consumers: prices and rights.

Let's get to it!

Prices

A casual observer of capitalism might assume prices of a product would go down once the costs associated with producing that item also went down. With regards to digital content, at the very least, this has not been the case. Prices for the very same product, minus most of the cost it took to produce it, have remained stable, and even increased in some cases. This is what I like to call the "Apple Effect." Apple found out it could charge the same price-per-song for digital music through its Ipod store, and in fact charge $1.29 (versus $0.99 per song for a CD) for a significant amount of time. (2) This was, of course, nothing but extra revenue, since the cost of making CDs was nonexistent.

Well, the same has come to be true for video games. Allow me to substantiate that claim.

I'm a singleplayer aficionado, preferring solitude to forced cooperation with the mostly-moronic inhabitants of the internet. Here was my humble Christmas gaming list this year:

Let's compare what I would pay for these titles if I were to grab some hard copies via Amazon.com, versus what I would pay over Valve's popular digital distribution service, Steam (which, with 70% or more of market share, is essentially synonymous with the term "digital distribution"):

                              Amazon.com:                            Steam:

 EUIII Complete           $9.65                                $14.99

 King's Bounty              $16.40                              $20.09

Somehow, I save 26% more cash by purchasing physical copies of the game than digital downloads. Now, the absolute amounts are relatively minimal, but you better believe such savings add up over time.

Not convinced by the numbers on a few relatively unknown European games? Fine, let's take a look at the big boys:

                            Amazon.com:                             Steam:

 MW2 (CoD)               $50.00                                $59.99

 Left 4 Dead 2           $34.99                                $37.49

 Dragon Age              $39.99                                $49.99

 There you have it. The consumer is paying more money for a product whose production cost (burning game onto disc, put it in a case, providing in-depth documentation and manuals printed on paper, and an artfully designed box to hold it all) has been vastly reduced. Note that the gouging applies to all genres of games: niche titles that are not "mainstream" based on sales, mega-hits that top the charts, and even the digital distributor's own games (Left 4 Dead 2). The only exception would be the weekend sales that steam has provided for certain games, but it seems to me that's like hoping you'll win the lottery (you don't know if the game you want will receive a price cut for sure).

There is only one logical conclusion from this data.

Primary group benefiting this change: Core business interests

Rights

There are other, equally important facets of this issue other than matters of currency, and these I have decided to collect under the umbrella labeled "rights."

The fact is, over the long term digital distribution has the potential to become a major vector for the limitation of consumer rights in the industry. It's in what might be called an embryonic stage now, but still, the trend is concerning.

For one thing, in an all-digital world, you don't actually "own" any of what you think of as "your" games. According to its own User Agreement, Steam grants a "non-exclusive license" to use the user; such a license does not imply ownership and thus can be revoked at any time. Not to sound overly conspiratorial, of course, but I think most people will agree it is preferable to actually OWN your own copy of the game rather than have someone else lend it to you for an unknown amount of time. 

The implications that already evident from such a policy are as follows: you cannot resell the product you payed (more than) full price for. Can you imagine not being able to sell a used book that you've had laying around for a while? How about even handing it to a friend for free? Neither is possible with digital distribution.

Further, since you never owned those game as you would have if you had bought hard copies, it is nothing at all to unconditionally banish accounts from playing games when they get hacked. Granted, it takes a certain level of ignorance to allow oneself to hacked, but I believe in second chances. If only Steam felt the same way: "the use and security of your Steam account is your responsibility." And thus the consumer is forced to purchase all of their games again.

Primary group benefiting from such changes: Core business interests

Conclusions

The assertions made above shouldn't particularly surprise anyone. It is quite logical that industry-wide changes enacted by the core business interests of that industry will tend to benefit those interests most. Further, this whole enterprise is just getting off the ground, and the conclusion that the consumer is not going to be the primary beneficiary is neither permanent nor inevitable. Nor should it be bloated out of proportion. Things are still relatively calm at this point. Still, the trends are rather disturbing. 

Take DLC as an example. The most advanced effort to utilize DLC as extra revenue has probably come out of Bioware, in Dragon Age:Origins. A character that very well could have been (and was obviously designed to be) incorporated into the game from the start was cleaved off of the main body and sold for additional money. Again, this shouldn't be pushed too far, since DA:O was a massive game regardless. Still, companies are testing the waters here; the success of Dragon Age DLC will only encourage more developers to spin off main game content and charge extra for it, at the expense of the consumer.

In the end, it will take vigilance from the consumer base to push back if any of these trends reach their logical conclusion and become unbearable. If anybody is going to look after poor'ole Joe the Gamer, it isn't going to be the corporations holding his hand, gently guiding him towards increased costs and less rights. It's got to be Joe. 

Featured on my relatively useless website, http://pcgamingcomp.blogspot.com/

1. http://www.gamasutra.com/view/news/26238  /Gamasutras_Best_Of_2009_Top_5_Game_Biz_Trends.php, under "3. The Widening Net of Digital Distribution".

2. http://en.wikipedia.org/wiki/IPod, under "iTunes Store".