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06/22/2005

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Foopy

"I think almost every developer here would love to see this kind of market emerge, if only so we can play what comes out of it."

Emerge? I've always thought this market emerged in the early 90's, with the advent of shareware distribution over BBS's, and it's what got me really excited about game development in the first place. Id's rise to power with Commander Keen, Wolfenstein 3D, and Doom was made possible by the distribution of these games over telephone lines, and a lot of modern games like Counterstrike, Puzzle Pirates, Gish, and A Tale in the Desert owe their successes to internet distribution as well. In other words, there isn't any "commercial garage game" that needs bringing back--it's already here; if anything, these games are the very progenitors of this "long tail" distribution system you speak of. Or is there something about this long tail thing that I'm missing?

In addition to the "niche market" concept of the long tail, though, I'd say that this method of distribution also makes it possible to make games that are extremely accessible at a very low cost to both the developer/publisher and the consumer (i.e., the shareware concept). For instance, I've heard that Puzzle Pirates is played by lots of people who don't even consider themselves gamers.

goth with a chainsaw


If this is true for Netflix, it might also be true for Gamefly.com. If one has a "long tail," the other might, too.

StGabe

Id's rise to power with Commander Keen, Wolfenstein 3D, and Doom was made possible by the distribution of these games over telephone lines, and a lot of modern games like Counterstrike, Puzzle Pirates, Gish, and A Tale in the Desert owe their successes to internet distribution as well.

It used to be that ALL games were essentially garage games. The majority of games came from shareware catalogues, etc. The market has been consistently shifting AWAY from this model, not towards it. Nowaways when an indie title makes it to the mainstream well:

1) More often than not, it's not truly indie and there was some VC/Publisher backing.
2) It's an exceptional case. The one that made it, or at least sort of made it, against a backdrop of the legions that didn't.

The question is really, how can the internet distribution really start to be a market force and not the Dark Horse, only occasionally relevant, element that it currently is.

And really someone smart has to find a way to reach out to consumers in a big way or consumers need to start a movement towards different spending-habits. Consumers bring all the money to the market (and thus have ultimate control) and Publishers are currently doing very well selling consumers Teh Shiny, harnessing the hype machine, mass-marketing, etc., to guarantee that only big-budget, over-hyped titles make a dent in the market (i.e. that they are the only ones who can afford to play the game).

It can happen but I think we're a ways out yet. The market is still too hype-entrenched, far too interested in all the accoutrements of big budget titles and too tied to the distribution models that support this. Maybe a movement to more casual gaming will help this but consumers, right now, just aren't indicating that they really want to leave their comfortable little cubby hole of hype and graphics.

ClockworkGrue

Foopy:

I think you're right about shareware taking off in the early 90's, thanks to BBSes, early AOL and similar services, and early internet adapters. However, my perception of this community has been that it's dried up. Possibly lost in the bursting of the dot com bubble, although I don't have any evidence to back that up.

Puzzle Pirates, Gish, et al are examples of what I'm talking about, but to really get the Long Tail effect, these games need to be more widely exposed. I can go on iTunes, download a track by Atmosphere that references Lifter Puller, a Minneapolis rock band that broke up in 2000, and then go back on iTunes and download every song Lifter Puller ever released (not only can I do this, I have actually done it). Hits and niche titles need to be availble from the same distribution source, and we need "people who bought X also bought Y," or a list of similar titles so that anyone shopping for games can be made aware of other titles, regardless of their hit status, might be of interest.

Foopy

ClockworkGrue and StGabe, thanks for clarifying these things.

Grue, I really like your idea about there being a sort of "iTunes" for games, though there seem to be a few impediments to it... Here's two big ones that I can think of:

* The diversity of hardware platforms. Assuming things work out legally, any song can be converted to MP3 and any movie can be converted to DIVX, but a game for any specific platform can't necessarily be converted to the one you're using. This is actually a major problem with gaming in general, as a lot of people I know refuse to buy a next-gen console system because it only runs a subset of the games they want to play. To non-gamers, the console wars are like a horrible version of the Beta vs. VHS debacle.

* The diversity of interfaces. Even if a program was provided that could emulate all known hardware platforms (let's forget the technical issues and legal ramifications for now), there's still the fact that specific physical interfaces are integral to the gaming experience. For instance, playing Katamari Damacy with a keyboard and mouse would be fairly ridiculous.

There could be iTunes-like services that provide a subset of the full "gaming spectrum" and avoid the above impediments: a service that provides only Flash games or a service similar to Bioware's Premium Neverwinter Nights Modules Store that sells modules for a specific kind of framework or platform, but the markets for such things are relatively small and anything really wide-scale analogous to iTunes itself--i.e., something that encompasses the whole entirety of gaming as an entertainment medium--seems very difficult to accomplish.

I love the concept, though; it sounds kind of like a commercially viable version of The Home of the Underdogs.

Clubberjack

I've thought a lot about this sort of thing, and I think that we're headed in the right direction in a lot of ways. For PC games, digital distribution is starting to take hold, not just for indie games, but for mainstream games as well (Half-Life 2 over Steam, premium NwN modules from BioWare's online store, etc). Services such as Game Xstream (touted by Scott Miller) or even everybodies favorite vaporware, the Phantom, aim to separate the distribution from the development (my main gripe about Steam is that it only carries Valve games). At least for PC games, we seem to be moving towards a service that can aggregate and deliver the necessary number and variety of games to create a long tail business.

Of course, it's hard to imagine a day when those services (or which ever few come out on top) are monolithic enough to truly represent the same kind of market coverage for games as iTunes does for music or Netflix does for DVDs. The variety of hardware makes that tough, as Foopy points out.

On the other hand, with broadband/online features built into every next-gen console, it's not too tough to imagine services that can deliver a long tail selection for each platform. Xbox 360 seems like it will certainly be able to support that kind of thing, and it's hard to imagine that the PS3 won't. The big trick in that case will be finding a way for indie devs to get their hands on dev kits. If digital distribution really happens on next-gen consoles and someone makes the long tail happen, then indie devs can avoid worrying about competing with the big boys and focus on making cool, innovative games.

Clubberjack

Oh yeah... GameFly (and it's ilk) are good places to start, but they aren't truly long tail yet. Mostly, this is because the cost of entry into the retail game biz (console games on physical media, in boxes, on shelves) is usually prohibitive for the types of developers that would be filling in the long part of the tail (ie indies).

bowler

"The question is really, how can the internet distribution really start to be a market force and not the Dark Horse, only occasionally relevant, element that it currently is."

StGabe, I think you and I can finally agree on something.

The problem here, though, I believe, doesn't lie with the consumer as you state, but actually with the distribution market. Believe it or not, WalMart controls about 30% of the distribution market by themselves. That number doesn't really seem that large initially, but when you consider that 1/3 of any retail video-game sales come from Wal-Mart, they have a stranglehold lock on the market.

What they say goes. If they don't think your title will sell well, they won't stock it. If Wal-Mart won't stock it, a lot of other stores won't either. Even if other stores do stock it, not having Wal-Mart means you don't have game distribution in a lot of "red-state" areas of the country.

So Publishers are forced into a situation where they're basically trying to make the kind of games that Wal-Mart's willing to sell, and I think we can agree that that's a really shitty position to be in.

In a way internet distribution is already working. GameStop was initially an internet only company, and garnered enough sales and market-share to eventually buy out Funco-Land, and then the Babbages/(I forget the other store) chain, giving them a brick 'n mortar retail presence to the point where they've become the Starbucks of game retailers (no, really, there's one in my mall and one across the street from my mall). That all started from a solid internet sales platform.

But in another way, it's not working. The real challenge here in getting internet distribution to work is what I like to call "the Grandma clause." Steam doesn't work well because of this (not to mention Steam's just as much of a piracy protection as much a distribution model), and neither does a lot of internet distribution models (and I think this is a large reason why Gamestop bought up some real world retail).

If your Grandmother (or Mother in a lot of cases) couldn't figure out how to buy the game for you for Christmas or your birthday, it's not a good distribution model. Steam doesn't work so good because if the only way to get Half Life was via the internet, there'd be a lot of kids going without it. It's not so much a matter of broadband, but of giftability. If it can't be wrapped and doesn't come in a box, a lot of people outside of the internet savvy won't buy in on it. Sometimes I think the only way this sort of long-tail approach is truly going to take off is from generational growth (the internet users supplanting the non-internet generation).

Foopy

That's a good point about the Grandma clause, bowler, but I wonder if it may be dependent on the prohibitively high cost of games, which could be why they're often purchased as gifts.

The purchasing of CD's as gifts, for instance, probably doesn't account for a huge percentage of their sales, which is perhaps why the Grandma clause doesn't seem to apply to music delivery (e.g., iTunes doesn't satisfy the Grandma clause, yet it seems wildly successful). If games distributed over the internet start to cost a lot less because distribution costs are lowered, then perhaps this will become the case for games as well. If a game a kid wanted only cost him $10-25, then it may be easier for him to buy it himself rather than ask for it for his birthday.

Then again, perhaps games are often purchased as gifts because kids usually obtain all their material posessions in the form of gifts, and maybe kids aren't really interested in CD's.

I also imagine part of the success of iTunes lies in the fact that a CD that normally costs $18 is usually sold for $10 through iTunes. If Vivendi sold Half-Life 2 for $10 less through Steam, perhaps Steam would've been more successful? Computer games seem to be one of the few markets where the online-distributed version costs just as much as the packaged one, which isn't much of an incentive for me, at least.

Anyhow, I'm not very familiar with the realities of game distribution so this is pretty much just guesswork on my part.

ClockworkGrue

A little caveat on the giftability of an online distribution system: iTunes sells little gift cards, so even if grandma can't figure out how to navigate the store correctly and burn me a cd, she can certainly pick up a $10 gift card from Best Buy.

I know this isn't exactly what we're looking for, and truth be told I hate gift cards (they're essentially no-interest loans that consumers give to corporations), but there you go.

StGabe

The problem here, though, I believe, doesn't lie with the consumer as you state, but actually with the distribution market. Believe it or not, WalMart controls about 30% of the distribution market by themselves. That number doesn't really seem that large initially, but when you consider that 1/3 of any retail video-game sales come from Wal-Mart, they have a stranglehold lock on the market.

Oh I'm totally aware of the Walmart thing (not to mention the fact that it costs money to actually get your game on a shelf in a place like GameStop). However I'd say it's a mistake not to say that this is very muchso related to consumers. Distributers are distributing where consumers want them to. Walmart will continue to control a large portion of the market as long as consumers continue to buy from Walmart. Grandma may not understand what an ITune is either, but if their grandkid can't stop talking about it they may stop to figure out how to give them some bucks to spend on music there.

Any consumer movement isn't going to start with Grandmas, it's going to start somewhere else -- and it will take a smart distribution plan AND consumers that are willing to change their buying habits. But if gets a strong enough niche to really mean something to gamers then the Grandma thing won't matter -- Grandma will just have to pick up an IGames gift card at Walmart.

The point is really that it is not Walmart that is the problem. It's really fairly pointless to mention them given that, if they didn't control 30% of the market then some similar entity would. Because that is a market niche that exists due to consumer's throw money at it and not simply because Walmart wills it to be. And it's not game publishers really for doing what is really the no-brainer thing with their distribution model. Really in the end, all the money starts with consumers and consumers drive what is viable in the market and what is not. Ultimately consumers have to start directing their attentions (and wallets) to other sources of games if they truly want to have different sources of games become viable. That's really what made ITunes, for example, viable in the first place. Consumers embraced MP3's and demanded them. MP3 quickly ensued and were eventually followed by IPod's and internet music catalogs. Admittedly of course, a nifty technological advance (really good music compression) helped a lot to get things rolling too. I definitely think that someone has to find a very smart way to package this stuff too -- they simply still won't sell anything if consumers don't meet them halfway.

Consumers have the power. If they demand it, it will be made for them. If they consinstently demonstrate a willingness to pay for crap though then that's exactly what they'll get.

bowler

"The point is really that it is not Walmart that is the problem. It's really fairly pointless to mention them given that, if they didn't control 30% of the market then some similar entity would. Because that is a market niche that exists due to consumer's throw money at it and not simply because Walmart wills it to be. "

I totally agree with where you're coming from regarding consumers having the power (normally) to buy what and where they choose to, but for rural Americana, Wal-Mart is literally the only game in town. It's not just the only place to buy video-games in a 50 mile radius, it's the only place to buy milk, shirts, etc. In these scenarios, Wal-Mart does indeed control where the consumer will spend their money, because they've railroaded the competition clear out of existance.

But yeah, I'd actually welcome consumers spending their money elsewhere. Katamari Damachi only cost $19.99. Buy two, and give one to a friend. It's fun, it's non-mainstream, it's affordable, and it's more enjoyable than most of the sequel/licensed garbage out there. Consumers have no excuse NOT to buy it. We owe it to ourselves to grab titles like that as they become available. I think I had to drive an hour to get it, and I live in a place where you can throw a rock and hit 2 GameStops, 2 EBs, and a slew of Best Buys and Circuit Cities, all within a 5 minute drive from home. Even mainstream distribution failed this title, since it was under-sold by the retailers (under-stocked). I'm all for a new distribution model. Please.

Foopy

Wait, don't most rural folk also not have broadband internet access? I mean, one of the other big downsides of distributing games online is that most games are at least as big as a CD.

And what about online retailers like amazon.com? Can't rural folk buy from them instead of going to Wal-Mart?

Clubberjack

I grew up in rural Maine, and while we didn't have much in the way of broadband when I was living there, it's certainly not a major problem now. My father and step-mother live on an island on the coast and have DSL with a wireless router, the same thing I have in my urban apartment. Rural areas may be slower in getting broadband, but that is mostly pretty moot now and will be totally irrelevant in a few years.

Wal-Mart, on the other hand, still beats Amazon as the shopping venue of choice for a few reasons: instant gratification, convenience, and savings. When you go to Wal-Mart you get what you want immediately. When you shop at Amazon you wait for the item to be shipped to you, and in rural areas, shipping takes longer. When you're in Wal-Mart you can make impulse buys (not that I don't do that on Amazon, but I'm not talking about me). It's convenient to grab a game along with a 50 lb. bag of Fritos, the dvd of Beaches, and a shotgun. Amazon can't beat that (for the time being, anyway). Finally, Wal-Mart is still cheaper. Battlefield 2 is selling for 17 cents less on Wal-Mart.com than at Amazon. You may scoff at 17 cents, but remember, you're still adding shipping on top of Amazon's price. Basically, rural folks don't have a reason to use Amazon instead of Wal-Mart.

So that was a long winded tangent, but it brings me back to Foopy's point about cost. There has to be a big reason for consumers to switch to some other purchasing mechanism. Right now there isn't any reason for the mainstream to buy games digitally. In the future, as Foopy points out, cost is the obvious answer, but there may be others.

With digital distribution, the benefits are weighed against another additional factor in the consumer's mind: ownership. What do they own after the transaction? Bits aren't tangible (again, this may change). I think mp3/iTunes is a good example of how this sort of perception can change through disruptive technology and adoption can be driven through both industry innovation and consumer demand. The main question is how to spur that with games...

Foopy

Those are good points, ClubberJack. Five years ago, Outpost.com actually provided free overnight shipping on all their products, which was an incredible boon; I remember ordering the Rainbow Six platinum pack at midnight and having it arrive at my dorm room (in my rural college town) at 11:00 AM the next day, less than 12 hours later. That's the kind of delivery I'd love to see more of with online retailers, but I guess that didn't really work out for Outpost in the long run. :)

I agree with your point re: ownership. One of the things I've always wished to see more of is the idea of more permanent "remote ownership". For instance, on Amazon.com, when you buy a digital eBook, they put it in your "digital locker" for 60 days so you can download it, but after that it's gone. But why can't they just turn on a flag saying "this person owns this book" so that I can always download it from Amazon at any point in the future? I imagine there's some problems with this, but I think it might go a ways to help the ownership issue, not to mention the added benefit that even if a person's home was burned to the ground (or their hard drive just crashed), their "digital posessions" would be safe and sound.

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