GameStop: Retail to Reign Over Digital Distribution Until 2010

[Logan Frederick]

GameStop: Retail to Reign Over Digital Distribution Until 2010

GameStop Chief Executive Officer Dan DeMatteo is doubting the short-term success of digital distribution, saying it will be another 10-15 years before the infrastructure for full game downloads will be in place.

In an interview with GameDaily [http://www.gamedaily.com/articles/news/gamestop-digital-distribution-wont-overtake-retail-until-2020-at-earliest/?biz=1], DeMatteo focused on a couple of points as to why there will be a decade delay before downloadable games will pass retail in sales.

First, hosting full game files on a hard drive provides easier piracy access, something that still scares publishers away from relying solely on download services.

"The first digital distribution was Napster and it was illegal. Let's just start there. The software publishers are afraid to death of piracy. Once a full game is lying on a hard drive, there's the potential for piracy. Aside from the games, the bandwidth, etc., our studies have concluded that the network won't be in place to do digital distribution of full games until 2020 to 2025," he commented. "And that's using today's size, but as consoles get more powerful, games get bigger. Right now, a 30GB game with your best T1 line is about 72 hours to do it."

Second, and less arguable by those not part of the retail-publisher relationship, is that digital sales yield less profit for developers than going through store channels.

He said, "Microsoft and Sony are the gatekeepers for their consoles. And if you're a third party that should scare the hell out of you because that's the only way to get to your customer. They'll take 10 to 15 percent. Video game publishers sell me games today for $48 wholesale. If they go direct to the customer they'll probably get about $30 for them. They'll get less for the game if they bypass retail."

In the meantime until 2020, DeMatteo may be right, as retail revenues for GameStop rocketed 82 percent [http://www.escapistmagazine.com/news/view/84627] in 2007 as it acquired more locations.

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[L.B. Jeffries]

The only word I can think of to describe this is "agog". A person who makes a living fleecing and robbing publishers & developers of money is arguing that they are still better off with them?

They ain't gonna let you download em, you're gonna access them from a central server via the interwebs. That includes your console, which is already developing the tech to do it with a software update. If my Netflix 'Watch Now' habits are any indication, I'd give it a lot less time than 12 years.

 

[rougeknife]

This guy comes across as a complete Arsehole.

He's also sprinting towards a cliff's edge and not slowing down. This fall is going to be BEAUTIFUL.

 

[BleachedBlind]

His numbers are off. With my 300KBps speed, it only takes me 3 hours to download a 3GB game via electronic distribution. Translation: 1GB per hour * 30GB = 30 hours, not 72. Granted, the time is still pretty sickly long, but how many games are seriously 30GB? I was shocked when Age of Conan sprawled into 25 gigs.

 

[TheWickerPopstar]

I'm actually partial to retail over download.

Anyone who's known me for more than 2 months knows how I hate Steam (has it already been 2 months since I bashed Steam? Man, time flies). I don't trust a product that has no physical backup. Data gets lost or corrupted so much easier than a disc does.

And then there's the honesty in such transactions. My roommate purchased Northern Strike from EA Downloader. EA fucked up somehow, and it won't install to his account. They won't refund him, and their tech support can't fix it, nor will they just give him a new copy. Without a physical disc to slam in the face of a physical retail establishment, you are at the mercy of the seller, and they have more lawyers than you.

Amen. And let's not forget that with advances in gaming comes the necessity to upgrade the destination device...meaning transferring all of those files...redownloading...I've gone through it once with a laptop. I couldn't imagine doing it for an entire library of games. I'll keep my discs, thank you.

 

[ElArabDeMagnifico]

Still gotta sit there installing the games with your discs, it's pretty much the same thing. I guess it boils down to "backup online or backup on my discs".

Anyway, I hate these "exclusive pre-orders" they are using to combat this - I'm on the opposite side that Khell is and I prefer steam simply because of auto-updates, but now that I hear that the best deal to pre-order Far Cry 2 is at Gamestop, it gets on my nerves. I'm not gonna expect a Ubisoft game to run great on PC at launch, I need those updates ASAP, but if I get it at Gamestop then I guess I'll have to make "Fileshack" or Fileplanet my front page.

Oh, and Far Cry 2, if you preorder at gamestop you get these extra missions. Yep, if you pay full price anywhere else you still don't get the full game.

 

[Lt. Sera]

"The first digital distribution was Napster and it was illegal. Let's just start there.

And let's end it there as well. The only reason that Napster was there before let's say Itunes is simple: Companies / Publishers didn't know jack shit about the possibility, or were to afraid/stupid to seize it. This is why Napster became such a hit, it was the first easy way to get the music you wanted, when you wanted.

Instead of always looking at the flaws, they should focus more on the potential.

 

[Grampy_bone]

Wow, either this guy is a complete moron or he thinks everyone else in the world is (probably both).

Saying there is no infrastructure to deliver games online is a lie. Where has he been in the last five years? Maybe it's time to upgrade your 56k connection, buddy.

Saying developers make more money from retail is a lie. PUBLISHERS make more money from retail. The developers have to pay the publisher back the money they used developing the game, plus the cost to produce the physical discs, plus the licensing cost if it's a console game, plus they have to pay Wal-Mart and Gamestop for the shelf space to sell the game to people. Any copies that don't sell are then returned to the publisher for a refund, which gets handed down the line to the developer again.

Or they can just distribute it online, avoid ALL the costs, keep every single dime they make from selling it and never have to worry about the store asking for a refund on unsold games (you can't have unsold digital copies now can you?)

Of course Gamestop doesn't like the idea of digital distribution because you can't buy a used digital copy of a game back from someone and sell it at a 300% mark up.

Saying the risk of piracy is higher without a physical disc is plain lunacy. Never mind that all games get pirated with or without a disc, no matter what; current DRM trends are moving away from 'watermarked' CDs and over to online activation which doesn't require or rely on the physical disc.

 

[DeadlyYellow]

I find quite a few things ironic here. Firstly, a company widely believed to be in direct violation of numerous labor laws and shady business practices is dissing piracy.

Secondly, the company sells more used games which then goes toward their profit margins and not the developers. I find digital distribution to be cheaper than going to my local Gamestop, as well as better since it releases older games that have been out of print for years.

 

[fix-the-spade]

I may be being incredibly ignorant here but...

...isn't Steam a full game Download and Distribution service? One that's already been here for about four years, that works.

I realise that it's a pc only thing, but it's there and it proves the concept is not ony feasible, but that it's perfectly possible to do it now.