212: The Downside of Direct Downloads

Jou-LotD

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lritting said:
There's a few key points missing from this argument:

...they proceed to push a used copy of your game on the consumer since their profit margin is so much higher (because they pay the consumer WAY below market value for their game and then price the used copy at a slight discount over retail), of which the developer sees $0 for the sale...
I think this pretty much describes my hate of used game retailers. The only difference between this and pirating is that they are making a profit off of it. This basically falls in line with stores who rent movies/games. The developpers and everyone up top making those games/movies possible don't get a cut of those rentals or resales of their product. This is far more damaging to the industry than digital distribution.
 

Sillyiggy

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I can't speak for the majority but I can only afford gaming because I don't keep anything I purchase. I play it through, sell it, then get a new game. Online downloads therefore have never appealed to me as they are games that I can not get any sort of return on. With the economy the way it is and income taxes on the super rich and rich being the lowest they have been in decades (i.e. really slow recovery if any) I imagine more and more people will go the used game route since it is far cheaper.
 

SpaceGhost2K

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Denmarkian said:
You're missing one of the key points of having direct downloads: they're cheaper.

If software distribution goes completely digital, there's absolutely no reason for the retail price of a new game to remain at ~$60 because the costs of designing the box art, disc art, manufacturing the disc, packaging the software, warehousing the merchandise, and transporting the merchandise to the retailer are gone.

None of those costs matter anymore, unless you're a complete idiot who wants to appease the physical-copy-fetishists and give them a box for a digital download game like Patapon 2.

I'll have to do some digging through Steam to get some better comparative pricing lists, but I'm fairly certain that brand-new titles released on Steam are not priced at the exact same amount as a new-in-box copy of the game at Best Buy.

--EDIT--

Okay, so there are several games that are the exact same price on Bestbuy.com and Steam:
Guild Wars Trilogy - $49.99
Fuel - $39.99
Spore: Galactic Adventures - $29.99
Prototype - $49.99

What the hell?!?

That completely shits over my entire argument. Fuck.

Well, I hope that in the advent of digital-only distribution we can see some more reasonable pricing models. I think that these pricing examples are there because the costs I mentioned at the beginning of my post were already factored in and need to be recouped before publishers can discount the price.

I absolutely love Steam for being a platform that grants me access to a lot of my games that were published before Windows Vista came out, and even where I can find anthologies of old games I had only one or two of. I mean, they've got a Space Quest collection for $15, I only ever had a copy of Space Quest IV and I don't remember how I got it. If I ever want to get it, I'm sure I'll always have that option, and it will never be out of stock because it only takes up server space for one copy instead of a warehouse full of unsellable boxes.
There's one thing you overlooked in your statement, "there's absolutely no reason for the retail price of a new game to remain at ~$60." There is a reason, one very GOOD reason...

People are willing to pay it.

That is the MAIN reason games are priced where they are. A game can be priced $59.99 and sell ten million copies. So regardless what happens to the cost, what makes you think they'll drop the price?

Games used to be $79, then they were $59 and then $49 and $39. Last gen, they went back up to $49. And something strange happened. Publishers wend crazy with $59.99 LE and SE versions of game, AND PEOPLE BOUGHT THEM. So what happened this gen? Simple. Games came out at $59.99, and the LE and SE versions were bumped up to $79.99.

If prices drop to $49 with the digital download revolution, it will simply be as an incentive to get people to adopt the concept faster, NOT because games are cheaper to make. A $3.00 bag of chips costs a dime to make... why aren't they .50 instead of $3.00? Because people will pay $3.00.

Don't worry about selling hardware. If retailers drop hardware, big deal. Hardware is sold by the cargo container on places like Amazon.com, WalMart.com and BestBuy.com. What they miss out on profits from software sales, they will more than make up be the extra traffic forced through their websites. The best thing that could happen to those retailers would be a webstore "killer app" like a game console.

If stores still want to make a profit on software, and gamers still want a nice DVD case with a printed manual and other crap, retailers can sell the package with a code for the download. They could even sell SE and LE editions. We get our chotchkies, they get some profit, and the publisher still gets the full value for the download code.

Oh, and "10 years from now," LOL! Try FIVE or THREE.
 

SpaceGhost2K

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Michael Comeau said:
sgrif said:
This argument is completely ridiculous. Games aren't priced what they are because of some knight in shining armor company making it that way. It's priced this way because that is what consumers are willing to pay for it! If Microsoft were to hypothetically get a monopoly on the system (which in America at least would be prevented by anti-trust laws) and were to hypothetically jack up the prices to unreasonable levels (which they already have the power to do, since developers pay licensing fees regardless of the media), another platform would inevitably enter the ring and sport affordable prices.
Another platform? Who's going to get into the console business? If you look at the actual financials of Microsoft and Sony, you'll see that console gaming isn't a very good business!

Good point on the anti-trust - I didn't consider that.
Apple will be next. There's no field that MS is in that Apple isn't, or Apple is in that MS isn't... except that MS has a set top box. Apple failed at the Pippin - yes, but that DOES establish that they're interested enough in the space to give it a shot. Also, they have iMoney now that they didn't have then. They also have an O/S, hardware manufacturing, software developing and publishing, relationships with third party devs courtesy of the iPhone, and a pipeline for content (iTunes). They have everything they need to launch a console, except a console. IMO, their association with Disney/Pixar will solve that problem for them... maybe, say, involving Toy Story 3?

Sony will drop out next gen, after the PS3 is retired. Others have come and gone, don't think it's too far out there to imagine. They lost too much on hardware, they lost too many customers, they lost too much developer support. All they gained - while huge - is the Blu-Ray victory, and that doesn't even have anything to do with the game division.
 

Kotomo

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I find most of the points in the article are quite valid but I don't find that either of them are swaying my opinion of Digital Distribution. The best argument in the article in my world is the used games one. You can't sell back that digital copy you just paid $50 for to your friend or eBay. That I find to be a huge kicker to the consumer.

I am a strange person, and I like to collect all the games that I have bought. Even if I didn't like them too much or only played half-way through them. I don't worry about getting something back for them because I am not buying that many games. This is mostly due to the fact that I have an MMORPG sucking away all my time(and I don't really care about that) but also due to the fact a lot of games being released feel like rehashes of everything or that they're just not compelling enough to make them a wonderful experience for me. The price of such games is also related to this. I feel like people are shelling out $60 for a prettier version of something that came out 5-10 years before it and the graphics are the only unique feature to the game.

The best example I have from my experience is when I played Mirror's Edge. A friend had pirated it and said it was really cool but also really short and not quite worth the $50 or $60 for it. I tried it at his housed and really liked how it played. I wanted to play all the way through it. New copies were still going for $60 at GameStop and it was not released on Steam yet so I pirated it as well. I decided if I really liked the game I would actually buy it. So I played all the way through it, and did enjoy the game but not enough. I really like the action, gameplay it's setting was beautiful but the story and the characters just were not compelling to me at all. It felt like everything was trying to be this epic adventure/journey and it was all condensed into too small a time frame and it killed the overall experience for me. The last chapter where you're climbing up the tallest building that overlooks the city? Half-Life 2 did that already. Even the whole dystopia thing with police watching your every move, Half-Life 2 did that already! I am probably relying too much on the story to be the selling point of a game but with only 3-4 hours with not much change in the overall gameplay it did not warrant my $60 at the time.

With all that in mind, I find myself playing games that came out a year ago, or ones that are 15 years old that I never played when I was a little kid. A game that came out a year ago or even 3 years I know I can get much cheaper used and I do not mind waiting that long if I'm only mildly interested in it. Only some games that I am really interested in or looking forward to release I buy at their full price and there just are not that many for me. With digital distribution I can actually still buy those old games for pretty cheap, especially through something like Steam.

I would much rather buy them than pirate them if I know the game is worth playing through. Piracy is the biggest scare for most developers who may consider the PC as their platform because of how easy it is(if you like to hack) to actually rip everything from the install disc and send it on it's way via Bittorrent. Having something like Steam so readily available makes a lazy person such as myself stop pirating games and consider paying money that developers deserve for their work. Piracy in a way is just like digital distribution only stealing. Just a few clicks and you can have the latest games in a few hours without paying a penny or getting off your butt.

To sum everything up, I am arguing more over the fact that to me, it's more worth it to buy older games at cheaper prices unless I'm really looking forward to something and that digital distribution doesn't change any of this. It's giving me more opportunity to find something I have never played before. I want to be able make a few clicks and search an entire database of every game ever made and find a true gem. You can't do that at a GameStop. Let's face it, I don't care if I cut out a big retailer like GameStop or publisher like ActiVision which tends to ruin everything it touches. They're just big businesses doing a great job at pulling in a lot of money. I just feel it's in the wrong way.

I just checked Mirror's Edge on Steam, it's $20 now. That's actually worth it.
 

Michael Comeau

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Jou-LotD said:
lritting said:
There's a few key points missing from this argument:

...they proceed to push a used copy of your game on the consumer since their profit margin is so much higher (because they pay the consumer WAY below market value for their game and then price the used copy at a slight discount over retail), of which the developer sees $0 for the sale...
I think this pretty much describes my hate of used game retailers. The only difference between this and pirating is that they are making a profit off of it. This basically falls in line with stores who rent movies/games. The developpers and everyone up top making those games/movies possible don't get a cut of those rentals or resales of their product. This is far more damaging to the industry than digital distribution.
Selling used games is far different from piracy. Legit retailers are selling legit copies of games. GameStop does marks their used games up something like 100%. I use them because I'm too lazy to deal with Craig's List or eBay. I consider it to be the cost of convenience.
 

Michael Comeau

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SpaceGhost2K said:
Michael Comeau said:
sgrif said:
This argument is completely ridiculous. Games aren't priced what they are because of some knight in shining armor company making it that way. It's priced this way because that is what consumers are willing to pay for it! If Microsoft were to hypothetically get a monopoly on the system (which in America at least would be prevented by anti-trust laws) and were to hypothetically jack up the prices to unreasonable levels (which they already have the power to do, since developers pay licensing fees regardless of the media), another platform would inevitably enter the ring and sport affordable prices.
Another platform? Who's going to get into the console business? If you look at the actual financials of Microsoft and Sony, you'll see that console gaming isn't a very good business!

Good point on the anti-trust - I didn't consider that.
Apple will be next. There's no field that MS is in that Apple isn't, or Apple is in that MS isn't... except that MS has a set top box. Apple failed at the Pippin - yes, but that DOES establish that they're interested enough in the space to give it a shot. Also, they have iMoney now that they didn't have then. They also have an O/S, hardware manufacturing, software developing and publishing, relationships with third party devs courtesy of the iPhone, and a pipeline for content (iTunes). They have everything they need to launch a console, except a console. IMO, their association with Disney/Pixar will solve that problem for them... maybe, say, involving Toy Story 3?

Sony will drop out next gen, after the PS3 is retired. Others have come and gone, don't think it's too far out there to imagine. They lost too much on hardware, they lost too many customers, they lost too much developer support. All they gained - while huge - is the Blu-Ray victory, and that doesn't even have anything to do with the game division.
I wouldn't necessarily consider Blu-ray a victory because it came with the problem of keeping the PS3 production cost (and thus retail price) much higher than the Xbox 360.
 

Michael Comeau

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Sillyiggy said:
I can't speak for the majority but I can only afford gaming because I don't keep anything I purchase. I play it through, sell it, then get a new game. Online downloads therefore have never appealed to me as they are games that I can not get any sort of return on. With the economy the way it is and income taxes on the super rich and rich being the lowest they have been in decades (i.e. really slow recovery if any) I imagine more and more people will go the used game route since it is far cheaper.
I'm thinking the same thing. Except for MW2 and Halo: ODST, I'll probably only buy used games this year. With the way the economy is going, the used game market is going to explode which means tons of awesome, reasonably-priced games.
 

Woem

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Denmarkian said:
You're missing one of the key points of having direct downloads: they're cheaper.

If software distribution goes completely digital, there's absolutely no reason for the retail price of a new game to remain at ~$60 because the costs of designing the box art, disc art, manufacturing the disc, packaging the software, warehousing the merchandise, and transporting the merchandise to the retailer are gone.

None of those costs matter anymore, unless you're a complete idiot who wants to appease the physical-copy-fetishists and give them a box for a digital download game like Patapon 2.

I'll have to do some digging through Steam to get some better comparative pricing lists, but I'm fairly certain that brand-new titles released on Steam are not priced at the exact same amount as a new-in-box copy of the game at Best Buy.

--EDIT--

Okay, so there are several games that are the exact same price on Bestbuy.com and Steam:
Guild Wars Trilogy - $49.99
Fuel - $39.99
Spore: Galactic Adventures - $29.99
Prototype - $49.99

What the hell?!?

That completely shits over my entire argument. Fuck.

Well, I hope that in the advent of digital-only distribution we can see some more reasonable pricing models. I think that these pricing examples are there because the costs I mentioned at the beginning of my post were already factored in and need to be recouped before publishers can discount the price.

I absolutely love Steam for being a platform that grants me access to a lot of my games that were published before Windows Vista came out, and even where I can find anthologies of old games I had only one or two of. I mean, they've got a Space Quest collection for $15, I only ever had a copy of Space Quest IV and I don't remember how I got it. If I ever want to get it, I'm sure I'll always have that option, and it will never be out of stock because it only takes up server space for one copy instead of a warehouse full of unsellable boxes.
I was thinking exactly the same thing about the lower price and the availability of golden classics.

But indeed, most games are not cheaper although you would expect them to be. Just like you can get a music album for 9.99 euro on iTunes instead of the normal 17 to 20 euro, you would expect that downloading a game without the box, printed manual and other extras would cost less. I'm sure that this will change soon. And this cheaper price would offset the author's objection that you can't sell a download game second-hand.

As for the classics: this is huge plus for me as I love to re-play old classic point-and-click adventures or RPGs. Niche sites like gog.com (Good Old Games) provide these classics at a really low price and the games are usually adapted to be playable under Windows XP.

And here's another wonderful thing about direct downloads: it's a great platform for independent developers ("indie games"). Putting them online drastically reduces the cost to make them available and there are many creative ways to promote them for free on the internet.
 

Plinglebob

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Nov 11, 2008
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I dislike Digital Distribution, but not because of the same reasons in the article.

What no-one ever considers is what will happen when the servers shut down? When people talk about DD they act like the servers will constantly be running and so you will have no problem playing your game 6 months/year/10 years down the line, but PC gaming has shown this isn't the case.

Scenario 1. Sony decide that they will never be able to take back the lead in consoles and it will never be profitable for them so they stop making PS3's and get out of the console business altogether. Being a nice company, they keep support running for the PS3 for another couple of years, but then shut down the PSN servers. This would mean should your PS3 go tits up and you replace it, or you've bought DD games but deleted them due to space, you have lost them for good.

Scenario 2. Microsoft release the Xbox 720 which, unfortunately, is not backwards compatible. This means any games you bought for the 360 (DD or not) don't work on it. Should they make some games currently available on the arcade compatible with the new system, you will have to pay again at either a full or reduced price.

Both of these things have happened in a similar fasion on the PC. The re-release Lucasarts games have been changed so they work on Vista, but there is no official support for my original Sam and Max disks and finding official patch servers for old games is not easy. Thankfully, because of the flexability of the PC and the tech savvy communities, you can get round both these problems, but with a console, which has limited functionality and limited acces to 3rd party information, you're screwed.

This is also the reason I avoid buying games where you have to log in/register with Steam as before I've been unable to connect to Steam and the only way I was able to get round it was formatting my PC.
 

Credge

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Prohibitive console prices may be the least of consumers' problems, however. The biggest one is the elimination of price competition in the software market...In highly proprietary, closed systems like Xbox Live and the PlayStation Network, there will be no competing sources for game downloads - in other words, no shopping around for the best price.
This is one of the dumbest things I've read in a while.

Elimination of price competition? What? Aren't they forgetting the fact that theres more than one game available? The competition comes from the developers, not from the system.

Absolutely terrible logic.
 

Midniqht

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Jul 10, 2009
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While I agree with some of the points in the article, there's a few things that actually work out for the better in the end with digital distribution. I really like the fact that if I've payed for a download of something, it is always available for me again as long as I use that same account. You could scratch the hell out of a disc and have to buy a new one, but if my hard drive goes bad or if I replace my console with a newer model, I can always just download the content I've already payed for again without having to shell out extra money.
Places like Gamestop though, will always make a profit selling stuff like used games/hardware. That's their golden egg. I used to work at a Gamestop and that 6% markup on hardware is pretty much spot on. The company doesn't depend on hardware as it is. There's pros and cons of almost every type of marketing change. We just have to accept that the way games are distributed and sold is inevitably going to change, with or without our consent, and that although it might have a seemingly rough start, it's going to work out for us in the end. I love my downloads
 

Plazmatic

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Its really funny when you see microsoft and sony whining about it, but you dont hear valve complaining, or the smaller modder affiliations. If console players are so worried that microsoft will take away thier ownership of the games they buy, then get the hell away from microsoft, boycott thier games, go to the PC, don't bend to microsofts will like you did when Bungie decided to make ODST 60$ instead of 20$, and then pay to preorder just to get jhonson, make them bend to your will, they give you a bad deal, boycott the game, they lie to you, boycot, or do somthing other than putting you tail between your legs. You dont see PC gamers doing that crap now do you (lol l4d2 boycott)?
 

zBeeble

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Nov 19, 2008
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Well... there are several flaws in the opening argument. Let's deal with them in turn.

First, There isn't a lot of variation in pricing of an individual game unless a retailer is trying to shed stock --- which isn't common. The competition driving games pricing isn't between prices for the same game, but between prices for different games. If you look at steam --- one of the larger services, prices for games range from $5 to $50 or so.

Secondly, unlike retail (in which the pricing is partially driven by the whims of the retailer --- and why "discount" a game that would undercut your used sales), most online distribution seems driven by the publishers --- and there is strong incentive to discount the games as they become older. Again, in steam, I picked up Bioshock when it was $5. I often pick up titles I havn't played yet for $20 or $30 rather Than $40 or $50.

Lastly, yes, you can't "resell" your downloaded game. You may have bought it more cheaply or you may have paid full rate. The used game market favours the non-packrat among us. Since I'm a packrat (I'd keep the game anyways), I'm not affected.

In the end, first "sale" doctrine covers physical sales ... and makes sense there. I understand what is meant by buying something and I understand my rights in that situation. To be effective, digital downloads have to strike a bargain that is attractive. Punitive download services (such as EA's) do not strike such a bargain. Why would I download when I can only reinstall 3 times (certainly less than a year of living with windows) and I have to pay even more for "extended" downloads. Permissive download services (like steam) win. In exchange for not re-selling my game when I'm done, I "get" the ability to download as often as I want, install on multiple machines (but play on one at a time) and even make convenient backup copies of my games. This works well as I have a gaming laptop and a gaming desktop and either of them could be reinstalled at any moment (such as to try win 7).

It would seem like I'm trying to make the argument for games as service. That is not the case. I still fiercely defend that I "own" my games. Steam preserves that bargain. The steam "offline" mode even preserves that bargain when steam servers are being stupid. Woe be to any service that suggests that I don't own games I pay for.
 

Michael Comeau

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Plinglebob said:
I dislike Digital Distribution, but not because of the same reasons in the article.

What no-one ever considers is what will happen when the servers shut down? When people talk about DD they act like the servers will constantly be running and so you will have no problem playing your game 6 months/year/10 years down the line, but PC gaming has shown this isn't the case.

Scenario 1. Sony decide that they will never be able to take back the lead in consoles and it will never be profitable for them so they stop making PS3's and get out of the console business altogether. Being a nice company, they keep support running for the PS3 for another couple of years, but then shut down the PSN servers. This would mean should your PS3 go tits up and you replace it, or you've bought DD games but deleted them due to space, you have lost them for good.

Scenario 2. Microsoft release the Xbox 720 which, unfortunately, is not backwards compatible. This means any games you bought for the 360 (DD or not) don't work on it. Should they make some games currently available on the arcade compatible with the new system, you will have to pay again at either a full or reduced price.

Both of these things have happened in a similar fasion on the PC. The re-release Lucasarts games have been changed so they work on Vista, but there is no official support for my original Sam and Max disks and finding official patch servers for old games is not easy. Thankfully, because of the flexability of the PC and the tech savvy communities, you can get round both these problems, but with a console, which has limited functionality and limited acces to 3rd party information, you're screwed.

This is also the reason I avoid buying games where you have to log in/register with Steam as before I've been unable to connect to Steam and the only way I was able to get round it was formatting my PC.
Good point on server capacity - I can't imagine what it would be like when a new Call of Duty game would come out, with millions of people trying to download/stream all at once.
 

wordsmith

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May 1, 2008
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Plazmatic said:
get the hell away from microsoft, boycott thier games, go to the PC,
...

HAHAHAHAHAHAHAHAHAHAHAHAHAHA

Sorry man, that comment just hit the irony sensor :p I have to say, I agree with you though. You don't like a service? don't use it. No-one's making you use it, there are other consoles/systems/distributors around.
 

Razman

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I don't think there's such a thing as an 'advantage' to download distributed purchases, at least not for the consumer. First off it doesn't necessarily have to be faster than getting to your local retailer and picking it up depending on your internet connection.

Also I don't think DLC games are significantly cheaper than boxed retail(especially not with the whole 'buy a disc only to need to download and install via steam' packages one can find in stores today). Also retail games arn't exactly cheap or necessarily 'worth the retail price' so I can imagine people being dependent/ more interested in second hand games, which brings me to my personal reason to dislike digital purchases:

There's no such thing as actually owning the content you pay for, seeing that any installers are kept on the publisher's servers, so you CANNOT even begin to play an uninstalled game if anythign where to ever happen to your connection to the file, nor are you able or within the right to do much with said software, seeing it is tied to your specific account, so it brings various issues for those who 'play and resell' OR returning said software for whom have inexcusable technical issues with the software involved(i.e. having EXACTLY the combination of hardware that casues a crash on startup).

All in all, with regard to DLC I try ot avoid it, I mean for 50-60 Euro's, I expect to be able have more than just the right to install and play a digital copy as long as thep ublisher is willing to supply the installer......that and I'm a sucker for a nice disc, manual, box and any goodies they're willing to give me. I don't just play games, I collect them.

sorry for the rant or repeating arguements said before.
 

Rect Pola

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May 19, 2009
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I accepted the age of "shopping around" died with the SNES generation. Everything on a platform costs the same everywhere at retail, and buying new at retail is often the lowest you're going to get because older/used games are impossible to find via Gamestop and non-retail sources like ebay only mark things UP. I've never gone for reselling games on the principle I only get "a few bucks" when they sell (assuming you find it) for $5-10 cheaper than new.
 

GonzoGamer

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As someone who, rents, borrows, lends, and buys used sometimes, I don't think digital distribution is the way to go.

It's fine for those little psn/xbl games that only cost $5 to begin with but if I'm paying more than $10, I want something that I can rent first (to see if it's total crap), sell (in case it gets tiresome quickly), lend (to friends who are cheaper tan me), and buy used if I don't think it's worth the full retail price.

It's the same reason I don't like $20 packs of dlc, that's getting to new game price and you should have something that's you can resell or otherwise pass along if it ends up not floating your boat.
 

Monshroud

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Jul 29, 2009
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I would need to see a cost analysis between digital and box. You would think that since there is no box/manual/CD or shipping costs that it is cheaper to do it online. Something we need to remember is that Host Servers, disk storage, and bandwidth are not free to companies. So I am not sure how much extra they are making per sale of a game when you take those costs into account.

On the minus side, Direct Download gives people less and less reason to go to real stores to purchase their games. This is an issue for me since some of the people I play with on a semi-constant basis have been people I met at EB Games when picking up a title. I would never have met some of my friends if it wasn't for these places. I like box-art and being able to look through an actual manual. Also, I like the idea of being able to take a game over to a friends house to play, you can't take a download over unless you lug your console or HDD over, which is a tad more dangerous. Dropping you HDD can destroy it, dropping the game case might put a scratch on the disc.

On the plus side of direct downloads, it opens the doors to a lot of small and independant developers who would otherwise not be able to mass-market their game. I am not sure if we would see games like Braid or Defcon available if it wasn't for things like Steam and Xbox Live. It is also a great medium for distributing game updates, patches, and add-on's.