EA's Riccitiello predicts fewer titles per year, harder push for digital distribution
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Having already implemented major layoffs for a second year in a row, EA CEO John Riccitiello needs to start cutting more nitty-gritty costs. Following up on previous statements about cutting the number of releases per year, the executive tells Reuters that the company will have 40 releases in the next fiscal year, but that around 30 releases a year "wouldn't shock [him] at some point in the future." Focusing on fewer, quality titles sounds like the THQ gambit.
Another way EA can reduce costs is by cutting down on its packaged goods manufacturing and distribution. Riccitiello believes packaged games like Madden NFL will always have a following, but that digital distribution will account for half the industry in 2010, up from 40 percent. He states that EA's "goal" for the publisher's digital distribution operation is to become "as important as, and over time maybe more important than, our packaged goods business."
Reader Comments (60)
Posted: Dec 2nd 2009 3:03PM RKN said
With the rising of digital distribution, I worry about the caps that our ISPs are putting on us, like the 250gb a month from Comcast, may seem high to many, but will seem small and very restrictive in the future.
Also, what about selling our digital purchases or even gifting them to others? These guys would like to cut out middlemen like Gamestop but also screw us over.
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Also, what about selling our digital purchases or even gifting them to others? These guys would like to cut out middlemen like Gamestop but also screw us over.
Posted: Dec 2nd 2009 3:09PM (Unverified) said
I could understand gifting "used" purchases, but how do you sell back something that's infinite? Gamestop works because there's x number of certain games.
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Posted: Dec 2nd 2009 3:23PM CaramelZappa said
You can always buy each steam game on a separate account and then sell/lend out the account. I dunno, most of the games I buy on steam are heavily discounted, and I only buy games I'm genuinely interested in. So I don't really see the need to sell them. PC gaming has been without a good used market in ages. Even boxed games require online verification and places like game crazy and gamestop don't do used PC games at all.
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Posted: Dec 2nd 2009 3:07PM (Unverified) said
Don't forget all that money made from charging for cheats or other previously in-game unlockables, as well as charging for access to an entire multiplayer mode in the next Army of Two game. Not to mention what they're doing to Battlefield Heroes now
http://kotaku.com/5416592/battlefield-heroes-is-practically-ruined
Shades of the old evil empire are still there it seems.
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http://kotaku.com/5416592/battlefield-heroes-is-practically-ruined
Shades of the old evil empire are still there it seems.
Posted: Dec 2nd 2009 3:34PM Tapejara said
But they're not charging for the extra mode in Army of Two: The 40th Day. It can be unlocked on day 1 by those who pre-order the game, but those who don't will have to wait a month until they can get it free. And hey, at least they're better than Activision...
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Posted: Dec 2nd 2009 3:08PM NightElve said
Good luck with that. I for one will always choose a physical copy of a game over the digital on.
I don't have anything against digital distribution, it's just that I want to be sure that I will be able to play the game in a couple of years from now, without the fear of the servers going offline or the company disappearing.
Besides that I really like to display my games on my shelf =P ...
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I don't have anything against digital distribution, it's just that I want to be sure that I will be able to play the game in a couple of years from now, without the fear of the servers going offline or the company disappearing.
Besides that I really like to display my games on my shelf =P ...
Posted: Dec 2nd 2009 3:44PM (Unverified) said
Try and take my physical copies of games... from my cold, dead hands.
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Posted: Dec 2nd 2009 7:18PM (Unverified) said
Good luck for these companies trying to stop an increase in piracy.
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Posted: Dec 3rd 2009 12:24PM Swindle said
i was for digital media but it just doesn't work as smoothly as physical for me. for instance i bought braid on xbla and it will not believe me! its stuck i perpetual loop of unlock the game, (i say ok) it says play now (i say ok) it then goes back the trial game (i cry). if it was a DvD i would pop it in, it would load, i would be happy.
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Posted: Dec 2nd 2009 3:10PM Padilla7921 said
Hopefully lower quantity = higher quality. It's unfortunate that EA, for the most part, has lost touch with the artistic aspect of game creation. Let's hope they get back to producing the goods.
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Posted: Dec 2nd 2009 3:25PM CaramelZappa said
So I'm guessing you missed out on games like Mirrors Edge, Dead Space, and Brutal Legend?
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Posted: Dec 2nd 2009 3:15PM (Unverified) said
Digital Distribution on CONSOLES will suck. Why?
-No competition: Steam is so successful because it has to compete with D2D, Impulse, and retail. Also Valve is just too awesome.
-Look at the price of some DLC, it is usually overpriced. Look at games on demand, overpriced. Microsoft has shown they don't want to price the digital distributed games at competitive prices. What makes you think you think they will all of sudden decide to.
-Retailer specific deals (Amazon, Toys r us, etc...) will no longer exist. New games for $40?
-Price of games won't fall as much as they do, or won't fall at all.
-Loss of control, and ownership for gamers. You don't own the game, you own the rights to play it.
-ISPs being douchebags like usual. Capping internet usage, and throttling speeds.
As much as some of you might hate Gamestop with a passion, you are forgetting about gaming communities and sites that will suffer: Cheapassgamer, Goozex, etc... Your friend has an awesome game you want to try out, or trade? Good luck on any digital only systems.
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-No competition: Steam is so successful because it has to compete with D2D, Impulse, and retail. Also Valve is just too awesome.
-Look at the price of some DLC, it is usually overpriced. Look at games on demand, overpriced. Microsoft has shown they don't want to price the digital distributed games at competitive prices. What makes you think you think they will all of sudden decide to.
-Retailer specific deals (Amazon, Toys r us, etc...) will no longer exist. New games for $40?
-Price of games won't fall as much as they do, or won't fall at all.
-Loss of control, and ownership for gamers. You don't own the game, you own the rights to play it.
-ISPs being douchebags like usual. Capping internet usage, and throttling speeds.
As much as some of you might hate Gamestop with a passion, you are forgetting about gaming communities and sites that will suffer: Cheapassgamer, Goozex, etc... Your friend has an awesome game you want to try out, or trade? Good luck on any digital only systems.
Posted: Dec 2nd 2009 3:23PM Chief Oddball said
Additionally, what's going to happen to rental models like Gamefly?
DLC is one thing, but I fear I may eventually play many fewer games than I do today if those games become digital distro only. I'm lucky that I've been able to sample as many of today's great games as I have -- and it's largely been due to retailer-specific sales and trades.
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DLC is one thing, but I fear I may eventually play many fewer games than I do today if those games become digital distro only. I'm lucky that I've been able to sample as many of today's great games as I have -- and it's largely been due to retailer-specific sales and trades.
Posted: Dec 2nd 2009 3:26PM DBuckEye said
Digital Distribution on CONSOLES won't suck. Why?
-So Microsoft, Sony, and Nintendo won't be competing any more if the industry goes digital?
-Competition
-Chances are retailers will be selling download codes which means they'll still discount them if they want to.
-That really isn't a problem unless you're a paranoid nut or you pirate games right now.
-That may be, but it's kind of irrelevant.
I'm not saying there aren't flaws to current digital distribution systems, but if everyone is in on them, they'll change and evolve and those flaws will disappear in due time.
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-So Microsoft, Sony, and Nintendo won't be competing any more if the industry goes digital?
-Competition
-Chances are retailers will be selling download codes which means they'll still discount them if they want to.
-That really isn't a problem unless you're a paranoid nut or you pirate games right now.
-That may be, but it's kind of irrelevant.
I'm not saying there aren't flaws to current digital distribution systems, but if everyone is in on them, they'll change and evolve and those flaws will disappear in due time.
Posted: Dec 2nd 2009 3:28PM (Unverified) said
Also, many people use trade-ins to buy even MORE games than they would have. Friend of mine completes a game, trades it into evil Gamestop for for $40, and spends that money buying a NEW game.
I don't mind it as an option, but it is obvious that digital distribution is so that game companies get even more control over their products.
I called it here first. $10 will be added to the cost of games for bandwidth.
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I don't mind it as an option, but it is obvious that digital distribution is so that game companies get even more control over their products.
I called it here first. $10 will be added to the cost of games for bandwidth.
Posted: Dec 2nd 2009 3:32PM baby sea tuna said
You must have a great Gamestop if they're paying $40 for a used game (CoD MW2 *maybe*.) Hell, I doubt they'd even give you that much for a Tony Hawk Ride package at this point.
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Posted: Dec 2nd 2009 3:32PM (Unverified) said
@DBuck_Eye
- Did you even read it? Microsoft has to compete, yet their games on demand prices are ridiculous. What about exclusives?
-Chances are that they wouldn't. The retailers would suffer if they had to discount game codes which they had to buy at full price.
-Piracy will go up if it is digital distribution only. Conspiracy nut? It is going on right around you. COD4 is still retailing for full price on digital distribution. Games on Demand prices are a prime-example.
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- Did you even read it? Microsoft has to compete, yet their games on demand prices are ridiculous. What about exclusives?
-Chances are that they wouldn't. The retailers would suffer if they had to discount game codes which they had to buy at full price.
-Piracy will go up if it is digital distribution only. Conspiracy nut? It is going on right around you. COD4 is still retailing for full price on digital distribution. Games on Demand prices are a prime-example.
Posted: Dec 2nd 2009 3:33PM (Unverified) said
In Canada the trade in values seem much higher. I don't use it, but I know many do.
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Posted: Dec 2nd 2009 3:34PM Granger said
@DBuck Eye - You are forgetting that we Joystiqers are the MINORITY in this industry. The market is set up in such a way that it excludes multi-console owners from the equation. Microsoft, Sony, and Nintendo do NOT have to compete with each others prices for digital content because they know very few people have the choice of which platform to consider the purchase from.
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Posted: Dec 2nd 2009 3:52PM Johnnynumber5 is powered by cell said
@Dreaded Fear
The only problem with your assumption is it's based on the theory that all games sales are digital only in the future. The digital market will continue to grow but it will co-exist with the physical market for a while now. Otherwise, how will console manufacturers get their systems in the hands of consumers? Why would a retailer sell the system without being able to sell the games which is where most of the markup is? They wouldn't.
Whose to say your concept of digital distribution won't change in the future? Who says systems can't be put in place to lend or sell your games if they are all digital?
The reason digital is going to happen whether you like it or not eventually is because of piracy.
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The only problem with your assumption is it's based on the theory that all games sales are digital only in the future. The digital market will continue to grow but it will co-exist with the physical market for a while now. Otherwise, how will console manufacturers get their systems in the hands of consumers? Why would a retailer sell the system without being able to sell the games which is where most of the markup is? They wouldn't.
Whose to say your concept of digital distribution won't change in the future? Who says systems can't be put in place to lend or sell your games if they are all digital?
The reason digital is going to happen whether you like it or not eventually is because of piracy.
Posted: Dec 2nd 2009 3:54PM DBuckEye said
I guess that I'm referring to a time further down the line than everyone else. I'm saying if it gets to the point where a full version of a multi-platform game like Madden is being distributed on all 3 systems, the manufacturers are in competition. And it's not like there is a need to discount exclusives on disks right now either, but they still drop in price eventually.
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Posted: Dec 2nd 2009 3:56PM (Unverified) said
If it is the way it is now, no one will have a problem. But, it is obvious that is not the case. With the PSP Go, and this general "push" for a digital distribution future, I doubt the plan is to have them co-exist.
Oh, and piracy will still exist if there is digital distribution. Look at Steam only games such as Half-Life 2, TF2, etc... They have all been pirated, and cracked.
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Oh, and piracy will still exist if there is digital distribution. Look at Steam only games such as Half-Life 2, TF2, etc... They have all been pirated, and cracked.
Posted: Dec 2nd 2009 3:18PM RudyHuxtable said
K, I'm just gonna say this. If you're going to not be paying for the cost of printing a game manual or paying for the cost of manufacturing a game disc and box art, etc., then I want the game for less. Because as expensive as bandwidth may be, i'm not buying that the costs equal out.
Oh who'm I kidding. It's EA. Prices will probably go up.
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Oh who'm I kidding. It's EA. Prices will probably go up.
Posted: Dec 2nd 2009 3:18PM (Unverified) said
As digital distribution goes up, the number of games I purchase will go down. These companies are seriously underestimating the number of people that A) like having physical copies of things so that they can't get screwed over by DRM and B) Use the money/credit they make off their old games to buy new ones.
It would be like the new car market wanting to strip out the used car market ... getting value for your old purchase allows you to make a new purchase and keeps the economy rolling.
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It would be like the new car market wanting to strip out the used car market ... getting value for your old purchase allows you to make a new purchase and keeps the economy rolling.
Posted: Dec 2nd 2009 3:23PM Shagittarius said
As a collector of games digital distribution will only encourage me to pirate future releases.
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Posted: Dec 2nd 2009 3:30PM CaramelZappa said
That's a shitty ass excuse to be a thief. If you really collect games then pirating will not add to your collection any more than DD will. You will just be playing a game you have no right to play. If you are that against digital distribution, don't buy games through it. You don't have a god given right to play every game that comes out though, so your pirating is still not justified. Don't try to give off shitty reasons like "the game companies are greedy" or how "they don't listen to their customers" or "I wouldn't have bought it anyways" The only real reason is that you're the one being greedy, taking while giving nothing in return.
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Posted: Dec 2nd 2009 3:37PM Shagittarius said
"...pirating will not add to your collection any more than DD will." DING DING DING, give the man a cigar. Exactly why I say it will encourage me to pirate.
There's no difference to me in owning a pirated digital copy and a real digital copy. Or you could stop trying to nickel and dime the hardcore gamers and keep the $1.29 worth of packaging and continue to receive my money.
I didn't say pirating was justified, I was just pointing out that once you go digital distribution there is no effective difference in the download process from piracy, except that one link is gonna charge you $60 for it.
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There's no difference to me in owning a pirated digital copy and a real digital copy. Or you could stop trying to nickel and dime the hardcore gamers and keep the $1.29 worth of packaging and continue to receive my money.
I didn't say pirating was justified, I was just pointing out that once you go digital distribution there is no effective difference in the download process from piracy, except that one link is gonna charge you $60 for it.
Posted: Dec 2nd 2009 8:00PM RudyHuxtable said
Yea, you're right: one link is going to charge you $60.
The other is going to have a virus or just links you to shit like lemon party or meatspin which then formats your hard drive and fries your mother board so at the end of the day the pirated game costs you $1000, and you didn't even get to play the tutorials.
Something else I love doing that I'd like to open your mind to: waiting until demand for a game drops and buying it when it's cheaper. OR, waiting for a sale. I got Bioshock for PC from Steam for $5. And I didn't have to gouge out my eyeballs afterwards for being duped into watching something decidedly homoerotic.
Seems like a win/win to me.
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The other is going to have a virus or just links you to shit like lemon party or meatspin which then formats your hard drive and fries your mother board so at the end of the day the pirated game costs you $1000, and you didn't even get to play the tutorials.
Something else I love doing that I'd like to open your mind to: waiting until demand for a game drops and buying it when it's cheaper. OR, waiting for a sale. I got Bioshock for PC from Steam for $5. And I didn't have to gouge out my eyeballs afterwards for being duped into watching something decidedly homoerotic.
Seems like a win/win to me.
Posted: Dec 2nd 2009 3:28PM onlineatron said
As much I respect Riccitiello for his push towards new IPs... it's seems convent that he, the CEO of a company losing a lot of money, would predict that next year publishing will spend less money and make more money through digital distribution.
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Posted: Dec 2nd 2009 3:33PM Shagittarius said
I agree with you, this is just a lude for investors.
** Dangles straws over Riccitiello's head **
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** Dangles straws over Riccitiello's head **
Posted: Dec 2nd 2009 3:29PM Tapejara said
I'm a videogame collector, so I perfer to have all my games on disc. I really hope digital distribution doesn't take over as the industry standard, there's something about having the case and the manual that make owning a game more...fun? I'm not sure what word I'm looking for but I'm sure many of you know what I mean.
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Posted: Dec 2nd 2009 3:29PM baby sea tuna said
"Riccitiello believes packaged games like Madden NFL will always have a following, but that digital distribution will account for half the industry in 2010..."
It's funny because Madden (and Tiger, FIFA, et al) are the ONLY franchises in EA's arsenal that actually SHOULD be digitally distributed, as opposed to packaged. Of course, they're all guaranteed sellers year after year so obviously that'll never happen (unless they can come up with some way to make you subscribe a la WoW.)
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It's funny because Madden (and Tiger, FIFA, et al) are the ONLY franchises in EA's arsenal that actually SHOULD be digitally distributed, as opposed to packaged. Of course, they're all guaranteed sellers year after year so obviously that'll never happen (unless they can come up with some way to make you subscribe a la WoW.)
Posted: Dec 2nd 2009 4:08PM Ridgecity said
The fact that the PSP Go, a new Playstation branded console, will not survive by this time next year kind of says what people want, and that's a fact.
And the XBL, Wiiware, iPhone and DS stores are not a good way to measure sales for they are tiny cheap games, the are not devoting big budgets for them.
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And the XBL, Wiiware, iPhone and DS stores are not a good way to measure sales for they are tiny cheap games, the are not devoting big budgets for them.
Posted: Dec 2nd 2009 3:34PM Starsmore said
One day I'd love to hear one one these CEOs be all "Yeah, we're losing money, so myself and all the executives got together, and we're just gonna take a pay cut across the board this year. We figure we can live with two Ferraris instead of three..." whenever they talk about cutting costs.
I mean, who makes the games? Riccitiello and Kotick? Frak no, it's the developers that you keep firing!
And then they get on their soapbox later, after cutting 75% of a game's development team, stumped that the game sucked and sales tanked.
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I mean, who makes the games? Riccitiello and Kotick? Frak no, it's the developers that you keep firing!
And then they get on their soapbox later, after cutting 75% of a game's development team, stumped that the game sucked and sales tanked.
Posted: Dec 2nd 2009 4:10PM CaramelZappa said
Reminds me of the last episode of "The Office"
"Limo's are for people who make the company money, not lose millions and have no plan."
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"Limo's are for people who make the company money, not lose millions and have no plan."
Posted: Dec 2nd 2009 3:42PM ducttapeBigSexy said
Once you factor in the price of bandwidth, servers, electricity, and people to maintain those servers, I highly doubt digital distribution offers that much of a greater profit margin. The main cost (development) doesn't change.
Let's state it for what it really is: EA doesn't like used game sales.
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Let's state it for what it really is: EA doesn't like used game sales.
Posted: Dec 2nd 2009 4:07PM Skruff said
I think you nailed it on the head... We've seen stories on here for quite a while about how publishers are bemoaning the fact that they don't get their cut when a game is bought/sold used.
So now they're going to start pushing this electronic distribution more under the guise of "because YOU demanded it", when it probably has very little to do with there being a great demand for a digitally distributed game.
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So now they're going to start pushing this electronic distribution more under the guise of "because YOU demanded it", when it probably has very little to do with there being a great demand for a digitally distributed game.
Posted: Dec 2nd 2009 4:14PM Dale P said
Digital distribution annoys me, because so far nobody really has any freaking clue about how to do business well. Even Steam has issues.
1. Do not charge the same for a digital release that you would a physical release. The costs are nowhere near the same - manufacturing, distribution, replacement of damaged stock and all of that other junk just vanishes.
2. Do not impose arbitrary restrictions around who can purchase your content and when. I can buy a book in another country and read it. Just because you have the technological means to prevent me from buying a game from another country, doesn't mean you should.
Additionally, I am English, and have no problems consuming content produced for any English-speaking country (given that I live in the US, I have to). I get that you need time to localise content for other languages, but the UK, US, Australia and Canada should get English-language content simultaneously.
3. Understand how consumers use and share entertainment content. If I buy a CD, my wife can use it. I can lend it to a friend or family member. I can hop in a rental car and listen to it. I can buy a new CD player and use it. It is not locked to just one CD player in my house, that only I can use. Why on earth are digital games tethered to one device or user?
4. Do not see this as an even greater invite to rush out buggy crap knowing you can easily patch it later. When social media sites slapped a beta label on their sites to indicate their work-in-progress nature, it was initially cute, but users are getting increasingly frustrated with flawed software products.
If you know of major bugs, it doesn't go gold; or you at least incentivise early adopters for acting as your QA team.
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1. Do not charge the same for a digital release that you would a physical release. The costs are nowhere near the same - manufacturing, distribution, replacement of damaged stock and all of that other junk just vanishes.
2. Do not impose arbitrary restrictions around who can purchase your content and when. I can buy a book in another country and read it. Just because you have the technological means to prevent me from buying a game from another country, doesn't mean you should.
Additionally, I am English, and have no problems consuming content produced for any English-speaking country (given that I live in the US, I have to). I get that you need time to localise content for other languages, but the UK, US, Australia and Canada should get English-language content simultaneously.
3. Understand how consumers use and share entertainment content. If I buy a CD, my wife can use it. I can lend it to a friend or family member. I can hop in a rental car and listen to it. I can buy a new CD player and use it. It is not locked to just one CD player in my house, that only I can use. Why on earth are digital games tethered to one device or user?
4. Do not see this as an even greater invite to rush out buggy crap knowing you can easily patch it later. When social media sites slapped a beta label on their sites to indicate their work-in-progress nature, it was initially cute, but users are getting increasingly frustrated with flawed software products.
If you know of major bugs, it doesn't go gold; or you at least incentivise early adopters for acting as your QA team.
Posted: Dec 2nd 2009 4:48PM CaramelZappa said
1. As someone already said, the packaging and distribiution costs pennies anyways, and while digital distribution is a lot cheaper, the bulk of the cost of the game is still development. That said, you say steam doesn't even get this right, but steam has sales every weekend that put any retailers sales to shame.
2. I'm doubtful they have a choice in restricting who can buy what in each country. L4D2 had to be censored in australia, even on steam. I'm sure there are different rules and regulations for each country in order to sell certain games and services. Besides, this is a huge problem with general purchasing, and has nothing to do with the digital distribution space in particular. It may seem easy for valve to open up sales to everyone, but it also seems easy for Nintendo to ship some black wii's to the US along with the white ones.
3. Sharing is a tricky one. With steam you can always share your accounts, and with D2D you can always let someone else download your game and cd key, since it isn't tied to the account and program like steam. Neither is a perfect solution but they both offer some form of flexibility. It's overall the biggest problem with DD since they have to try to provide flexibility while fighting piracy. I really like what Sony does with the PSN. You can have a game on your account and as long as your login information is there you can share the game over 5 ps3's/psn accounts. In this way having a PSN game actually gives you a bit more freedom than a physical copy would, since you can only play your copy of Uncharted 2 on one PS3 at a time.
4. Digital Distributed games aren't going to be any different than physical games are now in this regard. Epic shipped out Gears of War 2 before it was done and it was a buggy mess, but they just had the intention of fixing it later. Now that everything can update over the internet this is going to be a problem, DD or not.
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2. I'm doubtful they have a choice in restricting who can buy what in each country. L4D2 had to be censored in australia, even on steam. I'm sure there are different rules and regulations for each country in order to sell certain games and services. Besides, this is a huge problem with general purchasing, and has nothing to do with the digital distribution space in particular. It may seem easy for valve to open up sales to everyone, but it also seems easy for Nintendo to ship some black wii's to the US along with the white ones.
3. Sharing is a tricky one. With steam you can always share your accounts, and with D2D you can always let someone else download your game and cd key, since it isn't tied to the account and program like steam. Neither is a perfect solution but they both offer some form of flexibility. It's overall the biggest problem with DD since they have to try to provide flexibility while fighting piracy. I really like what Sony does with the PSN. You can have a game on your account and as long as your login information is there you can share the game over 5 ps3's/psn accounts. In this way having a PSN game actually gives you a bit more freedom than a physical copy would, since you can only play your copy of Uncharted 2 on one PS3 at a time.
4. Digital Distributed games aren't going to be any different than physical games are now in this regard. Epic shipped out Gears of War 2 before it was done and it was a buggy mess, but they just had the intention of fixing it later. Now that everything can update over the internet this is going to be a problem, DD or not.
Posted: Dec 2nd 2009 4:17PM Skruff said
I wonder if part of the reason they're salivating so much over this idea is because they see how well things like music performs in the digital distribution world (via outlets like iTunes). Does anyone have statistics handy on what percentage of music is downloaded vs. bought on a CD?
If so, then I think publishers are grossly overestimating the desire of gamers to get their games digitally if they're using the music industry as a comparison. As a consumer, I'm willing to risk $1.00+ on a downloaded song or even $10-14 on downloading the occasional new album, knowing I'll never be able to sell it used. However, I'm NOT willing to risk $50-60 on a downloaded game that I may hate and not get to recoup at least part of that money by selling it used.
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If so, then I think publishers are grossly overestimating the desire of gamers to get their games digitally if they're using the music industry as a comparison. As a consumer, I'm willing to risk $1.00+ on a downloaded song or even $10-14 on downloading the occasional new album, knowing I'll never be able to sell it used. However, I'm NOT willing to risk $50-60 on a downloaded game that I may hate and not get to recoup at least part of that money by selling it used.
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