Are We Truly Ready for Digital Distribution of Video Games?

The other day I was finishing up a session of Motorstorm: Pacific Rift and proceeded myself to go back to the XMB menu.  I figure I pop in a bluray movie to show off my new HDTV to others, or perhaps attempt to proceed past level 3 of The Last Guy.  As I was scrolling through the Game tab in the menu, I noticed I haven’t played Warhawk in a very long time.  So long in fact that I haven’t played it even before it got its trophy update.  I’ve always wanted to get back into playing this game but I find myself never having the time to commit to get back into the game.  That’s the problem I have with games that are focused more on multiplayer (or in Warhawk’s case, MP only), I just don’t have the available time to commit to these games to be able to keep playing and to stay competitive.

I remember rocking in Warhawk, and I don’t mean to sound like I was number one.  Most times, I rank in the thousands in games, if at all.  But for some reason I was very good at Warhawk, especially during the beta.  I was constantly finishing first, and I just kept getting kill and kill without dying.  This continued on when the game came out.  I played for hours and hours, and I rung up the points.  Unfortunately, most of my success came during the time in which the leaderboards and stat tracking were at their worst.  For those who can recall, for the first month or so the Warhawk servers were terrible at tracking player stats (though games themselves were very smooth).  For those who would look at my profile would think, “ok, this dude is just exaggerating, he ain’t no phenom.”  I wasn’t number one, but I surely was one of the top dogs of the game.  Eventually my time became restricted again and me and my Warhawk playing days were coming to an end.  While opportunities always arose, my growing library of games and movies just overcame my determination to play Warhawk.  It was a fantastic game, and I did shell out for its first booster pack but I simply could not devote the time to the game to remain a top dog.

If I were to log in today and get back into this game, there is not a doubt in my mind that I wouldn’t come out of it terrible.  Obviously practice makes perfect but there have been players on there that have been playing this game since day one that would just embarrass me.  I remember logging on to the game right before the trophy patch hit to attempt to get back into it and I was getting annihilated by everyone.  I was no longer king of the skies in dogfights, and people made an embarrassment out of me on foot battles.

In a situation like this, I would usually find myself to sell the game off to either make some money to go towards another game, or I might even trade the game to another person via a trading site (like GameTZ) for a game in return.  Unfortunately with Warhawk, I purchased the game via PSN and not a physical copy.  I was too eager to get the game in my hands, and did not want to drive to town on my day off to get the game, if the store even had it all.  Which finally leads me into what this article is all about – are we ready for the digital age of gaming?

While digitally distributed games have been here for the last few years, it is still in the preliminary stages.  Full fledged retail games still come in the form of a physical copy, and unless you are a PC gamer – the selection of digitally distributed retail games on consoles is quite limited.  However with both Sony and Microsoft moving forward to test the market with the offerings of digitally distributed games – are we (the customers) in trouble with our wallets?

The biggest problem the customers have, and the biggest advantage the distributors have when it comes to the digital age is the re-selling of such games; it’s impossible to do so.  While I loved the time I spent in Warhawk, I truly have no desire to continue owning this game when I don’t play it and can get something back in return in the form of another game or cash.  Now yes, there was a physical copy option that I could have gone with to allow me to get something in return for this game so in this particular situation I am the one at fault.  But what if there wasn’t a retail option, with a game like Wipeout HD?  That game was strictly digital in North America, and there is no possible way for me to trade or sell this game away for something in return unless I sold off my PSN account (which is usually against the rules at most credible trading markets like eBay).

While this situation sucks for us, this is a great situation for the distributors.  If people want to play this game on their own home console, they can’t go to their local GameStop or look for a trader on GameTZ and get the game secondhand.  No, they will have to shell out the distributors price, which is usually twice if not three times the price of that of a used copy.  For example, NFL Head Coach 09 is still priced at $49.99 as of this article’s post time on the PlayStation Network.  You can find this game used for under $10 at practically any secondhand place (not to mention most retailers who sell the physical copy of this game have it priced at $10).  This situation also hurts retailers…in a sense but in other ways also helps them.  If games were to go all digital, stores would carry download codes like they do now with PSN games, Xbox Live points, and Wii points.  This situation helps them by creating less wasted space taken up by games that are not selling (like NFL Head Coach 09), but can also hurt them in many ways.  Download codes would save them money when it comes to ordering.  After all, what’s more expensive for a store to carry?  A physical copy of a game that has the possibility of being stolen, thus making no money for store or the distributor?  Or a download code that can be stolen, but is useless without being activated at a cash register?  Sure, it loses money on both sides, but its not as big of a loss as it would be an actual copy of the game.

The flaw here is that who would buy download codes from stores when they can simply log into the internet on their console of choice and buy the game then and there.  There is no need for a middleman.  If the digital age came during the time of dial up internet, then sure the middleman would be needed (imagine downloading a game like Metal Gear Solid 4 on a dial up connection), but we are in the age of broadband.  Certainly there is a great deal of users out there that still use dial up, but broadband is getting cheaper every year and soon enough it will be the majority service if it’s not already.  Years ago I remember broadband services starting at $70 in my area, now-a-days you can get a decent broadband connection starting at $19.95 a month.  Sure, if you want better speeds and to play online games you would want to go with a higher up package (currently I pay around $44 a month) but for those who strictly use the internet to retrieve information then the $20 package would be just fine.

Looking past the lack of needing a middleman, retailers can also strive on games not selling well at MSRP.  Allow me to explain.  I’ll use Target as an example.  Normally, I am not one to shop there simply because their prices normally don’t appeal to me, and most of the time I can find better deals elsewhere.  Target though can usually roll out a deal here and there.  If there is one thing good about Target when it comes to video games, it’s their clearance section.  In fact, their clearance section is so popular, gaming site CheapAssGamer runs numerous threads tracking Target clearance sections at numerous locations (view the latest Target clearance thread here).  I remember many months back word got out that Target was selling Mirror’s Edge for $14.98 on clearance, when at all other locations the game still rang up between $50-60 (MSRP was still $59.99).  That’s a heck of a deal, considering the game was still rather new at the time and I was desperate to get my hands on it after enjoying the demo.  So I took a trip to my local Target to see if I can snatch up a copy, unfortunately this particular Target location was cleaned dry of all (if any) copies of Mirror’s Edge.  But here’s the angle I am getting at – this one little promo got me to their store.  I  may not have found what I was looking for, but I still walked out with a Target bag full of goodies.  While looking through that same clearance section that supposedly held Mirror’s Edge, I found a couple of games on the cheap that I wanted to pick up, and proceeded to since the prices were very good.  I then stopped by their DVD section and picked up a handful of TV seasons on the cheap during what I presume was a Target weekly ad deal.  So while I didn’t find what I originally looked for, I came out spending money at the Target store nonetheless.

Which is why I say middlemen strive on low selling games.  While Target would take a loss on me buying Mirror’s Edge at $14.98 when the MSRP is $59.99, they made a gain on me purchasing those handful of DVDs.  That promo got me to their store, and led me to giving them my business.  This is not always the case, I have gone to Target numerous times looking for something and walking out with nothing, but the possibility remains.  Middleman have the potential to turn a loss that is clearance games into a profit either in that same department or perhaps in another area in the store.  Call it a ridiculous theory, but so far it has been proven by my wallet on a few occasions (and not just @ Target).

It all comes down to the basic fact – why would anyone buy download codes at retailers when they could simply just buy the game off their game console?  Sure retailers could always sell the code for a discount sale price, but how often have we seen retailers run promos on these types of cards so far?  I have never seen a discount on PSN cards or Wii point cards – but we have seen the occasional deal on Xbox Live Marketplace cards, most notably at Target and Amazon.  One could say, “well for those who don’t have broadband can now get access to the game.”  Then that same person would come to the realization that no matter what you need a broadband connection to download the game.  The code is simply taking the place of currency, you still have to download the item.  So essentially these code cards will only sell during sale periods, in which we shouldn’t expect many.  The digital age of gaming still has a long way to go to become a reality; as stated numerous times in this article, there is still a strong userbase of dial up users out there, and no matter if buy the code in-store or on your game console -  you still have to download the game via the console and if you use anything lower than a decent cable connection, you shouldn’t even bother attempting to download it.

However the digital age of gaming is getting prepared – as we have seen recently with both Sony and Microsoft moving forward on offering digital service for full retail games.  Sony recently announced the PSP Go at this year’s E3 Expo, which has removed the UMD drive seen previously on the other three PSP models to go completely digital.  You must buy the games from the PSN Store; there is no other way to play PSP games on that particular model.  The worry here are for those who already own a PSP 1000, 2000, or 3000 model.  While they also have the ability to play digital games, they probably already have a strong collection of UMD games.  It’s no lie that PSP software sales cannot compare to that of the DS software numbers, so Sony is purely trying to reduce cost by offering digital games.  Sony has assured PSP users that they will continue to release all games on UMD and in digital form, but how long will that last?  Going digital saves money, but if Sony and third party publishers are still releasing games in UMD form, it’s only adding to the expense.  Eventually the UMD format will be dropped – with the PSP Go going completely digital and publishers trying to find ways to reduce expenses in today’s economy, it’s almost inevitable the UMD format will be no more in two to three years.  The PSP Go hits stores October 1 of this year, and the library of digital games is already growing via the PSN Store in preparation of its launch.

Also at E3 Microsoft announced their Games on Demand service for Xbox Live which begins this August.  Microsoft has promised roughly 30 titles on it’s launch with new games being offered every week.  Microsoft already runs their Xbox Originals service via the Xbox Live Marketplace, in which players can download a limited selection of Xbox games and play them straight off their Xbox 360’s Hard Drive.  The service has grown since it first launch but the selection is both limited and rather dull.  To most, the Xbox Originals service is Microsoft’s replacement of supporting their backwards compatibility updates considering the difficulty Microsoft has allowing Xbox games to be played on an Xbox 360 console with a different graphics card (Xbox was NVIDIA, 360 is ATi).  While Microsoft has no plans to discontinue physical copies of retail games, this on demand service will be acting as an experiment to see just how many people hop on board the digital age.  Microsoft has confirmed prices on the on demand service will match that of retail; so if a game’s MSRP was to drop in retailers, it will drop as well on Xbox Live.

There are flaws to going completely digital, and in this time period right now it would be hard for publishers to win over their customers if they were to ask them to go all digital.  Both the PS3 and 360 are limited in hard drive space; and as mentioned the pricing of internet services are not feasible for everyone.  PS3 users could always upgrade their HDD via any 2.5″ SATA (recommend at 5400RPM), but that’s a burden placed upon them as they will be forced to upgrade if they want to buy more digital games.  Personally, I am not too worried about the coming of the digital age just yet, but I am interested to see what the next generation has to bring to the table.  Will we see games being offered both in physical and digital form on release day?  Will Nintendo follow suit and also announced a handheld that offers digital only games?  After all, non-DSi owners are currently sh*t out of luck on games offered via the DSiWare service, for example the new Mario game that came out right after E3.  Nintendo is forcing users to upgrade to the DSi if they want to be able to play every game available for that platform.  Sony isn’t forcing users to upgrade to the PSP Go as you can play digital games on any model of the PSP, but for those who will be will need to begin to stock up on memory sticks (PSP models 1000 through 3000 take Memory Stick Pro Duo; PSP Go takes M2 Micro cards).

The basis in which I am trying to reach here is that with digital games we (the customers) will be forced to pay MSRP prices and have no ability to trade in or sell old games for cash or other goods.  Distributors and publishers have the advantage here, but at the same time this would hurt sales (afterall, not everyone will pay MSRP), and can also hurt the a game’s appeal.  If it wasn’t for used copies, there would be several game franchises out there I never would have played.  For example I am a big Ratchet and Clank fan; however I never would have gotten into the franchise if I didn’t buy the original game used from an EBgames.  That’s how I got introduced to the franchise and since then I have bought every R&C game released (some of which I even paid MSRP).  Digital distribution will hurt the customers and retailers.  Like I said, I am not worried that the digital age is upon us, but to see people wanting to go digital only just confuses me.  It hurts you more than helps you, but if people are willing to shell out $60 for every game as compared to getting it used for half that then more power to you.

I insist you (the readers) sound off?  Are you interested in getting the PSP Go?  For those who currently own a PSP, do you plan to upgrade?  Have you already purchased PSP games via the PSN Store?  For those with a 360, do you plan to test out the games on demand service; even with the games being the same price as their retail counter-part?  What do you think of digital distribution?