Retail is Dead: 38 Studios' Curt Schilling Speaks Out on Digital Game Distribution
Not long ago, just about every gamer had a shelf, desk corner or floor that contained stacks of game boxes and CD cases housing the disks to their favorite PC games. Retailers such as GameSpot, Best Buy and Wal-Mart had aisles devoted to PC game box sales. But times have changed. The real estate occupied by boxed games in retail outlets these days is shrinking significantly, and there’s strong evidence to suggest that the trend will continue.
In 2009, market research analyst NPD released its PC Games Digital Downloads: Analyst Report, which indicated that digital sales were close to overtaking box sales as the most popular form of PC game distribution. According to the report, 21.3 million PC full-game digital downloads were purchased online in the U.S. in 2009 compared to 23.5 million physical units purchased at retail in the same period – a difference of just 2.2 million [source: npd.com]. But gamers don’t need a report to do the math for them—one only needs to go in search of a physical copy of a not-so-recently-released MMOG (other than World of Warcraft, the longevity and potency of which makes it a longstanding exception to almost every rule) to realize that boxes are a scarce commodity.
Curt Schilling, founder and Chairman of 38 Studios, the developers behind the upcoming Kingdoms of Amalur: Reckoning and the MMOG in development still known by its codename, Copernicus, shared his thoughts and predictions for the future of game distribution with us.
“The PC game retail space will continue to see someone scream ‘Retail is never going away!’ while digital continues to eat the market,” Schilling said.
Currently Steam and Direct2Drive stand at the number one and two positions when it comes to digital game sales based on unit percentage share according to NPD’s report. But Schilling pointed out that there’s a new and heavy contender entering the arena.
“I still think the biggest industry news this year was the almost stealth announcement that Amazon.com is going digital ,” he says.
And Schilling predicts great things for Amazon.com’s move to digital distribution. “It’s insane to think the company providing the world’s best guest experience on the internet will do anything but something extraordinary and revolutionary when the day comes,” he says.
Purchasing a digital game download rather than a physical box has plenty of advantages, which likely accounts for the continuing rise in digital sales. Digitally downloaded games may take up hard drive real estate, but they never take up floor, desk or shelf space. There’s also the cost and convenience factor.
“With the cost of goods – essential ones like food and gas – continually rising why would I get in the car and drive to the store to buy something for a price higher than what I can order online and receive in the mail within 24 hours?” Schilling asks. “Simple answer is: I won’t, and neither will you.”
However, with those things in mind, there are still some potential pitfalls that digital distribution must overcome before it can become the de facto means of purchasing PC games.
“The only experience worse than having to physically go somewhere to get a game is having to wait a day and a half for that game to download,” says Schilling. “Don’t get me started on the game that makes me drive somewhere to buy it and then wait 6 hours while it patches!”
Nearly every gamer who’s purchased a digital copy of a MMOG has experienced the dreaded 6 hour (or longer) download, usually followed by a hefty patch. That element of digital sales alone can make the idea of driving to a store to pick up a physical box, or ordering one online and hoping that it’s delivered on launch day, a more tempting option.
Where to download is the next question gamers face. Options for MMO gamers usually include, at the very least, the game’s official site, Steam and Direct2Drive. Which option provides the best experience and the least bandwidth bottleneck is a subject of much debate in gaming circles.
“There are far too many digital download ‘services’ right now and it’s mucking up the landscape,” says Schilling. “Someone will get smart and start consolidating power in this market and whomever notices first will jump start this race. That will likely be followed by companies realizing the need to create a better guest experience for the downloading process.”
Indeed, it makes sense for gamers to limit their digital download source to one convenient and trusted site, if even just to ascertain that, should the need to redownload and reinstall the game arise, it’s in an easy-to find location makes the gamer’s information and download keys easy to access. In the past, boxed copies of provided gamers with reassurance that their game would always be there for them should the need to reinstall. Digital distributors are tasked with providing the same level of reassurance.
Region restrictions provide another source of potential frustration. Recently gamers in Europe and other countries outside North America have expressed confusion over possible region restrictions related to SOE’s DC Universe Online, but DCUO is far from the only MMOG to have to wrestle consumer questions about regional limitations at launch.
At Ten Ton Hammer, we deal with the question of digital distribution and regional restrictions often when we run contests and our members ask us whether the game will run in their area.
“Region restrictions are a nightmare,” says Ten Ton Hammer’s Editor-in-Chief, Jeff Woleslagle. “As much as we announce that certain contests and giveaways are limited to certain regions, we still routinely have to disappoint potential winners who live outside North America. But it's the same with physical distribution, it’s only more apparent because the Internet has us believing that national boundaries don't really exist in terms of the flow of information or commerce. Still, with every contest and giveaway we run, we find that they do.”
Collector’s Editions in a Digital Age
A poll we featured before the launch of World of Warcraft: Cataclysm indicates that there’s no lack of interest in collector’s edition MMOGs. Digital distribution doesn’t appeal to trinket junkies, the kind of gamers who love to collect physical stuff related to a game. You simply can’t transmit a little plastic statue and a branded flash drive over the internet.
Curt Schilling is optimistic about the effect of digital distribution on CE box sales. “It will actually place a premium on legitimate collector’s editions,” he says. “Gone are the days of cloth maps and some trinket being labeled as CE for an MMO or RPG or any fantasy IP. Given the shelf space they take [developers will] have to have something truly worth it to get into the stores.”
Developers have become digitally savvy, though, and are including coveted virtual perks in digital CE packages. Trion’s upcoming title, Rift, recently revealed their pre-order details that include a digital CE with an exclusive mount, which grants a 60% run speed increase, a companion pet, and a 24-slot bag. Prices vary depending on vendor, but the digital CE costs about $10 more than the standard digital client.
Schilling’s prediction that retail box CE’s will have to step up their game rings true with Rift. The retail collector’s edition costs about $20 more than the digital version on average but includes all the digital goodies plus an 8GB flash drive, the Rift soundtrack, a gaming mouse pad and the Telara Chronicles, a hardcover graphic novel miniseries based on the Rift universe. There’s nary a cloth map or a plastic statue in sight, but enough juicy goodies to make Rift fans ponder a box sale, proving that retailers have indeed recognized a need to step up their game when it comes to selling a pricey collector’s box.
With digital sales poised to outstrip boxed sales of PC games it seems clear that things can only change for the better as digital retailers struggle to compete with each other in a growing marketplace. Customer experiences have already improved markedly over where they were a few years ago and will likely continue to improve as digital retailers tune in to their customers’ expectations. Add Amazon.com to the mix – an incredibly savvy and experienced retail juggernaut – and the digital retail space gets all the more competitive, a boon for the consumer looking for the best buying experience.
“I think the next 24 months will see massive growth in technology and the guest experience in the online digital download/services space and the guest will be better for it when all is said and done,” says Schilling. “Knowing that we will be launching a game or two in this window makes it that much more exciting for folks here at 38.”
Are retail sales still where it’s at, or has digital become the way to go when it comes to new PC game purchases? Do you prefer a box in hand over a digital key and a download link? Share your thoughts with us in our forum.