The Problem with Digital Distribution

I don't think any of us would try to argue that digital distribution isn't the future of games retail. However, at the moment, there are a few things holding it back, often making digital purchases notably inferior to regular retail. One of the issues is simply bandwidth (although this is far less of a problem in the first world) and another is transferability (digital purchases are often locked to your PC or console, whereas you can lend a disc to someone), but what really sets them back is price. By doing away with the middlemen, and almost all of the physical costs of the product (no boxes, manuals, discs, freight charges), digitally distributed titles should be cheaper than conventionally marketed ones. However, this is seldom the case, and the lack of discounting causes significant price discepancies once a game has been out for a while.


Regular readers of this blog, or anyone who knows me in general, will know I am fascinated with retrogaming and the history of videogames. A little while back I bought a copy of the Namco Museum Virtual Arcade collection for the Xbox 360. Essentially, this is a collection of 9 games previously released onto Xbox Live Arcade (when the disc is in the drive, you can even select them from the games menu as if they were XBLA titles installed on your hard drive), as well as 25 other retro titles from Namco's back catalogue.

When Namco Museum Virtual Arcade was released on disc, it was probably a full price (or close to full price) title, but over time the price has gone down, and I bought it for £12.99, which was about R155 at the time of purchase (or 1530 MSP for the sake of comparison). Despite the fact that many of the games released on XBLA have been there for years (according to Wikipedia Pac Man was released on XBLA in August 2006), I believe that all of them are still at the full price they were released at. Even assigning no value to the other 25 games not previous released on the Xbox, the 9 XBLA titles included on the Museum collection alone come to 4800 MSP (£40.80 / R486), which is a pretty poor comparison, even if you could argue that a person might not choose to buy Pac Man as well as Ms Pac Man, or that you probably wouldn't want to buy New Rally X at all.


The problem with digitally distributed titles is that they are immune to the regular pressures of retail, as there is no cost to holding stock and therefore no real need to keep it cycling. This is great for the retailer, but not so good for the consumer. If you look at Microsoft's Games on Demand initiative, many of the games loaded onto the service cost more than a boxed copy now does at retail. Valve's Steam service is great for indie games and the occasional weekend deal, but the standard pricing on new titles is often higher than a boxed version. Until this is sorted out, digital distribution is not going to be able to make substantial progress in supplanting the retail games market.