Longtime revenue scourge of game publishers and developers everywhere, GameStop, has a pretty unsurprising view of the current and future states of digital video game distribution. As Industry Gamers reports, Sterne Agee analyst Arvind Bhatia found that GameStop management doesn’t believe digital download services will pose any real threat to its retail business until 2014, when GameStop predicts “25 percent of the population will have access to the technology required to download full games.”
The two other obstacles that GameStop feels will buy them some time are broadband and storage costs, and game prices, with $39 cited as some magical number in terms of what consumers are willing to pay for downloadable games.
These predictions seem a bit dubious for a number of reasons. First of all, this past April, the Pew Research Center’s Internet & American Life Project found that 63 percent of adult Americans now have broadband Internet access in their homes, up 15 percent from the previous year, despite higher monthly prices. So clearly, paying for the kind of service required to bring digital versions of games into houses is something with which the majority of Americans are already quite comfortable.
Secondly, the install base, as of this past May, in terms of major consoles that currently support digital downloads (PC/Mac not included), was around 74 million, which is just under 25 percent of the entire U.S. population, and that's despite noticeable hardware sales declines over the past year.
So when you combine all these figures with factors such as Xbox LIVE, PlayStation Network, Steam, GameTap, OnLive (potentially) and Sony’s upcoming UMD-less PSP Go, among other services, it seems that the digital gaming revolution isn’t five years away; it’s clearly already here.
This suggests that GameStop doesn’t have as much time as they’d hope to figure to out how best to prepare for the day when it’ll no longer be able to rely on used games to generate around 25 percent of its revenue like it has over the past several years. Of course, GameStop will still be able to rely on sales of new hardware, accessories and peripherals to bring in revenue, but without that added chunk provided by used games, the company will have some serious strategizing to do if it wants to stay relevant.
So it’s no wonder then that GameStop has predicted (perhaps a bit wishfully) such a delay in digital adoption on behalf of gamers. Because once those digital downloads start flowing on a wider scale, the once mighty game retailer’s reign will be over.
Do you think GameStop can find a way to fill the gap that will be left when digital distribution kills the used games market?
Source (via Ars Technica)
Comments are Closed
Comments
Displaying 21–29 of 29
112
StrongestSaiyan
Part of this is probably Gamestop wanting to get people to forget about downloads. 5 years seems like a long time to most people, so they are probably stretching it. That said, storage is the big issue. Games are huge so HDDs have to either be very big or we need to buy several. Prices would have to decrease to compensate us. I wouldn't pay full price knowing that I would have to delete a game or buy a new HDD.
Penetrator72
@ Storm1968
Costs will drop dramatically for the manufacturers of the games. Remember, no more distribution costs. The question is however: Will the manufacturer keep this savings as a nice profit or pass it along to the consumer.
Penetrator72
I'm a gamer that buys games and resells them on Ebay when I'm done with them to recoup in hopes that I get almost half my money back to buy another new game. I'm all for digital downloads, but how am I going to be able to sell my game if there is no physical form of it? I agree with the first 2 posts here: The price for digital downloadable games will have to be drastically less(since there will be no way to resell your game) and secondly that should be very feasible since there will be no middle man any longer(except for prepaid cards probably). I'm sure stores like Best Buy will make arrangements to pre purchase games through them, enter in your code and download the game a day or two before it's released. Then on the release date you don't have to deal with a ton of people fighting over bandwidth. This is how I see some stores remaining relevant.
Storm1968
@Padilla
Exactly my point :D You must have posted that just as I was typing LOL
Storm1968
@big13lak
No, the price won't drop if you cut out the middleman. There is still the manufacture of the product. Also, I add to ccruse1112's take on not wanting to have to delete something that I paid good money for (whether I'm playing it or not) just so I can add a game to my library. There is also a bandwidth issue that most people forget. Even with decent cable, you are talking a couple of hours to dl a decent size game. And, with the current attitude of your local cable/broadband ISP, they don't want to see it because you'd be sucking up someone else's bandwidth... which they'd like to charge you extra for if they could get away with it.
ccruse1112
@big1lak
But by how much? Would you buy a game online if it cost $60 in the store and $50 online? I wouldnt. That $10 is not worth the storage size and lack of disc or the fact that I can resell the game if I wanted to. Now if Halo:Reach sold for $40 new online and $60 in the store for a product that was exactly the same, then I would do the digital download thing, but I really doubt thats going to happen anytime soon.
If you look at the PSP Go, PSP games are now selling for $20 online, while they used to cost $40-$50 on UMB from a store. That price difference is something I can get into, and the games dont take up that much space on a HDD or a memory card. I just dont see that happening for consoles anytime soon (5 years or more).
r_pad
If American ISPs continue to behave the way they do, then Gamestop's point might be valid. Throttling, capping, and a lack of competition slowing down upgrades prevent digital distribution from really taking off.
big13lak
@ccruse1112
Dude if you cut out the middleman the price is gonna drop (hopefully).
ccruse1112
I dont think digital downloads will take over for quite some time. So I agree with GS. I just dont see gamers downloading full price $60 games that take up 9-50gb of HD space anytime soon. First of all you will need a lot of space to store these games, and the PS3 80gb HDD or the 360s 120gb HDD just arent big enough. Plus who wants to spend full price on a game then one day have to delete it off your HDD to make space. I wouldnt. Add to that rentals and used games (avenues that allow you to game at a discounted price, or get money for a game you no longer play) that are available because of discs, and I think digital downloads wont take over for quite some time. I only see it taking over when there is a huge library of AAA games that are sold new at $30-$40 online, while the disc versions sell at &60. And these games drop in price overtime equal to sales that you may find at Best Buy or Walmart.
Displaying 21–29 of 29
112