July 11, 2011

Digital Distribution… Competition Bad for Business?


A war is brew­ing on the inter­net for your mon­ey, sup­port, and loy­al­ty (no it’s not the PC vs Con­sole war that you see flames on a dai­ly basis) and the out­come could have dire con­se­quences for the gam­ing indus­try.  That war is the suprema­cy over Dig­i­tal Dis­tri­b­u­tion.  Cur­rent­ly there are sev­er­al key play­ers in the indus­try, Steam (Valve Soft­ware), Impulse Dri­ven (GameStop), Direct2Drive and GoG.  Steam is by far the most pop­u­lar and largest of the group by sev­er­al times how­ev­er sev­er­al com­pa­nies are look­ing into pro­vid­ing their own ser­vices instead of sell­ing them through a ven­dor and com­peti­tor like Steam.
We often hear the phrase “com­pe­ti­tion is bet­ter for con­sumers” and in many cas­es this is true but in the case of Dig­i­tal Dis­tri­b­u­tion is this tru­ly the case?  Con­sid­er this, the major­i­ty of major title games can be had through Steam and Impulse at this point in time.  And they can gen­er­al­ly be had below the stan­dard retail costs of $50 — $60.  This pro­vides the cus­tomer with a reli­able source with a large and estab­lished cus­tomer base, prices below mar­ket stan­dard, large selec­tion of mer­chan­dise to choose from and many friends to social­ize with.
Now enter EA and Activi­sion that see the suc­cess of Steam and want to piece of those prof­its.  How do they bring cus­tomers over to their side that are per­fect­ly hap­py with anoth­er, pos­si­bly supe­ri­or prod­uct.  Sim­ple, they cre­ate their own dig­i­tal dis­tri­b­u­tion ser­vice.  That alone, how­ev­er, is not enough for cus­tomers to come crawl­ing to them.  In the case of EA and Activi­sion the chances of them pulling cus­tomers away from already estab­lished enti­ties in the mar­ket is slim so what they do is with­draw all of their prod­ucts from their com­peti­tors ser­vices.  More com­pe­ti­tion is good right?  Maybe?  Per­haps not…
In some cas­es in a free mar­ket there is an argu­ment for a nat­ur­al monop­oly or per­haps a oli­gop­oly.  Util­i­ties are a prime exam­ple of this because it would be harm­ful to the cus­tomers to have more than one Util­i­ties Com­pa­ny and it could even be dan­ger­ous.  This isn’t to say Steam, Ori­gin or any oth­er Dig­i­tal Dis­tri­b­u­tion ser­vice is as impor­tant as util­i­ties ser­vices, because they most def­i­nite­ly are not.  How­ev­er, it does cre­ate a inter­est­ing dilem­ma for cus­tomers who are now forced to choose between their favorite game and their plat­form of choice.  It’s in this way that large com­pa­nies force cus­tomers to their prod­uct even if they don’t want to.  Cry­sis II was recent­ly removed from steam because EA was vio­lat­ing Steam poli­cies by dic­tat­ing user con­tent.  Short­ly there after EA announced the rea­son for remov­ing their games and announced that Cry­sis II, Mass Effect III, Bat­tle­field 3 and The Old Repub­lic would all be Ori­gin exclu­sives and that they would not be avail­able on oth­er plat­forms.
Cus­tomers will now be forced to have not one but two or more of Dig­i­tal Dis­tri­b­u­tion soft­ware plat­forms adding more over­head to their sys­tems.  They also have to split up their game col­lec­tions across mul­ti­ple plat­forms and this can be incred­i­bly frus­trat­ing to con­sumers.  In addi­tion to this these com­pa­nies will now have exclu­sive monop­o­lies of their prod­uct and now can dic­tate price as there is no longer and com­pe­ti­tion for their prod­uct.  This is almost NEVER good for con­sumers.
Cus­tomers should be wary as we star to see the mar­ket frag­ment as more devel­op­ers try to devel­op their own Dig­i­tal Dis­tri­b­u­tion ser­vices.  What will con­sumers do as this hap­pens?  That remains to be seen?  While I don’t think it will get to the point where there is leg­is­la­tion involved (not to say that it couldn’t) , I do expect there to be some major chances in the PC gam­ing indus­try as the mar­ket con­tin­ues to move towards Dig­i­tal Dis­tri­b­u­tion.  What do you guys think?  Is more com­pe­ti­tion in the mar­ket when it comes to online games a good or bad thing? Do you think it will cause more harm than good?  Should com­pa­nies be able to hold a monop­oly over their games?  Let us know your thoughts!

4 comments

  1. CharcoalCoyote - July 12, 2011 8:12 am

    I’d be more than will­ing to bet that the EA pull to Ori­gin, as well as any oth­er large game com­pa­nies start­ing their own dig­i­tal down­load ser­vices, will cause an incred­i­bly sharp increase in pira­cy. Few com­pa­nies are able to com­pete with Steam’s epic sales, and peo­ple aren’t going to pay $60 for a sin­gle play­er game that’s been out for a few years and is only a tor­rent away. Even Bliz­zard, one of the most suc­cess­ful and fan-beloved video game mak­ers of all time, has to impose extreme mea­sures on its pop­u­lar games to pre­vent pira­cy. 90% of the peo­ple I know who have War­craft 3 installed pirat­ed it, and that’s a clas­sic game that would cost $30 today to pur­chase in a store. $60 for an online down­load that prob­a­bly holds nowhere near as much water? Please…

    Reply
  2. zero_19 - July 12, 2011 2:43 pm

    Yea, I’m real­ly not feel­ing this whole “we need it to” thing. I don’t want to deal with anoth­er ser­vice, install more shit on my com­put­er, and have to deal with keep­ing it out of my autostart. More pass­words and user names.
    I already have a place for all my games, it’s called steam, and it works well.

    Reply
  3. givemhellkid - July 12, 2011 9:35 pm

    what i don’t under­stand is how much mon­ey is this actu­al­ly mak­ing for EA? i mean you have to set­up the soft­ware and servers employ­ees etc.. I’m more inter­est­ed in how much of a cut Valve is tak­ing on steam, I’m sure the pub­lish­ers must pay some­thing to have there game on steam, but with all the indie title host­ed on there i’m sure it’s not to much.. I dun­no, all i do know is that no one has done it as well as valve, and i’d imag­ine a decrease in EA’s dig­i­tal sales, if minor due to remov­ing them from the most pop­u­lar dig­i­tal dis­trib­u­tor on the plan­et.

    Reply
  4. T8 - July 19, 2011 9:50 am

    ill stick with steam no mat­ter the games it has to release. They have been doing it right for years, they have earned my busi­ness.

    Reply

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