Yesterday, along with a slew of new functions in its Xbox 360 system update, Microsoft launched its Games on Demand store with full Xbox 360 titles for download. Is this move a game-changer or just business as usual?
The store launched with 24 titles, a mix of games from several companies. And while Sony has offered a handful of full games for download, Warhawk, Siren, and SOCOM, Microsoft has taken it a step further in launching a full store. Shane Kim, Microsoft’s VP of Strategy and Business Development for Interactive Entertainment, said, “It’s a natural evolution, not only of the capabilities of the service, but the expansion of the business model that we offer, not only internally, but to our business partners.”
All of the games were priced at either $20 or $30, a markdown from the usual $60 due to the lack of packaging or a physical disk. And while those prices seem reasonable, is it really remarkable? Many of the titles are from the first year of the Xbox 360, and few are less than two years old. Those prices may seem low, but used copies of the same games probably run for about the same price or less. Compared to the Xbox Live Arcade games running from $5 to $15, a $30 download is hardly an impulse buy.
While price may not be the differential for the service, the convenience of not having to leave the house may be enough to hook gamers. Downloading Call of Duty 2, a 5.27 GB title, took about two hours and 20 minutes on my cable modem–fortunately, the 360 can download in standby with the power off. By the time I finished watching a Blu-ray film on the PS3, ironically, the download was done–an acceptable alternative to a trip to the game store, even without the retail experience. Jack Tretton, President of Sony Computer Entertainment America, isn’t worried about retail, “Digital content is going to have an impact, but it’s not going to eliminate the retailer. I still think there’s a place where consumers want to go, see packaged media, experience it and really get a feel for the brand and the presentation.”
So while the price and convenience competes with retail’s used offerings, the true benefits of full downloads are for publishers. Unlike used titles at Gamestop, developers and publishers will earn profit on these sales, rather than retail pocketing the entirety of the wide margin of profit on used games. And since most of the titles are sequels or franchise titles, Games on Demand provides marketing for upcoming releases in their respective franchises: Assassin’s Creed and Mass Effect, for instance. Ubisoft’s Andy Swanson, Senior Director of Strategic Sales & Partnerships, said, “The long term exposure or the ‘long tail’ of being in the digital space extends the life of our brands and provides consumers with an additional distribution channel to obtain Ubisoft content.”
So what is the real benefit to players? They can access older games that may be hard to find used. They are financially supporting the game makers. And they can do all this from their living room. But until newer titles are sold at prices lower than retail’s used games, this digital strategy will not be a revolution. Swanson is hopeful, “If the technology allows for it and there is enough consumer demand, we will determine opportunities to release titles simultaneously via Games on Demand.”
According to Microsoft, that will not happen anytime soon. As Kim said, “When it comes to us saying we want Games on Demand to enable day-and-date release of new titles, then there’s certainly a lot of work we would need to go through. We’re not anywhere close to that world today. We have great relationships with the retail channel–they’re important partners. We sell a lot of hardware and software through retail.”
With Microsoft, Sony, and Nintendo beholden to retail to sell hardware, day-and-date digital releases will never become standard. But perhaps the three hardware manufacturers can push an industry standard of providing games as downloads 6 months after release–not unlike the home video market–and gamers can truly experience a digital revolution. Until then, as cool and cutting-edge as Games on Demand is, it is business as usual.