Digital Sales Small But Mighty

Digital sales are now 10% of total sales, even though that's not the way this article positioned it. Funny how that difference in phrasing makes all the difference in perception. I'd say the advance of the digital market is inevitable, but that all the implications have yet to be processed by the publishers, distributors, retailers, and consumers.

Digital distribution means a fundamentally different relationship between the publishers and the consumers. There are several established digital distribution points (like Steam for PC games, or Xbox Live for Xbox 360 games) and more are jumping in. And, of course, publishers can establish themselves as digital distributors, though most haven't wanted to do much along that line for fear of angering traditional retailers. Even retailers like Gamestop are getting into digital distribution, though it seems to me they are going to have a difficult road ahead. Customers and easily move from digital storefront to another with a single click (except, of course, for the consoles and handheld devices that are locked into their respective stores... which goes to show why making hardware is still an important thing). So why will customers favor one digital distributor over another? Answers to that question are just beginning to be developed. Price is an obvious one, but no one wants to destroy their profits if they don't have to. Customer service? Exclusive titles or content? And this doesn't even begin to get to other issues like live-streaming of games... or non-resaleability of digital titles... or non-lendability... It's a vast territory where data is scarce and opportunities for success and failure abound.

One thing I do think is true: There will still be a market for physical goods (especially with special items like custom controllers, maps, figures, posters, etc.). But it will be a much smaller market... and that day is approaching faster than most publishers are prepared to accept.