Retailers Want To Let Off Steam

A retailer getting Steamed?

A UK game industry site, www.mcvuk.com, is reporting that UK retailers are threatening to keep PC games that include Steam off their shelves. Apparently the retailers are afraid that Steam, with 80% or so of the digital distribution market, threatens their business.

Well, yeah, it would... if their PC business was anything to speak of. Have you been to a retail store and looked for a PC game lately? Not a lot of shelf space allocated there, and it's usually poorly arranged and jammed with an assortment of non-gamer oriented titles based on game shows and such. It's been years since PC games at retail mattered all that much to the retailers; they make most of their money from console games. Aside from the occasional megahit, that is... like Blizzard's upcoming Cataclysm release. But such AAA titles are a market force unto themselves.

I think retailers are concerned about publishers concentrating on more downloadable content that the retailer doesn't get a chunk of, as we've already heard about from THQ and others. Major publishers are already heading in the direction of digital distribution, at least for add-on content. So retailers are trying to stop the tide from coming in... but it's going to come in regardless. Banning games from stores may just push customers to looking for them online, thus bringing about what the retailers fear.

I haven't heard of this revolt occurring in the US, perhaps because retailers here are already exploring ways to deal with digital distribution. (Like GameStop buying Kongregate, for instance.) It's really going to pinch retailers if publishers start pushing for the release of console titles through digital distribution, not just the occasional map pack or scenario. Perhaps that's one of the reasons so many retailers are exploring used games as a revenue source.

Retailers are nothing if not adaptable, though, especially the mass-market chains. Audio CDs not selling the way they used to? Reduce the shelf space allocated, expand the area devoted to something else. When it happens with games, we'll see the same thing. Publishers have to be concerned about visibility for their titles, and hardware makers are especially concerned about their retail presence. I expect there will be a lot of pushing and shoving going on between retailers and publishers over the next couple of years.

Game Distribution, 2015?

At a game marketing conference in San Francisco, some executives held a panel discussion on what game distribution will look like in 2015 (a report from Gamasutra here). As you might expect, the answers tended to be in line with what their companies are planning to do. So GameStop thinks that retail will become "more experential, something like an Apple Store"... really? I have a rather hard time visualizng GameStops becoming similar to Apple Stores. I can say my that my Hyundai econobox plans to become a Mercedes sport sedan, but that doesn't mean it's likely to happen. GameStop seems to think that it can ride the wave of digital distribution. Heck, Rich Hilleman (Creative Director at EA) is even feeding their illusions: "My opinion is that Target or GameStop or Best Buy or Amazon has nothing to worry about, digitally, because they understand their customers really well, and they know things we don't know." Rich, I think you know better than that. EA is already striving to establish direct relationships with customers, and in five years I would think that EA should know a hell of a lot about their customers.

Sure, Apple has taken the lead in digital music distribution... for that matter, in all music distribution. Partly because the music industry was bone-stupid about making the transition to digital distribution. They didn't want to believe that digital distribution would ever replace CDs. They saw their business as depending on the huge margins of CD sales, so they saw themselves as in the CD-selling business rather than selling music. So they let Apple determine pricing and presentation of their titles, and now many musicians are abandoning the classic model of signing with big labels.

Digital distribution of games is not exactly the same, of course. But many developers are beginning to wonder why, exactly, they need to sign a deal with a publisher when they could sell a game directly to consumers. And some are making good money with non-traditional models (see League of Legends, for instance.) It's a time of great change in the game business, and we will see many winners and losers emerge. I suspect companies that insist things will remain pretty much the same as they have been will be among the losers.