RE: NPD's response to EA about retail vs. digital

the digital business

James Brightman about the NPD’s response to EA:

“While digital is a growing part of the industry and something that needs to be addressed for the future, the current games industry is still largely rooted in retail and any industry player involved with AAA content simply can’t take their eye away from the retail environment. Successful companies are looking at how their products are performing within all channels, particularly retail,” he said.

Let’s take a moment to discuss why AAA content on consoles is still largely marketed as physical products. First: the pricing is ridiculous. If you’re making me pay more for an old product as a download than it would cost new at the next best online retailer, you already lost. If you publish a game online shortly before the next title in the franchise launches, you might have some fans who will do a stunt and dive into the older product to get the feel for the franchise again, but you’re not doing good on the other customers. Because those will just be wondering why they should now pay more for a non-physical outdated product and question why you weren’t able to put the game online before. Microsoft actively discourages people buying digital games on their Xbox Live platform that are not XBLA games.

Now, I am not sure how Sony handles this, because I don’t own a PS3 and read less news about their business, but from what I’ve heard they managed to do at least one simultaneous release of retail and online in their store.

And Nintendo? Let’s not talk about them. Their mobile platforms have the same flaw that Sony’s have: They’re not taking the Apple Appstore as a role model. You can’t simply buy things. You’re not allowed to download them to all your devices. It’s not even easy to find good items on the platforms from what I gather from fellow bloggers.

By now it should be crystal clear that an Apple iCloud like approach works well for digital items. They can be stored, redownloaded and don’t disappear when you remove them from you device. They are updated easily and when you download an item you only get the newest version. Now granted, they are copy-protected and bound to your ID. But in the case of games that isn’t a problem because the customers can only use the item with the respective company’s device anyway.

the retail business

McQuillan also stressed that gamers’ buying habits still very much include retail products, particularly during holiday periods when the industry Todaygenerally does a sizable chunk of its annual business.

On one hand this is certainly caused by the fact that when you’re buying a video game (read: retail DVD boxes) for a loved one that is in fact a tangible thing and not just some esoteric gift certificate, voucher or whatever you want to call it. On the other hand I’m fairly sure that there are an incredible lot of people handing out those vouchers for a reason:

• There are many people who don’t know anything about video games and therefore are lost when deciding what to buy. They are either likely to ask a sales rep and are either helped into a great buy or conned into buying a game that will just go to the bin or resold.

• You might not be sure about what the person who is going to get your game likes, which genre or franchise they are into. That’s a perfect reason for a gift certificate. Keep in mind that there is still a choice between a generic, say Amazon certificate and something more specific, like Microsoft points.

So the main reason a gift certificate gets bought is: You want the receiver to decide. (Whether on purpose or because you don’t know their taste.) In contrast to that you give physical products like retail games if you want to gift a physical item. I’d even go as far as saying that those making piles of gifts under Christmas trees looking bigger is an incentive to buy them during holidays.