In part one of this feature, we examined the boxed-retail past that many gamers have abandoned. Now we take a microscope to the digital-driven future of PC game distribution, which many gamers have already embraced. Like downloading music, downloading games for your PC makes a shitload of sense: it's fast, convenient, better for the environment, and you can do it in your underwear and no-one will ever know. Sneaky and classy.
Where did all the money go?
Half to 70% of the $4 billion market for downloaded PC games are purchased through a platform named Steam, according to an article published by Forbes earlier in 2011. (Steam operator Valve refused to comment on the accuracy of this claim.) Though Steam was a right royal pain in the ass when it launched in 2002 during the beta period of Counter-Strike 1.6 - any gamer who recalls that frustrating time will no doubt concur - using the software is now as akin to the average PC gamer as breathing and circle-strafing. It's the gaming equivalent of iTunes. Both are clear market leaders; both maintain an enormous brand loyalty worldwide.
That same Forbes article quotes North American market research firm NPD Group as stating that, in 2010,"sales of PC games via download outstripped sales of boxed games in stores for the first time". When I question Valve VP of marketing Doug Lombardi on the significance of this outcome - was this always a goal on the agenda, or happy coincidence? - he cryptically replies, "Our goal has always been to deliver a higher quality of service to the customer, regardless of where or how they purchase the product." Perhaps enormous consumer uptake and financial success was always going to be a consequence of aiming to develop the market's best digital distribution platform.
Lombardi makes it clear that Valve still values traditional retail and healthy competition in the digital distribution market. "We don't advise folks to skip retail, or other digital outlets," he says. "Every publisher and developer should consider the widest possible distribution possible." I'm curious as to how he pitches the service to prospective Steam clients - from indie developers, to the world's biggest publishers. "We start with the 30 million-plus gamers connected to the service, the instant access to data on their Steam sales, and the increasing number of Steamworks features we offer free of charge such as matchmaking, anti-piracy, support for in-game DLC, and more." Also of note is Lombardi's eyebrow-raising claim that "Steam has grown over 100% year-over-year for the past six years." A userbase of 30 million is a fairly compelling reasoning for both developers and publishers to do a deal with Steam, I'd imagine.
Game developers such as Tripwire Interactive are among the legions of Steam supporters. The Roswell, Georgia-based studio - creators of Red Orchestra 2 and Killing Floor - have been fans since they signed up in 2005. "And we still are", says vice president Alan Wilson. "They still have that Valve sense for what the people buying the games actually want, will give it to them at a good price, good customer service - and they treat the developers/publishers right as well. They're always easy to work with. There are other good services out there - D2D, GamersGate and so on. But until Steam either starts getting it all wrong, or the others find some miracle formula, Steam will stay king of the pile."
A challenger appears
Gamers are clearly very happy with Steam, as they have a history of providing a quality service. That's not to say that this will always be the case. A handful of publishers and retailers - and their shareholders, no doubt - would love to possess their market share and loyalty, as evidenced by the competitors that have appeared in recent years.
Electronic Arts opened Origin, their Steam challenger, in June 2011 and have spent the last couple of months denying - unconvincingly - that they're trying to take a bite out of Valve's pie. "There's a space for Steam, there's a space for Origin, there's a space for third party etailers," EA's SVP for European Publishing Jens Uwe Intat told GamesIndustry.biz in late September. "Both are pure etailers and traditional retailers that are entering the digital distribution space. I think in that space, that competition will create superior experiences for the consumer. There's space for more than one player." According to a recent article at GameSpot, Origin has reportedly been installed by 3.9 million users as of September, and we're sure that number has grown significantly since the Battlefield 3 Beta's mandatory Origin installation. You can bet EA will have a gloating press release soon after Battlefield 3's release talking about the massive growth of Origin.
EA aren't the only company attempting to lure gamers away from Steam. GameStop - the world's largest gaming retailer - dived into digital distribution in July. Named Impulse, their service offered 1,200 PC game titles at launch. Steve Nix, GameStop's general manager of digital distribution, tells GameSpy that "it makes sense for us to be a major player in the PC digital space. Impulse is a good opportunity to combine solid technology with our relationship with gamers around the world, plus our solid publishing relationships. Since we're already talking to every major publisher about their physical products, it's very easy for us to talk to them about their digital games in the same meetings," he says. "We felt like there was a fantastic synergy between a good, solid digital distribution platform like Impulse with GameStop's customer base and publishing relationships." An interesting advantage offered by Impulse is its extensive back catalogue of PC games. "Ultimately, we'll have the full Impulse catalogue available in stores," Nix says. "If someone wants to buy an older title and it's not available on shelves, we'll be able to sell it to them there at the register and give them a redemption code that they can take home and start downloading and playing that game immediately. It's going to bring a huge PC catalogue back to all of our GameStop stores. People say, why would you want to buy a digital product in a store? There's two reasons: curation, because our associates (GameStop's in-store staff) are extremely enthusiastic gamers who are able to teach our customers about DLC and steer them toward what they might be interested in. And they might not necessarily want to use their credit card online, or buy a points card."
"There are some established distributors out there," Nix admits, cautious to avoid mentioning a word that starts with 'S' and ends with 'team'. "I think ultimately, we'll be successful. The biggest pressure is the ones we might not know about it. What are the unknowns? We're ready for where the market's going, but if there's something that comes up that none of us are expecting, we'll have to be prepared for that. We're well-positioned right now to sell any PC digital content, no matter what other distribution systems it might be on."
Free to play
Making a purchase isn't always a necessity, though. In 2011, PC gamers can play a hell of a lot of games for free, thanks to the burgeoning 'free to play' (F2P) scene. The play-before-you-pay model has been adopted by some of the world's biggest gaming companies: among them, EA (with their title Battlefield Heroes, released in 2009), id Software (Quake Live, 2010) and Sony (Free Realms, 2009). Among the biggest recent successes is a game called World Of Tanks, a MMORPG released by Belorussian studio Wargaming.net in October 2010. As of August 2011, over five million people had registered to play the game, which generates revenue for the developer through micropayments to purchase the in-game currency, 'gold'.
Jeremy Monroe, general manager of Wargaming.net's North American arm, laments that "PC gaming has taken a backseat in importance in the past years from the media." He notes, however, as "the free to play market grows, and more and more people join in on PC gaming, the media is definitely remembering their 'old girlfriend'. Media follows trends and has to give what the readers want but PC gaming is always here and it always ends up back at the top eventually. PC gaming has always been, and always will be, the dominant figure lurking in the shadows."
While it's foolish to suggest that F2P is the future of PC gaming, examples like World Of Tanks prove that keen development studios can fund their ongoing projects if the free game concept is compelling enough to draw a crowd, and keep them entertained long enough to open their wallets in order to improve the in-game experience. It looks as though F2P and full-price digital retail will sit snugly side-by-side for some time. And although boxed retail sales seem set to continue their slow decline, they too have a place in the current PC gaming market. To draw one last parallel to the music industry: people still buy CDs, remember, even if you don't.
"I think digital sales eclipsing physical is inevitable," says GameStop's Steve Nix. "We haven't really developed a timeframe on it. We can sit here and debate on how quickly it'll happen, but I'll just say that it's something that will happen eventually. The PC gaming market is sustainble in the long-term, absolutely. It's probably going to grow. What's amazing is, in the early 2000s - before the PC indie market had really established itself - the market was a really tough place. Now, for young, talented developers who have a great idea and want to distribute it to the market quickly, PC is by far the best platform. The PC is the world's largest gaming platform, and I expect that to continue."
External Reference: http://pc.gamespy.com
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