Digital distribution to rule 'in the next year or two'

GamersGate CEO sees sector as "biggest threat" for the future of retailers

Digital distribution is set for a huge rise in popularity in the next couple of years, and will force bricks-and-mortar retailers to change their business models or face extinction.

That's according to GamersGate CEO Theodore Bergquist, who told that the well-respected PC download platform saw 100 per cent growth last year, and expected up to 200 per cent growth this year.

"When I talk to all the publishers - both small, and really, really, big - digital distribution is on everyone's lips," he said. "Obviously some publishers are really ready to take these steps, while others aren't. Some still see digital distribution as something awkward, and they don't really know what to do with it, while some are really professional and they have it as a main strategy."

But, he says, once all of the publishers are on board, the industry is set for a "key change," and one that's possibly not so far away: "Whether it'll happen this year or next, I'm not sure - but I think it's that kind of time frame we're talking about."

In terms of the threat that the growth of digital distribution poses to bricks-and-mortar retails, Bergquist was clear: "I think digital distribution is absolutely the biggest threat they can ever have," he said.

"Look at the music industry, look at 2006 when iTunes went from not being in the top six of sellers - in the same year in December it was top three, and the following year number one."

However, it won't necessarily spell the end for those stores, unless they refuse to change their existing games-only business model.

"I think they'll get better on the hardware side, selling hardware together with games," he said. "But if it's games only, then no way - I can't see [them surviving]. I've been in e-commerce since 1996 and I haven't seen a goods business model better than this. It's so pure online in its nature - I can't really see how a traditional retailer can survive, unless they decide to go online themselves."

GamersGate, which began life as part of Paradox Interactive, now has over 1000 titles in its catalogue, specialising in independent developer products, but also now featuring key partners such as EA, with titles including Spore and Lord of the Rings: Online, and Microsoft Game Studio with Braid.

The full interview with Theodore Bergquist is available now.

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Latest comments (5)

Vilmar Simson Freelance writer 10 years ago
Maybe for PC games, but for console games I think it will take much longer. Not only that, bringing a copy of your game over to a friend to show him is quicker then downloading to his console (which will take hours depending on his/her connection).
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.10 years ago
I agree, Vilmar. Console games are a different beast from PC games and they have certain circumstances that will prevent a full on shift to digital distribution that quickly.

I can see by next generation we will have a larger portion of digitally distributed games or perhaps a DD version for every retail version of a game but even if every game was available on both ends, retail would likely still have the larger segment of sales for years to after.
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Mat Bettinson Business Development Manager, Tantalus Media10 years ago
DD company CEO sells up DD shocker...

On the consoles it strikes me the market is segmenting into retail and DD, with DD aiming at smaller cheaper games. At some point it'll make sense for full priced retail games to migrate to DD but that seems to be some ways off at least and it's hardly going to make physical product redundant.

Consoles need more storage and there's not going to be a point where the entire market has the bandwidth. Not everyone lives in cities/countries with high speed cable and ADSL and that's not going to magically change in a year or two. If you live in one of thousands upon thousands of small towns across Europe and the US, having any kind of broadband at all is something of a luxury. Something easily forgotten in the boardrooms of Stockholm apparently.

Still, DD is exciting. For the small game market on consoles (lower barrier to entry is a great thing) and for providing the lifeline for the PC for all those niche games that would struggle to get on the shelves.

Maybe these DD firms should be content with that rather than just selling up some reality which they'd quite like to be true. Some reality where they aren't trying to carve out a slice of a fragmented market by stocking old games, too expensive and with hilarious "this game is blocked in your country" messages when you actually show some interest.

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Paul Trowe President & CEO, Replay Games9 years ago
You guys are missing the picture. Sorry, but the small towns across Europe aren't the target market here. The large cities are, which make up 89% of the world's distribution. Don't ask me to quote the source, I forgot - yes, how convenient.

To address the ignorant people above Mat, who seems to be more in to retail since Tantalus is a retail oriented company and thus the bias (full disclosure, my company is a DD company), it doesn't take hours and hours to download a game, even at a friends house. And if you bought the game and want to play it somewhere else, you can, very easily. It's like an MP3, bring it where you go.

All these issues have been addressed. Please do your research before you go and talk about something you don't know much about.
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Mat Bettinson Business Development Manager, Tantalus Media9 years ago
All due respect, but showing up to necro a seven month old comments thread by misrepresenting what I was saying (and my bias) and calling me ignorant in the process is really not very helpful.

I think you've pulled these comments out standalone somehow. These are responses to a news story that digital distribution would be taking over from retail in the next year or two. All games, not the current DD market.

Edited 1 times. Last edit by Mat Bettinson on 5th October 2009 4:12am

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