Q: You've recently partnered with Microsoft to provide digital downloads via MSN – can you give us a overview of that deal and what regions it covers?
Paul Howes: Obviously MSN is a very big partner for us, not least because of the size of the traffic that they attracted here in the UK, but the fact that MSN have signed with us for all of Europe, which is effectively 11 countries. We'll launch in the UK, Germany and France but we've also got plans to launch with them in Sweden, Denmark, Norway, Spain, Italy, Switzerland and Austria. For us it's a major coup because they're such a high-profile partner, and it's a really, really strong endorsement of Metaboli and the digital distribution model. It could really ramp up the concept of digital distribution amongst mainstream gamers, which is the Metaboli objective in the long term. To take PC games to a much wider market through alternative methods of distribution.
Q: Is that the primary objective in terms of growing the Metaboli business in the next 12 months – to reach out to the mainstream gamer who isn't as clued up to digital distribution as the dedicated PC gamer?
Paul Howes: Yes, and there's a number of ways in which we're going to do it. The first is attracting new distribution and we're already exceeding with that. We've signed with major ISPs across Europe and the major Telco's, so in the UK that's BT, Virgin Media, Orange. In that sense we're reaching a more mainstream user.
In addition to this distribution, we're also building a very extensive catalogue of content. When we first started six or seven years ago we were very focused on core games, but as the business as evolved we've added much more mainstream content. We've got a really extensive range of adventure gaming content which appeals to the female gamers. Coming very shortly we'll be focusing on a family gaming pack which will provide more casual games, which again we'll push towards a female consumer, and that will broaden our market further.
Q: The Metaboli business had strong sales over the Christmas period – are you starting to see a real jump of consumers coming from traditional High Street retail to the online download market?
Paul Howes: Yes, the market is always evolving. Ten years ago everyone moved from bricks and mortar to e-commerce, and now we're seeing the market move from e-commerce to digital distribution. One of our partners is GAME. We've seen in recent months a real development of that relationship. Initially we provided them with a white label portal, but in the last three or four months we've actually started integrating links into their product pages. So we're giving their PC buyers a direct alternative to buying the boxed version. So if you go to a page on the GAME site you'll more often than not be given the opportunity to buy the boxed version or download the game. When the download product is presented alongside the boxed product we'll start to see PC gamers move across to digital. We have to be on a level playing field in terms of the boxed product and in terms of price and promotions, but that's starting to happen. With a company like GAME getting behind it in such a big way, again, it's a really strong indication of where the market's heading.
Q: Are you going day and date with your PC releases - the same day they're available on the street?
Paul Howes: It largely depends on the publisher. In most cases, the answer is yes, and in some cases we're going with a pre-load version so the user can download the game before the release, and we'll email them an authentication key at 12:01 on the day of release. Some publishers have really supported us with that but some are less keen to offer that at this stage. I would say that most publishers are moving to that idea.
Q: Is there still some education there that Metaboli needs to do, informing publishers that it's about providing more choice to the user in terms of how they get their games?
Paul Howes: Yes, because whenever a distribution model changes there's some resistance. Most publishers embraced it pretty early on, but there was a process of education mainly to gain confidence in digital distribution, and we've got the confidence now of all the major publishers. I think they've all developed a digital distribution strategy. It's still in the early stages but it's on their roadmap and all sales and marketing plans include digital elements. Some publishers are at different stages than others, but they're all thinking about it, and they all have a digital strategy now.
Q: Once publishers realise the benefits of digital, might there be an issue that they will bring that in-house rather than partner with a company like Metaboli?
Paul Howes: I think publishers would like to but it's quite a technical process and it requires a lot of investment. At the same time, we're supporting publishers with their own e-shops. But our argument is they cannot reach the same customers as we can with our distribution network. It's very much like the way e-commerce evolved where publishers thought they could sell direct, but the fact is they only reach a tiny proportion of end users directly. Most of their end users are reached through third-party distribution and I think the same will apply to digital distribution. Although the method of distribution is different, the models will look very similar.
Q: And how long does Metaboli think it will be before digital distribution overtakes High Street retail for sales of PC games?
Paul Howes: It's a really, really difficult question. There's been a lot of research done on when digital will overtake retail and we think in 2012 there night be a tipping point. It's an awful lot to do with broadband speeds and broadband networks. In the UK Virgin Media are pushing out 50 meg and fibre, BT is now pushing out fibre optic towards 2012. We feel that 2012 could well be the tipping point in the UK because of bandwidth issues. We're seeing steady growth month on month and once we have that bandwidth in place we'll see a real rush towards digital at that point.
Q: Obviously your main focus is the PC market, but there's also a lot of growth in digital distribution in the console market. Does Metaboli have any plans, or is it involved with any partners in that area?
Paul Howes: Not at this stage, that's all in the hands of the format holders. Our focus is very much on the PC format and that has been our focus since we formed back in 2002 and it continues to be our focus.
Paul Howes is the regional business director for Metaboli. Interview by Matt Martin.