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Only hard drive size holding back new 360 digital releases

Retailers will have no choice but to accept Games On Demand service for new Xbox 360 titles, says analyst

Digital releases of Xbox 360 titles are only being held back due to the storage capacity of the console's hard drive, according to Wedbush Morgan analyst Michael Pachter.

He also said that retailers will have no choice but to accept a service offering digital releases day-and-date with the High Street, as Microsoft's publishing partners are likely to back such a service.

"I don't see the timing between new release and digital download being a function of anything other than hard drive sizes," offered Pachter, speaking exclusively to "I think as soon as we have large hard drives - think the rumoured Project Natal 'new' Xbox 360 with a terabyte of storage in 2010 - we'll have day-and-date downloads."

Microsoft is due to launch its Games On Demand service in August, but will initially limit the series to best-selling older titles including Crackdown and Assassin's Creed rather than new releases.

"I don't think that the publishers care at all if downloads are day-and-date, and in fact, my guess is that many publishers favour such a model. It's true that retail partners wouldn't like it, but it is not necessarily true that they would have much to say about it," added Pachter.

Suggestions that retailers may be unhappy to sell the hardware without software are off the mark, said Pachter, who highlighted Apple's iPod business as evidence of such a market being lucrative for both.

"I don't see how they could scream too loudly about day-and-date downloads, unless the price for the download was lower than the packaged product price," he offered. "I don't see any retailers refusing to sell iPods, even though all the content on an iPod is distributed digitally.

"Much in the same way, while retailers may baulk at the possibility of day-and-date downloads, I don't see too many refusing to carry Microsoft product in retaliation. Should a retailer boycott Microsoft, I think that the full force of the publishers would be brought to bear on that retailer, and they would find themselves starved for product."

Microsoft has promised around 30 titles for the launch of Games on Demand with new games added every week.

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Latest comments (2)

Chris Hunter-Brown IT / Games specialist, BBFC12 years ago
I think he's lost the plot a bit here. If Microsoft do launch a Natal SKU, it's aimed squarely at casual users whom are very price sensitive. I don't see how they can bundle a 2.5" (ergo, more expensive) 1 TB hard drive along with the existing Xbox 360 and Natal camera for anything near an accessible price point, even in 2010.

That said, I'm sure it'll have some kind of storage better than 512MB. Maybe some flash memory in the single digit GB's.
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Caspar Field Consultant, Talk Management12 years ago
From a consumer perspective, the high price point of the 360's hard drive upgrades is in conflict with Microsoft's online strategy. And simply seems hugely overpriced. We're rapidly approaching the point where the 120GB upgrade offers 10x less capacity per pound than a standard external USB hard drive.
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