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Digital distribution of video games

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In thevideo game industry,digital distribution is the process of deliveringvideo gamecontent as digital information, without the exchange or purchase of new physical media such asROM cartridges,magnetic storage,optical discsandflash memorycards. This process has existed since the early 1980s, but it was only with network advancements in bandwidth capabilities in the early 2000s that digital distribution became more prominent as a method of selling games. Currently, the process is dominated byonline distributionoverbroadband Internet.

To facilitate the sale of games, various video game publishers and console manufacturers have created their own platforms for digital distribution. These platforms provide centralized services to purchase and download digital content for either specificvideo game consolesor personal computers. Some platforms may also serve asdigital rights managementsystems, limiting the use of purchased items to one account.

Digital distribution of video games is becoming increasingly common, with major publishers and retailers paying more attention to digital sales, includingSteam,PlayStation Store,Amazon,GAME,GameStop,Xbox Live Marketplace,and others. It is particularly popular forPC games.According to a study conducted bySuperData Research,the volume of digital distribution of video games worldwide was $6.2 billion per month in February 2016,[1]and reached $7.7 billion per month in April 2017.[2]

History

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1980s

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Before Internet connections became widespread, there were few services for digital distribution of games, and physical media was the dominant method of delivering video games. One of the first examples of digital distribution in video games wasGameLine,which operated during the early 1980s. The service allowedAtari 2600owners to use a specialized cartridge to connect through aphone lineto a central server and rent a video game for 5–10 days. The GameLine service was terminated during thevideo game crash of 1983.From 1987 to 2003,Nintendo'sJapan-onlyDisk Writer kiosksallowed users to copy from ajukeboxstyle of rotating stock of the latest games to theirfloppy disks.They can keep each one for an unlimited time, and play at home on theFamicomandFamicom Disk Systemfor¥500,then aboutUS$3.25and 1/6 of the price of many new games.[3][4][5]: 75–76 It was called "truly ground-breaking for its time and could be considered a forerunner of more modern distribution methods [such as] Xbox Live Arcade, PlayStation Network, and Steam".[6]There were also examples such as Soft bender TAKERU for PCs, which also served as a distribution system for karaoke.[7]

1990s

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Only a few digital distribution services for consoles would appear in the 90s. Among them wereSega'sSega MeganetandSega Channel,released in 1990 and 1994 respectively, providingSega Genesisowners with access to games on demand and other services. Nintendo released peripherals and services only in Japan: theSatellaviewsatellite subscription service forSuper Famicomand theNintendo Powerflash cartridge in-store kiosk system for Super Famicom andGame Boy.

On PCs, digital distribution was more prevalent. In the late 1980s and early 1990s, prior to the widespread adoption of the Internet, it was common for software developers to upload demos andsharewaretoBulletin Board Systems.In most cases, demos or shareware releases would contain an advertisement for the full game with ordering instructions for a physical copy of the full game or software. Some developers instead used a licensing system where 'full versions' could be unlocked from the downloaded software with the purchase of a key, thereby making this method the first true digital distribution method for PC Software. Notable examples include theSoftware Creations BBSandExecPC BBS,both of which continue to exist today - albeit in a very different form. Bulletin Board systems however were not interconnected, and developers would have to upload their software to each site. Additionally, BBSs required users to place a telephone call with amodemto reach their system. For many users, this meant incurring long-distance charges. These factors contributed to a sharp decline in BBS usage in the early 1990s, coinciding with the rise of inexpensive Internet providers.

In the mid-1990s, with the rise of the Internet, early individual examples for digital distribution under usage of this new medium emerged, although there were no significant services for it. For instance, in 1997 the video game producerCavedogregularly distributed additional content for theReal-time strategycomputer gameTotal Annihilationas Internet downloads via their website.[8]

Also, users used the Internet to distribute their own content. Without access to theretailinfrastructure that would allow them to distribute this content through physical media,user-createdcontent such as gamemodifications,maps orfan patchescould only be distributed online.

2000s

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By this time, Internet connections were fast and numerous enough such that digital distribution of games and other related content became viable.[9]

Consoles

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The proliferation of Internet-enabled consoles allowed also additional buyable content that could be added onto full retail games, such as maps, in-game clothing, and gameplay. This type of content, called DLC (Downloadable content), become prevalent for consoles in the 2000s.

PC

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An early innovator of the digital distribution idea on thePCwasStardock.In 2001 Stardock released theStardock Centralto digitally distribute and sell its ownPCtitles, followed by a service calledDrengin.netwith a yearly subscription pay model in summer 2003. In 2004, the subscription model was substituted byTotalGaming.netwhich allowed individual purchases or pay an upfront fee for tokens which allowed them to purchase games at a discount. In 2008, Stardock announcedImpulsea third-generation digital distribution platform, which included independent third-party games and major publisher titles.[10]The platform was sold toGameStopin May 2011.[11][12]

The period between 2004 and now saw the rise of many digital distribution services on PC, such asAmazon Digital Services,Impulse,GameTap,GameStop,Games for Windows – Live,Origin,Battle.net,Direct2Drive,GOG,GamersGateand several more. The offered properties and policies differ significantly between the digital distribution services: e.g. while most of the digital distributors don't allow reselling of bought games,Green Man Gamingallows this.[13]

In September 2003Valvereleased theSteamplatform for Windows computers (later expanded toMac OSandLinux) as a means to distribute Valve-developed video games. Steam has the speciality that customers don't buy games but instead get the right to use games, which might be revoked when a violation of theEnd-user license agreementis seen by Valve[14]or when a customer doesn't accept changes in the End-user license agreement.[15][16][unreliable source]Steam began later to sell the right to play games from independent developers and major distributors and has since become the largest PC digital distributor. By 2011, Steam has approximately 50-70% of the market for downloadable PC games, with a userbase of about 40 million accounts.[17][18][19]

In 2008, the websitegog(formerly calledGood Old Games) was started, specialized in the distribution of older, classic PC games. While all the other DD services allow various forms of DRM (or even have them embedded)goghas a strictnon-DRMpolicy.[20]Desurawas launched in 2010. The service was notable for having a strong support of themoddingcommunity and also has anopen sourceclient, calledDesurium.[21]Origin,a new version of theElectronic Artsonline store, was released in 2011 in order to compete with Steam and other digital distribution platforms on the PC.[22]

2010s

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Mobile gaming

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See also:Mobile game

Digital distribution is the dominant method of delivering content on mobile platforms such asiOSdevices andAndroidphones. Lower barriers to entry has allowed more developers to create and distribute games on these platforms, with the mobile gaming industry growing considerably as a result.[23]

Console gaming

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Today, each of the current main consoles (Nintendo Switch,Xbox Series X/S,andPlayStation 5) has its own digital distribution platform to sell games exclusive to digital formats and digital versions of retail games. These are theNintendo eShop,Xbox Games Store,andPlayStation Store,respectively, which all sell full retail games, along with other products, such as DLC.

Implications

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The main advantages of digital distribution over the previously dominantretaildistribution of video games include significantly reduced production, deployment, and storage costs. Games purchased digitally are legally licenses and not sold, meaning consumers do not have legal ownership and cannot resell their games.[24]

Compared to physically distributed games, digital games cannot be destroyed because they can be redownloaded from the distribution system. Services like Steam,Origin,andXbox Livedo not offer ways to sell used games once they are no longer desired. Steam offers a non-commercial family sharing options.[25]This is also somewhat countered by frequent sales offered by these digital distributors, often allowing major savings by selling at prices below what a retailer is able to offer.

Digital distribution also offers new structural possibilities for the wholevideo game industry,which, prior to the emergence of digital media as a relevant means of distribution, was usually built around the relationship of thevideo game developer,who produced the game, and thevideo game publisher,who financed and organized the distribution and sale. The heightened production costs in the early 2000s made many video game publishers avoid risks and led to the rejection of many smaller-scale game development projects.[26]Gabe Newell,co-founder ofValve,the developer andintellectual property rightsowner ofSteam,described the disadvantages of physicalretaildistribution for smaller game developers as such:

The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you'd be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it's the opposite extreme: we can put something up on Steam, deliver it to people all around the world, make changes. We can take more interesting risks.[...] Retail doesn't know how to deal with those games. On Steam [a digital distributor] there's no shelf-space restriction.

— Gabe Newell,Rock, Paper, Shotgun[9]

Since the 2000s, when digital distribution saw its first meaningful surge in popularity, an increasing number ofniche markettitles have been made available and become commercially successful, including (but not limited to)remakesof classic games.[27][28]The new possibilities of digital distribution stimulated the creation of game titles from small video game producers likeindependent game developers[29][30]andmodders(e.g.Garry's Mod[31]), which before were not commercially feasible.

Indie game development

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See also:Indie game development

The increasing prevalence of digital distribution has allowed independent game developers to sell and distribute their games without having to negotiate deals with publishers. No longer required to rely on conventional physical retail sales, independent developers have seen success through the sale of games that normally would not be accepted by publishers for distribution.[29]The PC and mobile platforms are the most prominent in regards to independent game distribution, with services such asGOG,GamersGate,Steamand theiOS App Storeproviding ways to sell games with minimal to no distribution costs. Some digital distribution platforms exist specifically forindie gamedistribution, such as theXbox Live Indie Games.

Business model

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Nearly all digital distribution services today take a cut of the revenue of each sale to cover costs for running the storefront, the distribution of content, and other facets. According to a 2019 study byIGNbased on published data and interviews with publishers and developers, this is nearly 30% for the personal computer storefronts, includingSteam,GOGand Microsoft, for console services forNintendo Switch,PlayStation 4,andXbox One,for mobile app stores includingApp StoreandGoogle Play.Some exceptions to this areitch.iowhere the developer is free to set the rate,Humble Bundlewhich takes a 15% cut in addition to an additional 10% that the buyer can select to go to charity or to the developer, and theEpic Games Store(EGS) which has a 12% cut.[32]This 30% cut is consistent with past licensing for development on video game consoles since theNintendo Entertainment System.[33]

Surveys from 2019 to 2021 found developers and publishers desired to see a reduction of industry-standard 30% take, since this would increase the amount of revenue they would see from each sale.[32][34]Epic Games'Tim Sweeney,prior to launching the Epic Games Store, had estimated that the current costs for delivering game content to buyers required as low as an 8% cut on sales revenue, and launched the EGS with its 12% cut to demonstrate this.[35]Microsoft announced it would similarly reduce theMicrosoft Storecut for Windows products from 30% to 12% by August 1, 2021.[36]

List of video game digital distribution systems

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Console

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Mobile

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PC - Websites

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DRM-free

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PC - Clients:

Client Publisher Open to
third-party operators 		Total titles[citation needed]
Amazon Games United StatesAmazon, Inc. ? = 40
Battle.net United StatesActivision-Blizzard, Inc. No = 20
Beamdog CanadaIdeaSpark Labs, Inc. No > 10
Epic Games Store United StatesEpic Games, Inc. Yes < 1,400
Gog Galaxy PolandCD Projekt S.A. Yes > 7,000
Microsoft Store United StatesMicrosoft Corporation Yes < 240
EA appfor Windows and Origin for Mac United StatesElectronic Arts, Inc. Yes > 380
Riot Client United StatesRiot Games, Inc. No = 5
Rockstar Games United StatesRockstar Games, Inc. No > 5
Steam United StatesValve Corporation Yes > 100,000
Ubisoft Connect FranceUbisoft Entertainment SA ? < 240
WeGame ChinaTencent Yes > 10,000

Obsolete

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See also

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References

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  2. ^"SuperData: Digital gaming hit $7.7 billion in April".May 25, 2017.RetrievedAugust 14,2020.
  3. ^Dalker, Brandon (July 8, 2011)."Mysterious curiosities of the Famicom Disk System".Nsidr.RetrievedJuly 29,2019.
  4. ^Linneman, John (July 27, 2019)."Revisiting the Famicom Disk System: mass storage on console in 1986".Eurogamer.RetrievedJuly 29,2019.
  5. ^Sheff, David (1994).Game Over: How Nintendo conquered the world(1st Vintage books ed.). New York: Vintage Books.ISBN9780307800749.OCLC780180879.RetrievedJuly 27,2019.
  6. ^McFerran, Damien (November 20, 2010)."Slipped Disk - The History of the Famicom Disk System".NintendoLife.RetrievedSeptember 5,2014.
  7. ^Nobushige, Kobayashi; Yuhsuke, Koyama (March 31, 2020).The Early History of the Hobbyist Production Field of Video Games and its Impacts on the Establishment of Japan's Video Game Industries.Replaying Japan(Thesis). Vol. 2. Ritsumeikan University.doi:10.34382/00013364.ISSN2433-8060.
  8. ^TA downloadable unitson cavedog (archived in theInternet Archiveon March 30, 2001)
  9. ^abWalker, John (November 22, 2007)."RPS Exclusive: Gabe Newell Interview".Rock, Paper, Shotgun.RetrievedJune 28,2013.The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you'd be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it's the opposite extreme: we can put something up on Steam [a digital distributor], deliver it to people all around the world, make changes. We can take more interesting risks.[...] Retail doesn't know how to deal with those games. On Steam there's no shelf-space restriction. It's great because they're a bunch of old, orphaned games.
  10. ^"Stardock Impulse Details".Gamers With Jobs.
  11. ^"GameStop Announces Acquisition of Spawn Labs and Agreement to Acquire Impulse, Inc".GameStop. March 31, 2011.RetrievedMay 2,2011.
  12. ^Grant, Christopher (March 31, 2011)."GameStop indulges in some Impulse buying... no seriously, it bought Impulse (and Spawn Labs)".Joystiq.AOL.Archived fromthe originalon January 31, 2015.RetrievedMay 2,2011.
  13. ^"Green Man Gaming Denies It Sells" Grey Market "Game Keys".RetrievedAugust 14,2020.
  14. ^Walker, John (February 1, 2012)."Thought: Do We Own Our Steam Games?".Rock, Paper, Shotgun.RetrievedJuly 1,2013.
  15. ^Demgen, Annika (September 17, 2012)."Verbraucherzentrale: Abmahnung für Valve und Steam".netzwelt(in German).RetrievedSeptember 22,2012.
  16. ^Alderman, Justin (August 5, 2012)."Valve: Accept New Steam Subscriber Agreement Or Disable Your Account".wegotthiscovered.RetrievedMarch 22,2014.
  17. ^"The Master of Online Mayhem".Forbes.February 28, 2011.RetrievedApril 26,2012.
  18. ^"40 Million Active Gamers on Steam Mark".Gaming Bolt. January 6, 2012.RetrievedJanuary 7,2012.
  19. ^Graft, Kris (November 19, 2009)."Stardock Reveals Impulse, Steam Market Share Estimates".Gamasutra.RetrievedNovember 21,2009.
  20. ^Caron, Frank (September 9, 2008)."First look: GOG revives classic PC games for download age".Ars Technica.RetrievedDecember 27,2012.[...] [Good Old Games] focuses on bringing old, time-tested games into the downloadable era with low prices and no DRM.
  21. ^Larabel, Michael (January 21, 2012)."Desura Game Client Is Now Open-Source".Phoronix.RetrievedJanuary 21,2012.
  22. ^"PDF E3 2011 Investor Presentation"(PDF).Electronic Arts.RetrievedApril 26,2012.
  23. ^"Rise of mobile gaming surprises big video-game developers".Canadian Business. March 13, 2012. Archived fromthe originalon March 17, 2012.RetrievedMay 1,2012.
  24. ^Thomas, Bill (October 2, 2019)."PC game ownership in the digital age: what do you do in a post-ownership age?".TechRadar.RetrievedMay 10,2022.
  25. ^"Steam family sharing".steampowered. May 13, 2015.RetrievedMarch 13,2015.
  26. ^MARCELO PRINCE, PETER ROTH (December 21, 2004)."Videogame Publishers Place Big Bets on Big-Budget Games".The Wall Street JournalOnline.RetrievedJuly 1,2013.The jump in development and marketing costs has made the videogame industry "enormously risk-averse,[...]Publishers have largely focused on making sequels to successful titles or games based on a movie or comic book characters, which are seen as less risky." We don't greenlight any more things that will be small or average size games.[...] "[permanent dead link]
  27. ^"The Secret of Monkey Island: Special Edition Tech Info".GameSpot.RetrievedNovember 15,2011.
  28. ^Onyett, Charles (June 2, 2009)."E3 2009: The Secret of Monkey Island: Special Edition Preview".IGN.Archived fromthe originalon May 27, 2012.RetrievedNovember 15,2011.
  29. ^abGarr, Brian (April 17, 2011)."Download distribution opening new doors for independent game developers".Statesman. Archived fromthe originalon April 21, 2011.
  30. ^Stuart, Keith (January 27, 2010)."Back to the bedroom: how indie gaming is reviving the Britsoft spirit".The Guardian.RetrievedNovember 8,2012.
  31. ^Senior, Tom (March 16, 2012)."Garry's Mod has sold 1.4 million copies, Garry releases sales history to prove it".PCGamer.RetrievedJune 28,2013.
  32. ^abMarks, Tom (October 7, 2019)."Report: Steam's 30% Cut Is Actually the Industry Standard".IGN.RetrievedOctober 7,2019.
  33. ^Mochizuki, Takahashi; Savov, Vlad (August 25, 2020)."Epic's Battle With Apple and Google Actually Dates Back to Pac-Man".Bloomberg News.RetrievedAugust 25,2020.
  34. ^"GDC State of the Industry: Devs irked by 30 percent storefront revenue cuts".Gamasutra.April 28, 2021.RetrievedApril 29,2021.
  35. ^Jones, Richard-Scott (August 23, 2017)."Steam could be profitable with an 8% cut rather than 30%, says Tim Sweeney".PCGamesN.RetrievedDecember 14,2018.
  36. ^Warren, Tom (April 29, 2021)."Microsoft shakes up PC gaming by reducing Windows store cut to just 12 percent".The Verge.RetrievedApril 29,2021.
  37. ^Cranmer, Brandon (September 11, 2022)."How to Get Exclusive Android Games That Aren't on the Google Play Store".MUO.RetrievedNovember 25,2022.
  38. ^abcdefghi"Gamasutra: Rebecca Fernandez's Blog - Where can I sell my Indie PC game?".gamasutra.RetrievedDecember 5,2015.
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