Digital distribution of video games

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In the video game industry, digital distribution is the process of delivering video game content as digital information, without the exchange or purchase of new physical media such as ROM cartridges, magnetic storage, optical discs and flash memory cards. 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 by online distribution over broadband Internet.

Contents

To facilitate the sale of games, various video game publishers and console manufacturers have created their own platforms for digital distribution. These platforms, such as Steam, Origin, and Xbox Live Marketplace, provide centralized services to purchase and download digital content for either specific video game consoles or personal computers. Some platforms may also serve as digital rights management systems, 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, including Steam, PlayStation Store, Amazon.com, GAME, GameStop, and others. It is particularly popular for PC games. According to a study conducted by SuperData 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

1980s

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 was GameLine, which operated during the early 1980s. The service allowed Atari 2600 owners to use a specialized cartridge to connect through a phone line to a central server and rent a video game for 5–10 days. The GameLine service was terminated during the video game crash of 1983. From 1987 to 2003, Nintendo's Japan-only Disk Writer kiosks allowed users to copy from a jukebox style of rotating stock of the latest games to their floppy disks. They can keep each one for an unlimited time, and play at home on the Famicom and Famicom Disk System for ¥500, then about US$3.25 and 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

Only a few digital distribution services for consoles would appear in the 90s. Among them were Sega's Sega Meganet and Sega Channel, released in 1990 and 1994 respectively, providing Sega Genesis owners with access to games on demand and other services. Nintendo released peripherals and services only in Japan: the Satellaview satellite subscription service for Super Famicom and the Nintendo Power flash cartridge in-store kiosk system for Super Famicom and Game 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 and shareware to Bulletin 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 the Software Creations BBS and ExecPC 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 a modem to 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 producer Cavedog regularly distributed additional content for the Real-time strategy computer game Total Annihilation as Internet downloads via their website. [8]

Also, users used the Internet to distribute their own content. Without access to the retail infrastructure that would allow them to distribute this content through physical media, user-created content such as game modifications, maps or fan patches could only be distributed online.

2000s

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

Consoles

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

An early innovator of the digital distribution idea on the PC was Stardock. In 2001 Stardock released the Stardock Central to digitally distribute and sell its own PC titles, followed by a service called Drengin.net with a yearly subscription pay model in summer 2003. In 2004, the subscription model was substituted by TotalGaming.net which allowed individual purchases or pay an upfront fee for tokens which allowed them to purchase games at a discount. In 2008, Stardock announced Impulse a third-generation digital distribution platform, which included independent third-party games and major publisher titles. [10] The platform was sold to GameStop in May 2011. [11] [12]

The period between 2004 and now saw the rise of many digital distribution services on PC, such as Amazon Digital Services, Impulse, GameTap, GameStop, Games for Windows – Live, Origin, Battle.net, Direct2Drive, GOG.com, GamersGate and 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 Gaming allows this. [13]

In 2004 Valve released the Steam platform for Windows computers (later expanded to Mac OS and Linux) 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 the End-user license agreement is 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 website gog.com (formerly called Good Old Games) was started, specialized in the distribution of older, classical PC games. While all the other DD services allow various forms of DRM (or even have them embedded) gog.com has a strict non-DRM policy. [20] Desura was launched in 2010. The service was notable for having a strong support of the modding community and also has an open source client, called Desurium. [21] Origin, a new version of the Electronic Arts online store, was released in 2011 in order to compete with Steam and other digital distribution platforms on the PC. [22]

2010s

Mobile gaming

Digital distribution is the dominant method of delivering content on mobile platforms such as iOS devices and Android phones. 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

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

Implications

The main advantages of digital distribution over the previously dominant retail distribution 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, and Xbox Live do 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 whole video game industry, which, prior to the emergence of digital media as a relevant means of distribution, was usually built around the relationship of the video game developer, who produced the game, and the video 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 of Valve, the developer and intellectual property rights owner of Steam, described the disadvantages of physical retail distribution 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.

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

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 as GOG.com, GamersGate, Steam and the iOS App Store providing ways to sell games with minimal to no distribution costs. Some digital distribution platforms exist specifically for indie game distribution, such as the Xbox Live Indie Games.

Business model

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 by IGN based on published data and interviews with publishers and developers, this is nearly 30% for the personal computer storefronts, including Steam, GOG.com and Microsoft, for console services for Nintendo Switch, PlayStation 4, and Xbox One, for mobile app stores including App Store and Google Play, and even for major retailers like Best Buy, GameStop, and Amazon.com. The only exceptions to this are itch.io where the developer is free to set the rate, Humble Bundle which takes a 15% cut in addition to an additional 10% that the buyer can select to go to charity or to the developer, and the Epic Games Store (EGS) which has a 12% cut. [32] This 30% cut is consistent with past licensing for development on video game consoles since the Nintendo 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 the Microsoft Store cut for Windows products from 30% to 12% by August 1, 2021. [36]

List of video game digital distribution systems

Console:

Mobile:

PC - Websites:

PC - Clients:

ClientPublisherOpen to
third-party operators
Total titles[ citation needed ]
Amazon Games Flag of the United States.svg Amazon.com, Inc. ?= 40
Battle.net Flag of the United States.svg Activision-Blizzard, Inc. No= 20
Beamdog Flag of Canada (Pantone).svg IdeaSpark Labs, Inc. No> 10
Epic Games Store Flag of the United States.svg Epic Games, Inc. Yes< 1,400
Microsoft Store Flag of the United States.svg Microsoft Corporation Yes< 240
EA app for Windows and Origin for Mac Flag of the United States.svg Electronic Arts, Inc. Yes> 380
Riot Client Flag of the United States.svg Riot Games, Inc. No= 5
Rockstar Games Flag of the United States.svg Rockstar Games, Inc. No> 5
Steam Flag of the United States.svg Valve Corporation Yes< 70,500
Ubisoft Connect Flag of France.svg Ubisoft Entertainment SA ?< 240

Obsolete

See also

Related Research Articles

<span class="mw-page-title-main">History of video games</span>

The history of video games began in the 1950s and 1960s as computer scientists began designing simple games and simulations on minicomputers and mainframes. Spacewar! was developed by Massachusetts Institute of Technology (MIT) student hobbyists in 1962 as one of the first such games on a video display. The first consumer video game hardware was released in the early 1970s. The first home video game console was the Magnavox Odyssey, and the first arcade video games were Computer Space and Pong. After its home console conversions, numerous companies sprang up to capture Pong's success in both the arcade and the home by cloning the game, causing a series of boom and bust cycles due to oversaturation and lack of innovation.

<span class="mw-page-title-main">Video game console</span> Computer system for running video games

A video game console is an electronic device that outputs a video signal or image to display a video game that can be played with a game controller. These may be home consoles, which are generally placed in a permanent location connected to a television or other display devices and controlled with a separate game controller, or handheld consoles, which include their own display unit and controller functions built into the unit and which can be played anywhere. Hybrid consoles combine elements of both home and handheld consoles.

<span class="mw-page-title-main">Famicom Disk System</span> Video game console peripheral

The Family Computer Disk System, commonly shortened to the Famicom Disk System or just Disk System, is a peripheral for Nintendo's Family Computer home video game console, released only in Japan on February 21, 1986. It uses proprietary floppy disks called "Disk Cards" for cheaper data storage and it adds a new high-fidelity sound channel for supporting Disk System games.

A console game is a type of video game consisting of images and often sounds generated by a video game console, which are displayed on a television or similar audio-video system, and that can be manipulated by a player. This manipulation usually takes place using a handheld device connected to the console, called a controller. The controller generally contains several buttons and directional controls such as analogue joysticks, each of which has been assigned a purpose for interacting with and controlling the images on the screen. The display, speakers, console, and controls of a console can also be incorporated into one small object known as a handheld game.

<span class="mw-page-title-main">Stardock</span> Software and video game developer

Stardock Corporation is a software development company founded in 1991 and incorporated in 1993 as Stardock Systems. Stardock initially developed for the OS/2 platform, but was forced to switch to Microsoft Windows due to the collapse of the OS/2 software market between 1997 and 1998. The company is best known for computer programs that allow a user to modify or extend a graphical user interface as well as personal computer games, particularly strategy games such as the Galactic Civilizations series, Sins of a Solar Empire: Rebellion, Elemental: Fallen Enchantress, and Ashes of the Singularity.

<span class="mw-page-title-main">PC game</span> Electronic game played on a personal computer

A personal computer game, also known as computer game or abbreviated PC game, is an electronic game played on a personal computer (PC) and form of video game. They are defined by the open platform nature of PC systems.

Digital distribution, also referred to as content delivery, online distribution, or electronic software distribution, among others, is the delivery or distribution of digital media content such as audio, video, e-books, video games, and other software.

Video game packaging refers to the physical storage of the contents of a PC or console game, both for safekeeping and shop display. In the past, a number of materials and packaging designs were used, mostly paperboard or plastic. Today, most physical game releases are shipped in (CD) jewel cases or (DVD) keep cases, with little differences between them.

<span class="mw-page-title-main">Stardock Central</span>

Stardock Central was a software content delivery and digital rights management system used by Stardock customers to access components of the Object Desktop, TotalGaming.net and ThinkDesk product lines, as well as products under the WinCustomize brand.

Downloadable content (DLC) is additional content created for an already released video game, distributed through the Internet by the game's publisher. It can either be added for no extra cost or it can be a form of video game monetization, enabling the publisher to gain additional revenue from a title after it has been purchased, often using some type of microtransaction system.

<span class="mw-page-title-main">Impulse (software)</span> Defunct video game distribution platform (2008-14)

Impulse was a digital distribution and multiplayer platform. Originally developed by Stardock to succeed Stardock Central, it was purchased by GameStop in March 2011, and was subsequently rebranded as GameStop PC Downloads, with the client being renamed GameStop App. The client was discontinued in April 2014.

<span class="mw-page-title-main">Nintendo Entertainment System</span> Home video game console

The Nintendo Entertainment System (NES) is an 8-bit third-generation home video game console produced by Nintendo. It was first released in Japan in 1983 as the Family Computer (FC), commonly referred to as Famicom. It was redesigned to become the NES, which was released in American test markets on October 18, 1985, and was soon fully launched in North America and other regions.

GamersGate AB is a Sweden-based online video game store offering electronic strategy guides and games for Windows, macOS, and Linux via direct download. It is a competitor to online video game services such as Steam, GOG.com, and Direct2Drive.

<span class="mw-page-title-main">GOG.com</span> Digital video game distribution platform

GOG.com is a digital distribution platform for video games and films. It is operated by GOG sp. z o.o., a wholly owned subsidiary of CD Projekt based in Warsaw, Poland. GOG.com delivers DRM-free video games through its digital platform for Microsoft Windows, macOS and Linux.

Platform exclusivity refers to the status of a video game being developed for and released only on certain platforms. Most commonly, it refers to only being released on a specific video game console or through a specific vendor's platforms—either permanently, or for a definite period of time.

Green Man Gaming is an eCommerce portal from British-based online video game retailer, distributor and publisher, Green Man. It has gained 4.7 million users since its release in 2010.

<span class="mw-page-title-main">Video games in the United States</span> Overview of the video game system in America

Video gaming in the United States is one of the fastest-growing entertainment industries in the country. The American video game industry is the largest video game industry in the world. According to a 2020 study released by the Entertainment Software Association, the yearly economic output of the American video game industry in 2019 was $90.3 billion, supporting over 429,000 American jobs. With an average yearly salary of about $121,000, the latter figure includes over 143,000 individuals who are directly employed by the video game business. Additionally, activities connected to the video game business generate $12.6 billion in federal, state, and local taxes each year. World Economic Forum estimates that by 2025 the American gaming industry will reach $42.3 billion while worldwide gaming industry will possibly reach US$270 billion. The United States is one of the nations with the largest influence in the video game industry, with video games representing a significant part of its economy.

Video game monetization is a type of process that a video game publisher can use to generate revenue from a video game product. The methods of monetization may vary between games, especially when they come from different genres or platforms, but they all serve the same purpose to return money to the game developers, copyright owners, and other stakeholders. As the monetization methods continue to diversify, they also affect the game design in a way that sometimes leads to criticism.

<span class="mw-page-title-main">Cross-platform play</span> Ability of players using different video game systems to play with each other simultaneously

In video games with online gaming functionality, also called cross-compatible play, cross-platform play, crossplay, or cross-play describes the ability of players using different video game hardware to play with each other simultaneously. It is commonly applied to the ability for players using a game on a specific video game console to play alongside a player on a different hardware platform such as another console or a computer. A related concept is cross-save, where the player's progress in a game is stored in separate servers, and can be continued in the game but on a different hardware platform.

<span class="mw-page-title-main">Epic Games Store</span> Digital video game storefront

The Epic Games Store is a video game digital distribution service and storefront operated by Epic Games. It launched in December 2018 as a software client, for Microsoft Windows and macOS, and online storefront. The service provides friends list management, game matchmaking, and other features. Epic Games has further plans to expand the feature set of the storefront but it does not plan to add as many features as other digital distribution platforms, such as discussion boards or user reviews, instead using existing social media platforms to support these.

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