Video games execs debate digital distribution

Online stores driving digital distribution revolution in gaming

TORONTO -- Looking to avoid the fate of music and movie producers whose retail sales are progressively undermined by the Internet and online piracy, the video game industry has been building out digital distribution networks to allow customers to download games and sidestep boxed copies of games.

But whether online distribution has come of age or remains a distant prospect was the subject of hot debate this week at the Game On Finance 2009 conference in Toronto.

Greg Short, executive chairman of EEDAR USA, told delegates during a keynote speech that, as storage costs fall and broadband speeds rise, the digital distribution of games, either via subscription or free to play, is at a tipping point.

"We're near to where you can get the same game experience on an iPhone as on an xbox console," Short said.

Daniel Connors, CEO of San Rafael, California-based Telltale Games, which distributes episodic gaming online as monthly downloads, said audience feedback on released episodes helps shape story-lines as succeeding episodes are developed and produced by writing and creative teams.

And just as studios can sell a season of a TV series on DVD, Telltale can package a completed series of episodic games in a boxed DVD copy of the game for eventual retail sale.

"This is only possible because of digital distribution," Connors said.

Online stores like Valve's Steam and Direct2Drive are driving the digital distribution revolution in gaming.

Robert Ferrari, vp of publishing and business development at Sanrio Digital & Typhoon Games, also pointed to Turbine, where he worked previously as vp of business development, shifting its multi-player game Dungeon & Dragons Online from a pay-to-play model to free-to-play, and supporting the property with spin-off sales and social community promotion.

"You take free-to-play and play with social games and transactions and Facebook and iPhone games," Ferrari argued, pointing to the increasing convergence of entertainment brands, online gaming and social communities.

At the same time that the iPhone offers unprecedented distribution potential for games makers, delegates were told Apple's smartphone is an increasingly crowded and competitive platform, which makes it a risky investment for game developers and publishers.

And Yannis Mallat, CEO of Ubisoft Montreal, insisted he was in no hurry to break away from retail model as the French-based games maker embraces digital distribution. "We have to be a little cautious," Mallat said, not least to avoid undermining long-standing relationships with major retailers.

The Game On Finance 2009 conference wrapped Wednesday.