Sony Planning Move to Digital Distribution

[fitbabits]

Thanks to GamesIndustry.biz (http://www.gamesindustry.biz) for the news (http://www.gamesindustry.biz/content_page.php?aid=15294).

Reports from development sources close to Sony Computer Entertainment are indicating that the firm is planning a major digital distribution service for game content, which could be a key element of PlayStation 3 - or even of a relaunched PS2.

Several senior developers have confirmed to GamesIndustry.biz that they have spoken informally with Sony about the question of digital distribution on consoles, although these discussions were described as being "purely about technology, not business models" by one source.

..........

The move would not be surprising, given that both other next-generation consoles will offer downloadable game content - Xbox Live Arcade and game demos in the case of Xbox 360, and the back catalogue download service on Revolution - which makes it highly unlikely that Sony will miss out on this opportunity.

..........

One of the key requirements of digital distribution on this scale, however, is a large storage system - such as a hard drive, a component with which Sony has had a patchy history. Although the PlayStation 2 hardware can support a hard drive, the peripheral was unsuccessful and was only ever used to any great degree by Square Enix' massively multiplayer title Final Fantasy XI. The PlayStation 3 hardware will also support a hard drive unit but is set to ship without one pre-installed in the basic configuration.
Interesting. Looks like someone at Sony is taking notes and implementing features that have already been successul on other formats.

[Salesmunn]

Well, this is to be expected, especially with the recent information released regarding the PSP2 and it's built-in internal memory.

[Roc Ingersol]

I'm only surprised it took them this long to say: "yeah, we're doing that too".

I'm itchin to see what competition for XBL brings.

[Tricky Thumb]

This news only makes me wonder what's being planned (if anything) for a new online service.

[Serapth]

They have to be careful here ( as does Microsoft ) as they are walking a tightrope on this one. If they move to far to the digital distribution side of things, it will threaten their publishers core business, which could lead to a mass exodus of publishers publishing titles on your system.

Directly competing with your bread winners is not normally a good idea. If they go to far as say, piss off EA, EA will switch allegiances and millions of madden loving, nascar racing fans will go with them.

This is why you only see Micro games and demos on live so far. Dont get me wrong, the tech is inplace for full distro of commerical games. Microsoft just knows better then to pull that trigger right now.

[gzsfrk]

Serapth, I would actually have to disagree. I would think publishers would be strongly FOR the switch to digital delivery, since it would effectively eliminate the used games market, which supposedly is the bane of the console game developer's existence.

I imagine those who would most vociferously oppose this move would be the retail videogame chains (EB, Gamestop, et. al.), who obviously have the most to lose by being cut out of the games-to-consumer delivery model.

[fitbabits]

Serapth, I would actually have to disagree. I would think publishers would be strongly FOR the switch to digital delivery, since it would effectively eliminate the used games market, which supposedly is the bane of the console game developer's existence.

I imagine those who would most vociferously oppose this move would be the retail videogame chains (EB, Gamestop, et. al.), who obviously have the most to lose by being cut out of the games-to-consumer delivery model.
You raise some valid points, gzsfrk. Time will tell whose panties get in a bunch.

[Serapth]

Serapth, I would actually have to disagree. I would think publishers would be strongly FOR the switch to digital delivery, since it would effectively eliminate the used games market, which supposedly is the bane of the console game developer's existence.

I imagine those who would most vociferously oppose this move would be the retail videogame chains (EB, Gamestop, et. al.), who obviously have the most to lose by being cut out of the games-to-consumer delivery model.

I can see your side of the argument but I think history speaks towards my side. Remember EA's reaction to XBox Live? They REALLY didnt want to support it and it was only through some backdoor dealings the microsoft got them on board. The EA, Activision and Ubisoft really dont want to let go of the controls they have.

The biggest fear I imagine the big publishers have is... once distribution goes digital, what do the larger developers ( think Bioware + Pandemic ) need the publisher for? The self finance so they arent dependant on the publisher for money ( besides, the role of banker can be played by people other then publishers ) so, outside of the distribution network ( aka, the making of boxes, shipping to retail, etc... ) what does a publisher really offer?

[EternalGamer]

I think you answered your own question Serapth. Why should MS or Sony be concerned with publishers who don't really offer anything? They are just a necessary middle man at this point. The people they want to attract and keep are the developers, and if this new system makes it easier for them to remain free of publisher pressures, well then, that is probably more of a benefit than a negative.

Dan

[Serapth]

I think you answered your own question Serapth. Why should MS or Sony be concerned with publishers who don't really offer anything? They are just a necessary middle man at this point. The people they want to attract and keep are the developers, and if this new system makes it easier for them to remain free of publisher pressures, well then, that is probably more of a benefit than a negative.

Dan

Because the switch from hard copy to digital only distribution doesnt happen over night. Keep in mind the adoption rate of Live last gen was a few percent. They cant obsolete the traditional publishers until that number is closer to 100%. However, if they start to piss the publishers off before they have the ability to go 100% digital distribution, they will lose titles, and with titles, market share.

Like I said, its a tightrope act.

[Mason]

Yeah, see the bigger question will be what relationship there is between digital distribution and developers. If a developer can spring for a few SDKs, make a game, mail it off to MS/Sony/whomever, and spend their remaining $50 on some shoestring advertising, then I could see publishers having a problem with it. Of course, it'd actually be a positive thing for gaming, too.

But if the cost of entry remains on the same order of magnitude as traditional publishing, then I doubt anyone would mind.

Publishers do handle lots of interaction with other businesses. Acquiring licenses, producing marketing and getting it into the media, managing the requisite team of rabid lawyers, all that. Big developers that wanted to truly live on their own would have to bulk up a bit to handle some of those functions, which would only really be required on a cyclic basis. A more ideal solution would be a stripped-down publisher, call it a "game logistics consultant" or something, that could handle some of that functionality for multiple developers on a game-by-game basis, so that you aren't paying constant overhead for a service you only need at the end of a development cycle.

[AntB]

Damn you Mason, took the words right out of my mouth.

Point being that publishers dont' just print cds and boxes, they do a lot of things that cost millions of dollars like marketing blitzes and acquiring licenses.

If Microsoft didn't blow up Halo... Halo what? 100,000 people would have bought it, and it would have been forgotten.

This is why we have sleeper hits, titles that weren't properly hyped and advertised.
If most developers can't pony up the money to finish their own titles without a publishers support, do you really think they would have a few spare million lying around to launch a marketing campaign?

[TheBrainKills]

I don't think the Bandwith and speed is there yet either, with 10/100 being the most prevalent out there right now. How big is the average game right now 4GB's ? that probably takes me about 1 day to download, I dont think the average consumer is going to like that. Plus my Internet provider has my download cap at 6GB for a month.. I think. Allot of other providers have a lot less.

[blackzc]

Im not crazy about this download stuff. But on the up side if one of the big 3 is open minded about the games they let in for purchase that could be pretty cool. Im a shump and 2d fighter nut, i would love to see some new KOF, 1942, giga wing, updates. Games that wouldnt sell in the stores but would sell a couple 100k online.

[Serapth]

Yeah, but as Mason said... there is no reason why those things couldnt be sourced. Marketing companies already exists. Finding one the specializes in gaming shouldnt be too hard... or, if the market exists, such a firm would come into existance.

Ditto for financing. Alternative sources of capital can be arranged. The dot com bubble may have burst, but trust me, there is still alot of capital out there be it from various funds or venture capital groups.

Once we have a pure digital distribution system, the age of publishers at least as defined now, will be over. Plus, if devs start seeing more then @5% of the pie ( if they are lucky ) suddenly they can afford to outsource the rest of these issues that publishers take care of.

As to acquiring licenses, thats more the publishers using their money to control devs, then the reverse. Predatary tactics like EA grabbing exclusive licenses to football are the kind of things that push devs away. Considering that Turbine can license AD&D and Lord of the Rings, on their own... it appears the dev's can easily acquire licenses if needed. Not to mention, more often then not, these licenses are already brokered by a 3rd party.

[Serapth]

I don't think the Bandwith and speed is there yet either, with 10/100 being the most prevalent out there right now. How big is the average game right now 4GB's ? that probably takes me about 1 day to download, I dont think the average consumer is going to like that. Plus my Internet provider has my download cap at 6GB for a month.. I think. Allot of other providers have a lot less.

Way off topic, but 6gigs a month. Dude, that blows, I feel bad for you. I would guess that I havent had a month were ive used less then 4 times that amount in years.

[Megalith]

Here comes the PSX2.

::noonebuys::

[Rafer]

Online distribution will probably gain a stronger foothold outside the U.S., places like Japan, Korea, parts of Europe and Canada where broadband is much cheaper and faster.

That being said, one thing I've heard about online distribution that's being worked on is being able to play a game as your downloading it... so you download the beginning of the game and can start within minutes as the rest of the game downloads in the background, so you don't have to wait all day for a game to download.

[ChaosDent]

Half-Life 2 works that way Rafer, so does Guild Wars. I'm sure it wouldn't be sufficiently more complex for that feature to migrate to consoles. Still, I'm thinking digital distrobution will mean "arcadish" titles and re-releases of classic hits for consoles this generation. I could see the PSP move to digital distrobution for all of its titles, but not the PS2 or PS3.

[gzsfrk]

I still maintain that the holy grail of practically eradicating used game sales will trump any other concerns the developers or publishers would have. They're just taking too great a hit to their sales right now from people like me who almost ALWAYS buy titles used when given the opportunity. Sure, those are valid concerns about the publisher's role being diminished. But both sides have far too much to gain by seeing financial returns from every game sold, rather than just seeing those returns for every NEW game sold.

Of course, next to retailers, those that stand the second-most to lose are us, the consumers. While we possibly win in the regard that more avant garde, non-mainstream games could become available, digital delivery is probably the easiest means by which to implement solid DRM. Which means, I can't bank on buying a game for $35-$40 and then reselling it for $15-$20 credit towards my next game. Think prices for digitally-delivered games will come down to offset the resell loss? Hardly likely...

[TheBrainKills]

Way off topic, but 6gigs a month. Dude, that blows, I feel bad for you. I would guess that I havent had a month were ive used less then 4 times that amount in years.

It is not off topic, if you don't have the infrastructure in place then whats the point. Once the Gigabit pipeline is in place then it becomes realistic, although downloading in chapters and in the background may be a stop-gap approach that will work short term, but only for small percentage of people.

I think I go over the 6 GB's all the time, but it's in the contract and I can see them enforcing it if I set up a major web page, or start providing for my apartment building etc.

[bapenguin]

Can I age my games like wine with their digital delivery service? Sorry...sorry...I had to.

[ElectricMonk]

i think devs could make their games smaller if they were motivated. using jpeg/png compression instead of raw tga files that are 16 mb each, etc.

the cd version of half-life 2 is what, 6 cds? and it downloads to 800 mb?

also they could sell boxes for games at retail, they'd just contain a 'registration card' that you could swipe and it'd download the game.

[Achilles]

This is why you only see Micro games and demos on live so far.That's not why. The reason is that anything sold on Live Arcade has to be able to fit on a memory card, it's a certification requirement. Demos are an exception because they're governed by a different set of requirements. Once they do away with that expect to see full games start showing up on Live Arcade.

Publishers have no problem with digital distribution as long as people can't illegally download their stuff. Printing copies of games is really expensive. The idea that publishers will go away if you can distribute games digitally is a myth, publishers provide a lot of services that cannot easily be reproduced by an independent developer, such as marketing, testing, technical and art support, in-house tools and engines, and most important; large scale funding.

[Serapth]

Publishers have no problem with digital distribution as long as people can't illegally download their stuff. Printing copies of games is really expensive. The idea that publishers will go away if you can distribute games digitally is a myth, publishers provide a lot of services that cannot easily be reproduced by an independent developer, such as marketing, testing, technical and art support, in-house tools and engines, and most important; large scale funding.

Oh come now Achilles, your going to tell me that developers cant get every single on of the things you mentioned from an outside company? Or, more accuratly, they cant get all those things for a better bang to their buck? ( or royalties, as the case may be ).

Your right though, publishers have no issues with digital distribution, infact its something of a holy grail for all of them. Material costs will go through the floor, and theoretically profits spike. That said, digitial distribution BY THEM. Much like Sony isnt much of a fun of iTunes, but gee golly, they love Sony connect.

[RMan]

Oh come now Achilles, your going to tell me that developers cant get every single on of the things you mentioned from an outside company?
Theoretically, yes, in the real world, VERY unlikely. All the same arguments could be made for small general stores competing with Wal-Mart, there are simply way too many ways in which consolidation is more efficient. Independent developers can make far larger royalty percentages, but it doesn’t matter if they can’t create awareness for their product or get enough distribution to sell it at a high enough volume to make that percentage worth anything (and that’s if they overcome all the development hurdles). Digital distribution does allow independent developers a venue where they can succeed, but they still can’t do it at anything near the level that large publishers can.

[Serapth]

Theoretically, yes, in the real world, VERY unlikely. All the same arguments could be made for small general stores competing with Wal-Mart, there are simply way too many ways in which consolidation is more efficient. Independent developers can make far larger royalty percentages, but it doesn’t matter if they can’t create awareness for their product or get enough distribution to sell it at a high enough volume to make that percentage worth anything (and that’s if they overcome all the development hurdles). Digital distribution does allow independent developers a venue where they can succeed, but they still can’t do it at anything near the level that large publishers can.

Ah, but your looking at the market at is it today. If digital distrubtion via Sony or MS becomes the norm, all of a sudden how hard is it to get a venue? If they can get published on Live Arcade, for example, they are going to draw the eyeballs needed to see their products. In a sense, its a built in marketing portal.

[RMan]

If they can get published on Live Arcade, for example, they are going to draw the eyeballs needed to see their products. In a sense, its a built in marketing portal.
Sure, but the Internet is a far easier marketing portal, and it still works out that the guys that pay for or own the popular media outlets get the most visibility, and the internet is not wholly controlled by one company. Digital distribution will greatly reduce cost of entry and completely eliminate stocking issues, but promotion will not significantly change; MS/Sony/Nintendo will control POS marketing, just like retailers do now, and other media outlets will perform pretty much the same role they have now. Digital distribution is a wonderful thing, but it is not a magical thing that levels the playing field. It does make it possible for independents to succeed, and that’s about the best independents can hope for and a big step up from what we have now.

[Achilles]

Oh come now Achilles, your going to tell me that developers cant get every single on of the things you mentioned from an outside company? Or, more accuratly, they cant get all those things for a better bang to their buck? ( or royalties, as the case may be ).It costs a fortune to maintain those kinds of things. And some things are priceless, like tech and art support.

Breaking down the 'better bang for your buck' issue: Say EA probably has some of the best marketing people in the industry. You can’t just clone those people. What they bring to the table they bring to the whole company, not just a single developer. You get the most bang for your buck having an incredibly skilled department that can lend itself to as many games in development as possible. If you're published through EA, you get the best marketing guys in the industry, you don't have to hire them, pay them, or have the project release rate to require them.

[Grimmjow]

Im not crazy about this download stuff. But on the up side if one of the big 3 is open minded about the games they let in for purchase that could be pretty cool. Im a shump and 2d fighter nut, i would love to see some new KOF, 1942, giga wing, updates. Games that wouldnt sell in the stores but would sell a couple 100k online.

personally i like downloading stuff, i have the speed why not use it (8mb download/768upload) but i will agree i would like to see some 1942 and GIGA WING :)

[mister_slim]

Ah, but your looking at the market at is it today. If digital distrubtion via Sony or MS becomes the norm, all of a sudden how hard is it to get a venue? If they can get published on Live Arcade, for example, they are going to draw the eyeballs needed to see their products. In a sense, its a built in marketing portal.
You should take a look at what's happening with casual game portals. Sure, the games are cheap to make, but you still have to attract attention to the game. The best way to do that is to get promotional help from a portal. So the portals can privilege their own games (which give them a better margin), or demand exclusivity, or squeeze the developer's royalties. Similar things are happening with cellphone games. As digital distribution becomes more popular budgets and marketing spend will go up, and larger entities (i.e., publishers) will continue to benefit from their capital and size.