Is Digital Ready To Replace Retail?

While some observers have predicted that conventional retail channels will dominate the videogame market for many years to come, GamersGate CEO Theodore Bergquist and Capcom VP Christian Svensson predict that major changes are coming to the way you buy games sooner than you think.

GameStop CEO Dan DeMatteo predicted last year that the infrastructure required to facilitate full-scale digital distribution of mainstream game releases won’t be in place for another 10 to 15 years, and more recently a survey conducted by the NPD Group found that a significant majority of gamers prefer boxed retail copies of videogames over downloads. Nonetheless, Bergquist expects things to change much more quickly, saying the GamersGate digital distribution platform experienced 100 percent growth last year and is looking at as much as 200 percent growth this year.

“When I talk to all the publishers – both small, and really, really, big – digital distribution is on everyone’s lips,” he said in an interview with GamesIndustry. “Obviously some publishers are really ready to take these steps, while others aren’t. Some still see digital distribution as something awkward, and they don’t really know what to do with it, while some are really professional and they have it as a main strategy.”

“Whether it’ll happen this year or next, I’m not sure – but I think it’s that kind of time frame we’re talking about,” he continued. “Look at the music industry, look at 2006 when iTunes went from not being in the top six of sellers – in the same year in December it was top three, and the following year number one.”

He claimed that digital distribution is “absolutely the biggest threat” that has ever faced game retailers, but said the advent of digital didn’t necessarily mean their days were numbered – simply that they would have to adapt to survive. “I think they’ll get better on the hardware side, selling hardware together with games,” he said. “But if it’s games only, then no way – I can’t see [them surviving].”

Bergquist’s comments were echoed by Capcom Vice President of Strategic Planning Christian Svensson, who told Rock, Paper, Shotgun that the company is working hard to build up a digital distribution network because “retail is falling away.”

“What are the reasons for that? Partly it’s that return rates are very high. Returns of a PC title are usually double that of a console title – why? Because it’s not a great consumer experience because there’s variation in minimum spec, and it requires a lot of consumer knowledge to figure out exactly what is in their box, and what that will run,” he said. “If we can improve that, if we can improve issues with DRM and create an anti-piracy policy that is friendly to consumers, that will remove barriers to sales, and improve the ecosystem.”