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Friday, 29th August 2008 at 3:18 pm

‘Games retail will dry up’

by Tim Ingham | Email a friend | Print

6 comments

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‘Consoles already in the last generation’; PC to become the ‘home console’ of choice

High Street retailers will soon realise that rapid uptake of digital downloads renders console sales unprofitable – and destroy the hardware business by refusing to stock major platforms.

That’s the vision of the boss of online games network WildTangent – which reaches 15 million gamers each month and counts Sony as an investor.

Alex St. John – who was pivotal in the development of Microsoft’s DirectX technology – talked at Leipzig on his ‘heretical’ vision that there will be no console market by 2020.

St. John believes that the struggle between retail and publishers will leave the way clear for PC to become the ‘home console’ of choice – with ad-funded gaming propelling the market forward.

“It’s obvious that we’re looking at the last generation of consoles,” St. John told MCV. “The game market will be dominated by ad-funding, micropayments and massively multiplayer games. The retail business for boxed games will completely dry up.

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“Sony is a small investor in WildTangent. I’ve spent lots of time explaining how our business works, and they asked me who my main competitor was. I said: ‘You are.’

“The only reason a retailer carries a console is because of all the games they sell. If the platform holders are monetising games online, the retailers don’t have a reason to give them shelf space. So the online model puts you out of business because retailers don’t need you. That puts the power in the hands of developers.”

Tags: alex st. john, wildtangent

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6 comments | Add a Comment

What a fool.

posted by koti Aug 29, 2008 at 6:42 pm

It's an opinion which is debunked by every historical account of entertainment retail.

Whilst the market is in the early stages of polarisation. It is an innumerable amount of generations away from 100% drm.

We're no where near the level of saturation of other entertainment streams - and unless you're a format holder/publisher who is monumentally short sighted you'd realise that drm and shopbox sitting hand in hand maximises your bang per buck for a long time yet.

I'd be surprised if this is an genuine opinion or just one to diret traffic to his site.

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Maybe a different outcome?

posted by Bruceongames Aug 30, 2008 at 9:41 am

Already high street retail sells a far smaller fraction of gaming than online provides.

Firstly far more games are stolen on peer to peer networks than are bought. So people are perfectly happy to accept delivery of games in this way. Admittedly without paying for them.

Then there is the legitimate online gaming, which is massive. Habbo, Maple Story, Runescape etc Downloadable games from all three platform holders. Steam and the other online content providers. And the monster that is casual gaming.

The main function of consoles is to act as an anti piracy dongle. And whilst this isn't broken high street still has a function for this generation. However the world is very rapidly converting to 100Mbps broadband, which makes a console as a media hub a practical reality. One which Sony and Microsoft are both working towards with ever bigger hard drives.

An alternative future is to have server based gaming with a fairly thin client in the home, perhaps built into the TV. This approach has the benefits of far lower hardware costs and zero piracy. Microsoft have invested heavily with a Chinese TV manufacturer, probably for this reason and Sony are already a major TV manufacturer.

So the future could be powerful entertainment hub or server based gaming. Or both.

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Re: Maybe a different outcome?

posted by Reythor Sep 01, 2008 at 10:23 am

"It's an opinion which is debunked by every historical account of entertainment retail."

Well… I had noticed that HMV no longer sells tape cassette Walkman's now that there are no more tape cassettes on the market.

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To the honorable gentleman above me.

posted by koti Sep 01, 2008 at 1:42 pm

HMV may have ceased selling tapes but they're still selling music. The medium with which the product comes to market may change ala Cassette, Floppy Disc, Cartridge, CD, DVD, Bluray, Super Bluray Turbo GTI.

BUT.

There will always (forseable future) be a market for ownership over and hand in hand with DRM.

Why restrict yourself to one route to market and narrow your band of consumer when you can have both your cake and eat it.

Three years ago you paid 39.99 and you got Need for Speed: Most Wanted and all of its constituent parts thereof.

Now you pay 39.99 and you get Need for Speed (insert sub name bi-product of EA marketing brainstorm) and if you want all its little add ons they cost little Johnny Fifteen Year Old the best part of his weekly pocket money through out 2009.

So it would be fool hardy and a step backwards to suggest that one route to market heralds the demise of another.

Yes market share may suffer of traditional media but in a burgeoning market its academic as revenue is ascending anyway and conversley episodic gaming is appealing to a huge consumer bracket therefore actually growing the sales potential of boxed product - making it healthier not signalling it's death nell.

The big hoo ha from retail isn't necessarily the fact that their revenues are falling it's because their markets shares are migrating elsewhere and with each new retailer - another new competitor happy to skim a few percentage margin points off of their bottom line thus making everyone work harder for less cream.

A wise man in this industry who worked for QuickShot called Walter Morriss once told me at my first ECTS. I'll do you a deal but don't piss on the biscuits.

And there we have the biggest problem in this industry right now: we have a huge biscuit tin but it's full of soggy biscuits.

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Re: To the honorable gentleman above me.

posted by Scouse Sep 01, 2008 at 7:23 pm

Whilst am sure everyone is right,
The mass delivery of entertainment has change massively over the last 70 years from simple sheet music to high-speed DVD to almost certainly flash memory (who said cartridges where dead). With this simple formula its inevitable that digital downloads will take over the delivery at some point but the mindset of the Standard Nato Issue human between the ages of 25 and 105 is they need something tangible to purchase. If you look at the gift voucher in the mid 90's this was a device that confused every grandparent who slipped a £5 into a card we now have gift cards you can load up alternatively this will manifest into mass online credit for certain games or retailers. One thing that will hold off the inevitable download delivery that our grandchildren will embrace fully is, trade in, while you crazy retailers offer a value for old games the consumer will still want hard format the public wants it & retail want it. And anyway haven’t you been able to download any PC game you want for years if you know where to look. Open source code is the way forward to cut out the greedy format holders and with this in mind this where PC may excel beyond the consoles developers completely missed a trick by ignoring the PC when the Amiga and ST went. Instead they developed for cartridge based formats made lots of money in the golden age and are now slaves to the format holders. Imagine spending lots of money and planning your whole release schedule around a new and fantastic format, well done PSP and while developers are happy to chase formats we can all expect high priced games that nobody will buy "Isnogood"
RA