Steam isn’t the only digital download platform enjoying the benefits of the online boom – IGN’s Direct2Drive service is seeing record growth. Tim Ingham speaks to marketing boss Rich Keen…
How is Direct2Drive performing compared to previous years?
September was the fifth anniversary of Direct2Drive globally. We’ve been established in the UK as a separate entity for two years. We ran a whole series of promotions here, where we gave away a load of titles for under £5. That for us was quite a big push.
We mainly did deals with triple-A publishers, who have really been pro-active during our negotiations. The fact that these publishers wanted to be involved in the £5 deal demonstrates just how much they want to support us. We’ve seen huge growth in the last three months. A lot of that is down to big games coming through, as well as having more resources in the UK to focus on the promotions. But downloading a game isn’t scary – consumers are realising that, and considering us alongside shopping at Play.com or Amazon or GAME.
What about growth?
Year-on-year revenue is up from fiscal year ’08 to fiscal year ’09 by over 300 per cent. Traffic growth from August last year to August this year was up 240 per cent. We’re seeing incredible growth as new users come to the site month-on-month. Our community feedback is almost instant – it really keeps you on your toes. If a major new game comes on and attracts gamers, we know that 20 per cent of them will go on to buy an indie game from us. We see that as hugely positive. There’s real added value there. Play.com or a bricks and mortar retailer can’t stock all the products we can. The wealth of content we have engenders a much more engaged and active user base than at High Street retail.
How is your relationship with publishers? Do you still meet any resistance from the publishers to use you over High Street?
Yes and no. No in the sense that no one comes to us and says they don’t want to invest in digital distribution. Publishers have always understood the added value we offer, but they haven’t always worked out how to best leverage their own resources to make the most of it.
We’ve learned a lot of lessons from the way the music industry ignored digital for so long.
here’s never been any negativity per se, but publishers have wanted to protect heir bricks and mortar retail relationship. The only publishers we’ve met any resistance from are publishers that have their own digital distribution resource. That’s pretty much resolved now with the exception of Blizzard, whose whole business is built around their own platform. Interestingly, Direct2Drive in the US is the only distribution platform to carry World Of Warcraft games outside of Blizzard’s own portals.
How competitive is the digital distribution marketplace?
The fish are feeding, so it’s pretty competitive – everyone’s trying to get in there. I don’t think the market’s developed to the stage where you ‘own’ a customer. We have a certain loyal proportion of our userbase, but there’s also a large proportion that are transient and attracted to our offers as and when they come on. Online customers are very price driven, but once they’re on our site, we do our best to keep them there.
Do you think the industry can avoid having one dominant online player like iTunes?
I think that’s already the case. Digital distribution of games, although comparable to brick and mortar retail in some regards, is a virgin market. Look at Steam for example. Steam jumped in and harnessed the power of a very, very loyal community and continues to. But in terms of our growth, we’re now considered equal to them in terms of positioning and awareness of our retail. Between us, Metaboli and very big bricks and mortar retailers, in 12 months’ time there won’t be any dominant players.
Everyone – from retailers to publishers to developers – is looking at how we can make digital distribution more transparent and help customers, publishers and developers understand it better. It represents potential huge growth. We don’t want to restrict it and we don’t want to build any monopolies.
Can you really catch Steam up?
The perception and credibility that Steam carries will continue to do well for them. It’s got a dedicated community. Anyone who’s interested in games has either been on Steam, knows of Steam or has played a Valve game. As a business, we have a lot of respect for Steam. We talk to them as and when we can at a high level. But we don’t feel they’re insurmountable in terms of size and scale of their business, but it’s us looking at what we can do with our userbase.
Their community is very loyal, but there’s a core focus on them. Our growth will really come from customers who are new to digital distribution – who don’t know what Steam is and who don’t know how to install a client. We get quite a few customers coming back because they don’t understand Steam. They don’t want to activate a client to play a game like The Sims 3. We feel we’ll slowly move apart in future, as an online platform that isn’t client-based has the greatest potential to attract an online audience.
How far away are we from an official digital chart – either here or in the US?
We can see it happening, and we’ve been discussing it with several different groups. From our perspective, it’s one of the most positive things that could happen to add validity to the digital marketplace. In terms of the digital industry, it would demonstrate how successful we feel our platform is. But it’s also important for consumers. They need to understand just how commonplace digital games are.
As soon as you see other people are doing something, it makes you more comfortable doing so. The obstacle for retailers to submit data, I believe, is confidence. One of the big negative comments we get when discussing a digital chart with others, is that retailers don’t want to release their market share. They don’t understand how the process would work. But there’s no need for that secrecy – it’s a group figure we think people are interesting in, across all portals, not individual sales data.
You only need to look at PC game sales to see how important it is. We believe that if you add digital sales onto PC, you wouldn’t see a sharp decline; you’d see flat sales or even slight growth. That’s great for the industry. We’re very keen on the idea. But it needs all the players to come to the table, which means killing some of the scepticism that exists.
When will the tipping point come for the chart? Surely we can’t go without one for much longer?
When download titles become so prevalent over Xbox Live and PSN that there’s digital-only releases – which there have been already – that’s when we’ll know it’s transcended PC and people will have to start standing up and shouting about it.
In the games industry world that we live, we know there’s demand for it already. Everyone wants to know where we are in terms of those statistics. But in terms of a tipping point of when a digital chart becomes 100 per cent necessary, it will be when new digital releases massively affect week one sales on console.
Do you have any plans to bring your service to Xbox Live or PSN?
For Direct2Drive, as we only retail on PC, both services are not really a natural fit. But we benefit from being part of a much wider community as part of the IGN entertainment network, which has a presence on PSN and Xbox Live. We harness that IGN community and bring it into Direct2Drive. Although it’s not clear how we can best use XBL and PSN to do that, it’s something we’ll keep an eye on. But there’s nothing we’re specifically focusing on.
The most popular digital download service is not you or Steam – it’s bitTorrent piracy. How can you turn a previously illegitimate user into a paid-up customer?
We believe that illegal downloads are mainly driven by ease of access. Sure, there’s a cost element – it’s nice to get something for free – but getting a game off these things is not as easy as ripping a music file. You need to work quite hard.
Once the ability to purchase a PC game online legitimately is very simple, it will have a huge effect. We allow people a sense of ownership, where you can re-download for free. There’s always going to be an element that’s going to look to syndicate and buy pirated material, but we feel that’s going to reduce once customers feel that they’re getting a problem-free user experience and quality customer experience elsewhere.