Many of the video games companies rushing towards the digital markets will fail.
That’s the warning from Digital River’s global gaming VP Jeff Hemenway, who is concerned by the sheer number of start-ups and major publishers looking to capitalise on free-to-play games and digital downloads.
“There is a goldrush, there’s no question,” he told MCV. “And there will be a lot of failure. The whole free-to-play model is very easy for companies to get into. The EAs and Ubisofts of the world are transitioning their business models into the free-to-play space. But the free-to-play space is made up of start-ups.”
“In our business, we’ve got to make sure we partner with the right people who we feel have a good chance of success.”
Digital River is one of the world’s biggest digital specialists, and provides downloads, subscriptions and micro-transaction systems for giants such as EA, Microsoft, Atari, Capcom and Ubisoft.
Hemenway says the growth in digital has helped turn the tide for the struggling PC games market.
“A few years ago people kept saying ‘PC is dead, PC is dead,’ but the business model was just changing,” he added.
“PC appeared to be dying because retail sales were. Last year digital distribution increased 200 per cent and micro-transactions grew 178 per cent.”