The ongoing debate over digital distribution’s role in the future of games seems to have painted offering games for download as an either/or solution. You either go boxed or you go digital.

System 3 is determined to dispel this notion. Starting in September, almost all of the publisher’s titles will be released on both digital and physical formats in the same week.

It’s an approach that has rarely been taken before, except for a handful of one-off Sony titles such as Warhawk and GT5 Prologue.

Other games – such as Burnout Paradise and anything on Microsoft’s growing Games On Demand service – have only been released digitally after spending a considerable time at retail.

The first System 3 IP to use this strategy is Ferrari: The Race Experience. The game is due on PSN on September 15th – two days before the Wii edition hits shelves. It’s a risk, but the publisher is confident that only Ferrari can lead its latest initiative.

We needed to try our new digital solution with a big title to see if it would work or not, so why not Ferrari?” asks System 3 CEO Mark Cale.

Downloads are not going to sell as many units as a retail copy at present, but I think that’s changing and we need to lead the way. We need to start the revolution because we’ve been foreseeing this shift for the last eighteen months – we’ve been planning this for that long.

We have titles ready for September and October to release as digital products across varying levels of gameplay style. Starting with Ferrari is a really good way of trying to launch this philosophy.

If this strategy doesn’t work with a title like Ferrari, at least we’ll have given it a go. But I think the world will be surprised as to how promising this opportunity really is.”

Despite the fact that downloads have yet to match the sales volumes of retail, System 3 is firmly dedicated to its new digital push. But with the sector still arguably unproven, why make such a commitment to digital games at all?

There are two clear reasons,” he explains. One is lack of retail space. The shelves are extremely competitive: any product released now might be on the shelves for four to six weeks, but then it’s replaced by another.”

Secondly, once you’re title is out of stock, unless it is in promotions, that’s it – your game is done. Typically in the past you’d get six months shelf life – you now get six weeks. And that’s really been a large contributing factor, as has the growing issue of second-hand games.”

The System 3 boss goes on to suggest that the rise of the pre-owned market is one of many reasons that consumers’ price perceptions are changing.

We’re now at a point where second-hand games have made lower prices the norm,” says Cale.

Unless it’s a must-have like Call Of Duty or FIFA, people don’t accept games at 54.99 or 49.99 any more. They’re expecting to pay the same amount as a Blu-ray or DVD – they want to pay 15 or 25.

It’s the same with some iPhone games. Angry Birds doesn’t have 3.5 million downloads for no reason – it’s the price point. If that game had been 1.99, I don’t think it would be half as successful.

I think we’re now reaching that point on consoles. However, the industry needs to be careful not to get into the position where people are expecting to get games for next to nothing because you won’t be able to afford to develop quality products.”

The publisher is hoping to offer a price tag of between 24.99 and 29.99 for Ferrari. According to Cale, one of the many benefits of digital is that doing away with the box and discs makes it cheaper to produce more games.

With digital, suddenly you don’t need to sell at 54.99,” he says. If you can pass on your savings – cutting out manufacturing costs, for example – you can go into digital at 29.99 or 24.99 and the consumer doesn’t feel ripped off.

What you’re losing through the lack of instant visibility and exposure at retail, you’re gaining by being able to protect your IP.

And it gives you access to the user: 24 hours a day, seven days a week. The product’s lifespan is then dependent on people continuing to support it.”

Cale believes other games firms will soon be following System 3’s example.

We’ve come to the point where publishers have to decide where they’re going: digital or retail,” he says.

If retail isn’t going to be able to support you in terms of resale in the long-term, you’ve got to look elsewhere to sell your products. It’s not a case of if, but when everyone goes to digital.”

Of course, the publisher is keen to emphasise that it will still support retail.

There is still a retail market,” Cale says. When you look at Ferrari Challenge Deluxe on Wii, we’ve sold through 500,000 copies across Europe in the last year. Retail is still important.

We’re also trying to find solutions in which we can work with a digital product within the retail area. We need to find a way to let retail be part of our digital strategy, to boost both sectors.”

Of course, there’s more to System 3’s upcoming line-up than just the digital editions. One of its more important titles is Williams Pinball Classics – a game set to introduce the firm to a new audience.

It’s our first title on Xbox 360, it is a family-orientated title and is perfectly suitable for the Xbox,” says Cale.

The Xbox has always been positioned by a lot of people as a console that doesn’t have a lot of family content. We’re about to support Xbox Live in a big way.

Williams Pinball Classics is also proof of our continued commitment to retail – the game is not going to be a digital release.”

System 3 is also dipping into its extensive back catalogue and bringing classic IPs to shelves for the first time in generations. Having been in the market since the days of the Commodore 64, the firm owns decades’ worth of popular properties.

The key title among these is Putty Squad. Released for the SNES back in the early ‘90s, the acclaimed platformer was also in development for Amiga and PC – but sadly never made it to shelves. Thanks to System 3’s new strategy, the game will finally reach a new audience.

It became one of the most anticipated games of its time but it never got released,” says Cale. Again, this was down to problems at retail. Suddenly the Amiga stopped being fashionable and it wasn’t commercially viable for us to release it, but it’s a game a lot of people have wanted.

Now we can launch this on PSN, iPod, iPad, PSP and so on – digital distribution gives us that opportunity.”

The balance System 3 has struck between digital and retail for its Christmas line-up is arguably a sign of things to come. The industry has seen the rise of boxed releases converted for downloads, and now it appears the delay between launches in the two sectors is narrowing.

Should System 3 prove you can secure significant success this way, it could mark a turning point for the fluctuating relationship between digital distribution and the High Street.

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