Is the industry really prepared for digital distribution?

You say you want a revolution?

Dave Perry’s keynote at last month’s Develop in Brighton showed a slide of the first patent for a digital camera. In the 1970s, it was a curiosity – with a 0.01 megapixel resolution, it took 23 seconds to capture an image.

We know what happened next – provided ‘next’ spans three decades. Even in the mid-1990s, digital cameras were gimmicky, with film-less operation hardly compensating for poor quality. But the point was reached where convenience overrode digital’s limitations. The fate of film, and those companies banking on it, was sealed. The warning shot was that patent.

Ironically, the first digital camera was built by Eastman Kodak, the imaging giant that flogged film well into this century. Few incumbents dare make their business obsolete.

As with cameras, so with games. There’s no doubt now that digital distribution and wedding games with the internet has moved beyond its 0.01 megapixel equivalents. Do we realise it?

I’d say Games 2.0 is about where digital photography was in 1998. The technology, or paradigm, has shown its strengths: the smart money and talent are following it, some consumers are on board, but incumbent games publishers and developers still believe it’s a sideshow – of relevance to casual audiences maybe, but a bolt-on to the conventional business.

Even this is better than two years ago, when people asked why we cited Facebook and YouTube in the Develop in Brighton conference programme. In contrast, this year’s attendees said the online-focused Evolve day felt very much ‘of the moment’.

A columnist, however, should risk being interestingly wrong rather than consensually right.

I’ve assumed for a decade that digital delivery will eventually replace boxed copies of games, with both single-shot purchases and All You Can Eat subscription models. I’ve also long believed games will become services, and that potentially only 50 or so game brands may exist – more like sports than movies – with new IPs spun-off or knitted into them. I now ask: is this too cautious?

Dave Perry’s Gaikai technology shows you can run console quality games in browsers via the cloud, albeit provided a server is in your locality. Is gaming’s YouTube upon us?

Then there’s iPhone, where expensive, higher-quality games have failed to establish a markedly superior pricepoint. Other things – buzz, novelty, luck, and community – seem as important, and they don’t play to traditional development’s strengths. It’s tempting to dismiss iPhone as a niche, but it is the first entirely digital content marketplace we’ve seen.

Meanwhile, in South East Asia a distinct games industry has used the internet from day one. Its business model – based around PCs, free access and subscriptions or micro-transactions – is different to ours, and it’s headed this way. Dozens of free MMOs and other games are already making profits in Europe.

Will free, lower-quality online games supplant standalone, high cost and quality products to capture the mainstream? If you were simply to extrapolate current growth trends globally, I suspect the answer is yes.

You could have left Evolve thinking brands, reviews and advertising will also vanish, going on the lessons from Facebook games where users are the kingmakers.

In contrast, David Edery’s closing keynote cited a study that seeded 12 distinct online communities with 40 indie tunes, and discovered quality did not ‘out’. How popular a song became depended on who heard it first, and how they responded. The wisdom of these crowds looks random, leaving room for traditional marketing to tilt the table.

Funding, that other traditional role for publishers, could also go either way. Lower quality games are less expensive to make. Yet fewer hits means making even a portfolio of them could be riskier than today’s business.

Then there’s the topsy-turvy revenue model of MMO/service-style games, where both income and costs must be pushed out, assuming success. Failure is costlier, faster, with little or no day one revenue.

Everything is changing, and it’s not exactly clear how studios should respond. But anybody who isn’t tracking real-time data from multiple instances of even single-player games and exploring A/B testing, who isn’t actively looking into social networking, and who can’t list 20 ways to micro-transaction-ise their next project, may soon be facing their own Kodak moment.

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