What would you say is the single biggest issue surrounding digital distribution that the games industry has to address?
Digital distribution has a number of hills to climb, ranging from technical to behavioural and legal. All are significant so I'm not sure whether one is bigger than another. Forecasting the future is always difficult; in the digital area this is even more pronounced as user behaviour, content and business models are all emergent. There's little historic data to help planning or forecasting.
PlayStation's approach is to continually track our user and publisher communities in order to anticipate current and future needs and try to satisfy them rapidly. To some degree this is trial and error, but there are few ‘rules' in this business and failures are sometimes as important as successes.
From Sony's point of view, how much of the market is digital? Can you share any projections?
In lieu of any other data points, our analysis of the market is based purely on the activity on the PlayStation Network. Although I can't share numbers with you, it's very obvious that growth is exponential. It would also seem growth is largely incremental to the traditional business – as much of the digital content and user behaviour augments rather than replaces existing activity.
Is Sony still adamant that digital downloads will be a bigger than retail within the next ten years?
Whether it will be bigger or not is very hard to predict. It is clear that there is appetite for digital distribution as some consumers are far more comfortable with this arrangement. Since we are all in the business of satisfying consumer needs and desires, it would be foolish to ignore them. However consumer expectations for content such are also demanding – high definition, collectors' editions with extra content, scale-able experiences and more, so this also affects how the contents are delivered. There will be a need for packaged goods for some time to come.
It's clear that the traditional and digital will co-exist for the foreseeable future and our challenge is making sure that consumers are fully engaged in whatever way they wish to receive their content. It will mean that all the stakeholders – format holders, publishers and retailers – will have to review the way we interact and service them.
Sony has tried simultaneous digital/physical releases. How do you see that developing in future?
The most important thing to us is that we provide our consumers with as much choice as we can. Therefore, if someone wants to buy a game digitally, then we want to give them that option. However, broadband penetration and services vary considerably across the PAL territories, so as long as there is a demand for traditional disc-based gaming, we will continue to deliver our content that way too. We have already shown with games such as GT5: Prologue that we are committed to this. And with the launch of PSPgo, we have shown that simultaneous releases on disc and via download are a reality.
How does marketing change when it comes to digital releases?
It depends on the type of download.
The biggest change is in the types of download that augment an existing title. On the PlayStation Network they are called ‘add-ons' – extra levels and so on. What we now have is an ongoing relationship with our consumers, and buying the game is only the beginning of that relationship.
This has major implications on the longevity of the marketing campaign. To a degree, the marketing of a title now only starts with the game release as opposed to this being the mid-point of the marketing plan. Add-on content provides a requirement for sustained marketing activity for as long as content is released. Although this places pressure on the marketing process, it has great advantages in keeping the title alive and on shelf for a longer period of time as consumer interest in it is prolonged.
We have not observed any particular difference in audience profile – audiences change primarily according to the IP and this is the same whether a piece of content is bought digitally or not. Basic marketing best practice remains the same and online channels of communication are important for many reasons, not just to promote digital content. The online channel allows us to talk directly to our audiences, and we take advantage of this opportunity as much as possible. A great example of this would be for SingStar, where we have created a huge networked community via PS3, Facebook, SingStargame.com and Home in addition to a traditional above the line campaign. Each audience is different and requires a unique approach.
How has Home helped support Sony's digital strategy?
Home has been a great learning experience for us. The intention for Home was to create a 3D, online world, where gamers could get together and share their experiences with each other and add value to their PlayStation life. What we have seen is that those within Home are very comfortable with this type of communication and interaction, and are hungry for content that enhances their experience, be it free or premium content. Other companies have seen the benefit of using Home as a channel to communicate with a generation of gamers who are clearly very comfortable in this digital world. Whilst the current Home audience may be made up of the same people who are already downloading content from PlayStation Store, what we hope will happen is that as Home continues to grow and offers more and more varied content, it will attract a wider range of people who will become accustomed to the digital culture.
What makes a different to a digital release different to a physical one?
There are the obvious logistical differences of manufacture and physical distribution, together with localised price considerations.
One key difference is the ability for specialist retailers to educate their customers – the digital environment is essentially ‘self service' and requires some degree of consumer knowledge to make an informed judgement. But retailer interaction is a very important part of marketing which requires particular attention and support from the publisher.
Does the industry need a more structured approach to how it shares and talks about digital sales?
I am sure something like this will be necessary eventually. At the moment investment decisions for development, marketing and other resources are being made without true visibility of the total market. This is OK whilst the digital channel is still embryonic, but as growth continues a more structured approach is necessary. It's equally important to contextualise digital and traditional together, as ultimately it is one business, just different delivery mechanisms.
Of course from a consumer perspective, having visibility to market data allows performance benchmarking which will ultimately lead to better products. Win-win for all!
There will be numerous barriers that need to be overcome, such as independent monitoring – and we still have issues obtaining all the information for disc-based sales throughout the PAL territories. That said, however, I think that before we get caught up in those issues, the digital marketplace needs a little more time to develop.
Are episodic games a viable model or will it remain an indulgence for just one or two developers?
We dipped our toes into this area with Siren: Blood Curse last year which was released on the PSN in three packs with four episodes per pack, and was later released on BD. It's certainly an area that has potential. The idea that people could be anticipating and discussing the next episode of their game in the same way they look forward to Lost or Heroes is really exciting and I think we'll see more and more developers experimenting with this over the next few years.
What opportunities do PSP Minis afford the industry?
Minis, like most things we are doing, are about consumer choice. PSP users want the opportunity to choose whether they immerse themselves in a triple-A game such as GT or Assassin's Creed Bloodlines, or whether they simply dip in and out of a more snackable game. Minis are the solution to the second option; they also bring more developers into the PSP world than ever before, making the platform more accessible than ever. We hope that Minis will help expand the portable gaming market and bring a new creativity to the platform.
Once again this is the type of content that is not economic to offer in the traditional way. Early indications are that the introduction of Minis has not cannibalised sales of existing content – traditional or digital – but added to it.