The following is a short editorial and does not necessarily express the beliefs of N-Sider.com or the rest of its staff.
I just now came across this link to an article by Wired magazine in the Gaming-Age forums. It's a highly suggested read. Although it was published in October 2004, time has not diminished its relevancy. It's a topic that I feel will not only affect video games over the next ten years, but all forms of entertainment.
The internet is creating a new market of consumers. The article basically explains how traditional retailers sell product aimed only at the pop culture and mainstream America. There's nothing flawed with this approach as it is the best and most profitable use of their limited shelf space. However, they are losing out on an entire section of the market. This other market consists of a wide variety of culture niches that when added up, are as profitable, if not more profitable than the primary mainstream market. Online retailers, on the other hand, are actively appealing to these niches and making a huge profit in the process. In the market of tomorrow, consumer's choices are going to continue expanding with the practically unlimited shelf space that online retailers provide.
My thoughts on this are as follows (and I admit, I do go off on a tangent). Entertainment -- music, movies and video games -- will one day be fully distributed online. The effects of this will be felt and implimented gradually. However, since we prefer to make a leap every five years in the video game industry, we might feel the effects sooner than we realize. We've already seen programs like Steam, which Valve used to distribute Half-Life 2 and a variety of other games. Half-Life 2 was sold for the same price, if not more than it was sold for at Best Buy and other retailers. Common sense would tell you that it should have cost less, since it lacked the packaging and didn't have the added overhead as a result of exchanging hands from Valve to Best Buy to the consumer.
Unfortunately, a future where it costs less to download entertainment online won't be met with open arms, especially by traditional retailers. This is one concern brought up in Wired's article. For example, the cost of MP3s should be less than a dollar since packaging and many of the overhead costs of exchanging hands are removed. The reason that MP3s and Half-Life 2 aren't priced less is because the publishers don't want to cause channel conflicts. If this started happening, traditional retailers would be in an uproar with music and game publishers since they could never compete with the low prices offered by online retailers.
The market is evolving. Although retailers might try to slow down this change, there's no stopping it as long as consumers continue to demand something they see as superior.
So how does this relate to video games? Microsoft, Sony and even Nintendo have their own ideas. Microsoft is already offering consumers the ability to download extra content as well as retro games with its Xbox Live service. Sony's PlayStation Portable meanwhile will likely allow users to download MP3s and other content to memory sticks. Nintendo's iQue in China already allows users to download video games from the internet onto cartridges. In all of these examples, traditional retailers are being pushed aside and content is moving directly from the publisher to the consumer. Although there's no telling what this upcoming generation will bring, chances are we'll see further moves in this direction.
So what are your thoughts on such a future? Is this just crazy talk? I'd like to hear from you, so feel free to drop me a line (glen@n-sider.com).