June 17th, 2010 
Cliff Riseborough Nobody denies that the digital market is increasingly the way forward in the games industry, particularly in the PC realm. However, according to MCV, some publishers are beginning to worry that the market is currently being oversaturated with a glut of digital content all at once.
Is there a big enough market that it can be profitable for everyone? How big a risk is there right now of releases being lost in the flood? Is the onrush perhaps a threat to overwhelm the average consumer?
“I am really concerned about that,” said THQ’s VP of core games Danny Bilson. “Our strategy is based on the fact that Taco Bell has games on Facebook. It seems every commercial venture has a game on Facebook now.
EA Sports’ senior VP of worldwide development Andrew Wilson added: “I think it is always a risk when moving into a new space of getting there before your consumer does. The corporate graveyard is filled with companies that moved into a new field before the consumer got there, and then someone comes up five years later with exactly the same thing and makes a gazillion dollars.
“The preference now is not to buy lots and lots of games, but to spend more money on fewer games. In fiscally challenging times, maybe a gamer won’t buy three games anymore, maybe they’ll buy two and spend the other £30 on extendable content, on experiences they know they love rather than taking the risk on another product.”
Sega West president Mike Hayes said: “The challenge for us is not if the market is big enough, but how we adapt. We need to be cautious. It is exciting and there is a huge opportunity, but we have to be very smart in how we approach it.”
One thing that seems likely is that we will start to see fewer games being released at once, both due to market saturation and costs. Also, this year has seen AAA releases more spread out than normal, rather than the usual flood of games in the Christmas rush and during the summer while the rest of the year is a barren wasteland. Perhaps that will prove to be more of a trend than an anomaly.
The games business is already changing with the shift in to the digital realm. However, it’s pretty clear that the digital realm is not some magical panacea that will serve as a cure all, and it comes with a whole new set of potential problems.
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I’m sorry, but I’m unsure with what you’re writing with this article. I say this because there’s two conflicting articles written in relation to this particular subject.
A few months back you wrote an article about the PC Gaming Alliance’s Report where you stated based off their figures that while PC Gaming Revenue remains steady there’s been a huge increase in consumers opting to purchase their games or virtual items in an online medium. You also quoted from David Cole that:
“This is very positive because, when done successfully, companies in Asia have found the digital distribution model to be significantly more profitable than the traditional retail boxed goods business.”
Now you’re stating and supporting in conclusion that some Publishers are wary of the oversaturation of digital content in the online medium even though:
- More consumers, according to the PC Gaming Alliance, are opting to purchase the games digitally than over physical retail
- Other Publishers, like EA and 2K, are still working in the DLC-related content (sell less for more concept) thanks to the general success of the Fallout 3 Model
Whether or not it’s successful is another matter and something I’m not going to discuss. What I would like to know, as a reader, is your thoughts into this subject and how you can explain what was forecasted a few months ago to what some Publishers have said now.
More sales occurring in the digital market doesn’t mean that game publishers aren’t going to be concerned about spending money on content, only to see it trampled under a flood of other games all launching at the same time.
Is the digital market becoming a bigger piece of the sales pie? Absolutely. Are companies moving towards it? Of course they are. However, while digital retail is an increasing piece of the pie, it’s really just replacing sales that would previously have happened at physical retail outlets. There have been numerous cases of good games being ‘lost in the wash’ in stores as well, particularly during the holiday rushes of years past when every studio is trying to pump as much out on to shelves as they can in a short period of time. The worry about content being missed due to market saturation isn’t anything new, it’s just moving from the physical realm to the digital one. There is still only so much money to go around, so worries about whether a given product is going to be profitable compared to the competition aren’t going to go away just because the sale occurs digitally. If anything, with a lot of indie developers and small studios able to release content online that wouldn’t have gotten a release in the previous store system, there are more games coming out and crowding the overall market space.
Also, while digital sales means sales from company store sites and third party retailers like Steam and Gamersgate, it doesn’t end there. An area where these companies are beginning to invest a lot of money (and where some of the biggest concerns of market oversaturation are) is in games on social media sites and products for mobile devices.
Unfortunately, that still doesn’t explain the anomaly you’ve presented in both articles.
I’ll cite other examples to clarify my confusion:
You quoted Danny Bilson to highlight your case of an oversaturated market in Gaming. His concern is that he’s seeing every company sell and launch some games on social networking sites like Facebook. However, that represents opportunity if you’re a company having complete access to ~400 million members (quote me if I’m wrong on the figure but regardless the figures are in the order of hundreds of million of members)
You also quoted Andrew Wilson to further you case. His concerns are the fear in entering into the market with a new product where many have failed in the process. However, he also emphasizes in the opportunity for consumers in producing more DLC in a particular franchise as opposed to producing and investing in a totally new product.
You also quoted Mike Hayes as well. However, he believes an opportunity is there for his company (or any company for that matter) to make a profit through the digital distribution market. Of course, he stresses the need to analyse the market a little closely and make the right risks as opposed to just ‘jumping in because everyone else is doing it’.
These observations you quoted show that the opportunity exists – the market is there – and it is prevalent thanks to your previous article and your observations in the digital realm in the Asian Markets. I’m sure the concerns of market oversaturation is there and remains one of the obstacles any gaming Publisher faces whenever they launch their product.
Based on what you wrote, however, this isn’t what I was reading. Hence my uncertainty and confusion in both articles as noted in my first response.
Okay, the issue I’m seeing here is that you’re taking articles on multiple topics and trying to weave them in to one big narrative, and that simply isn’t the point. None of the articles you mentioned were editorials…I’m simply sharing information and the statements of people in the industry. And as with any industry, there are a wide range of opinions. The only portion of it that really delved in to opinions were the last couple of sentences, and those were basically reiterating what others that were quoted have said…digital distro isn’t a magic cure all, and it does come with potential problems (in this case of market oversaturation).
…I see.
In any case, I just wanted to say thanks for your explanations into some of my queries and concerns.
No problem.