Thursday, August 25, 2011

Video game stores are dying

It is surprising easy to spot dying industries: There appears to be an universal law that forces them to get increasingly nasty in their fight for survival on their way down. Thus this week's news that Gamestop is stealing OnLive coupons from boxes of Deus Ex: Human Revolution to "not promote the competition" isn't all that surprising.

Like everybody else I used to buy my video games in stores like Gamestop. Over the years that experience turned worse and worse: The selection of PC games available got worse every year, and it was rare to meet an employee who could give you better advice on what game to buy than what you could have learned from 5 minutes with Google. Boxed games further suffered from the interaction between game companies and pirates, both of which I hold responsible for the evolution of DRM systems which mainly inconvenience legal buyers. These days I buy nearly all my games on Steam.

The only reason video games stores aren't dead yet is that consoles are lagging the PC in digital distribution. But that is really just a question of time. There are already handheld consoles which can't use any physical media at all any more, and services like XBox Live and Playstation Network are growing, despite this year's problems with hackers.

As gamers are getting older and richer, being able to resell a game or copy it for your friends is becoming less of a priority when deciding what game to buy and how. There was always a large group of gamers which just bought games for themselves, without ever making them available to other people through reselling or piracy. In many markets broadband internet is so widespread now that digital distribution simply has more advantages than disadvantages for the majority of possible customers. So why bother leaving the house, going to a shop that might not have a copy of the game you want to buy, and being limited to a selection of the latest best-sellers?

Apart from digital distribution being more practical for many consumers, there are also financial aspects. Digital distribution is clearly cheaper than retail distribution. Thus either more money goes to the game developers, or games become cheaper, or a mix of both. Actually games already ARE cheaper, by a significant amount, if you look at all games, and not just the best-selling games' prices on release day. Good prices come to people who wait, either for Steam sales or permanent price reductions. Rift now is available for $4.99 (albeit without the usual 30 free days, thus effectively the price is $19.99). And unlike video game stores, these lower prices for older games have unlimited availability, no more searching of bargain bins in vain for a cheap game. Furthermore digital distribution platforms have more indie and low-budget games than video game stores, there are a lot of excellent games under $20 on Steam.

Gamestop opening boxes of games to remove coupons for online services isn't going to change all this. The business model of selling video games in a box is clearly on its way out.

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