DIGITAL DISTRIBUTION
titles – the safe bets,” says Direct2Drive’s senior marketing manager Paul Herron. Digital distribution doesn’t have the same problem.
The inherent flexibility of any online service has been a key factor in the rise of downloadable games, and Chung believes the sector will continue to have key advantages over bricks and mortar. “Digital distribution allows for several marketing opportunities that are either difficult, costly or impossible to duplicate at retail,” he says.
“Pricing is easy to change quickly and ubiquitously across digital channels allowing for a games publisher to react quickly to market demand and more tactical sales periods in order to drive revenue and acquire new users.” Herron agrees: “This allows us to dynamically change many areas of the product – from its price and placement through to even changing the content offered – and all delivered within an hour or so to the customer.”
OFFLINE BENEFITS
That’s not to say digital distribution will be retail’s downfall.
In fact, Holtman points out that price promotions and other such hallmarks of digital’s success have actually gone on to benefit the sales of boxed products. “For both our own titles and third party ones, we’re seen that Steam events – such as our free trial weekends, sales and price drops –
CASE STUDY: CITIES XL
FOCUS Home Interactive’s city management title Cities XLwas released in the UK last October and enjoyed a single week in the Top 10 of the PC charts – rankings that sees
considerably fewer changes each week than other formats.
The 2011 edition was released last month, but while the publisher has decided against releasing it at retail, the game has still thrived online, racking up several weeks in the Top 10 of the Steam chart.
www.mcvuk.com
Does Focus lack faith in the game’s sales potential at retail?
“It is true niche games such as this will interest a number of players throughout the world, but not enough to be powerful sellers in store,” says the firm’s CEO Cédric Lagarrigue. “However, I believe Cities XL’s digital sales on the leading download stores reflect the commercial performances of the title at retail. “It is in the Top 10 everywhere in
Europe, except in the UK. That is the only territory where we decided not to stock it in stores. It was impossible for us to secure a strong place at retail because difficulties with distributors and the extremely unfavourable
conditions of the PC market. It has become very difficult to sell a good PC title there. “If people can’t find a product in store, they will buy it online. It is the same thing in the US, where PC does not have any more the place at retail that it had before. It was no surprise when NPD announced in September digital sales had exceeded that of boxed product for the first time. “If the same study were undertaken in England, I’m sure you would arrive at the same conclusions. Whereas in important territories like France or Germany, PC games have a better place in stores, digital accounts for only 15 per cent of the total sales.”
November 12th 2010 53
Green Man Gaming’s David Clark (right), Valve’s Jason Holtman (center) and Direct2Drive’s Paul Herron (far right) discuss the benefits of downloads
can drive sales on Steam as well as at retail,” he says. “And this phenomenon isn’t restricted to PC. Promotions run for PC products on Steam have caused sales spikes of their console counterparts being sold at retail.” And the Valve exec observes that
“
High Street retailers have several advantages that their digital rivals are unlikely to ever have.
Digital distribution allows for marketing and pricing that can’t be duplicated at retail.
Alexander Chung, Atari US
These include impulse buyers, the giftable nature of physical products and cash payment – an important factor when you consider that teenagers and children are less likely to shop using credit cards.
WORLD OF DOWNLOADS Ultimately, digital distribution can deliver stronger sales for a wider range of titles because of its broader scope and the permanance of its software library. High Street stores are locked into their locations, only capable of engaging with consumers from within their local area. Whereas the likes of Steam and Direct2Drive are everywhere, and
sales are all-encompassing rather than region-specific. As such, they need a different approach to selling games – and different results are to be expected. “Bricks-and-mortar retail is physical in just about every way, so it is geographically constrained and as such their marketing activities reflect this,” says Green Man Gaming’s co-founder and director David Clark.
“Digital retailers are communicating and selling globally and must therefore employ marketing techniques that reflect this such as Google Adwords and Facebook advertising. That said, such activities are not at the total exclusion of more traditional marketing media.
“The basic principles of retailing apply to all retailers, weather they exist online or offline. The key differences for digital retailers is their ability to communicate and sell globally and to be able to cater to a far wider selection of customer niches than a physical retailer will ever be able to.”
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