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The gaming industry is starting to show real signs of developing into digital experience consumers are craving. But with this evolution for the consumer, comes conflict and competition for publishers and retailers. As it stands gaming publishers see the entry point for consumers in the physical box product through a console, which then evolves into the DLC (Downloadable Content) model that they can sell directly to consumers through platform (PS3, Xbox 360, PC etc). The physical product distribution comes via high st. stores and online retailers.

For the traditional box product, sales are driven predominantly from in-store, but with online continually nibbling away at share. But, overtime, and as consumption practices change, sales via ‘online’ will take pole position and that itself begs the question: ” If all our sales are coming through an existing internet connection (online store), and if all consoles have an active internet connection, why don’t we (the games publisher) just send the game direct?” . Parts of the PC market are already exploiting this potential, with notable services such as ‘Steam’ leading the field in terms of direct digital distribution. Steam is affiliated with the gaming publisher Valve, and will undoubtedly be leaps and bounds in front in this sector.

So, if the trend for game consumption shifts from in-store to online store, the product purchased will still be analogue in the sense that it gets delivered to the consumer via postal services. Does this not defeat all the advantages of digital commerce ? If my Xbox 360 / PS3 has an internet connection already why cant i just buy the full game direct, here and now ?

The film and dvd industry is really making head way in this sector. Companies such as ‘Netflix’ are really progressing in this field, and have tied up great partnerships with Microsoft to be the leading distributor of films ready for direct download on the Xbox360 platform. This original deal was tied up in the US, but has proliferated into other markets in recent months, including the UK. I was a bit surprised to see that no other UK DVD distributors saw this as an opportunity, your Lovefilm and Blockbuster’s of this world were no where to be seen. Whilst we are on this subject, Netflix released this slideshow that is an excellent walkthrough of how the market is changing from ownership through to streaming.

It is a fascinating area for growth in the video game/entertainment sector and is one that will undoubtedly raise a multitude of questions and potential conflicts. But the result of this retail warfare can only benefit the industry and consumer. The industry itself will be different. Retailers may not wear the trousers in the future, but rather the platform owner. The point of entry for a gaming experience no longer becomes the store on the high st. or the online store, but rather becomes the ‘screen’. The shop window ‘screen’ will subside for the digital.

Retailers in the entertainment sectored to start reacting to this market and taking real strides into the digital delivery if they are to continue to make the margins they expect in the future. Market share in the entertainment retail space will become increasingly competitive in 2010/2011, with Game, Play and Amazon all going to battle with Best Buy, not forgetting the rescued Zavvi.

Delivery of an entertainment experience is changing, but the fortune will only favour those willing to accept and action this new relationship with the consumer.

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