Gently Down the Stream: Advances in the Digital Distribution of Video Games

The landscape of video game distribution is changing. Despite its relative youth, the video game industry has known quite a few different distribution methods already – tapes, floppy discs, CDs, DVDs and now direct downloading and streaming services.

In recent years direct download gaming has been on the rise. Nowadays, whole games can be downloaded legally without ever seeing a DVD and a thriving market in DLC – downloadable content – exists based on the concept that gamers are willing to pay extra money to add additional content to the games they already own. Small indie gaming outfits as well as major design studios and publishers are benefiting from this shift in distribution. Take for example Good Old Games, a platform that is solely dedicated to the distribution of older games that are currently out of print or otherwise hard to come by. Also, think of the ongoing success of Minecraft, that ridiculously popular indie game that continues to make ludicrous amounts of money for its one man development team (For an interesting analysis of why Minecraft is doing so well click here).

One of the big direct download players is Valve‘s Steam platform. Steam is a stand-alone platform that offers a direct download store, automatic updating and patching and full access to your library of purchased games with the option to make offline backups. Overall, Steam provides a clean, integrated gaming solution, but as with all platforms of this nature it also breeds dependency. For example, what happens to purchased games when Valve goes bankrupt and Steam is taken offline permanently? (Valve has promised that playable stand alone downloads will be made available in case this ever happens). Also, Steam still maintains staggered international release dates and various product and pricing regions, all of which are minor irritations and can be hard to justify given that all their products are fully digital. Proprietary platforms like Steam allow easy integration of DRM – digital rights management – solutions. The term DRM is often discussed negatively due to specific implementations that impose varying and sometimes baffling limits on the usability of the purchased game. For example, think of the Spore activation backlash or the reactions to Ubisoft‘s ‘always online‘ authentication scheme. The main problem with these DRM implementations is that the restrictions imposed by the software are in no way counterbalanced with additional added value. This is a pitfall Steam has so far managed to avoid. (Overall, Valve has generated so much good will that they could probably get away with charging 9,99€ for an in-game hat that’s purely cosmetic. Oh, wait…)

With direct download services now firmly entrenched in the video gaming landscape, the next generation of such platforms is starting to arrive. Services such as OnLive and Gaikai are designed to be browser integrated, streaming platforms. Both services aim to make gaming more accessible and remove hardware limitations. By actually running the game on the server end, all the hardware a player needs at home is a machine that can handle a compressed video stream similar to that of, say, YouTube. While this may sound like the holy grail of gaming – never worry about hardware upgrades ever again! – it further emphasizes the questions already raised by direct download services. What happens when the service goes down, or worse bankrupt? And what about the payment plan? OnLive was planning on using a monthly subscription model but has announced that these plans have been dropped in favour of pay-per-game model. The question remains however: what are you actually buying? Are you buying the game itself or are you merely purchasing temporary access to the game?

Personally, I’m very curious as to how these services actually work. OnLive is currently not available in Europe and Gaikai is yet to launch, so I haven’t been able to try either. In my opinion, these services will only survive if they can provide an extended gaming catalogue, clear added value and ease-of-use and a reasonable pricing scheme. Ignoring the network latency, video compression and availability issues for a moment, I’m particularly interested in the chosen approaches to in-game (in-stream?) advertising and the integration of these platforms into existing websites. Gaikai’s concept of having a clickable game ad that allows you to immediately try out a game demo followed by the option to actually purchase the game, all without leaving your browser, seems highly conducive to impulse buying and is worth further exploration.

The US-only launch of Onlive has been – as far as I can tell – a relatively quiet one. If succesful as a platform, its existence will undoubtedly further stimulate the spread of casual gaming into the mainstream (think of the mind boggling success of FarmVille). Though Onlive‘s recent change in pricing scheme may be an indication of their success thus far, I’d love to see some real usage figures. With the launch date of Gaikai fast approaching, it’ll be interesting to see what the future holds for both platforms. Will the stream swell into a tsunami of eager gamers, a churning maelstrom of DRM unrest or will it just wither away until it’s nothing more than a small trickle? Due to the variety of issues involved here – open versus proprietary platfoms, digital ownership, piracy, DRM, commercialization, Web integration – the future of streaming gaming platforms could remain an interesting topic for years to come. OnLive, Gaikai, I’ve got my eye on you.