Digitally yours
OPINION
Some time ago, Microsoft big-wig Bill Gates started spreading the idea that the format war between the two new DVD standards HD-DVD and Blu-Ray, would be the last format war ever. Being a Gamer, this concerns me. First they took away those cool PC game bo
With his statement, Bill Gates rocked the boat of many current-day industry leaders. Reading between the lines, what he is really saying is that instead of buying physical media, consumers will soon buy almost all of their music, movies and games online and - and this is what worries the industry - will get their purchase delivered through the Internet. The ramifications of this concept are enormous.
Your business out the door...
If you're a CD/DVD manufacturer, you'll likely be struggling for survival 10 years from now. It doesn't stop there however. What if you own a media store selling movies, music and games? Already the pressure is on, now that music finds its way to consumers through download stores like iTunes.
Many consumers, myself included, prefer to have physical ownership over digital ownership. The younger generation however is being brought up with completely different ideas about such things. Already I have heard stories of young people throwing their CD's in the thrash bin stating to their shocked parents "But I have them on my computer don't I?". *shudders*
Valve proved it
Further credence to Bill's ideas can be found in the world of gaming. Small developers have been offering paid downloads of their games for almost as long as the Internet has existed but in the past these have usually been budget titles. Recently, the high profile games have also made their entry into the growing field of digital distribution.
Late in 2004, Valve released the highly anticipated sequel to one of the biggest PC hits ever created; Half Life 2. Their online distribution system, Steam, had been around doing small tasks for some time; but on the release of Half Life 2 it received its first real test. While also available in shops, tens of thousands of fans opted to download the game online. The download service was so successful that the physical distributor, Vivendi, started complaining, leading to the eventual separation between Vivendi and Valve.
Half Life 2 proved that the concept of digital distribution was a viable alternative to the more traditional ways of selling physical discs in stores. For consumers the attraction is faster and potentially easier access to digital products.
Good for some
For developers the advantages are quite significant. They can cut the middle'men' (the publisher, distributor, shop) and keep a huge chunk of their earnings that would normally disappear into the pockets of others. The costs for digital distribution are minute compared to the cost-savings from cutting out the middlemen.
The question now is this: does this also mean the end of the age of digital data carriers such as CDs and DVDs? Will we really stop buying media in stores? We can only guess. After all, the coming of the personal computer was supposed to herald the coming of the paperless office. In truth, it meant more paper was used, and faster, than ever before.
I'm selling
What it does mean is that right now, I wouldn't want to own shares in either media retail outlets, CD manufacturers or online media stores. The coming storm will likely be weathered by a precious few.
Sources:
Half Life's former publisher Vivendi
Valve, current kings of the first person shooter genre
Valve's digital distribution system Steam
Engadget's interview with Bill Gates