How Video Games Are Digitally Distributed

Rebecca Brayton: Is the age of physical media coming to an end? Hi, I’m Rebecca Brayton and welcome to WatchMojo.com. Our host Mike Batell got the chance to speak with Industry Analyst Jesse Divnich about the digital distribution of video games.

Mike Batell: Is digital distribution going to be a game changer?

Jesse Divnich: I think it already is. I think digital distribution already is. I mean electronic arts have come out and said that digital sales are now compromising off I think and they said something like 35% of their revenue or it’s going to be there. And digital being not just digital ExpoLight but obviously social gaming, they need their play fish acquisition, Facebook games, all those different aspects are considered digital games. That’s happening now.

Mike Batell: How do you feel about the PSP Go and its model of total digital distribution?

Jesse Divnich: Ten years from now when the industry is digital, we are going to look back at the PSP Go as the first console to really have the gonads to make a product like that and really it’s the market. I don’t think it’s going to be commercially successful the PSP Go. I really don’t but I don’t think that’s the point.

The problem with Sony is that they always seemed to release systems ahead of their time, like the PS3. It’s powerful, it’s helm. I mean that was a powerful system because it cost $600.00 to $700.00. Now, it’s the recently price and now we’re seeing yourself speed up.

Mike Batell: Do you see a future for Brick and Mortar stores or do you think it’s going to go purely digital distribution?

Jesse Divnich: Will Brick and Mortar disappear? No, there will always be a place in Brick and Mortar. And if you want to look at an example, look what Apple and the iPod did to music. I mean put retailer like Sam Goody, the whole music land branch out of business. But best by still sells music, CDs so does Wal-Mart, and so Target, so still on the market, even though we can all admit music at this point is all digital. They’re still on marketing, Brick and Mortar and that’s how I think Brick and Mortar will survive through digital distribution.

Mike Batell: How attached are consumers to having physical copy of their game and an actual disk to put on the shelf?

Jesse Divnich: When you buy a package good product, not just for your games or anything. There are some types of residual value there. You could trade it in. You can put it on Craigslist or eBay or trading in the EB Games. Digital, once you buy it, there’s no value there. That does post a very interesting question in terms of our consumers willing to give up physical products. It’s going to be tough. It was tougher in music, it really was. It took almost I guess 70 years before the industry transition because people did not want to give up the actual physical packaging. And it has a static appeal. It is a good example of books. Books are still going digital as well.

I hope they don’t. But you walk in to somebody’s house and they have a library. I mean it just looks impressive. You need to see thousands of books on a wall. I mean it has a static appeal as well. And that’s why I say retail will always be around for video games and video games will never go completely digital. There are always be some types of physical demand and one of those reasons is because of the aesthetic purposes of it.