Digital Distribution Dilemmas

Is digital distribution coming of age or are there barriers preventing customers from embracing the advantages of cloud-based distribution? We look at the recent example of Mass Effect 2 for PS3 and questions who really stands to gain.


(Image: Derringdos, 2010, Flickr, CC)

There has been plenty of hype and excitement within the gaming press over the past few weeks regarding the release of critically lauded Mass Effect 2 for Sony Playstation 3.  This game has been out for quite some time on Xbox 360 and PC as it was released back in January 2010 and the game received high praise at the time, with Metacritic scores in the high 90% area.

I've seen several sites refer to the PS3 version of the game as either the definitive or the most complete version of the game, mainly due to the bundling of the Downloadable Content (DLC) that followed the original releases onto the PS3's Blu-ray disk. You can find a list of what DLC appears where and at what cost from this table.  Not all of the game's DLC is bundled onto the Blu-ray; that would be a missed opportunity for additional revenue.  However, what is genuinely surprising about the PS3 release is the cost of digital distribution.

Purchase options

If you wanted to go out an buy the game today you'd have a number of different options.  You could walk into your local high street game store or supermarket and hand over your cash.  The advantage here is you'd be able to play the game as soon as you got home, although you may be a hostage to price if there are few competitive stores in your locality.  You could hunt the game down online using a service like Gamestracker to find the best UK price and have it delivered to your door.  The advantage here is price (£35.86 delivered via ShopTo), but the disadvantage is the delay in getting the game in your machine.  The other option involves you downloading the game direct from the Sony PSN store direct to your machine.  The game is currently retailing at £47.99 on the network and I'd guess it would take a while to download for many folk.

For the record it's worth noting that the RRP for the game is £49.99, so the PSN store comes in at £2 cheaper.

Price disconnect

The price difference between the direct download and the ShopTo next day delivery is pretty marked at £12.13 in price.  Somehow, I can't see this direct download being a bargain purchase, especially when you could purchase much of the game's DLC with that difference as you can see from the image below:

I haven't been able to confirm this yet, but the Cerberus Pack DLC shown above comes in at £11.99.  What I'm finding a little confusing is whether this DLC is unique content or if it's the material included on the Blu-ray itself, especially as it seems to include material that reviews have hinted at as being included for free (eg the Mass Effect comic, the Zaeed character, etc).  If this is the case, the digital download strategy is one which seeks to make the most money off the PSN purchaser.


Digital Downloads

On this evidence I can't see myself ever opting to pay for the digital download format over the Blu-ray original - there's just too much doubt and not enough clarity from the PSN store regarding what you are getting for the increased price.  This has not gone unnoticed by the gaming press.  What could possibly justify the inflated price?  There's no dick, box, or manual costs. There are no transport costs bumping up the price to the consumer. OK, there may be bandwidth and storage costs incurred but it's not as if the PSN is hosting 50 copies of the game package.  Perhaps there is a licensing deal in place which prevents the PSN version from undercutting the RRP by a certain amount.  If that is the case, how is that money divided up?  We can see from the image below how that cost is divided up in the physical world.

Straight away we can exclude £6 of costs for returns as very few digital downloads will be returned. A game disk may be returned if it was damaged or faulty, thus becoming useless.  This same item will have already incurred marginal distribution costs in order for it to get to the shop shelves, and a return will need to be sent back to the publisher.  The figure of £3.50 per game per distribution seems excessive when there are no confines of physical shelf space.  I'd like to see more info on how digital distribution deals work.

For consumers, there is also no chance of selling on the digital copy if you tire of the game, and there's definitely no benefit to those interested in video game nostalgia - I can't see anyone pulling the game out after a decade and musing on the wonders of digital files.  That file certainly won't make it to eBay...

If Sony and others like them are serious about digital distribution then they really need to sweeten the deal, otherwise people will continue to flock to those environmentally unfriendly shiny disk formats.

Format exclusive DLC flip-flops

It seems like good fiscal sense has finally won out in the battle of format exclusive DLC, well, at least in relation to Bethesda's Fallout 3. C&VG are carrying a news story stating that the once Xbox/PC exclusive content is finally going to make it's way to the PS3. At long last, I will be able to spend my £30 on buying extensions to one of my favourite games of the last 12 months. The Bethesda post is here.

I got a little angry last month when the third batch of DLC was announced, Broken Steel, for Microsoft friendly environments. Hopefully, Bethesda will learn from their mistakes and ensure that when they release the new material for the PS3 that it will be functional and not broken again. One can only hope. If they do, I will even forgive them for messing with the chronology of the gaming narrative as outlined by Michael Abbott on the Brainy Gamer site.

A minor point of umbrage is that future DLC will still be staggered behind the Microsoft release, but what the heck. I'm pacified for now. I hope they updated the radio station with more classics from the wasteland...

On the problems of format exclusive DLC...

We might want to file this one under 'rant'...

It's not often that I stop to think about the ways in which games companies shoot themselves in the foot but today I had one of those moments. I had been reading through the recent press releases for Bethesda's Fallout 3 downloadable content (DLC), entitled Broken Steel. This is the third release to date which extends the world of Fallout 3, following Operation Anchorage and The Pitt.

Unlike the previous two releases, Broken Steel, promises to take place where the original game left off. The other games were set in the same post-apocalyptic game world as Fallout 3 but they deviated from the original title somewhat. Broken Steel allows you to increase your character's skill level to 30, beyond the original 20, and also brings with it other various perks. That is, if you have any version of the game that isn't PS3.

Having games be exclusive to a particular system is not a new thing. In fact, it was a big part of Sony's success with the original Playstation and its successor, and may have even been pivotal in platform purchase decisions. That can make a lot of sense in terms of a large scale marketing campaign focusing on brand exclusivity, but I'm not convinced the same thing can be said of smaller DLC.

The problem...

This is where my problem begins. The press release material all sounded pretty attractive to me - I am more than happy to buy additional content for those games I have enjoyed playing, especially if they promise to extend the pleasure of that experience or offer added value. However, I own a PS3 and a Mac, not an Xbox 360 or a PC where the DLC is going to be headed.

None of the DLC has been available to date for the PS3. The reasons for this? Unknown, although rumours of a deal between Microsoft and Bethesda are littered across various gaming sites. IGN reported back in July 2008 that Bethesda's Todd Howard promised "extensive" DLC for Xbox and Games For Windows. No official announcement was made at the time as to why the PS3 was excluded. Edge carried a story around the same time in which Colin Sebastain of Lazard Capital Markets remarked thus:

"...I think it's a very good possibility that Microsoft and Bethesda were partners in this decision. Obviously Microsoft paid up to secure exclusive online content for GTA IV, and online is a cornerstone for Microsoft's digital media strategy."

In the same article, Bethesda's marketing boss Peter Hines is quoted as saying:

"...We aren’t going to get into the details of the hows and whys," said Bethesda marketing boss Pete Hines in an e-mail. "[DLC] will be exclusive for PC and 360. [We're] not going to give any other qualifiers or clarifications as it relates to other platforms."

Incentive to buy?

As you can see, Fallout 3 is by no means an exception. Microsoft signed an exclusive deal with Rockstar so they get the GTA IV DLC on their platform. Now, I have to ask, who really benefits from this kind of exclusivity deal? Do Microsoft really gain that much by securing the rights to exclusive DLC content? Do the game developers gain from the cash tie-in which denies one platform? I enjoyed both GTA IV and Fallout 3 and would gladly buy the DLC if it were available. However, one platform having exclusive DLC whilst another does not is not enough to make me buy that machine over the other.

The only solution it would seem, is to buy an Xbox 360, then buy the games I already own, then buy the DLC. As you can imagine that is not something most consumers in the middle of a global recession are likely to do just to play an extra few hours worth of content. A quick estimate of exactly how much this would cost from Amazon goes to show you the potential implications:

• Xbox 360 60GB - £159.99
• Xbox 360 Wireless Network Adapter - £50.92
• Fallout 3 - £27.99
• Total - £238.90

I had to include Wireless Network Adapter as I'd be unable to connect my machine to my wi-fi router any other way, and I had to include an Xbox 360 which has a hard drive to download content onto. I excluded the cost of the DLC as that would be paid for on either format for the sake of this example. I also excluded the cost of Xbox Live Gold subscription which wasn't needed to get the DLC. The free Silver package is fine.

Almost £240 to play the DLC is beyond reasonable. Not everyone can afford to buy two machines. Not everyone can have the foresight to know which companies are going to get which exclusives, or which games are going to be so enjoyable you will want to buy more expansion packs. Not everyone who buys a games console is aware of the past deals signed between developers and manufacturers.

I make these points to highlight the shortfalls of DLC exclusives. DLC will seldom be a major purchasing factor when people decide which of the largely similar consoles they will opt to spend their money on. It may play a role, but not the deciding role. Therefore, I ask who actually wins and who loses as a result of these exclusive deals?

And the winners are...

I can only guess that the developers win in the short term by virtue of receiving a cheque from Microsoft. Microsoft may stand to win a small PR battle over Sony, but there are other areas in which they may lose out (Blu-ray functionality; cheap expandable storage; etc). The real losers here are the gamers who can't access the content they would gladly buy because of a format battle (one which is actually good for games in that it fosters competition and technological advancement).

Each of the Fallout DLC costs about £10 (or 800 Microsoft Gamer Points). That's £30 that Bethesda will not be getting from me or from the other angry PS3 owners who would have made excellent customers. Who's winning now?