Valve president Gabe Newell has revealed that the company will soon be making more money from the digital distribution of its games than traditional boxed sales.
“We see sub ten per cent growth rates in our core, packaged retail business,” Newell said. “Right now we’re seeing close to 200 per cent growth in the alternative ways of connecting with customers. It will actually pass over in the next three months, how much of our business is coming from retail versus how much is coming from other channels.”
When asked about how digital distribution overcomes the reassuring feeling of having a box in your hands Newell points out that Steam, their digital delivery system, makes downloading even more secure and reliable than physical media. And with the soon to be implemented Steam Cloud, meaning that your game saves can be accessed from any PC, it is clear where Valve are placing their bets.
This news seems to dovetail nicely with statements made a few days earlier by Wild Tangent founder, chairman and CEO Alex St John, who explains his vision for the future of gamin — maximum profit lies not in game sales at all but in microtransactions.
“It’s going to be microtransaction based…And, again, because I’m a mathematician and an engineer, microcurrency-based economies are just the most efficient way to maximize revenue. They work really well.
“And second is advertising, because advertising is a great alternative payment type for kids who don’t have access to online currency and are huge game players. So, if you don’t have any way to take money from kids, then the only way to get kids to play is by advertisers marketing to them.”
This argument is backed up by the imminent release of EA’s Battlefield Heroes, a free to play online only game that will make all of its money from microtransactions and advertising.
With EA getting on board with this vision of the future of the gaming market I reckon it’s a pretty safe bet that it is going to happen. I have mixed feeling about this, I am so old that I still miss the hefty feel of a vinyl album in my hands (ask your parents) and only grudgingly made the switch to the little plastic boxes of CDs. I like to have a shelf full of boxes so I can see MY COLLECTION in all its glory. I sometimes forget that I downloaded Warhawk and that it is sitting on my hard drive. But as with all things, I suppose we will get used to it and soon the youth will be amazed that we ever paid extra money just so we could not read a thick instruction manual and have a lump of plastic taking up room on our shelves.