Have we passed the web game Vs boxed game tipping point?

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The game industry has been wedded to the boxed cardboard and plastic retail game product for over 20 years. To the point that many people think that this is the industry. Everybody also knows that web gaming is growing and will be important in the future. But this is not the reality. The reality is that web based gaming is already bigger in terms of number of players and hours played. And that advantage is increasing at a phenomenal rate. Boxed games will soon be insignificant in comparison. Here are some of the numbers.

These numbers are simply staggering and are a reflection of the huge business advantages of online games.

  • No piracy. This incredibly important. People will steal games instead of paying for them. This has killed the PSP as a platform to develop for and has destroyed PC boxed games. It could just as easily invalidate the business model of any console that relies on boxed games.
  • Instant distribution. When you launch a new game it is available straight away worldwide.
  • Far lower costs. No manufacturing or distribution costs. No retailer’s margin. At a given price point your earnings can easily be double.
  • Servicing niches. A boxed game has to be mainstream to get shelf space, this holds back innovation. Online you can try anything and reach your customers worldwide with it.
  • No publisher advantages of scale. Conventional product favours massive global publishers as has been proved by music and film. Online removes these advantages of size. Small publishers can enter the market and thrive.
  • Long sales window. Traditional boxed games can stay on a retailer’s shelf for just a matter of weeks. Online games can continue to generate revenue for years. This makes niche products far more viable.
  • Added power of online marketing. All anyone has to do is click your marketing and they can buy your game without leaving their seat. If they want to buy a boxed game they have to make a trip to a retailer or wait for Amazon to deliver. Both of which are obstacles to purchase.

So if I were investing in games just now you can see where my money would be going.

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6 Comments


  1. I seriously hope it ALL goes online, but I also hope ISP’s offer better connection speeds to accomodate. We’re way behind regarding broadband as far as I’m concerned.


  2. I bought 11 new games in 2007, 7 of which were on Steam. I was thinking of trying Direct2Drive for UT3, but wanted the Special Edition with bonus disk, so I got a boxed version instead. Except for UT3, the only reason I bought a boxed game was because it wasn’t on Steam.

    I’m becoming a big fan of buying games via download. Don’t have to worry about losing disks (aaargh – I misplaced my UT3 bonus disk!!!), and I like the convenience of installing Steam games on any new computer I get. As long as I have decent internet connection, downloading games is the way to go.


  3. Piracy is not important. Quality, ease of use and price are important.


  4. The reason why we don’t put copy protection on our games isn’t because we’re nice guys. We do it because the people who actually buy games don’t like to mess with it. Our customers make the rules, not the pirates. Pirates don’t count. We know our customers could pirate our games if they want but choose to support our efforts. So we return the favor – we make the games they want and deliver them how they want it. This is also known as operating like every other industry outside the PC game industry…

    …Blaming piracy is easy. But it hides other underlying causes. When Sins popped up as the #1 best selling game at retail a couple weeks ago, a game that has no copy protect whatsoever, that should tell you that piracy is not the primary issue.

    ————-

    More here:

    http://forums.sinsofasolarempire.com/post.aspx?postid=303512


  5. Bruce,

    Not sure how you can claim there is ‘no-piracy’ from web-based gaming, STEAM have had their fair share of security issues, as with WoW. In fact, there are more ‘hacked’ servers hosting ‘STEAM’ games than I care to imagine.

    Piracy will ‘always’ exist, just to what extent the end-user is prepared to go to. For £30-£40 most people will go pretty far- unbeilevably far in my experience.

    The risk of an Online game being compromised by Credit Card thiefs is also a big issue – once they realise they have access to large numbers of ‘valid’ credit cards and personal information – expect the servers to be hit bad – especially if they plug this code into innocent looking ‘mods’ etc.

    I know I’m not being specific, I don’t want to be 🙂 – just highlighting that although piracy has been reduced, the risk has now been shifted to the ‘consumer’ rather than the ‘organisation’…

    Let’s hope I’m wrong though 😀

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