Have the first shots in the long-brewing Digital Distribution vs. Retail Wars been fired? About two weeks ago, GameStop.com abruptly stopped taking pre-orders for THQ’s upcoming Warhammer 40K: Dawn of War II, and scrubbed any mention of the game from its site. While no one has been able to get an official reason out of either GameStop or THQ, the speculation is that the conspicuous disappearance is connected to the use of Valve’s Steam service as copy protection—GameStop is probably peeved that in order to install DoW2, gamers will have to install Steam and be presented with an option for fabulous deals on PC games that doesn’t require hauling their asses down to the mall and digging through all the Barbie Horse Adventure games on GameStop’s depressing PC corner shelf.
Further investigation, though, may indicate that this is no coincidence.
The day that digital music outsells their time-tested physical counterparts is finally upon us. Just this week Atlantic Records announced that more than half of its music sold within the United States was digital, thanks mostly to iTunes and cell phone ringtones.
But sadly, with the lowered amount of in-store copies being bought, there’s ultimately a smaller pie to get a digital piece from. Analysts at Forrester Research are estimating that music sales in the United Sates will go down to $9.2 billion in 2013, from $10.1 billion this year. Compare that to the $14.6 billion in 1999, and there’s a disturbing trend for record execs.
It’s expected that piracy has a good deal to do with the lowering numbers, but the ailing economy could very well be a large factor. The real question though, is how long until an overwhelming majority of music sold is digitally? It can’t be too far off.
Microsoft lobbed another artillery shell towards brick and mortar retailers on Thursday with the debut of its new U.S. online marketplace. Microsoft has been slowly expanding its direct to consumer sales channel over the past several months and launched its first pilot program in the UK and Germany back in July. Currently the online marketplace offers everything from Mice and Keyboards to Xbox games and consoles. Landmark PC software products such as Windows and Office will also naturally be made available.
A disproportionately large percentage of our readers have been shopping on Newegg and Tiger Direct for years. And the idea of buying items online isn’t all that unique to most of us. Perhaps the most interesting new feature of the online marketplace however, is the option to download software and install it without the need for the physical media. Downloaded software can be burned by the customer to a DVD, but this process is optional. Microsoft will also allow repeat downloads of its software, and offer remote access to product keys. According to Microsoft’s Trevin Chow; "There is no longer any need to pay for shipping costs and waiting for the big brown truck to drive across the country."
We all know that online software distribution is hardly a novel concept, and people have been downloading productivity software and OS’s such as Open Office and Linux for years. Despite these facts however, this is still a huge step for the Redmond based software giant and a further reminder that internet distribution is here to stay. Let’s just hope they find new ways to compress this stuff. I’m not sure how much more of this my bandwidth cap will take!
Forget about the fight between DVD and Blu-ray, Playboy has decided to leave physical media behind altogether. Instead, the company best known for its articles (you do read Playboy for the articles, right?) will focus solely on digital distribution, according to the company's regulatory filing. The move is expected to save Playboy about $12 million a year in expenses.
Shedding its DVD operation will result in the loss of 80 jobs an $2 million in restructuring charges. Combined with an additional $4 million taken against archival materials and a receivable, Playboy expects to take a total of $6 million in charges against operating income resulting in a net loss for the third quarter.
Despite the initial net loss, Christie Hefner, the company's chairman and chief executive, wrote in a memo to all Playboy employees that the goal is to return the company to profitability in 2009. In addition to migrating to digital distribution, savings will come from cutting overtime, travel, and entertainment.
Almost makes you not want to work at Playboy. Almost.
A year ago most of us were bracing for a long, drawn out battle between Blu-ray and HD-DVD, but we all know how that turned out. What we don't know, at least not yet, is what impact digital distribution will have as the nation's broadband continues to improve. Michael Bay, the man who directed Transformers and then voiced his outrage over Paramount's decision to abandon Blu-ray, claimed in late 2007 that Microsoft wanted both formats to fail, and was even actively trying to sabotage the high definition format war, all so it could reap the rewards when digital downloads take over.
Hit the jump to see why some think Blu-ray and digital downloads are both here to stay.
GameStop CEO Dan DeMatteo recently voiced his thoughts on digital game distribution's far-flung, jumpsuit-clad future -- even in the face of screaming success stories like Steam. Fortunately, David Perry, Shiny Entertainment founder and current CCO at Acclaim Games, speaking for everyone else currently residing in, on, or around earth, decided to cram some food for thought down DeMatteo's throat.
"I hate to think someone this powerful can put out this kind of nonsense in an interview, and confuse professional investors, that might have been interested in the digitally distributed future of the games business," he wrote. "Some developer (or publisher) pitching a digitally distributed strategy might have just been 'thrown under the bus' today by Mr. DeMatteo."
"This wave will be just like the disruption the camera industry experienced – you can hope 'digital' won't show up and keep selling film cameras, or you can embrace the future. Every major camera company alive today embraced the digital future. It's not like he or GameStop has any part in deciding where or when; the consumers will decide. Let's face it, he's running the shop that sells the film."
"If they want their company to still exist in 12-17 years, I'd go and buy STEAM from Gabe Newell, which technically can't exist yet as Gabe is clearly 12-17 years ahead of the curve," Perry concluded, also noting that 100% of Acclaim's digitally distributed games are profitable.
Purchasing software and other digital content online is not only be convenient, it can also make fiscal sense when there's no sales tax involved. That's been the case for some time now, but according to DailyTech, the free ride may be rapidly coming to an end.
With a $130 billion digital market going untaxed, the temptation for some states to cash in may be too great to pass up, even if the idea of taxing downloads doesn't pass muster at the national level. Indiana, South Dakota, and Utah are the most recent states to sign digital download taxes into law, bringing the count up to 9 states altogether in 2008, and 17 in all. But are taxes the answer?
Several online entities have begun lobbying against the taxes, claiming that this differentiation is vital to their business. As Steve Delbiano from NetChoice - which is composed of Ebay, AOL, Yahoo, and others - explains it, "With global warming and a world that's running out of oil, the last thing governments should do is add taxes on something that uses no oil and produces no carbon. A digital download is the greenest way to buy music, movies, and software, since it requires no driving to the store, no delivery vans, and no plastics or packaging."
What's your stance? Do states have a moral and legal right to tax digital downloads, or should the internet tax moratorium trump individual state desires?
He blamed digital distribution and rampant file-sharing for broadcast TV’s woes. He has a point as digital distribution hasn’t even fully taken off and the Youtubes and iTunes might just be the precursor of bigger things to come, and digitally distributed content will hold sway be it game consoles or TVs.
However, broadcast TV is not going anywhere in large parts of the world that still don’t have a high broadband penetration rate. We have all been told how a certain technology or gadget is headed for its grave only for it to survive; even the radio has managed to survived till now. Tell the whole world what you think about broadcast TV’s fate in the comments section.