Alternative distribution to optical disks : SSD, cards, and download*

[Silent_Buddha]

How can you say this, when the ASP of the DD is a lot less as compared to disc? There are less hands in the pie, but the selling price is lower too.

At least on PC, the day and date launch price between DD and Physical media is exactly the same.

At any other time, it's usually the same except when they are trying to move more titles (like Steam's Holiday Sale for example). And this will quite obviously skew the dollar versus unit sale ratio when you have titles selling for 50-90% off during the sale. However, without manufacturing, stocking, transportation and other costs associated with physical media, there's still some profit to be made. And quite likely the 90% discounts represent titles that have already made back the initial investment in developement or publishers have given up on making back the initial investment, thus why they are discounted so low.

Regards,
SB

 

[Silent_Buddha]

There are two views here, the market for DD today and the market for DD in the future.
Today you say rural Germany has an issue, fine, but will it be an issue in 3 years?

Rural area's are always going to be problematic. It doesn't make sense to upgrade the equipement to support faster speeds in any area until you have recouped your initial investment and hopefully made a profit.

Since rural area's are less dense, it's going to take signficantly longer to recoup your initial investment. So the likely scenario is that while cities and dense urban areas get bandwidth bumps like clockwork, rural areas will likely skip generations.

So while you have.

City - Upgrade speed 1, upgrade speed 2, upgrade speed 3, upgrade speed 4, etc...
Rural - Upgrade speed 1, no upgrade, no upgrade, upgrade to speed 2 maybe 3 or 4 if extremely lucky, etc...

With each comma seperated segment being similar time frame. For Germany you might be more lucky to get either faster upgrades in rural or better upgrades in rural due to the country being relatively small. But still not as fast as smaller and denser countries like Korea or Japan.

The US, Canada, Australia, and other large countries where the population is far less dense for most of the area, rural is going to be a significant problem when it comes to upgrading bandwidth and services... Our family ranch and much of the surrounding area, for example, only has 2 options for broadband. Satellite or heavily metered wireless (3G) broadband.

And I know some places that still only have access Satellite broadband and nothing else. They don't even get cell phone service.

Regards,
SB

 

[corduroygt]

At least on PC, the day and date launch price between DD and Physical media is exactly the same.

At any other time, it's usually the same except when they are trying to move more titles (like Steam's Holiday Sale for example). And this will quite obviously skew the dollar versus unit sale ratio when you have titles selling for 50-90% off during the sale. However, without manufacturing, stocking, transportation and other costs associated with physical media, there's still some profit to be made. And quite likely the 90% discounts represent titles that have already made back the initial investment in developement or publishers have given up on making back the initial investment, thus why they are discounted so low.

Regards,
SB

I guess that's because only Steam has sales, and online or B&M retailers never have clearance sales on games. In any case, the numbers in the link weren't for the Christmas season, they were for the summer.

People who are willing to pay full price on a download -that's inherently worth less than a disc- are much fewer than people who are willing to pay full price for a disc they can later resell. I am one of them and I'd never pay more than $15-$20 for a download but I have no problems paying $60 for a disc.

 

[JPT]

Rural area's are always going to be problematic. It doesn't make sense to upgrade the equipement to support faster speeds in any area until you have recouped your initial investment and hopefully made a profit.

There will always be areas that can not be serviced, but the people there can not really play online games either today or ? If so are they a viable market segment anyway?

But if you turn it around then and just look at the people that today can enjoy the online part of their games, those are also the ones that are targets for DD.

Also you can mix up things quite well if you want, for instance GPON as an access extender and then tag on VDSL2 or something like that. Or heck building fiber rings isn't that expensive or hard in reality, especially in rural areas

 

[JPT]

People who are willing to pay full price on a download -that's inherently worth less than a disc- are much fewer than people who are willing to pay full price for a disc they can later resell. I am one of them and I'd never pay more than $15-$20 for a download but I have no problems paying $60 for a disc.

I understand thats your view, but claiming that its like this for everybody else ?

To me it seems your claiming that if COD:BO is priced $60 in the store, the optical disc, plastic wrapping and 4 page manual is worth $40-$45 and the software is only worth $15-$20, to you?

Personally I'd, pay the same price as the disc price, for the convenience which is basically having the game on HDD without needing a disc in the PS3 and getting it day 1.
To me no game has resell value, because I either keep it forever or I give it away to friend etc.

But as time goes on, I'd expect that the price would drop to get more people in, but as everything else, being an early adapter is expensive.

 

[corduroygt]

I understand thats your view, but claiming that its like this for everybody else ?

Seems to be that way, given the ASP of digital downloads in the PC domain.

To me it seems your claiming that if COD:BO is priced $60 in the store, the optical disc, plastic wrapping and 4 page manual is worth $40-$45 and the software is only worth $15-$20, to you?

Yes, because I sold it after 3 weeks of playing it and it only ended up costing me $12. I bought it for $52 from Newegg and sold it for $40 three weeks later. I wouldn't have bought it in the first place if I couldn't sell it and Activision would have made one less sale. The guy I sold it to also wouldn't have bought it at full price, since he was obviously looking to save money by buying my used copy.

 

[Shifty Geezer]

There will always be areas that can not be serviced, but the people there can not really play online games either today or ?

Online gaming only needs basic broadband, and most westernised countries have a minimal uniform BB level. You may have 99% of a nation with broadband, but only 30% with faster than 4 megabit, say. Thus online gaming is an option for almost everyone, whereas download tens of GB of game is going to be very slow for most, who'd prefer a disc.

 

[Colourless]

Out here in rural Australia, unless you live in a major town (like me) the only options are Satellite or Wireless. Both are heavily metered costing, for example, depending on your provider, 10, 20, 100 times more than equivilant ADSL plans in a City (depending on DSLAM installation and availability).

 

[I.S.T.]

Online gaming only needs basic broadband, and most westernised countries have a minimal uniform BB level. You may have 99% of a nation with broadband, but only 30% with faster than 4 megabit, say. Thus online gaming is an option for almost everyone, whereas download tens of GB of game is going to be very slow for most, who'd prefer a disc.

Given the fact that wireless is often the only thing you can get in those smaller areas...

Trust me when I say wireless and online gaming is never a good thing. I had to deal with that for nearly a year.

 

[Blazkowicz]

well you should be able to have good games of chess-by-mail with that set up.

 

[JPT]

Seems to be that way, given the ASP of digital downloads in the PC domain.


Yes, because I sold it after 3 weeks of playing it and it only ended up costing me $12. I bought it for $52 from Newegg and sold it for $40 three weeks later. I wouldn't have bought it in the first place if I couldn't sell it and Activision would have made one less sale. The guy I sold it to also wouldn't have bought it at full price, since he was obviously looking to save money by buying my used copy.

I have no problem with the resell market, but you are basically devaluing all games to 15-20 USD, regardless of it being physical copy or DD. So DD is not good since you are not able to resell and get the price point you are willing to pay?

I think there is the crux of the matter, you look at DD and you feel that you lose something, while I look at DD and feel that I am gaining something.
To you DD = price increase to me DD = more convenience.

As I mentioned before, I have no problem to pay on par as a physical copy for my DD copy, now. But as the volume increases on DD, I also expect it to go down in price, as all things in retail seem to do

So I'll stand my ground and say that DD is a perfectly viable alternative/additional distribution method for the platformholders and the consumer.

 

[JPT]

Online gaming only needs basic broadband, and most westernised countries have a minimal uniform BB level. You may have 99% of a nation with broadband, but only 30% with faster than 4 megabit, say. Thus online gaming is an option for almost everyone, whereas download tens of GB of game is going to be very slow for most, who'd prefer a disc.

I admit I do not spend most of my time working outside Norway, but from what I hear and getting told, the speed increase is coming due to the fact that the service providers need to be able to transport new streaming services like Netflix/Spotify/IPTV etc.

But I think we again are getting into the market segmentation/penetration of different things.

Just to make it easy, we drop the worst case rural scenario ie dial-up, satellite, mobile broadband and wireless, because their either low bandwidth, unreliable or have a latency that renders them useless for most online gaming and also the ones that are the hardest to get good enough broadband access to.

Where is the bulk of most nations population located, I assume we are talking about urban areas and most of these areas are most likely profitable in the large scheme of broadband delivery.

The broadband industry is going through an upgrade phase now, its Docsis 3.0 for the cable people, VDSL2 or GPON mix for the incumbent and FTTH. All of these technologies bumps your speed to anything from 10/5 (DL/UL) Mbps connection to 1 Gbps symmetric.
And we are talking so small formfactors and low price now that installing an 8 port VDSL2 DSLAM or 8 port switch per entrance in a 4 floor apartment building is cost effective.
You feed that DSLAM with GPON or FTTB and this solution will also get you better coverage in the rural areas.
You just pop out the old DSL card in the DSLAM you got installed at the POP, insert a GPON or FTTx card and you got a reach of about 20Km to 80Km you can drop in a 8-24 port VDSL2 DSLAM on the other end. These are the guys that today have 512K or 1Mbps connections.
Pulling the fiber is of course some work, but its long term investment that most countries have to do anyway.

But probably the most interesting stat is, how many console owners got bandwidth enough today, most likely Sony/MS etc got some stats, since you can measure your bandwidth from your console and then how many can upgrade now or will be able to upgrade in the future.

And of course I strayed way of topic, but I do belive DD is a viable alternative for a handfull today, ie early adopters (if you payed 600USD for a PS3, your most likely paying for a decent broadband connection already) and the mass market will catchup in the near future.

But I am actually more worried about IPv4 - IPv6 transition and how XBL Live and PSN will cope with that. Because we are taking tops 2 years before we see V6 only connected homes.

 

[Shifty Geezer]

Just to make it easy, we drop the worst case rural scenario ie dial-up, satellite, mobile broadband and wireless, because their either low bandwidth, unreliable or have a latency that renders them useless for most online gaming and also the ones that are the hardest to get good enough broadband access to.

DD doesn't necessitate online gameplaying. You could potentially have a super fast, super laggy satellite connection that is no good for online lay but fine for buying games. For the purpose of game distribution, we only need concern ourselves with availbility of fast/stable broadband.

And of course I strayed way of topic, but I do belive DD is a viable alternative for a handfull today, ie early adopters (if you payed 600USD for a PS3, your most likely paying for a decent broadband connection already) and the mass market will catchup in the near future.

Absolutely. You can buy some few PS3 disc titles on download. Next gen we'll probably be looking at larger download though.

 

[corduroygt]

So I'll stand my ground and say that DD is a perfectly viable alternative/additional distribution method for the platformholders and the consumer.

I agree with you there. As long as discs are still available (and resellable), I have no problems with DD. I'll even buy a few DD titles if they have sales like steam does.

 

[aaronspink]

I wouldn't say that to loud, mobile broadband is all metered and I know plenty of ISP's are looking to add it to their product portfolio.

wireless bandwidth is a different issue than wired bandwidth. wireless bandwidth really is a fixed resource, wired bandwidth is not.

 

[aaronspink]

I wish that were true, but it doesn't seem to be the case. Metered bandwidth is increasing in popularity in Canada and Japan. One country I recently looked at (Chile) has seen almost all ISPs implement bandwidth caps when just 2 years ago very few of them had caps. And while some of the large ISPs in the US (AT&T and Time Warner for example) have backed off plans for bandwidth caps, they are still on the table with both wanting to implement some caps.

Yes, the ISPs would love to charge by the bit (as just about every industry would love to charge by consumption), but the reality is that it is an evolutionary dead end. The issue is the upstream connections to the greater network itself but this is easily solved via local CDNs. Most of the newer high speed networks are designed with CDN from the start which removes the vast majority of the internetwork bandwidth.

The reality is that it is in the long term best interests of the ISPs not to go to metered bandwidth. This is both from a perspective of increasing service competition, customer satisfaction, and government interference.

Even my DSL provider after 13 years of having no wording in its terms of service with regards to bandwidth useage has recently (about 3 months ago) put in wording that they can now temporarily turn off the DSL connection if a user is determined to be using "excessive" bandwidth. And has started interrupting service (about 2 months ago) of users if so detected. Although currently you can get it instantly turned back on after digitally signing off acknowledging that you've read the terms and have been notified of excessive useage.

It will only be a matter of time until service providers doing this will get sued to oblivion and back. Lawyers, sometimes evil is good.

 

[aaronspink]

Got any examples to that? I can think of many examples on the contrary, which is a bad thing.

Yes, almost all the newer consumer end user networks are uncapped and the vast majority are also symmetrical. The secret is that instead of being antagonistic with CDNs, they are inviting them in from the start and incorporating then into the basic network infrastructure. It doesn't matter if your users are pulling down 100 Tb/s of bandwidth if they are doing it only on the local loops.

DD is nice, but only at Steam clearout prices. I bought COD:BO and sold it a few weeks later for $10 less than what I paid for it. If such an option did not exist, I would never have bought it in the first place until it was in the bargain bin. I'm not paying more than $15-20 for a download, ever. Valve realizes this and their success is due to their pricing model.

DD is nice period. And steam is selling plenty of games at full price. It is also leveraging the consumer tail via value pricing over time. Just getting rid of the brick and mortar will knock ~$10-20 off the distribution costs.

 

[aaronspink]

You're making the assumption that a complete DD title is being made available early. To cut back bandwidth costs the platform holder may decide to limit how much of the DD title is pre-downloaded. They could make small portions available leading up to its official release date. If they were to make the whole title available all at once, then you would be correct about it being ready to play, but then that could have serious effects on its infrastructure, especially if they're not able to gauge their audience accurately to meet demand. Remember what happened to Xbox Live a couple Christmas ago?

A modern day CDN isn't going to be brought to its knees by a game release. The various CDNs are constantly pushing out Tb/s+ levels of bandwidth. In fact, they are most efficient when there is a rush of demand as it becomes a hot cached datum within the CDN. It is important to point out that video distribution via CDNs already makes up over half of the bandwidth on the networks already. Adding none time sensitive data delivery on top of that is just noise.

 

[aaronspink]

Any numbers to back that up? Less people will be able to buy the DD only game, and less people are likely to spend some money on software that they cannot physically hold or resell. There's a reason for all those Steam clearance sales, because the demand for high priced DD is not there.

No, that is not the reason for the steam clearance sales. The sales are there to take advantage of the tail end of the demand curve. This is now a well documented thing where people are willing to pay reduced prices for things that they wouldn't pay full price for regardless. This applies both to digital and physical media. In fact, the first major company to take advantage of this wasn't a digital company but one of the largest global media conglomerates: Warner Brothers. They pioneered it will low prices checkout line DVDs and have continued it with the various other programs including their DVD2BLU program. In both cases, via pricing, they are able to move large quantities of product that they wouldn't normally be able to move at high profit margins. The reality is that something that won't sell at say $20 has no NPV while something that sells at $10 does have NPV. By matching price with demand, a company is able to maximize revenue and in many cases maximized captured revue for a products (captured revenue is the revenue that the company makes vs the revenue that another company makes off their product. Selling a catalog DVD for <$10/$5 makes more money for WB than does someone renting that same DVD).

 

[aaronspink]

hahahahahahahahhahahahaha god you don't live near a rural area do you

I have a friend to lived out in the boonies on a farm. Miles and miles outside of any town. He has symmetric 100 Mbps and can get 1000 Mbps with a phone call. He lives in an area where if you have electrical power, you can get a 1Gbps fiber connection.