A case for kiosk based distribution for Microsoft’s Xbox and Live cloud services.

[corduroygt]

Cartridge based consoles have been dominant since the beginning of time and people are used to them. The massive cost of starting up a new distribution scheme will not be offset anytime soon...

Different conditions in the 80's and early 90's compared to today. There was no DD that would make the kiosk system irrelevant back then. Blu-ray is the last physical media before going download only. It'd probably be cheaper to invest in Verizon, etc. to bring internet to those who don't have it than try to set up kiosks.

 

[Squilliam]

The only thing I could forsee happening is that they price the content at the kiosk the same price as the digital content. We've faced this issue since the inception of the digital age and until content providers alter this business structure, it will inevitably fail.

The reason why they cannot price the digital content at less than retail is because they cannot offer the same deals to retailers. If they use digital store based distribution they can do just that because the price in store can be the same price as online, so this is an alteration of the business structure to support direct download in a practical manner which keeps the retailers happy and allows them to pass on the savings of a lower cost distribution model.

The dynamics for a long transfer time could change drastically however if there are Kiosks available in say, fast food restaurants. Or perhaps gas stations (with attached convenience stores). Many times you're already going to be there for a certain length of time.

People concerned with time could certainly bring a super fast storage medium if it is supported and if they wanted fast transfers. Kiosks supporting eSATA 6G for example. Crucial has already released 1.8" versions of their C300 SATA 6G SSDs. 1.8" SSD with enclosure would still be smaller than many portable media players and smartphones. Throw in media playing abilities and it could serve multiple purposes in addition to being a data transfer medium.

And if you have a retailer you like to shop at consistently (Walmart or Gamestop for example) they could always offer a service featuring the exchange of standardized USB keys of a set size. They preload popular games of the time and you just swap out your "Walmart" or "Gamestop" branded USB key with one preloaded with the game you want. They can then preload something else on that key you just swapped for whatever game/games is popular at the moment.

Theres always going to be a wait when people go into retail stores anyway. I have never personally gone to a Gamestop and not waited for 5 minutes before I could complete my purchase. With physical kiosks, they can easily have more than one because its a fixed cost and they don't have to pay anyone to stand around serving people if a machine is doing that job. Provisionally a kiosk system would also enable those people who don't have a credit card to take advantage of digital distribution as they'd have to walk into retail and people wouldn't neccessarily have to bring physical media because their console can boot itself up and start downloading the content as soon as they make the purchase if they want that.

In regards to the physical mechanism, most games especially new games are sold to people who walk into the store knowing what they want. Most of the time when a new game comes out, if someone wants it they'd know to bring their media with them. Even if they don't, it is still possible to have a very fast USB key attached to a key ring and at a 50 MB/S transfer rate it is still possible to transfer 10GB in under 4 minutes which is well within the limit of patience most people have for retail transactions. However my suspicion is that if digital distribution becomes more popular developers will be looking for ways to bring the overall size of games downwards to between 3-6GB and use the performance of next generation consoles for procedural generation whether it be offline to unpack a game or on the fly as the game is played.

As mentioned it isn't something particularly compelling in countries with widely available uncapped broadband, but would certainly be popular someplace like Canada or Australia where most broadband has a monthly cap.

But the point is that it's just an extension of DD making DD available to people without uncapped broadband with all its attendent benefits over traditional retail distribution of media.

Regards,
SB

Its compelling in two ways, if they can make Live the premiere digital distribution method then ISPs could make Live transactions not count against a data cap. They only do it with a few providers so once they get that priviledge it would be difficult to compete with them. It'd also mean they could still sell to people who cannot for whatever reason gain access to fast enough broadband or whom prefer retail for whatever reason.

I can't see how MS can have any success trying to invent a new distribution system if they go it alone, trying to control everything themselves.

Though the system may offer lots of incentives to MS, it offers very little to the consumer. At the end of the day as long as MS' competitiors will be producing optical media that you can simply buy at a store, not have to wait around for a file transfer, and also still holds resale value, such a system would see masses of MS customers abandoning them in droves.

It isn't a new distribution system, its an extension of an existing system just as Netflix DVD and Redbox were extensions of the old physical distribution network. It is effectively a physical manifestation of the cloud based distribution for music, movies and games. You can buy all of those on Live.

The usage scenario for a Kiosk:

A customer goes out and buys an eSATA storage device, but no games.
This blank device costs as much as one or two games before the user even has a game.
If you want more capacity or speed, this device may cost more than 5-6 games.

Do eSATA drives come formatted?

The user then leaves the home and finds a kiosk, and must then sit at the kiosk or abandon this multihundred dollar investment that may hold a lot of their game and personal data while doing something else.

You're painting not 'a' useage case but one of the worst usage scenarios. You argue expensive media which means fast media but then you argue that they'd have to wait a long time, which is it?

Are we comparing the download process to waiting in line at the checkout counter, or a vending machine?
The vending machine is: money in, product drops, done.
Checkout is: money in, product in the bag, done.
Kiosk: money in, storage device in, obstruct any other purchasers for 6-10 minutes, done.

Imagine five people in a game store want to buy something within a half-hour period.
The kiosk itself would prevent this, and what if some jerk buys two games?

The solution is to have multiple kiosks, which means multiplying the up-front expense.

Well you're more likely to have multiple kiosks than multiple staff members. Chances are great that you'll more likely find an empty kiosk than no que at the local game store. Even if the Kiosk costs $10,000 each they'll pay themselves back in less than a year. Compare that to a staff member who has to get paid. So even if 3 kiosks = 1 staff member your break even period is less than a year.

In terms of an overall useage scenario you have three ways to get content.

1. Aquire the licence for later/simultainious download.
2. Aquire a physical copy from a kiosk.
3. Use your own media for distribution.

Number 1 doesn't take much time, number 2 wouldn't be much longer than a typical retail transaction because digital printers and cases and SD cards are small and easily stored and number 3 could easily be bundled with a serious discount on the first game purchase which will mean with lower prices the end user would break even on the distribution medium within a few game purchases. Given flash which is optimised for throughput, it wouldn't be hard to figure out a way to get between 100 and 300 MB/S which would mean anything from 33s to 100s per game which is hardly too long. You've probably waited longer than 5 minutes at times.

 

[eastmen]

Ummm...the only benefit of DD for consumers is the convenience of being able to buy games without leaving their home. With a kiosk, you're totally missing the point. That's why the existing kiosks are used for buying/renting discs. Also how would you buy a gift for someone and put it under their Christmas tree with a kiosk?

Durability and speed are other benfits of DD over optical and the cost reductions for publishers can result in cost reduction for customers if retail wasn't forcing similar prices

 

[AntShaw]

The reason why they cannot price the digital content at less than retail is because they cannot offer the same deals to retailers. If they use digital store based distribution they can do just that because the price in store can be the same price as online, so this is an alteration of the business structure to support direct download in a practical manner which keeps the retailers happy and allows them to pass on the savings of a lower cost distribution model..

See that's the issue. The same thing that the Movie and Music industry is struggling with. They are used to all their sales coming in a physical format. We are on the cusp of a new era, or damn near in it one could argue. Until they break out of these old business models and adapt, they are leaving a lot of money on the table.

The simple fact remains it costs near nothing to output digital content to consumers compared to sending physical products out. Some people are always going to want a case, and a physical disc so they can pass to their friends or resale. But there are plenty of people like me who could care less and if that means I can get Killzone 3 for $39.99 instead of $59.99, I'd buy guadruple the amount of games I do now.

 

[eastmen]

Squilliam I don't see why they can't just use wifi

http://www.newegg.com/Product/Product.aspx?Item=N82E16820324010

the tech already exists , using wireless n you should have quite a long range for the user to do their other shoping or activity while its downloading to the card

 

[Squilliam]

See that's the issue. The same thing that the Movie and Music industry is struggling with. They are used to all their sales coming in a physical format. We are on the cusp of a new era, or damn near in it one could argue. Until they break out of these old business models and adapt, they are leaving a lot of money on the table.

The simple fact remains it costs near nothing to output digital content to consumers compared to sending physical products out. Some people are always going to want a case, and a physical disc so they can pass to their friends or resale. But there are plenty of people like me who could care less and if that means I can get Killzone 3 for $39.99 instead of $59.99, I'd buy guadruple the amount of games I do now.

Thats why the media industries, movies and games especially now need a way to transition from fully physical media to a mix of digital and physical based media without rocking the status quo of the present distribution model. That way they can offer lower priced digital copies alongside more expensive physical copies and offer people a true incentive to migrate over to the digital model. At the moment they can't offer the same incentives as retailers would throw a fit if they did.

Beyond offering content there are numerous other opportunities they can take advantage of. For instance you could buy movie tickets, charge your online account for Live, pay your cell phone bill, order a taxi, book flights etc. Pretty much any service which could be offered in a practical way could be done through a kiosk like that. My favourite idea would be buying a movie ticket and then being given the option of owning a digital copy of the movie when you come out of the theatre. Say $10 for the ticket plus another $30 for the pre-release movie tied to your account. Theres no conflct with theatre owners because they would get additional revenue and they couldn't sell the movie to people who haven't already gone to see it.

 

[Squilliam]

Squilliam I don't see why they can't just use wifi

http://www.newegg.com/Product/Product.aspx?Item=N82E16820324010

the tech already exists , using wireless n you should have quite a long range for the user to do their other shoping or activity while its downloading to the card

People carry cell phones which have 8+GB of storage. They wouldn't need anything like that. Im sure they can make the minimum storage level for WP8 16GB or thereabouts.

 

[AzBat]

I hear some great cases for & against kiosks, but I'm not totally convinced Microsoft wants to get in the kiosk business. That seems more like an experiment left for a retailer. Personally I can see Microsoft going completely download only. They want to get to the point where Apple is with iPhone, iPod & iPad. Does that mean Microsoft won't have a Bluray drive? Possibly, but they could still offer one in a higher priced SKU. I don't think Microsoft would purposely go DD only just so they could avoid using Bluray. I just think their platform goals for Xbox Live just makes for a natural evolution to the DD only model.

I think if you look at the way GameStop is currently handling Xbox Live content & where they want to go, you'll see that a DD only future is likely. Right now they can sell Xbox Live games, add-ons & Points to those that still want to visit a brick & mortar store. It's just a simple cardboard card on the shelf & their receipt has the printed unlock code. Gamestop has also even suggested they wouldn't mind linking your GameStop purchase directly with your Xbox Live account so that you don't even have to enter the unlock code. If you already have your Xbox on back home it could automatically start downloading & might already be available to play when you get home. All this can be done TODAY with the existing Xbox Live service & the Xbox 360. No need to wait for next gen.

Anyway, why is something like this attractive to GameStop or the customer? Their customers may not have Internet at home. Plus, they're a younger audience that either doesn't have access to a credit/debit card or don't want one. They already have cash in their hand, but no means to buy the digital content online.

Yes, going DD only could abandon users who don't have Internet or fast enough Internet. I don't think the percentage in 2 years time would be that big of issue. Though, I could see Microsoft & some retailers interested in dedicating some resources to get those sales. This is where I see kiosks coming handy, but not from Microsoft specifically. GameStop already has little kiosks machines in their store where you can look at downloadable Xbox Live content. The next step is to allow ordering that content from this machine. A further step is to allow users to plug-in their own storage device to download the content.

I could see Microsoft granting GameStop or other retailers the ability to offer their own kiosks to sell this content. Maybe even allowing GameStop to sell their own branded storage devices that would could be used on said kiosks. GameStop could offer customer incentives to purchase the storage devices like: "get 10% off digital purchases" or "get $10 off their next digital purchase". GameStop knows if a customer purchases such a device they're more likely to purchase more content in the future & Microsoft could give them a small cut.

Why don't Microsoft make these same devices themselves? Maybe they would, but I think their current strategy with memory cards is a sign they are not interested. They already abandoned the proprietary memory cards & though they did replace them with USB drives, they actually got SanDisk to manufacture them instead. I think that goes to show that they rather you just download data off Live onto the console's included storage. For those systems that don't have 250gb drives, Microsoft could still sell the add-on hard drive. But I don't see those being the primary storage device for buying DD from a kiosk unless of course the retailer wants to support them.

Anyway, I still see a completely DD model being standard next gen for the Xbox, but I just don't see Microsoft trying to bridge the gap with their own kiosks. I think GameStop will try just so they'll be able to stay in the game a little longer though. Eventually it won't matter since I feel everybody will get their games online. I think will Microsoft will foresee that & not even try to offer games any other way.

Tommy McClain

 

[Squilliam]

Tommy the point of the kiosk system which I proposed isn't just a means of directly making money, it also means they can directly increase their Live media download user base from potentially just the people who own Microsoft products like the Xbox 360 and Windows Phone to everyone who can access a kiosk. This could make Live the premiere content distribution network due to it's overall coverage which means that device manufacturers would by default have to support Live. Not only would it give them access to customers, it would give their customers much greater access to their own content which would be a significant competitive advantage.

 

[corduroygt]

Durability and speed are other benfits of DD over optical and the cost reductions for publishers can result in cost reduction for customers if retail wasn't forcing similar prices

I've had more flash memory go bad on me than Blu-ray discs, which have never gone bad on me, even ones I've rented. Last I checked, buying a game from a kiosk was slower than buying the disc since you had to wait for the transfer.

DD has advantages, sure, but Kiosk model doesn't.

 

[eastmen]

I've had more flash memory go bad on me than Blu-ray discs, which have never gone bad on me, even ones I've rented. Last I checked, buying a game from a kiosk was slower than buying the disc since you had to wait for the transfer.

DD has advantages, sure, but Kiosk model doesn't.

4 out of 10 bluray discs i get from netflix are bad. i've never had a single flash card go bad , sd /memory stick / ssd they have all lasted fine , i even have my first 64MB flash drive that still works just fine.

Heck my nintendo carts are 25 years old and still work fine , even my intellivision carts that are older than I am work just fine.

 

[BRiT]

4 out of 10 bluray discs i get from netflix are bad. i've never had a single flash card go bad , sd /memory stick / ssd they have all lasted fine , i even have my first 64MB flash drive that still works just fine.

Does the usual disc cleaning work to have the bluray work again, were they just dirty or are they scratched entirely too much? I've had cases where a dvd was scratched too much so the movie jumped a bit in one spot but the rest of it was fine.

I did have a 1GB USB Flash drive die on me, but that was maybe around 3 years ago so I chalked it up to being a cheap version with too much use. I used it for all my scratch files and Windows was using it for ReadyBoost towards the end of it's lifetime too. My current 8GB drives are working fine without any hiccups.

 

[eastmen]

Does the usual disc cleaning work to have the bluray work again, were they just dirty or are they scratched entirely too much? I've had cases where a dvd was scratched too much so the movie jumped a bit in one spot but the rest of it was fine.

I did have a 1GB USB Flash drive die on me, but that was maybe around 3 years ago so I chalked it up to being a cheap version with too much use. I used it for all my scratch files and Windows was using it for ReadyBoost towards the end of it's lifetime too. My current 8GB drives are working fine without any hiccups.

blurays have a special coating put on them , so i don't believe the disc cleaners will work . I've tried the windex and then freeze the disc trick and it wouldn't work on them.

 

[Silent_Buddha]

Anyway, I still see a completely DD model being standard next gen for the Xbox, but I just don't see Microsoft trying to bridge the gap with their own kiosks. I think GameStop will try just so they'll be able to stay in the game a little longer though. Eventually it won't matter since I feel everybody will get their games online. I think will Microsoft will foresee that & not even try to offer games any other way.

Tommy McClain

It all depends on where broadband is by the time serious R&D is going on for next gen consoles. If significant portions of some of the current consumer base (Australia, Canada, parts of the UK and rest of Europe) still have low bandwidth caps on their broadband offerings then I don't think DD can be the only method officially supported.

IMO, the next generation of consoles will be a transition generation where both Sony and MS push DD. The transition part is them somehow providing a way for users without uncapped broadband (speed isn't the issue, it's the bandwidth caps and surcharges after the cap is reached) to purchase and install the games while at the same time abandoning the 1 game = 1 media (Optical disks or game carts) method of retail distribution.

Perhaps it'll be like your suggestions (a good one, IMO) where the mechanism for 3rd parties to provide this service exists but the console manufacturers don't themselves do it. But that's something that is already built in as long as the systems use some form of account based game authorization combined with encrypted redistributable packages.

As long as that exists, then anyone and everyone could redistribute the games. A kid in the neighborhood could download it and spread it around to everyone else. At that point even bandwidth caps and surcharges on overage isn't a big deal as the kid could just charge everyone a dollar or something. Or Gamestop or whoever can provide that service.

The potential roadblock is if retailers insist on being the sole redistributors of such files. At which point the security measures become more complex as each package would have to digitally signed to that person's machine or account. At which point you'd need a unique package for each person and sharing of files wouldn't be possible.

In other words, both are account based. But where a freely redistributable version can be installed on any machine where the account is flagged as having purchased the game, the retail restricted version would have the packaged signed so that ONLY that account could install the game.

Regards,
SB

 

[AlphaWolf]

on an interesting note someone is talking about cardboard disposable flash media. I'd suspect it'll be on the slow side, but it would certainly be a way for stores to prepackage digital to stop a kiosk system from being bogged down on release day. No idea how far along this idea is, might just be concept. I'm trying to find where I heard it, but my google is weak.

 

[AzBat]

Tommy the point of the kiosk system which I proposed isn't just a means of directly making money, it also means they can directly increase their Live media download user base from potentially just the people who own Microsoft products like the Xbox 360 and Windows Phone to everyone who can access a kiosk. This could make Live the premiere content distribution network due to it's overall coverage which means that device manufacturers would by default have to support Live. Not only would it give them access to customers, it would give their customers much greater access to their own content which would be a significant competitive advantage.

I understand your thinking, but I just agree with it. In the past we've seen Microsoft experimenting with the Xbox first before integrating their idea into other products & services. So I don't see kiosks being used for anything other than Xbox games initially and that's if they even decide to do that. The future is the cloud & DD, so I only see kiosks as a stomp gap measure until they can get everybody downloading the content off the net. Just remember that these devices are for people who can afford to let go of disposable income. Those that do are more likely to have access to the Internet than not. Kiosks would then be only for a small minority. A minority that will continue to shrink(to almost nill) through the lifetime of the next gen console cycle.

Tommy McClain

 

[Squilliam]

I understand your thinking, but I just agree with it. In the past we've seen Microsoft experimenting with the Xbox first before integrating their idea into other products & services. So I don't see kiosks being used for anything other than Xbox games initially and that's if they even decide to do that. The future is the cloud & DD, so I only see kiosks as a stomp gap measure until they can get everybody downloading the content off the net. Just remember that these devices are for people who can afford to let go of disposable income. Those that do are more likely to have access to the Internet than not. Kiosks would then be only for a small minority. A minority that will continue to shrink(to almost nill) through the lifetime of the next gen console cycle.

Tommy McClain

A kiosk is good for the 50% of people who don't buy their Xbox Live points cards online. I don't see that fraction of gamers shrinking significantly as time goes by. It isn't just a point of distribution it is also a point of sale for people who want to pay cash, use eftpos or otherwise don't have access to a credit card. If the cloud distribution model cannot be bought to the retail market then the complete cloud distribution model will never work as they cannot completely divest themselves from retail.

(expanding on my original posts point)

We can see in this generation that games are limited by the lowest common terms of distribution, I.E. direct download and DVD on PC / Xbox 360 makes the Blu Ray effectively irrelevant for most games on the PS3 inspite of that capability. So even as we have the possibility of games taking up more space, most developers stick within those well defined limits in order to maximise their potential market size. I don't understand why any console maker should try to stretch the limits of what optical drives can do with present technology whilst at the same time limiting the potential rewards of a new distribution model for the sake of the old.

The publishers like the idea, the retailers could be even more profitable per m^2 of expensive retail space and the end users, the customers could find their content coming packaged in ways which is both cheaper and suits their needs better. It can really be a win / win / win for everybody involved. We don't even have to wait for the next generation to start this transition, they could install kiosks in retail stores by Christmas if only as a dry run for the next generation of consoles.

 

[AzBat]

It all depends on where broadband is by the time serious R&D is going on for next gen consoles. If significant portions of some of the current consumer base (Australia, Canada, parts of the UK and rest of Europe) still have low bandwidth caps on their broadband offerings then I don't think DD can be the only method officially supported.

IMO, the next generation of consoles will be a transition generation where both Sony and MS push DD. The transition part is them somehow providing a way for users without uncapped broadband (speed isn't the issue, it's the bandwidth caps and surcharges after the cap is reached) to purchase and install the games while at the same time abandoning the 1 game = 1 media (Optical disks or game carts) method of retail distribution.

Perhaps it'll be like your suggestions (a good one, IMO) where the mechanism for 3rd parties to provide this service exists but the console manufacturers don't themselves do it. But that's something that is already built in as long as the systems use some form of account based game authorization combined with encrypted redistributable packages.

As long as that exists, then anyone and everyone could redistribute the games. A kid in the neighborhood could download it and spread it around to everyone else. At that point even bandwidth caps and surcharges on overage isn't a big deal as the kid could just charge everyone a dollar or something. Or Gamestop or whoever can provide that service.

The potential roadblock is if retailers insist on being the sole redistributors of such files. At which point the security measures become more complex as each package would have to digitally signed to that person's machine or account. At which point you'd need a unique package for each person and sharing of files wouldn't be possible.

In other words, both are account based. But where a freely redistributable version can be installed on any machine where the account is flagged as having purchased the game, the retail restricted version would have the packaged signed so that ONLY that account could install the game.

Regards,
SB

You might be right about bandwidth issues being an issue for outside the US. However, Microsoft skipped dial-up altogether on the original Xbox. That tells me that they might be crazy enough to go DD only for the next Xbox in the US, but launch a year later in the other territories where they have to have figured out a back-up distribution method.

You don't think MS's current Xbox Live download/DRM scheme could be used as the next DD distribution method? They're already encrypted & it already is tied to the account that downloads it. They could release a DD only 360 SKU now as long they offered day & date On Demand new releases. Maybe they could offer a different Xbox Live subscription where you can get access to every disc based game as a GoD title? Hackers have already shown that they can convert any game that can be installed to the hard drive to a GoD title. So it's not a technical limitation.

Tommy McClain

 

[Silent_Buddha]

A kiosk is good for the 50% of people who don't buy their Xbox Live points cards online. I don't see that fraction of gamers shrinking significantly as time goes by. It isn't just a point of distribution it is also a point of sale for people who want to pay cash, use eftpos or otherwise don't have access to a credit card. If the cloud distribution model cannot be bought to the retail market then the complete cloud distribution model will never work as they cannot completely divest themselves from retail.

I'm not sure the MS Points is a good jumping off point for something like this. The use of MS Points is primarily to keep retailers happy with digital distribution. Hence there is a fairly large markup in place for good retailer margins on the Point cards (as well as the Live membership cards).

It could be that they'll continue with that method of keeping retailers happy, but there's also a chance that if they feel they don't need retailers anymore or as much that they'll drop the point system which could allow them to lower the price of a game for consumers while at the same time increasing their own revenue from games (take half of the current retailer margin for the cards/MS Points and decrease the cost by that much).

When you start to think of it, there are so many costs associated with retail distribution that affects so many things.

One thing that I would like to point out however, is that all of this will also come with a significant loss of jobs. But that's true for anything that reduces the cost to consumers. It is something to think about however with WW unemployment rates what they are, and the world still in a global recession.

Regards,
SB

 

[AlphaWolf]

One thing that I would like to point out however, is that all of this will also come with a significant loss of jobs. But that's true for anything that reduces the cost to consumers. It is something to think about however with WW unemployment rates what they are, and the world still in a global recession.

Regards,
SB

Less minimum wage gamestop employees, more salaried developers, sounds like a good trade off.