Microsoft Selects Exent Technologies as Worldwide Digital Distribution Partner for PC Games
One of the major problems the games industry has had to deal with is the issue of piracy. Unlike other physical goods, the nature of the software allows itself to be copied and duplicated perfectly and cheaply. In order to protect things from being copied, various techniques were developed to discourage duplication, but as anyone can tell you, for evey ingenious copy protection scheme written, there were hundreds of programmers ready and waiting to break it. Some even took it as a challenge to crack the "unbreakable".
This went on for the last 20 years or so, until the use of the internet became widespread. It started off slowly, with third-party companies offering use of servers and proprietary connection protocols to connect players up, and eventually subscription based online games like Ultima Online and Everquest grabbed the attention of gamers.
Massively Multiplayer Online Games are great revenue generators -- people have to pay to play, and they can count on the revenue being mostly constant. It's a good way for the publisher to get most of the money while cutting out the middleman. The downfall of this particular model is that a lot more content is required to make sure that gamers feel they are getting their money's worth of gameplay.
There is an increasing divide between Publishers and Game Developers these days, publishers feel games are too expensive and risky to develop while game developers feel publishers take too much of the profits from the success of the game. Now the trend is for small studios to attempt to cut the publisher out entirely by having online purchases of their game via direct download. Valve, the studio behind the very successful Half-Life series of games created STEAM, an online distribution (and authetication) system for their games.
Which brings us to Microsoft's latest announcement of using Exent to do online distribution of their games (or to be more specific, of their old discount bin games). Microsoft is big enough to do their own publishing of games, so why go this route? It's simply cheaper. There's no excess inventory of games, no need to print game materials or press CDs, and there's no need for the customer to go into the store and purchase the game. It's an ingenious move for games that are already retailing for below the $20 mark in stores.
I think that the traditional distribution system of stores (an absurdly large percentage of game sales comes from Wal-Wart) will continue for quite some time, but as broadband cost decreases (I mean think about it -- the bandwidth equivalent of the DSL line you've got running into your home for $25 a month would have been $200+ a month 10 years ago), distribution of things online will increase and eventually be the way one gets their games.
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