Digital software download cuts out the retail middle man

Digital software download cuts out the retail middle man

Film Victoria's recent funding for new downloadable game projects is helping developers to bypass third-party sales channels entirely

New government funding into Australia’s digital gaming download industry is indicative of a market shift away from traditional retail distribution, an industry representative claims.

At the recent Digital Distribution Summit in Victoria, Film Victoria announced it would provide $75,000 towards the production of a game for digital downloading. Games Developer Association of Australia (GDAA) president, Tom Crago, praised the initiative, but admitted it was another example of ways software developers could bypass the retail distribution line.

“Film Victoria is ahead of the curve somewhat in recognising that this is a growth area, and one in which a number of Australian companies have already had some success,” he said. “$75,000 is a decent contribution towards a prototype, and if successfully realised, it could at that point lead to publisher funding, or further support from Film Victoria.”

Although traditional retail is by far the dominant method of distribution still, Crago warned new gaming hardware units like the PSPGo, along with disruptive technology like the iPhone, were allowing developers and publishers to inevitably access their target markets directly. Both the PSPGo and iPhone are download-only game consoles.

Other significant consoles, such as the Nintendo Wii and DSi, the Xbox 360 and the Playstation 3, also feature robust game download services. Australia’s video game development industry is a significant one, employing around 2000 people and generating nearly $200 million in annual revenue.

With the ability to bypass retail, and its associated production costs, there is now an incentive for developers to take their products directly to download services, Crago claimed.

“Sometimes developers will partner with publishers to release a downloadable game,” Crago said. “This would typically happen where the publisher is funding development, and often where the game is based on a publisher-owned or licenced property. Of course, it is more likely that the developer will go straight to market, through something like Apple's App Store.”

CEO for developer, Firemint and Film Victoria board member, Rob Murray, said few of its games were available as box products. But he claimed to still see viability in the business model.

“Both downloadable games and being able to purchase boxed products over the Internet are competing with bricks-and-mortar retail stores, but I think there are always opportunities for smart retailers and new models and approaches may emerge that support a balanced co-existence,” Murray said.

Film Victoria has a number of existing initiatives to support developers of box retail products, Murray said. He added its latest funding proposal was a reflection of the new opportunities opening up to developers as well as the changing market.

“The role of publisher and developer will need to evolve a little to work effectively in the new downloadable ecosystem,” he claimed. “There is certainly a trend all around the world for developers to self-publish, but it does mean that they need to take on new challenges, particularly in marketing their games.”

Recent statistics from GfK for the year to date also show a growth in retail box sales for video games. The analyst group doesn’t collect data on downloadable game sales.

“Retail sales are up eight per cent in value for the year to date in Australia, and up 12 per cent in New Zealand,” a GfK spokesperson said. “In a difficult economic environment, it’s a good sign.”

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Tags gamingsoftware developmentdigital downloads


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