From the Shelves to the Web: A Case Study

Consumers, empowered by the Internet, have been pushing the game industry from print magazines and tangible products on retail store shelves to the enthusiast Web sites and the Internet’s digital distribution channels. This evolution, long under way. is fueled by the consumer demand for access, customization, control, and input into the games they play — on their terms.

Game developer marketing practices have been adapting to this. What you may not know is that this transition imparts a valuable lesson and offers new strategies to all marketers.

Note the harbingers of full-game digital distribution:

  • Online enthusiast destinations are the central “touch point” between game and gamer (e.g. GameSpot).

  • Big media companies have entered the space (e.g. Time Warner/Turner’s GameTap).
  • Full-game digital distribution hubs are gaining momentum (e.g. Valve’s Steam).
  • Console manufacturers are taking steps to evolve (e.g. Xbox Live Arcade).
  • Small independent game developers are breaking the shackles associated with publisher relationships.

As the video game industry continues to expand into and enhance the online landscape, digital distribution has taken on a new significance. Until recently, the release of digital assets was viewed purely as a marketing strategy to drive awareness and interest in games prior to release. Specifically, the developer and/or publisher utilized game enthusiast Web sites to deliver press releases, screenshots, game trailers, and demos into the hands of eager gamers. In the past, the end goal of this strategy was to create excitement and drive gamers to their local retail outlets to buy the full game.

As consumer demand for online content has increased, game developers and publishers have responded by providing more digital content. In turn, the points at which the content is exchanged have grown in importance and size. These distribution outlets, or “file sites” (e.g. FileShack), now play the most important role in the video game release process.

The past and present point to the future: digital distribution of full games as the primary sales channel. With e-commerce, broadband penetration, and security at critical mass, the ability to distribute games in their entirety has arrived.

Several notable game developers and publishers have been distributing full titles through online channels much to the dismay of their retail partners. For example, “Half-Life” game maker Valve and its distribution platform, Steam, is the industry’s greatest success story. Steam, which launched in late 2003, has more than 15 million registered users. The Web site offers games from Valve, as well as other publishers, and connects people to an online gaming community.

Across the industry, game publishers are investigating and discussing digital distribution policies and how to structure business relationships. The most pressing concern is how to handle the inevitable shift without losing shelf space at the major retailers during the transition. A delicate balancing act has been required to maintain existing retail relationships while harnessing the power of digital distribution.

With all the attention on the big boys, most analysts miss the greatest benefactors of the digital distribution of full games: the small independent game developers. Like independent musicians, indie game developers have always sought channels to build awareness and distribute their games without having to sign with a publisher that will demand most of their profits.

Now, a developer can turn to digital distribution to drive awareness and sales while keeping the lion’s share of the revenue themselves. As this trend grows, many game publishers are losing “steam” and small developers are gaining ground.

The evolution in the game industry teaches us a valuable lesson. Ask yourself these questions to ensure you’ve learned it:

    Q: Are you clinging to antiquated business practices and marketing strategies that your consumers are rebelling against?

    A: Take your consumer’s pulse and ask hard questions that may condemn what you’ve been doing. Be real, don’t work statistics in your favor. Favor your consumer’s voice with statistics.

    Q: Are you activating your brand ambassadors by arming them with online assets and information?

    A: As scary as it may sound, get source files of your logo and ads out there for your brand ambassadors to play with and spread. Dig up all the historical imagery, photography, video, and animations you spent a King’s ransom to build and make them readily available. Current initiatives should never fully replace or attempt to bury your “skeletons.” Good or bad, your product or brand’s past can be dug up. Put it out there with a spin before someone does it for you.

    Q: Are you leveraging press releases and announcements to keep bloggers and enthusiast channels aware of your initiatives?

    A: I’m continually amazed by the volume of new sites and blogs that scraping tools pull into our PR reports. It’s astounding how many people care about things you think they don’t.

    Q: If games have made it into your consideration set for advertising spending, are you tapping digital distribution channels in your efforts to reach gamers?

    A: One of the highest response advertising units reaching gamers today is the “game downloading unit.” Captive audience… time to waste… I’ll let you fill in the rest.

Thanks for you mindshare.

-KC

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