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Downloading: Not (Yet) a Viable Option

There has been a lot of hype in the past couple of years about the possibilities of bypassing the retail channel with online games, offering direct downloads of the client as an alternative. Publishers like the idea of bypassing all the middlemen in the retail process and the need to pay marketing development funds (MDFs), creating higher margins on the client.

Unfortunately, the hype is once again overtaking the reality of the situation. While this is a fine idea and will eventually become a reality, we're not there yet and won't be for years:

  • With over 90% of the U.S. and world market still on 56k dial-up connections, only the most dedicated gamers will even consider a download over 50–100 megabytes (MB). Compare this with an online game client, which has an average of well over 500MB. It is true that hard-core gamers do tend to upgrade to faster Internet connections when they become available and have remarkable tolerance for large downloads, but they are a small percentage of the overall market. Compare this to the download figures for the much smaller 10MB episodes for Electronic Art's Majestic, of which fully 91.5% of downloads started were never completed.1

  • Broadband access is growing far more slowly than expected. In 1997, most analysts expected a full 30 million people in the U.S. to be accessing the Internet on broadband connections by 2002; the actual total as of March 2002 was less than 11 million connections and, due to the failures in 2001 of cable modem provider @Home and many digital subscriber line (DSL) providers, the rate of new connections slowed throughout most of 2001 and the first quarter of 2002. Broadband access is not expected by the authors to be a major force in the U.S. and Europe until 2005 at the earliest, and possibly not until 2007 or later. And even though Asia is laying broadband fiber far more quickly than the U.S. and Europe, the broadband access numbers in the region are roughly equivalent to those in the rest of the world.

  • The exception is South Korea, which is, by some estimates, almost 75% broadband-connected. The great bulk of these connections and gameplay happen in cyber cafés, which are unique to that country and are a major force in online games. By some accounts, almost 5% of the total population is registered for one online game, NCSoft's Lineage: The Bloodpledge, which sees the great bulk of its revenues from cyber café access fees. Interestingly, however, the number of home broadband connections in South Korea is growing steadily and is expected to reach parity with cyber cafés in the next year to two years.

At any rate, for the foreseeable future, publishers should make plans to maximize retail distribution for the client.

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