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Take-Two President Predicts Complete Industry Shift To Digital


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Speaking at the annual Credit Suisse Technology, Media & Telecom Conference – an event where usually Strauss Zelnick represents Take-Two – the president of Take-Two Interactive, parent company of Rockstar Games, developers of Red Dead Redemption 2, spoke a bit about how he sees the future of the video game industry.

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Digital distribution has changed the way many gamers buy their games and while the mainstream consumer base still makes retail the bigger market, trends indicate this will soon change. Digital distribution’s benefits to broadening the potential audience of games is vast, increasing the accessibility and longevity of games.

What game store would carry 2011’s Red Dead Redemption on its shelves today? What if someone lives in a location with no game stores nearby? Digital distribution allows them to buy games from the comfort of their homes, and the selection of games on offer reaches back decades, spanning the breadth of the entire industry.

Digital distribution also has budgetary and environmental benefits. All those discs, cases, cover sheets and manuals (provided there are any) cost the publisher money. That’s a chunk of budget that could go towards development, and actually making the game better and more polished. The retail copies need to be shipped to resellers, which also costs money and consumes fuel. Cases and discs will inevitably become waste at one point. None of these concerns stand with digital games.

Digital distribution has also transformed the way content is added to games. While not directly linked, the trend of constant post-launch content support, with some games setting the example of adding free DLC to the game every single week, stems from the digitization concept as digital distribution does, and the two systems are entwined. In the case of DLC, it’s even in the name – “Downloadable” content.

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The reason why, for all its benefits, digital distribution hasn’t yet outstripped retail is that the majority of consumers are casual.

In terms of percentages, the walk-in buyers still make up a larger segment of the market than the hardcore gamers. Simply put, the majority doesn’t much care about the benefits of digital distribution. Most people who bought Red Dead Redemption walked into a non-game specific store that also happened to sell games, and picked it up, or did so simply because of the Rockstar logo. The die-hard fans who followed the game pre-release, pre-ordered it and so on are the minority, but they are also the minority most prone to opting for digital purchases.

Karl Slatoff predicts that the scales will tip soon – so soon, in fact, that he thinks the entire industry will shift to becoming 100% digital within the next 5-20 years. 5 might seem a bit extreme, but it’s safe to say that, based on how things look today compared to the early 00’s, in the next decade or so major shifts in the market will be seen.

I think over the long-term, it will be 100% [digital]. I just can’t predict whether that’s five years, 10 years, or 20 years. It’s probably less than 20 and maybe more than five, but I think it ultimately gets there. That’s the zeitgeist. Things are moving in that direction.

The increasing popularity of digital services that are integrated with games, even when bought through retail, are conditioning the average consumer to shift their views to digital distribution as the default instead of retail. Even if you buy a physical copy in a store, you’ll likely need to download patches before playing and register an account.

You’ll have access to an in-game store, or the game will have additional content available only digitally. In extreme cases, like with the DLCs of Skyrim which for some reason got retail releases, you’ll go home, open the case and not even find a disc in there, only a sheet of paper with an activation key.

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Another factor that has hastened the shift to digital is how two of the biggest players on the scene, Microsoft and Sony, have weaved together their multiplayer services with their digital distribution. Since multiplayer console games lead the industry in terms of player count, this has the most significant effect of all factors involved. Anyone playing through Xbox Live or PlayStation Network will have bumped into their respective online stores a few times.

Why I think it’s a little quicker than people imagined is honestly, Sony and Microsoft have done a really nice job with their services. You’ve got more people on Xbox Live, more people on PSN, and it helps. The friction is going away at a quicker rate because these platforms have been really well developed, and the consumers love it.

Digital distribution has went from being nonexistent, to a new and strange experimental method, to being the norm. It’s logical to assume it will soon be the go-to method of buying games for everyone. Convenience is another factor, as this doesn’t require you to leave the comfort of your home, and this convenience factor is what pushed almost every other industry to embrace online shopping.

These days, anything can be bought online, and people are buying everything online. Streaming has transformed the way people watch movies and TV, how they listen to music. The various services of sites like Amazon have transformed shopping, be it for gifts, clothes, books and anything else. Grocery chains allow you to purchase everything on your list and have it delivered to your door. If all these are going digital, it’s only logical for games – the best-suited product for digital distribution – to lead the charge and be the first to become 100% digital.

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This vision of the future is one thing, but in the present, the power of retail cannot be denied, and Karl Slatoff knows this. It will very likely still account for the majority of Red Dead Redemption 2’s sales, as it had for the majority of Grand Theft Auto V’s sales back in 2013 (and 2014 and 2015). Digital is more powerful than ever, and it will only get stronger, but retail has a head start of… well, the entirety of human history.

The truth is physical retail is still the majority of our business, and very important partners of ours,” he said. “And we want to do everything we can to support that environment. And we do. They’re very strong marketing and distribution partners for us. But again, it’s out of our control. Whether we want it or not, it looks like it’s going to happen eventually.

As distribution methods shift, other market practices shift with them. When digital distribution didn’t exist yet, or was very preliminary, post-launch content had to be released in a similar manner as standalone games. So, if you’re putting out a new disc with a whole new marketing push to let people know it exists, you might as well pack it full of stuff, right? These expansion packs have become a rarity in the industry, replaced by a new form of DLC and monetized content, which is far smaller, far more frequent… but not a lot cheaper. Monetization of content in AAA games is something of a hot topic currently, and Slatoff commented on the recent lootbox controversy as well.

The whole gambling regulator thing, we don’t view that sort of thing as gambling. Our view of it is the same as the ESA statement for the most part. That’s going to play its course, but in terms of the consumer and the noise you hear in the market right now, it’s all about content. It’s about overdelivering on content and making sure you’re focused on engagement. That has been our strategy and where we’re focused, and as long as you keep your eye on that ball, you’re going to be OK. The consumer’s going to be really happy with what they get.

While it might still be a while until we reach that point of a fully digital gaming industry, based on the speed at which Rockstar Games releases its titles, we might very well see Red Dead Redemption 3, or whatever the fourth game in the franchise will be called circa a decade in the future, get released in digital format only without any retail versions.

The post Take-Two President Predicts Complete Industry Shift To Digital appeared first on RDR2.

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I have to say it... With Net Neutrality becoming a thing of the past soon... I can't see this being a good idea. It will take AGES for people to download games. Just a crappy way to go in my opinion... UNLESS we get a savings here. Like if games come down to $45 a pop instead of $60. 

Also, places like Gamestop will go out of business if everything ends up digital. 

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3 minutes ago, tadp0le said:

I have to say it... With Net Neutrality becoming a thing of the past soon... I can't see this being a good idea. It will take AGES for people to download games. Just a crappy way to go in my opinion... UNLESS we get a savings here. Like if games come down to $45 a pop instead of $60. 

Also, places like Gamestop will go out of business if everything ends up digital. 

Yup Agree with this completely. It is not a good move for businesses or consumers. Not yet anyways. And yeah I want those savings passed on to me too. 

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Agreed on moving to a purely digital marketplace would make buying console games a bit more difficult. At least now we can buy a game and then re-sell it if we don't want to keep it but with a digital only copy they'd have to make them cheaper for me personally.

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On 12/3/2017 at 4:21 AM, Jamesie said:

Agreed on moving to a purely digital marketplace would make buying console games a bit more difficult. At least now we can buy a game and then re-sell it if we don't want to keep it but with a digital only copy they'd have to make them cheaper for me personally.

If they work a system into action where digital licenses can be moved around, fine. Like if I want to "lend" a game to a friend I can do that. Or if I want to sell the digital rights to a game I bought, I can do that too. Other wise this wouldn't be good for anyone. 

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11 hours ago, YellowDragon said:

If they work a system into action where digital licenses can be moved around, fine. Like if I want to "lend" a game to a friend I can do that. Or if I want to sell the digital rights to a game I bought, I can do that too. Other wise this wouldn't be good for anyone. 

Yeah I'd be up for a "checkout" type of system where I can give my friend/family a code that allows them to play the game for a set period where it then expires.

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Boo! I hate the sound of this. I am one of those people like likes to horde things. I still have every single CD case from every CD I ever owned. Even if I don't have the CD I keep the case. Same with games. It takes away from it if I have to download all my games. 

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I don't mind everything being moved to digital at all but if we are going to be paying the same amount for games, it better come with more than just a digital download of said game. Heck, they can still mail us things like posters, t-shirts, collector edition figures, and so on. 

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Not a fan of this. Even if we did get games slightly cheaper, I like to have a physical disc. Downloads can be a pain. The last digital one I got took me nearly 4 hours to download and my internet isn't horrible. 

Edited by mizTik
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On 11/30/2017 at 11:34 PM, NewsBot said:

I think over the long-term, it will be 100% [digital]. I just can’t predict whether that’s five years, 10 years, or 20 years. It’s probably less than 20 and maybe more than five, but I think it ultimately gets there. That’s the zeitgeist. Things are moving in that direction.

I am sure by then people won't care but doing it suddenly now would only hurt us, the players and businesses. There has to be a shift and I think 5 to 10 years is reasonable. 

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  • 5 months later...

I much prefer buying physical copies of games, personally. They're easier to sell when you don't want them anymore and our internet is so slow, it takes days to download games! I think we should still have the choice of what we want! 

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17 hours ago, BelleStarr said:

I much prefer buying physical copies of games, personally. They're easier to sell when you don't want them anymore and our internet is so slow, it takes days to download games! I think we should still have the choice of what we want! 

I moved to a Thai island a few years ago and it's virtually impossible to get physical copies of anything after Fifa 14 here so I am forced to get the digital download. I do like having a physical copy, the smell, unwrapping the plastic, reading the new inlay. All adds to the experience. Digital downloads are so impersonal. 

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On 5/23/2018 at 5:54 AM, Benjo said:

I moved to a Thai island a few years ago and it's virtually impossible to get physical copies of anything after Fifa 14 here so I am forced to get the digital download. I do like having a physical copy, the smell, unwrapping the plastic, reading the new inlay. All adds to the experience. Digital downloads are so impersonal. 

Exactly! I totally agree with the smell and unwrapping it, haha. It's like a mini present. 

Can't you order physical copies online on your little island?

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1 minute ago, BelleStarr said:

Exactly! I totally agree with the smell and unwrapping it, haha. It's like a mini present. 

Can't you order physical copies online on your little island?

Yeah but it would take 3 weeks to get here. Where I do like to have the physical copy, I don't like to wait to play a game. 

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