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Editor's note: Mark gives us a broad view of the current landscape of digital distribution. What will the future hold for everyone from consumers to the Blockbusters of the world? -Shoe

Penny-Arcade's take on GameStop and digital distribution.

The idea, which is nothing new, seems to be a popular topic these days as more online distributors rise up and vie for your gaming and entertainment dollars. While companies like Netflix and Gamefly have been around for years (Netflix was founded in 1997 while Gamefly started up in 2002), many more companies and even publishers have recently begun to toss their hats into the digital distribution arena.

This means that, while we lose physical media, we have a faster and more readily available resource for our gaming purchases. But what does that mean for us, the consumers? As physical, real-life competition begins to drop and all we’re left with is a computer screen and a “buy it now!” button, to what extent will it affect us? Will this cause the industry to collapse in on itself?

Let’s look at a few major concerns that have cropped up around the industry:

 

1) Pricing/competition:

With fewer competitors selling you that shiny new copy of Modern Warfare 2 or Final Fantasy 13, it would be wise to worry about the future of pricing. With lack of competition comes a lack of price cuts and specials because the few companies left standing no longer have to fight for your money.

Digital distribution companies like Steam, Impulse, and a slew of developers on the iPhone, though, have shown that the idea of the “sale” will not go away. Almost every weekend and usually right before a new game comes out, both Steam and Impulse throw in either free titles or drastically discounted the price on earlier releases to sweeten the deal and keep you coming back for more. Impulse even goes the extra mile for some titles and allows you to purchase (for an additional fee) an actual hard copy and box of the game.

Even when physical video game stores do crumble, competition will always be around for your entertainment dollars. One good thing about publishers letting you directly purchase your games from them would be that with no middleman to pay off, companies could easily drop the prices much lower than your local GameStop or Best Buy can. Competition and bargains are not things you should worry about disappearing — they’re both always going to be around.

2) Actual downloads/connection speeds:

This concern could cause some problems in the future unless things change by the time digital distribution goes mainstream. One of the benefits of being able to get in your car, drive to a store, and buy a game is that you don’t have to rely on much in order to get it. In many rural areas, Internet users are still struggling with dial-up connections; downloading that shiny new game would take a few seconds short of forever. Even those with cable or DSL connections can experience sluggish speeds because, in an effort to stop pirating, many Internet service providers have started to enforce bandwidth caps.

A flowchart on both retail and digital methods of distribution.

If we become a nation reliant on downloading our entertainment, and most modern games run anywhere from 2-12 gigabytes, the gaming purchases of a lot of the population will be limited unless ISPs change the way they monitor their business. This problem could be the Achilles' heel of digital distribution — and it may end up being the reason why stores like GameStop will remain open indefinitely.

3) Rentals:

Companies like Hollywood Video and Blockbuster are bleeding money as they attempt to find a way to compete with Netflix and Gamefly. The truth is that, unless they find some radical way to adapt, their demise is almost a certainty.

While Blockbuster has experimented with its own Netflix-like service that allows you to return movies through the mail or in the store, the corporation seems to be neglecting the physical shops these days. I know personally that when I try and rent something from Blockbuster, I can almost never find what I am looking for. This makes returning something to the store in order to rent something else essentially useless.

Keeping only one or two copies in stock, while saving them money, means fewer people are renting games at one time. They've solved this problem slightly with movies — a guarantee that gives you a free rental if a new release is not in stock helps — but it still means that you have to wait for someone to actually bring the movie you want back before you can check it out, free alternative movie or not.

While this does happen with Netflix as well, it doesn't come up nearly as often as with Blockbuster, and the wait time is usually only a day or two. Unless these companies begin to implement a more modern and affordable business plan, they’ve really got no chance at competing with online distributors or even Redbox, which provides one-dollar-a-night rentals at conveniently placed kiosks in Targets, Walmarts, and grocery stores.

4) Collectibles:

Recent collector’s editions of games have been, with a few exceptions, horrible. Spending an extra $10-30 to get a tin case instead of a plastic one just isn’t worth it to me. A few games have added additional content that may warrant the cost (Fallout 3’s collector’s edition came in a cool lunch box and included a bobblehead and an art book for only $10 more). These special editions will most likely never go away and will hopefully become a better deal than a mere aesthetical upgrade.

The online equivalent of this is pretty wonderful. When a sequel or a new game by an older developer is about to come out, Steam will sometimes bundle the first game in the series or with another title by that same company with preorders. Keep in mind that you aren’t even paying extra but getting a game completely free — which, in my opinion, is better than a tin clamshell any day.

Also, as we've seen with games like Dragon Age: Origins, special editions can be offered online that come with preloaded content or special items just like a physical collector's edition can.

5) Hard drives/data backup:

With Microsoft charging an arm and a leg for its hard drives and with the possible chance of corruption and loss of data, digital entertainment becomes kind of a crap shoot — but one that can be easily fixed. We already see it with the major consoles: If you purchase something and end up deleting it later on, you can re-download it at no extra charge. The problem with this is who wants to sit there and re-download something for an hour just to play it again?

Adding to the problem is that, with the exception of the PS3, modifying your system's hard drive may void your warranty and your ability to play online. With no easy way to move files once a hard drive is full, re-downloading will become an annoying necessity.

The bottom line is that, while GameStop and other physical stores will be hurting financially in the near future because of digital distribution, they will most likely never go out of business — at least not for a long time. Until we can get fast, uninhibited Internet access for everyone, gaming won't go completely digital and most likely shouldn't.