Today’s idea is a simple one and that’s one of the reasons I find it very compelling.
Take a moment to think about how much of your PC’s software are downloaded applications and how much you bought in a store. Now think about the triple-A games market. Why is it that nearly everything comes in a box, even if it then takes 3 hours to patch it? My inkling is that AAA games will move to a download mechanism faster than films, not least because the hardcore gamer demographic dreads daylight (ha! but true), and that licensing from EA, TakeTwo, Ubisoft, etc. is a whole lot easier than the film industry. Indeed, from what I hear, some of the publishers are positively excited about licensing to download as they want to share in game retailing margins.
You can now download WoW for a free trial. Why they didn’t let you do that before I have no idea. Such a no brainer, really.
Retailing, the last step in the games industry value chain, is a hefty 30-40% of total value and thus commands very healthy economics. This is one attractive industry to be in, especially if you can get to size quickly and obtain special geographic deals: 1-2 day exclusives are pure gold in a hit-driven industry. One downside: supply will determine traffic, conversion as well as basket size, so you are really dependant on good database liquidity from the get-go. Basket size in turn will determine your margin as acquisition costs aren’t exactly low in a cluttered market. Then again, you could buy one of the fledgling gaming community sites that are not getting funded at the moment. Or do a deal with my favourite MMO site in Europe, Curse or Atlas-backed Giga, a German games TV station. Or extend your portfolio to great casual games from the likes of PopCap - acquire through a major title and then sell on yet another Bejeweled Deluxe.
“Butters, go out, buy World of Warcraft, install it on your PC and join the online sensation before we all murder you.” But why should Butters have to go out at all?
Obvious competition is from publisher platforms such as EA Store (formerly EA Link), Sony Station and upstarts such as Direct2Drive. And I am sure there are lots of others I don’t know about. Please leave a comment if you know this market well.
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We also offer digital downloads of PC Games alongside our Dance Music downloads. Further channels are in development for roll out this year.