The Evolution of the Video Game Market -- Digital Stores

When it comes to the Video Game market, digital transition has been one of the most far reaching changes in the Game Industry; affecting how games are played, designed, bought and sold for all areas of the industry. 

And while there are still some areas that have to be figured out, the digital market has been a boon to the Game Industry.

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The Digital Market and Steam's Impact:

The digital age of the Game Industry like the online market was dependent on the growth and consumer integration of the Internet. As we've talked about plenty of times before, it was Steam developed by Valve Software and released in 2003 which was the first example of a true digital platform in the sense that it was required software that also tracked and stored player's accounts.

Steam was originally developed as a way to tie consumer owned titles to an online account and making it easier to track legitimate copies of titles. This proved to be effective and soon Valve was partnering with other developers to sell their games on Steam.

The first example on the console market came in 2005 when Microsoft released the Xbox Live Arcade system and fully integrated it into the Xbox. The Xbox Live Arcade System became a very attractive online system for consumers because of this.

Steam's popularity can be attributed to accessibility, sales and the community features it provides.

Going back to Steam, Valve continued to expand the software with additional functionality including community features, Steamworks and a lot more. When Valve had their first major Summer Sale to drive interest, Steam became one of the most widely used and profitable digital platforms. This would eventually lead the way to EA's Origin service, Ubisoft's UPlay and sites like GOG.com, Green Man Gaming and others making use of digital.

To figure out how much Valve has made off of Steam is impossible as they do not release sales figures but it's safe to say that Valve will not be running out of money anytime soon. The secret to Valve and Steam's success are the advantages that digital provides to both developers and consumers.

Advantages:

Developers:

The digital market has done a lot to impact the Game Industry and there are specific advantages to both consumers and developers.

Developers no longer have to deal with physical constraints of stores as digital copies are infinite. Another big plus is cutting down on production costs as publishers don't need to spend money on manufacturing and shipping physical copies of games to stores and users. For the developers who make use of Steamworks -- Valve's API for Steam, they can integrate elements like matchmaking, achievements, analytics and more to their titles.

A huge advantage is that digital makes it a lot easier to get your game into the consumer's hands and has been instrumental in the rise of the Indie market. Before, developers had to deal with stores who may restrict what games were shown based on content. With Steam and other digital platforms, it's far easier to get your game out there and has helped many Indie studios take off over the years.

Developers like Overkill Software constantly release new patches and content for Payday 2, which wouldn't be possible without digital platforms.

Digital also allows developers to quickly and effortlessly patch games with fixes or new content where it wasn't possible in the pre digital era. This has of course led to developers working on games longer with DLC.

Digital stores have become so popular that many games set up online digital accounts and stores directly within the title, either set up by the developers or by a third party site like .

Consumers:

Moving on to the consumers, digital has made it a lot easier to buy titles similar to the online market. You no longer have to wait in lines at stores hoping for a copy as buying a game on Steam takes very little time. Having an online account for your titles means that everything is consolidated into one place with updates automatically found and downloaded for you.

And when talking about the advantages to consumers, we have to mention game sales that have radically shifted how games are being marketed today. We no longer see games stay at full price for a long period with little exception. And at this moment we are getting ready for the Black Friday/ Cyber Monday sales event where we'll see both physical and digital stores having massive discounts on titles.

Consumers now have varieties of sales across digital stores and platforms to get titles for less.

Thanks to these sales, consumers are able to buy more games and spread their income around easier compared to the days of every game costing $50+ with no sales.  While there is so much good about digital accounts, there are a few unique problems that have appeared over the years.

Disadvantages:

Developers:

While digital sales and accounts have been very good for developers, there are a few problems that have begun to take shape. First is that the increase in sales has driven prices down and have devalued titles all across the board. It's become a lot harder to sell games at $20 or more thanks to all the options on the market.

Another problem is with Steam itself and how it has gotten so big. Many developers feel that Steam has become “The Golden Ticket" and that if you can't get your game on the platform, you're not going to sell as much as you would elsewhere. Valve at the moment holds all the cards and there really aren't any alternatives that have the reach, popularity and consumer approval that Steam has.

Steam has been trying to make it easier for developers with Early Access and Greenlight, but there have been cases of lower quality games getting through and casting a poor light on them.

For consumers, the digital age has brought a new problem concerning ownership.

Consumers:

The definition of ownership of a video game has changed thanks to the digital age. Today, when you put your game key onto Steam or any other digital platform, you're not buying or accessing a "game" but a "game license." This means you don't completely own the title and that the digital platform has final word on that copy.

This has created a lot of debates regarding who owns digital copies and whether or not consumers have the right to sell them or get any protection if there are problems with the title. The complexities of this issue are a much bigger topic for this post and something that is not easily solved.

Games attached to digital accounts aren't owned by the consumer and their content and usage are controlled by the developer and digital platform.

At this moment, the European Union has ruled in favor of the consumer and has given them the right to return or trade in digital copies. However no such ruling has happened in the US with the digital stores at the moment having the final say on things.

But despite these issues, there is no doubt that digital is here to stay.

The Future of the Game Industry:

The digital market has been instrumental in changing everything about the Game Industry. Without it we wouldn't have sales, easy access to games, the Indie Market and more. We can also say that the digital market has led to the PC industry boom thanks to Indie developers and easy access to titles. There is no way that things will go back to the way it was in the early 00s.

But there is still plenty of work that needs to be done. Issues of ownership and consumer protection will need to be straighten out and there is the big question of whether someone will come along to truly challenge Steam for control over the Digital market.

To wrap up this post series, we turn to the last change that has happened to the video game market -- Free to Play.

(Reprinted from the Xsolla.com Blog)