Talking Point: The Inevitability of Digital Retail Games

How will it affect our gaming?

For Nintendo gamers, the video game market is currently a simple, relatively traditional place. If you want to buy a retail title, you hit the high street or visit your online retailer of choice and pick up a box with a disc or game cart inside. Pop that media into your Wii, 3DS or DS and you’re immediately playing your game: it’s fool proof and reliable. If you’re feeling extravagant and daring you can venture into the eShop, DSi Shop or Wii Shop Channel, where you buy digital, download-only titles; a wonderland where games appear out of the ether.

At least, that's how Nintendo's approached digital gaming until recently; an optional extra to be flirted with, if not wholeheartedly embraced. Wii and DSi are perfect examples of online strategies that have been behind the curve, failing to match or even come close to the set up on rival consoles. With the 3DS eShop, however, Nintendo appears to be catching up with a strong line-up of exclusive content, a dynamically changing marketplace, retail game demos and DLC (downloadable content) on the way. Wii U, which will also be part of the Nintendo Network, will surely include all of that as a bare minimum.

Retail downloads are an obvious and notable exclusion from this digital evolution. Nintendo president Satoru Iwata has stated that Nintendo is considering retail downloads on 3DS and Wii U, but there's no true indication of when this will become a reality. We’d suggest that Iwata doesn’t procrastinate too much, however, because in this case nothing comes to those who wait. For anyone who doesn't think it's important, consider these issues.

Microsoft and Sony have been there, done that

Let’s face it: Nintendo is already way behind in this market. Full retail downloads of many major titles have been available on Xbox 360 and PS3 for years, with updated models offering more hard drive space to help accommodate those who don’t care about a box and disc. Technical limitations made an equivalent service almost impossible on Wii, though in some respects Nintendo can claim that it was right in this strategy: Wii challenged its rivals with affordability and unique gaming experiences, and won handsomely.

The industry progresses and develops, however, and Nintendo now faces an entirely different reality. It no longer has exclusive rule over the motion-gaming dominion, and is facing competition for the so-called ‘casual’ crowd. In order to win gamers of all levels, Nintendo has to match the experiences and conveniences offered on rival platforms, so Wii U fundamentally has to offer a strong digital retail offering.

This requirement surely rests on 3DS, too, with PlayStation Vita offering the majority of retail releases for download at a slightly discounted price (in some territories at least). While proprietary memory cards will potentially make Vita owners think twice, high-capacity SD cards can be purchased relatively cheaply and eShop games already run from this extra memory, so the issue of space shouldn't be a problem for Nintendo's handheld.

Some consumers simply place no importance on packaging or physical media, and it would be foolish not to accommodate this demographic.

Nintendo and its rivals also face competition from Apple and Android smartphones and tablet devices. For many gamers this is irrelevant, with games on these platforms not providing the same experience, but that’s an issue for another feature. What these devices undeniably offer is almost unrivalled accessibility and convenience: tap a few buttons and a game is downloading, without a cart or disc in sight. There are also services such as OnLive or PC applications such as Steam, so there are plenty of competitors offering substantial content through digital downloads. Some consumers simply place no importance on packaging or physical media, and it would be foolish not to accommodate this demographic.

It’s all about the money, money, money

The argument for bringing full retail downloads to Nintendo consoles isn’t just about ideology or consumer demand, it’s also about making the most of the company’s business. Recent news articles about retailer GAME Group’s issues are worrying and concerning for the store’s staff, in particular, but it's also representative of a gradual decline in the high street market. It’s vital that high street game sales continue, simply for buyer’s choice and, of course, for the sake of thousands of retail jobs. Despite this, the digital market is accounting for a bigger share of sales, something that Nintendo isn't exploiting anywhere near enough.

Only last December, Nintendo of America president Reggie Fils-Aime let slip that digital makes up 14% of key Nintendo franchise sales: outside of developers defying non-disclosure agreements and some speculative analyst comments, this is one of the few indications we’ve been given about the state of Nintendo’s digital revenue. While 14% sounds respectable, it’s well below par.

Digital sales are already vital to some major developers, as shown in an interview that Christian Svensson, senior vice president of Capcom, recently gave to Gamasutra. Take these comments about potential revenues in the next five years, and his predictions on the future roles of digital and physical games to future consumers.

I’d like to say that within five years, certainly well north of 50 percent of our revenue will be coming from digital, and significantly higher than [50 percent] of our operating profit will [come from digital].

Retail will always have a place in our future, but I think that five years down the road, the value proposition of retail and publishers will change. I think that retail’s role will shift from planned purchase to impulse purchase, predominantly, and planned purchases will increasingly happen online, just for sheer convenience’s sake.

Even if predictions such as these are ambitious or overstated, it would be foolish of Nintendo not to exploit this market, especially as its rivals are already doing just that.

It won’t suit everyone

The march towards digital content is unsettling for some, including a few of us in the Nintendo Life team: we even wrote about the desire for physical media just one week before this feature. The prospect of an extensive market of digital retail titles also has its share of issues that naturally follow when ownership is rather perilously established by a non-physical entity. Without a disc or cart issues of hacking, copyright disputes or server failures represent a potential future of trouble and controversy. Despite these cons, there are also pros, and this is an area where the revolution has already started; it cannot be undone.

It’s our view that there should always be physical retail games, as not everyone has suitable internet access or even the desire to go all digital. It should be about choice, so that neither side of the argument has any cause to complain. If Nintendo is genuinely planning to introduce full retail downloads to 3DS and Wii U, however, we suggest that it doesn’t take too long to get the wheels turning. In a current economy where the company is striving to return to profit, it simply must exploit every potential money-making avenue: technological change and progress never waits, and this is surely an area that Nintendo can't afford to neglect.

What do you think about digital retail downloads? Will you always prefer physical media, or do you want the option to download all of your games?