The Steam Review

Research firm Screen Digest have published a report on videogame digital distribution, titled with typical think-tank flair as Digital Distribution of Games. The 87 page report costs £995 and judging by the contents listing covers just about everything there is to know about the financial and business side of the practice, from CCP Games to splitting revenue. For those of us who don’t have that sort of money in our back pockets, an extremely brief overview of the paper’s conclusions is provided both on the splash page itself and in the press release: it predicts ‘strong and constant’ growth until 2010, at which point the market is expected to be worth over $400m.

A section of the press release also appears to be the report’s introduction, and it is reproduced below.

“Towards the end of the 1990s, when the world was gripped in Internet-based business fever, industry commentators were heralding the potential of digital distribution for games, and estimating that within a few years it would have a significant impact on the make up of the industry's supply chain. Fast forward to the mid-point of 2005 and although these predictions have yet to materialise, over the last 12 months the market has shown signs of getting into its stride, and has produced a number of noteworthy success stories in both the download and Games on Demand sectors.

The digital distribution market is made up of two key segments, digital download and streaming, also known as Games on Demand (GoD). Whereas digital download is the direct, retailer-to-consumer distribution of games via the Internet under an outright (or, occasionally, subscription) purchase model, GoD is a broadband-only service where games application data is downloaded to a user's PC on a continual basis as and when needed. Games are never downloaded in their entirety although – depending on the technology used – significant portions of the game tend to be cached (pre-loaded) on the user's PC to improve the efficiency of the application streaming process. GoD offerings are normally subscription-based.

There are a few major trends which characterise the market at the mid-point of 2005. Significantly, most available premium game content is PC-based and appeals to a narrower consumer segment than mainstream console platforms. Aside from Microsoft's premium content downloads via its Live! service - which accounted for a significant 11% of Western World core download sales in 2004 - console content downloads have yet to emerge. In addition Sony and Microsoft have already dismissed the idea of offering full premium game downloads via their next generation consoles, although add-on content on these platforms is predicted to make a considerable impact in 2006 and onwards.

Another key trend – the lack of publisher and developer support for the sales channel with regards to content availability – has started to dissipate during the last 12-18 months. Although there remains a general reticence to compete with the retail channel, more premium and up-to-date PC titles are available via download and GoD services than ever before.”

Quite why the report differentiates so much between systems that let you play before a download is finished and those that don’t (particularly when Steam can do both) is a mystery that I for one will have to live with.