At a time when new ideas and technology are transforming movie and music distribution, video games are emerging as the next medium to feel the effects of change.
Media-Mind is our column charting how technology’s opportunities and challenges transform traditional media and entertainment, for better or for worse.
Video game rentals and digitally offered content are nothing new to the gaming industry, but new data from Redbox and an aggressive move by Sony suggest more consumers are drifting from the conventional retail model than ever before. Buying physical copies of games from the store may be the best available option on the current crop of video game consoles, but next-generation systems will likely give users new ways to play.
Nintendo’s Wii U is already confirmed to have a disc format, while analysts expect Sony and Microsoft’s new systems to play games on Blu-Ray discs. However, while it is unlikely new consoles will render physical copies of games totally obsolete, digital downloads of retail games and rentals may play a larger role than ever before.
There’s a small selection of diehard gamers who are intent on collecting their games. For these customers, buying games is a hobby and the packaging they come in along with the idea of ownership is important. But this represents just a fraction of the people playing games. Most users want to play the latest and hottest titles for a bit and are ready to move on shortly after, making them perfect candidates to rent games.
The downfall of Blockbuster and Hollywood Video left a void in the video game rental market, but Redbox is beginning to seize the opportunity those chains left behind. The company has rented a total of 18 million games from its 36,800 kiosks since it began offering Xbox 360, Wii and Playstation 3 titles one year ago.
Redbox game rentals’ popularity is likely due to the increasing price of new titles. Most premiere games on the Xbox 360 and Playstation 3 cost $60, while a Redbox rental of the same titles costs $2 per day. Factor in that many kids play their new games for a week before getting bored with them, and there’s no mystery why the average Redbox renters are parents with three or more children.
Redbox isn’t going to bankrupt game developers, especially the ones that make games featuring heavy online multiplayer experiences that add replay value. However, if the video game side of the company’s business continues to grow, it could end up picking the industry’s pockets, while providing gamers once again with an alternative way to play the newest titles.
Downloads and Streaming
Sony, Nintendo and Microsoft have all taken big strides this generation by offering game content that’s downloadable through their online services. Each company offers backlogged titles from past consoles, small full-length games not offered in stores and add-ons to retail games. However, analysts believe the gaming giants will take things to the next level on their new consoles by making all retail titles available for digital download on the same day and date as their physical release.
While retail downloads would be a big move for games, Sony’s latest transaction could take things one-step further. The Japanese electronics giant spent nearly $400 million to acquire Gaikai, a U.S-based company that specializes in streaming video games over the Internet.
Sony said it plans to allow Gaikai to continue to run as usual for now, but a Sony representative said the purchase underscores the vision that streaming and cloud technologies are likely the future of gaming. The acquisition means that there is a video game streaming service in the works at Sony, and although no one knows for sure if or when it’ll see the light of day, it’s a wildcard that could radically change the gaming industry.
The Next Step
The music and movie industries continue to attract all the attention as technology changes the medium, but the video game market is approaching a potential windstorm of new opportunities and fragmentation as well. Sony, Microsoft, Nintendo, game developers and retailers all have visions for the future of games, and it’s becoming clear that they may not look the same.