For years we've been hearing about how digital distribution is the future of gaming (and music, and movies etc.). After all, it's a win-win for both publishers and consumers. Publishers save a ton of money by taking retailers out of the equation and not having to produce a physical product which has to be packaged, stored and shipped. Consumers, in theory at least, get cheaper games as well as the "convenience" of being able to download a game directly to their console of choice without ever leaving their house.
I say in theory, because in practice, the exact opposite has been true. Far from passing savings on to consumers, digitally distributed games typically cost the same as or more than their retail counterparts.
Take the recent Oblivion expansion pack, Shivering Isles, for example. Both the 360 and PC versions were released with an SRP of $29.99, regardless of whether you were purchasing the downloadable-only 360 version or the disc-based PC version. So right off the bat the savings to someone downloading instead of buying a physical product, with all the costs associated with it, is absolutely nothing. This is made worse by the fact that the PC expansion can easily be obtained on sale for under $20. Circuit City has it regularly for $18. Digitally distributed content on the Xbox Live Marketplace doesn't go on sale because there is no competition. If you want Shivering Isles, it's the Marketplace or nothing.
You can see how, in reality, this business model benefits only the publisher, while the consumer is firmly held by the balls.
The recent song packs for the 360 version of Guitar Hero II are another demonstration of how consumers are being raked over the coals with digital distribution. At the price being charged for them (over $2 per track) it would cost a customer over $100 to download all 47 Guitar Hero I tracks. Now, keep in mind, all you're getting is songs. You already paid for the game separately. How is it reasonable in the least bit that those 47 tracks can be sold on PS2 for $40 along with the game itself, pressed on a disc with a manual, case etc. but just the data for the songs, distributed digitally at much less cost to the publisher, will run you almost three times that?
If Guitar Hero I were to be released as a standalone game for 360 they couldn't get away with selling it for more than $60, and yet, because it is being digitally distributed, the price is inflated tremendously.
The worst part of digital delivery came smacking many 360 owners in the face this week with the release of the new Elite model. Fans who chose to upgrade to the new machine discovered that content downloaded to their old unit is forever tied to it due to Digital Rights Management (DRM). What that means is any previously purchased XBLA games, TV shows or expansion content will only work on your shiny new Elite's while signed into Xbox Live with the GamerTag that purchased them, so Microsoft can verify that you are in fact entitled to play them.
So, not only are you paying a premium for downloaded content, you don't even actually own it.
While it is unlikely digital distribution will replace physical media-based distribution any time soon, simply due to bandwidth and storage limitations, the emergence of networks controlled by the console manufacturers (PS Store, Live Marketplace, Wii Shop) is already giving rise to some shady practices such as the aforementioned DRM and gripping of balls.
I dread the day widespread digital delivery becomes prevalent because there is absolutely no benefit to the consumer. The publisher saves a fortune on production and associated retail costs, eliminates the middle man and the possibility of lost sales to secondhand copies, and can maintain a high price point for much longer because they're essentially the only store in town. You can either choose to play by their rules or find a new hobby.
