Everyone knows that digital distribution is the future of gaming, but nobody can agree on when it will hit. Specialty retailer GameStop and its shareholders would like to know, since digital distribution would make things difficult for the company. The latest guess comes from Broadpoint Amtech analyst Ben Schachter. He told IndustryGamers that the bell will toll in 2017:
There is little doubt that over time more and more media content will be delivered digitally to the home. However, the question of the timing of this trend is critically important as it relates to GME’s stock. In our view, it is unlikely that digital downloads will have any meaningful impact to GME’s business this console cycle (which we think will run through at least 2014). Technologically, full game downloads to a console are feasible already (and there is already a small library of full-games available on Xbox Live), but limited hard drive space (we estimate approximately 70% of current-generation consoles have no hard drives) and bandwidth limitations (full games can be 20GB+) create significant barriers.
These barriers will obviously change over time, but the timing of the replacement cycle is key. Even if one assumes that by 2014 all new consoles have capabilities that eliminate storage and bandwidth concerns (which we believe is unlikely), it will still take several more years before these consoles have significant household penetration.
Hard drive space is a small issues. Storage gets cheaper and cheaper all the time and I have no doubt that the next generation of consoles will have significantly larger HDDs than this generation. I found it curious that Schachter bothered to point out that 70 percent of current-gen systems to not have hard drives. That’s a bit misleading; the Wii is obviously the best-selling system this generation, but its customers are less likely to download full retail games in the future than PS3 or Xbox 360 owners. Hell, a lot of Wii owners can’t be bothered to buy more than one game. I don’t really see a point in him bringing it up.
The big issue is broadband. (I’ve gone on this rant before on TheFeed, so some of you know what’s coming.) ISPs are the biggest roadblock to digital distribution. Things like bandwidth capping and bandwidth shaping are bad for digital distribution. Cable and phone companies being reluctant to push technology due to a lack of competition is bad for gamers. While it sucks that broadband in America isn’t what it could or should be, I’m pretty sure GameStop is happy about it.