Last week brought about some interesting quotes from game industry folk.  Specifically, Mr. David Lau-Kee stating things along the lines of piracy is good, traditional publishers are bloodsucking leeches, and the PS4 and Xbox 720 will be browser based.  All of these comments and more thanks to a panel in London which I was lucky enough to attend called, BAFTA Presents: Digital Distribution hosted by GamesIndustry.biz.

It was a nice insightful and entertaining talk on the impact of Digital Distribution in the gaming industry with some key people.  The panel was comprised of Simon Oliver, the creator of Ronaldo on the iPhone.  James Brooksby, Studio Director from Doublesix Games.  David Lau-Kee, co-founder of Criterion, former EA VP, current Kerb Games director, and Fredrik Wester, CEO of Paradox Interactive, all hosted by Phil Elliot of GamesIndustry.biz.  Hit the jump to find out what all the buzz was about and what was conveniently overlooked.

Conversation kicked off with a focus on the iPhone and smaller developers getting into games.  The indie scene is becoming more popular as easy access to the mass consumer has been achieved with products like the iPhone and iPod Touch.  Simon Oliver, not coming from a gaming background, spoke the most on this, centered around his iPhone release of Ronaldo.  The big attraction for him was the low cost, low risk entry into game development that Apple offered.  Add to that the lack of platform capability testing and consistency hurdles on the Apple platform versus the stringent requirements of Xbox Live or PSN and it’s an indie developers wet dream.  James Brooksby was also encouraged by this and the ability to quickly create a title and get it to the consumer.  In general, everyone was in agreement that the App Store and web distribution does good by bringing the developers closer to the consumers, allowing feedback and upgrades to flow much smoother than retail boxes.  As David Lau-Kee put it, digital distribution allows developers to “engage and build community” which leads to a successful product and service.

On the other side of the sword, digital distribution has dropped the barriers to entry, while leading to Simon Oliver’s success, has also allowed for more shovel-ware and low quality product to flow into the marketplace, making it more difficult for developers and consumers to connect.  James Brooksby was bothered by this as he has teams of two or three people make a quality title for download only and it will be buried by wanna-be developers unless a ton of hard cash is spent on marketing.  While Burn Zombie Burn, which scores a 76% on Gamerankings.com, has been moderately successful, the only reason this title stood out was the very large marketing budget the game was given.  Obstacles like overcoming shovel-ware, and simply being noticed adds to the costs of development and makes turning a profit much more difficult.

This is one of the advantages of using stricter services like Xbox Live and PSN who place quality controls and operating standards on the products offered through their service, limiting shovel-ware.  While good for the consumer, these services take a share of the profits from developers and the restrictions and controls put in place don’t allow the complete reign of freedom that developers typically prefer.  In turn for some of those freedoms and profits, marketing may come free.  It is a situation that must be weighed out carefully by developers and will probably change on a title by title basis.

There was no love for Nintendo in that room.  It was clear to everyone Nintendo is a publisher of first party titles first and everything else is competition.  No one in that forum could speak to any experiences, much less positive ones, in making WiiWare or any other DLC for Nintendo.  Steam received some negative remarks as well, primarily from Fredik Wester who runs GamersGate.com, a competing digital distribution service.

Steam is not a good service

If parties don’t see eye to eye on pricing, DRM requirements or limitations, depending on how you look at them, then other distribution services will be born.   Fredik stated GamersGate arose from the need to reach gamers who did not have easy access to retail shelves and to regions that did not receive any distribution of a game.

Digital distribution is still a young method which the industry is learning how to monetize it, and David Lau-Kee made sure it was clear to everyone that this is the way forward.

Traditional publishers are blood sucking leeches who have no place in the future of digital distribution

While it is an incendiary comment, he went on to explain the services publishers provide need to adapt to meet the market.  No longer can a publisher just provide marketing, financing, and retail distribution, they must expand and evolve to be of use to developers, or go the way of the dinosaur.

There were a few other interesting points to come out of the group discussions.  Mr. Lau-Kee carried on to mention his views that after this generation consoles will simply be browser based gaming tools connecting to your TV and the web.   I’m not clear on how this will be achieved, especially with a number of gamers still not connecting to the web.  The thought of Xbox 720 running Internet Explorer makes me laugh.  I can’t wait to hear the horror stories beyond the RROD that IE + Xbox will spawn!

Fredrick Wester mentioned a few rough numbers for Paradox Interactive stating they sold 80% of units via retail and 20% from digital distribution.  So downloading still hasn’t trumped box sales, but it is worth noting that the 20% of digital distribution sales made up 40% of profits.  Cutting out the middleman to reach the consumer does the developers some good for their bottom line, no surprise there.  The question I have that wasn’t covered is, will any cost reductions be passed to the consumer?  To date, we haven’t seen many situations where buying online offers any significant savings from going to the store and getting your hands on the physical media.

Everyone on the panel encouraged the concept of building a community around the games and offering James Brooksby’s view of “Games as a service” using DLC to continue supporting the product and tailoring it to customer feedback.  The good news is developers can now read reviews, listen on the message boards, and in their next update, give gamers what they want.  The bad news is this now factors into business plans. As Fredik Wester stated, for every release so far, he sees a spike in sales of a title after the first update is made available.  Now Paradox looks to push the first update out a week or two after release to keep the buzz going and maintain sales.  So if you buy a game, you will need to download an update a week later, and there is no clear sight of when you will receive a finished product.

My personal favorite exchange of the night was between an ELSPA representative and the panel regarding questions of DRM and piracy.  This sparked controversy as after Fredik Wester said it is heart-breaking to see your game being pirated and David Lau-Kee boldly stated piracy is great!  Mr. Lau-Kee took a view of piracy keeps developers and publishers on their toes.  If they create games worth buying and price them right, piracy will be minimal.  DRM is too limiting on the customer.  The ELSPA representative proceeded to contort and convulse in an interesting manner, then jumped up to say something but the brick he shat in his pants planted him back into his seat, allowing Mr. Lau-Kee to continue on defending his stance that the industry model will evolve with micro-transactions, advertising, subscription, and other methods to monetize gaming that will help curb piracy.

I was upset that few topics were not covered, such as the recent announcement of OnLive, bandwidth limitations, and reaching markets that have low broadband penetration.  All factors to account for when going all digital.  There were some comments about using consumer feedback to change the end product but at what point is the game finished?  When does customer feedback outweigh the developers creativity?  Digital distribution effective grants the seller unlimited shelf life, but how long will the product be supported, will gamers be able to download and play a game they bought 10 years prior?

In all, it was a very entertaining evening with an interesting, talented, and experienced panel.   With everyone eagerly sharing plenty of failed business plans and bad ideas, it is clear that digital distribution is still in it’s infancy and will need some time to grow before anyone can be sure how it will change the industry or even what business model is proven to work.