The video game industry is – paradoxically – very traditional and resistant to change. That’s odd when you consider the history of video games and its the first 100% digital industry ever – All content has always been created and consumed on a screen. Yet for years, the business has been about putting this digital content onto plastic disks and cartridges then selling them at retail stores. However these major video game publishers like EA, Sony, Nintendo, Activision, Microsoft and UbiSoft are having a tough time with the “digital transition” not wanting to upset the sacred cow of the powerful few retailers that currently move 90% of their revenues. Now the social games and app businesses roar ahead leaving traditional video game publishers scrambling to answer their moves.
This shouldn’t be a suprise – they have seen this coming for over 12 years! An earlier company I founded in 1999, Gigex, was a leader in digital downloads of game demos, trailers and MMOs. We believed that the network would flatten distribution of content across the Internet. We didn’t focus on transactions, just getting the content into people’s hands. We tracked that distribution data and provided predictive trends that video game publishers used to predict future sales. We tried to sell them cost per click ads (before Google) but they said that was “too complicated” a model and instead wanted a flat rate. They said we had the “wrong” business model – (I guess we were a little early for that one! )