The Problem with Digital Distribution

I love the Xbox Live Arcade marketplace, because it’s so convenient to instantly download a game and forever have it stored on my hard drive where I can access it at any moment. I like download games in general, but I am especially fond of XBLA and XBLIG, because I can easily copy the game over to a flash drive and use it on another console. I like that download games tend to be smaller, cheaper games that would be inappropriate retail releases but work well as a digitally distributed title. What scares me about digital distribution is the trend toward all games being released through this route. With the popularity of services like Steam and the emergence of Onlive, digital distribution is being pushed harder than ever.
It makes perfect sense for publishers; they don’t have to manufacture discs or packaging, and the game is harder to pirate. They save money, sell more legitimate games, and pass the savings on to… well, nobody, actually. Newer releases cost just as much on Steam, if not more than in retail outlets. Sure, you get the game immediately and don’t have to bother with disc swapping, but at what cost? Once you buy a digitally distributed game, you’re stuck with it. Games have never really been sold to consumers, they are merely licensed. This isn’t a huge deal with physical copies of games, because you still own the disc and can sell it if you don’t want it. With digitally distributed games, there is no way to sell your copy. Every purchase is permanent, and you have to make absolutely sure you want the game you’re buying.
With cheaper arcade games, this isn’t too much of an issue, because you can write it off as a pricey rental. As companies push for digital sales of retail games, and the price of arcade games slowly creeps up, bad digital purchases get all the more devastating. I have a tendency to sell most of the games I buy, because I will more than likely never play the game again. I know some people like to keep all of the games they buy for nostalgic sake, but you have to admit there are some games that just suck. I know I’ve bought quite a few awful WiiWare games that I’m stuck with now. A solely digital distribution model would make me nervous to buy anything, because I know I’d have to keep it.
At the risk of letting my true nerd form shine through, I really like to have the physical copy and packaging of a video game. I like to admire my collection, smell the discs, and rub the booklets all over my body… Okay, so I don’t actually do that, but I still like having the physical media, because it feels like I really own the game. The case artwork and manual are just as much a part of the experience as the data stored on the disc, and believe it or not, I actually do read parts of the manual sometimes.
I don’t mean to suggestion that digital distribution is always a bad thing. It was a necessary move for the music industry, for example. I have no problem dropping 99 cents for a song, and I’d never buy a physical CD again, because I’d just rip it for the mp3s, anyway. It becomes a problem, though, when the asking price gets out of hand. I’m not about to throw down fifty bucks for something that I only kind of own and can’t get rid of. Unfortunately, digital distribution is the way everything is headed. It’ll be a sad day when consoles finally do make the switch to download games only and may be the day I give up on the industry.
I think that it is still a way off since GameStop is such a huge part of the industry and deal 99% in physical media and digital distribution cuts them out of the loop. I'm totally ok with that part of it. I hope that they can coincide the way DVDs and digital movies do. Can't we all be friends?
Another concern about a digital-only model is the fact that, at any time, the company could pull the plug on its service, and you'd lose all your games. I'm surprised JR left this out, because I remember reading it in his original essay about this on his blog. The point, though, is that a company would never come into your house and ask you to give back all the discs that you bought, but they could easily take back the digital rights you had to play them.
Last year, Microsoft decided to end all online support for original Xbox games. Okay, not a big deal. All the indie games on the 360 require being connected to the Internet, though, or you can't play them, regardless if they are online or not. If Microsoft ends 360 support when its new console comes out, does that mean we've lost access to all the indie games we bought from this generation? Something to think about...
Companies have been ending support of older media for a long time now, no surprise there, but throwing the online sign-in is a new wrench, which I'm a little anxious about. When it comes to what will be lost between this console gen and the next, I think we'll have a really good idea when we see what happens with the PSP2. How the NGP plays with PSP digital games and the 3DS with DSi downloads will set the precedent.
@JR - I agree that publishers would be more than happy to get GameStop's grubby hands out of their pockets, but not until DD becomes the main way to sell the big games console games. COD BO had the biggest media opening release ever. How much of that would have not happened without GameStop?
Now that consoles are catering so much towards the non-gamer crowd, though, an online-only model doesn't make sense. Moms aren't going to stumble across a budget dance game in Nintendo's shop channel and snatch it right up, but they'll certainly do so if they see it in Toys R Us or Kmart.