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Wednesday, Dec. 5, 2012

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Pay and play: Download codes for digital versions of popular Nintendo games for sale at a convenience store in Osaka.

TECH_JAPAN

GAMES

Despite downloadable versions, packaged games in high demand


Late last month, Nintendo issued a press release, regarding its smash hit "Animal Crossing: New Leaf." The game, a simulator in which cute characters do things like collect items and decorate their houses, hit No. 1 on the game charts thanks to its dedicated following with young and seasoned players alike. In the press release, Nintendo apologized for the game being sold-out at retailers across Japan, adding that sales were above forecast and promising to release more copies.

It was a peculiar announcement — because pretty much anyone can buy the digital-download version of "Animal Crossing: New Leaf" at anytime, without leaving the comfort of their own home. However, even though digital downloads are becoming increasingly prevalent, players or game companies aren't ready to ditch packaged games just yet.

Digital downloadable games are nothing new for Nintendo — or its rivals Sony and Microsoft. For years, Nintendo has offered small digital games via the Wii, but reserved its big titles, such as its "Mario," "Zelda," or "Animal Crossing" games, for traditional, packaged retail releases. Meanwhile, Sony and Microsoft have been offering their biggest games as downloads for the past couple of years as Internet speed and bandwidth improved. And PC gamers, typically on the forefront of technology, have been playing digital download versions of games for much longer.

With the 3DS and the brand new Wii U, Nintendo is making a much bigger push with digital downloads. The profit margins are higher, because the digital versions do not need to be packaged and then shipped to shops around Japan and the world.

Many digital releases are slightly cheaper, too, enticing customers with a less expensive price point that may make them forego a physical copy. For example, the downloadable 3DS version of Square Enix role-playing game "Bravely Default" is ¥5,400, compared to ¥6,090 for the packaged version. Nintendo, however, tends to price its digital and packaged versions the same: "Animal Crossing: New Leaf" is ¥4,800. Nintendo would probably argue that its packaged games are already reasonably priced, so there's no need to lower the price for digital versions.

Companies like Nintendo (and its rivals, for that matter) aren't yet able to go completely digital, as music basically has. Unlike music, video games are still tied to hardware that is sold in game shops. As a result retailers are valuable partners for hardware companies and game makers. Stores do in-shop promotions, where elaborate displays or posters that can entice potential buyers. So, if game shops start to vanish, like music retailers largely have, that ultimately hurts game makers and hardware companies. This is one reason why Nintendo is even selling download codes for its games in stores, allowing Internet-shopping wary folks to pay cash for a downloadable game instead of shopping online with a credit card.

Another reason for the continued sale of hard copies is that many gamers aren't ready to go digital only. Some players like collecting physical copies of the games. Other players might be reluctant to use their credit cards online — especially with the spate of Internet hacks in the last few years. Players may even be too young to have a credit card, or they might get a physical copy of the game as a present.

What's more, neither Sony, Nintendo, or Microsoft are able to dominate a retail ecosystem in the same way Apple has been able to. It's simply not possible with video games. Most gamers want to play a variety of titles, some of which are available on Nintendo hardware, some of which are available on Sony or Microsoft consoles. Apple, however, doesn't have to face such a segmented marketplace, so it can offer essentially every album, or even game app, that's been released. It's one stop shopping. Neither Nintendo, Microsoft, nor Sony can offer that experience because "Mario" is still tied to Nintendo hardware, "Halo" to Microsoft, and "Uncharted" to Sony. These platform holders publish the games, so they'll never allow them to appear on a rival console.

Nintendo isn't the only Japanese company reluctant to kiss packaged games goodbye. In summer 2006, back before the PlayStation 3 was released, a Sony executive let it slip to Wired magazine that he'd be "amazed" if the inevitable PlayStation 4 had a physical disk drive — implying that he thought the PS4 would be digital download only. The comments were baffling considering how Sony was in the middle of a format war, positioning its Blu-ray Disc to beat HD DVD discs. A couple years later, however, Kaz Hirai, then Sony Computer Entertainment's boss, said he didn't think the PlayStation 4 would be digital only, adding that not everyone has access to high-speed Internet.

Even in our digital reality, a mix of physical and downloadable games is ideal. The balance allows those who want the games on-demand that ability, but it also retains the traditional shopping experience with which many players feel most comfortable. It's likely that the number of packaged games will decline over the next few years, and the number of digital ones will increase, especially as people become more comfortable with digital shopping, whether that's due to Apple or Android phones. But for the time being, packaged games aren't going anywhere.

Brian Ashcraft is a senior contributing editor at gaming website Kotaku.com.


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