Tuesday, October 5, 2010

Cataclysm Digital Download, War On Retailers?

WoW's Cataclysm finally has a release date, December 7th 2010.  If you compare the press release to the announcement for Wrath two years ago, you will notice a small but significant difference. 
"The expansion will be available on DVD-ROM for Windows® XP/Windows Vista®/Windows® 7 and Macintosh® at a suggested retail price of $39.99 and will also be offered as a digital download from the Blizzard Store."
For most players, this means very little.  Personally, the DVD drive on my gaming machine is broken, so I'm probably going to take Blizzard up on this offer even if it means not having a box to set on the shelf with my other WoW packaging.  For retailers, though, this may mean war.

Both previous WoW expansions were not available as a digital download on launch day.  This means that Blizzard had to share the launch revenue of these expansions with a variety of middle men, from the guys who manufacture the boxes to the shippers and distributors to the actual retail store that ultimately sold the game.  For Cataclysm, all the revenue will go straight to Blizzard - they won't even pay for the majority of the bandwidth, since they managed to set a precedent six years ago of using the customers own bandwidth to serve patches. 

The Retailer's Dilemma
This will put retailers in an interesting position.  On the one hand, the older expansions are apparently still selling in large enough numbers that every store that carries any PC games carries them.  Blizzard has not announced plans to obsolete the old expansion boxes by offering an all-in-one box like other games (such as EQ1/2 and LOTRO) have done. 

That said, stores generally don't get a cut of the recurring revenue from subscriptions, excepting the portion of players who use time cards.  Instead, they lose revenue from players who stay subscribed to WoW instead of buying other new games from the retailer. 

Don't get me wrong, it's certainly going to be possible to walk into a store on December 7th and pick up a copy of Cataclysm.  Whether or not they like what Acti-Blizzard has done here, Cataclysm may be the biggest selling game of the year, and they'd be hurting themselves by sitting out the expansion launch.  The question is whether they will continue to allocate as much shelf space as they do to the game's four boxes even as Blizzard takes greater efforts to promote digital downloads, or whether stores will let their current stock run out and cut shelf space accordingly. 

Do MMO's Need Shelf Space?
In the end, there's an open question of how much retail space actually matters. 

SOE clearly thinks that it does matter, as they made a point of delaying the digital version of the latest EQ2 expansion by a week to encourage stores to stock it.  In my view, the gesture was half-hearted.  The all-in-one box obsoleted all previous SKU's of the game currently on store shelves, one of which had been released less than six months prior.  SOE also included a coupon for $10 off the digital download of the expansion in the retail box, to encourage players with friends or multiple accounts to take their business straight to the source after buying a token box from a retailer - perhaps they make more off of a $30 digital download than a $40 retail sale.  Retailers apparently were fooled, though, as I've seen many more unsold copies of TSF on shelves than previous expansions, all of which will be obsolete in five months. 

Then again, the EQ2 story raises the question of whether MMO's, which are inherently online only, actually do get a lot of walk up impulse purchase traffic.  How many of these boxes are actually sold to new players, and how many were bought up on sale months later by knowledgeable players when the full priced digital download cost more?  Perhaps a lapsed subscriber might see a new box someday and decide to try the game out, but otherwise the commitment required for MMO's tends to draw a more informed consumer.

Especially in Blizzard's case, it's possible that the stores need the sales more than WoW needs the store. 

16 comments:

Kurt said...

If the digital download is equally priced to the store box, then my decision on which to purchase would hinge on two factors:

1. Which is faster for me, traveling to the store and back, or downloading the game?

2. Cost to travel to the store, versus concerns about bandwidth cap on my connection.

End result of this analysis: I can walk to the store and buy a copy much faster than I can download the game, even if I have to wait in line for 30 minutes.

If in the future Blizzard introduces differential pricing between these two models, my decisions may change.

Tesh said...

"How many of these boxes are actually sold to new players"

I suspect that very few are. Something like Guild Wars can sell its expansions much easier than WoW, since they are standalone and nonsub. CAT will *require* TBC, Wrath and the base game, so it asks a lot of a customer (though that might explain why retailers keep all expansions on the shelf).

I know that if I were to get it at a retailer (online or offline), I'd only be doing it because of a sale. I won't buy the game at full price. Maybe that makes me a terrible, no good, rotten, evil consumer, but it's my money so I get to make the call.

Maybe if the digital download were cheaper (less overhead) and/or CAT was a standalone game (sub-free), I'd buy it via digital download, but when it's the same price as the store version, requires buying the other expansions, and a recurring fee to actually play the darn thing, it triggers my "sorry, no" reaction.

The deeper down the rabbit hole the expansion unit chain goes, the less likely it is to pull in new players. At some point, retailers won't have much reason to carry much, either.

hound said...

Personally I like a physical copy to handle. Though, it might be that if I had begun with a digital copy then I might stick with that instead.

Of course, I do tend to re-install the game from time to time so I'm not certain I would be happy with having to wait on the core game and three expansions and recent patches.

I suspect that, although Blizzard would certainly love to cut out the middle man and keep even more money for themselves, they might actually be offering this service up front primarily for people who can't get to a store with a box on launch day.

On the other hand, while Blizzard is very egotistical and loves to see its product on the shelves, Activision might be the ones pushing this digital download to squeeze that extra bit of profit.

I know that at this time they are one and the same, but I still like to relate the two companies and individuals; one that is about entertainment, one that is about profit.

Anonymous said...

Blizzard has not announced plans to obsolete the old expansion boxes by offering an all-in-one box like other games

It's my understanding that the expansion DVD is the entire game, and it loads content according to your licensing level. I tested this out after I wiped a harddrive of mine, and using only the wrath DVD, was able to install the entire game. I'm not sure what would happen then though if you were to logon with say an old vanilla account. I assume you'd just get the errors that say you need "X" expansion to enter "Y" area or use "Z" item.

Green Armadillo said...

@Tesh: I hadn't noticed the hard requirement for TBC and Wrath on Cataclysm. It seems kind of strange that you have to buy two unrelated expansions if you're a new player who wants to play a Goblin or a Worgen.

@Anon: The other games I mentioned actually bundle all of the previous expansions FOR FREE with the current expansion. EQ2 has had six expansions so far, and asking new players to track down boxes for all of them would be a pretty big stretch. The downside for retailers is that every box on your shelves other than the most recent (right now "The Sentinel's Fate", soon to be "Destiny of Velious" in February) is worthless because you can get more recent expansions for the same amount of money.

Brian 'Psychochild' Green said...

The big worry in the past was about upsetting the retailers. Offering a direct download was verboten because it could make the retailers cranky. Last thing you'd want is a retailer not carrying some of your products because you offered a digital download on some other game.

I suspect we're starting to see the writing on the wall that a large publisher is (possibly) willing to do a digital download along with a retail package. (Note that they don't explicitly state that digital download will be available from day one, at least not when I read the press release.) The big numbers of WoW probably work in its favor in making it silly for a retailer to throw a fit about not wanting to stock it. But, we've seen that the retailers aren't doing all that well, and the used games "discussion" has shown that there's definitely no love lost between retailers and publishers in some ways.

Interesting times, as they say.

Green Armadillo said...

@Psychochild: I guess you could read "will be released starting on December 7" as implying that some formats might be arriving later. If so, let's have a toast to the poor customer service people on the day that detail comes out.

That said, the press release for Wrath does not breathe a single word about a forthcoming digital edition, even though TBC had been available digitally for over a year, and the Wrath digital version came out very shortly after the retail launch (I think it was like a week). Why go to the bother of irritating retailers by mentioning the digital download in advance if they're going to hold it back for retailers' benefit?

Carson 63000 said...

Wasn't there a fairly similar discussion to this going on when Half-Life 2 launched six years ago? I remember buying that from Steam, and being very impressed that (a) I was able to do so and (b) that it cost not much more than half of what a box would have cost in an Australian retail store.

But that was a big name sequel to a very popular game, and I'm sure I remember conversations about whether or not Valve needed retailers as much as the retailers needed them.

Slyght said...

@Tesh
Lack of sales tax and shipping rates makes digital download the cheapest way to get Cataclysm on day of release for me. Digital download saves me $4 on sales tax, as well as one less trip to the game store (which almost always results in me getting stuck in line behind some confused mom).

Animagis said...

Blizzard could also remove yet another obstacle that might incentivize the digital download route: launch day access time.

If they mirror what they did with Starcraft II, then the digital download will be available for pre-purchae AND pre-download, ensuring that the customer is able to log in and play AT midnight rather than having to get back from a store launch and install.

Tesh said...

"It seems kind of strange that you have to buy two unrelated expansions if you're a new player who wants to play a Goblin or a Worgen."

Indeed. It borders on dishonest in my book, and is the biggest part of Cataclysm that I think is extraordinarily ill-advised. I personally detest subscriptions, but the CAT requirement for all three predecessors is an even bigger barrier to entry for new players.

It's truly baffling to me that they would run that way. It seems like a PR mess waiting to happen for the "newbie hose".

Then again, I'm a big fan of the Guild Wars business model, complete with standalone expansions, so I'm not the target audience. Still... I can't help but think it's not going to be nice for new customers. Further evidence of a shift to retention over acquisition? It just doesn't make sense to me on its own. (Unless the point is to put newbies over a barrel, which I wouldn't put past Kotick.)

Tora said...

I guess the stores will have to pick up the glove and fight back. Throw in goodies with each purchase, have events in the store on release - like contests to win the expansion for free in exchange for customer details for newsletters etc.

What the stores are experiencing when all us gamers rather shop online is more or less deserved.

Especially here the customer service is bad (they know little about games, if any at all) apparently they just hired a lot of girls to try to attract more guys. But what I find is a bunch of incompetent airheads (forgive me) that store all DVD's in drawers at the back instead of original packaging - which means they are usually scratched and the game cover is covered in stupid stickers and glue.

Of course I'd rather buy a game directly from the developer if it means I wont have to argue with the cashier that the game she is trying to sell me is in Swedish (a brutal insult).

So retailers just have to shape up and be professional like any other business. If they can't survive on their own, I'm not going to reach out if they don't deserve it. Good riddance.

Glyph, the Architect said...

"It seems kind of strange that you have to buy two unrelated expansions if you're a new player who wants to play a Goblin or a Worgen."

I can't find anything from Blizzard to confirm that BC and Wrath are required for Cataclysm.

I can find a ton of posts on different websites from people stating the obvious that you can't get to 85 without BC and Wrath.

I'm not sure if they are required to just install Cataclysm and roll a Goblin though (a Goblin that would be level capped at 60, but still).

Green Armadillo said...

@Glyph: Dunno if this can be linked, but the splash screen on the official site shows a picture of box art that says that Cataclysm requires the three previous boxes.

http://www.worldofwarcraft.com/cata-splash.htm

Tesh said...

I'm pretty sure I saw a Blue post quoted on mmo-champion to that effect, but all I can find at present is this:

http://forums.worldofwarcraft.com/thread.html?topicId=24702262775&sid=1

Certainly not official, but it seems I'm not the only one with that impression.

That said, I'd be very happy to be proven wrong. I think it's idiotic to require someone to buy all four boxes to start as a Goblin or Worgen. That's always been one of the weird tensions of the CAT expansion, as opposed to making it a standalone like a GW "expansion".

John said...

Since Blizzard is an empire and has been for awhile, the digital purchase will give obviously help them out more, and they have to spend less. However in time, they have spend their money wisely on their employees and patches that this game lives up to the 800-pound gorilla nickname.

That said, the digital purchase will get rid of all the extra resources used to make and transport a game (i.e. cardboard for packaging, gas for transportation) I could easily purchase online at the cost of a few Kilowatts per hour.

Not to say I'm a tree-huger, but If I can avoid any unnecessary use of resources, I'll do it. Besides, the future is the internet. The retailer is the old way of things.