The Potential of Online Distribution

As reported by Gamasutra, a joint study by DFC and GamerNDA, showed how the nimbleness of online distribution may extend a games shelf life dramatically. The study tracked user activity for Left 4 Dead across the PC (via Steam) and the XBox 360. While throughout most of the study, the PC and XBox activities were relatively on par with each other, the two major deviations were to the advantage the PC numbers. These deviations were attributed to promotions offered by Steam.

DFC's main takeaway from the study is that the flexible, quickly-adaptable nature of online distribution services like Steam allow for developers to use a broad variety of promotions and incentives to keep their game communities fresh; individual promotions like the Survival Pack had a positive effect on both platforms, but it was the one-two punch of that DLC plus the follow-up free weekend through Steam that had the mot meaningful impact on the game at any point on either platform.

This shows that one of the potential advantages of online distribution: the ability to easily slash prices to dramatically increase shelf-life. However, while the number of users may have increased on Steam, it was primarily due to substantial price cuts and free trials that were not necessarily available (at least not in the same volume) for XBox. Thus, while the number of user's increase, the revenue stream per user most likely plummeted as well. Due to the nature of these promotions, more users do not necessarily equal more money. What I would like to see are the week over week revenue streams for the PC v. XBox 360, to compare if the revenue stream under Steam tapered off more slowly than the revenue stream for XBox.

But despite my comments above, I don't think that these numbers are completely useless. What they do show is that nature of online distribution permits developers to extend what have become increasingly short shelf-lives for games. Naturally, by offering promotions, the revenue per user will diminish, but the secret will be to offer the right incentives at the right time to get those users who would not normally purchase the game (or the service) to do so, ultimately garnering more revenues than you would have if no discounts were offered.