The death of the physical disc
Posted by Tobold's Blog [HTML][XML][PERM][FULL] on 20 June 2013, 2:45 am
Buying a game on a physical disc has some advantages: You don't need a internet connection to install and play that game, you can resell the disc, or you can take it and play it elsewhere. A physical disc also has disadvantages: You need to leave your house to buy it, you can lose or damage it, it takes physical space to store it, and every time you want to switch games you need to change discs. Physical discs also have a big disadvantage for the game company making them: They cost money to make, and too many middle-men and used game resellers make money of it that doesn't go to the game company.

In 2010 something happened: Sales of PC games online for the first time were higher than sales of physical discs of PC games. If you include consoles, sales of physical discs are still ahead, but in 2012 they dropped by 21 percent, while online game sales were up 16 percent (and those numbers don't even include Steam).

This trend towards "digital distribution" (stupid term, as if a DVD wasn't digital) persists in spite of release prices online being objectively too high. Given the lower cost of distribution and less middle-men, game companies could sell online games cheaper. Currently they don't do it, because they fear reprisals from retail stores. But that isn't going to last forever: PC games are selling just fine in spite of not getting much shelf space in retail stores any more. And an Apple Store is doing just fine without selling software.

So today's news that Microsoft is giving up on online-based DRM for physical discs in some ways is a Pyrrhic victory: Everybody failed to notice that both on the XBone and the PS4 the much-touted advantages of being able to trade games only applies to physical discs. Games that you bought online on either system can't be resold, traded, or anything else. At some point in time Microsoft, Sony, and all the game companies they work with will notice that they make a lot more money from those online sales than from disc sales. And they might decide to not give subsidies to retail stores any more, and price downloadable games cheaper than physical discs. On the PC they already give discounts a lot faster on Steam than in retail.

The time between two console generations is about 7 years. Seeing how even today I barely ever use the disc drive of my PC any more, and my iPad doesn't even have one, I wouldn't be surprised if the next console generation of 2020 came without a disc drive either, at least not in the cheapest default version. Today might well be the last hurrah for physical discs.
Tobold's Blog

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