More game companies should be like this; Stardock Customer Report 09

It is our rough estimation that for the calendar year 2009, digital distribution will represent approximately 25% of the revenue for a typical PC game publisher on a new title (though this varies significantly based on demographics).

Our estimation is that Steam - as the current market leader - enjoys approximately 70% of the overall digital distribution market with Impulse at 10% and all others combined at 20% in terms of actual dollars generated per month.

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One of the most significant trends of the past year we have seen has been the rise of “Weekend Sales.” One major advantage digital distributors have over retailers is the ease in which prices can be altered for limited times. These weekend sales began in earnest mid last year with the Weekend “Impulse Buys” in which a series of games were priced dramatically lower than normal. The news of this sale was picked up by some of the major gaming sites which in turn helped encourage other digital distributors to begin offering their own weekend sales, resulting in more sites to cover these events. This attracted the attention of the major publishers who began to request their own games participate in these weekend sales because of the promotion they received in the press.

In effect, the gaming news sites including Blues News, ShackNews, Joystiq, Examiner, Crispy Gamer, Gamer’s Hell, Rock Paper Shotgun, Game Focus – and these are just some that I can think of off the top of my head – have resulted in an unprecedented reduction in price for PC gamers. Ironically, this fairly dramatic trend has gone largely unreported for the obvious reason: the gaming media is the source of the PC gamer’s good fortune, and thus it might seem self-congratulatory for the media to point out the significant change in the average cost of a PC game in the past year.

It has also highlighted the importance of competition in digital distribution. With each digital distributor competing for customers, the result has been a vast and rapid reduction in cost for gamers.

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In Stardock’s case, we had the opportunity to put our money where our collective mouth was with the problematic network performance of Demigod when it was first released. Players who were unable to play the game online were allowed to return the game to Stardock for a full refund even if they purchased it at retail (which effectively meant we ate the difference between wholesale price and retail).

At the time of this writing, approximately 2,000 users did return Demigod to us. Approximately 60% of those users purchased at retail. Nearly 90% of all users who returned Demigod subsequently re- purchased the game once the network issue had been resolved.

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Survey Question:How do you purchase software?
Today:
34% in a box
61% digitally

Last Year:
58% in a box
42% digitally

(A 43% swing)

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