We Are Seeing The Death Of The Disc Drive
Last night Microsoft released an ad for the Xbox One S All-Digital Edition and, separately, in a financial call with its investors, EA revealed that in the past 12 months, 49% of its game sales were digital. The game industry has been headed this way for years, but it feels like we're on the cusp of the death of the disc drive. It won't be this year but perhaps in the next generation we'll see the end of physical game releases.
The game industry has been moving towards a digital only space for years. Since the launch of digital stores like Steam, the Microsoft store, and PlayStation Store, we've been seeing a year on year increase in the number of games bought digitally. Previously, these sales made up a small portion of a game's sales and they were predominantly still bought in brick and mortar shops. However, if last night's call is anything to go by, next year is likely to be first year EA can say more of its games were bought online than through a store.
It makes complete sense for publishers to push for an all-digital future. Producing physical copies of games costs money and selling games through physical shops like GAME means they see less of a cut of the profits. Put simply, a publisher makes more money selling a digital copy of a game than a physical copy.
The platform holders have been supporting this transition, too. Microsoft's Game Pass and Sony's PlayStation Now service both offer us access to a library of games for a subscription fee. Microsoft even went as far as to offer all its first-party games through Game Pass on day one of release. These subscription services are a dream for these companies. They provide regular, reliable income from customers and it creates a captive audience - if you ever cancel your subscription you're cutting yourself off from the game library.
The All-Digital Xbox One S is not so much dipping a toe in the water as Microsoft wading in up to its knees. It's chosen to put out this version of the console at the end of the generation's life, both flagging its intentions and trying not to raise gamers heckles. But it's clear that this is where Microsoft sees its hardware headed.
All-digital also puts an end to the second-hand market. How can you share games with a friend or buy them more cheaply from someone who's done with their copy if there is no physical game to trade? Microsoft tried this six years ago when it first revealed the Xbox One. The console originally required a daily authentication and games you bought for the machine were locked to that device. That was an artificial lock on your games, this time it's an inherent quality of the digital medium.
At this point it's pure speculation, but I suspect that when the next generation of consoles is revealed they will both have disc drives, but we'll see all-digital versions of the hardware much earlier in the generation than we have this time. And I think that will be the last time the machines run physical media.
All-Digital is good for publishers and platform holders, but what about players? Is this some end of days moment? Not really. The PC has been pretty much all-digital for years. I've not had a disc drive on my last two PCs and have largely picked up all my games through Steam, Origin, Uplay, and Humble. The move to digital stores has allowed for the value of games to drop - Steam sales and Humble Bundles are largely possible thanks to the nature of digital distribution.
The main downside is that it makes the existence of games more temporary. We've seen games removed from stores leaving players unable to download or access them. That can't happen as easily when you have a physical copy of the game.
The real risk of all-digital is what happens if one of the major stores closes. If Steam were ever to close, what would happen to all the games you'd bought? It's not something we've faced yet, but if there's one takeaway of the recent rise of the Epic Games store, it's that Steam is not a permanent fixture in the industry. Nothing is too big to fail.
Featured Image Credit: Microsoft