SCEE president Andrew House has confirmed the thing we all knew by now, that physical media will still be an important part of the games industry for at least a few more years. House has also added that digital distribution has a set of issues that need to be overcome before it becomes the norm.

“The reason retail has been around for thousands of years is because it works really well at showing you a range of content,” he says, “having experienced store staff that can find the game you are looking for, tailor choices to your needs and up-sell you something you hadn’t thought of.

“Digital, for me, still has a challenge in that it doesn’t have the equivalent of that. Browsing is a little overwhelming and too confusing, and that’s the challenge that makes me think there’s a strong role for physical media for years to come.”

No, the reason Store based Retail sales have existed for thousands of years is because there has not been an alternative.  There are hugh drawbacks to retails stores:

• Unless you own the store space directly, the owner of the mall/complex usually has to be paid a flat monthly fee, plus a percentage of your sales.  In some cases that can be 25-40% of your sales.
• You have to be able to stock the merchandise you want to sell.  Take a look at Gamestop, you will see a small 3-5 foot rack that has Windows / Macintosh games.  Compare that the 16+ foot racks of  Playstation 3, WII, etc games.  Wonder why Macintosh & Windows games are not selling at Gamestop, that’s because they are not in stock.  Yes it’s possible to order from the distributor and have it shipped to the customer, but they came in to walk out with the box. The customer will be disappointed.
• To be successful, your employees need to know about the subject.  For example, retail computer sales.  Most employees learn the real basics, and are forced to spout BS when a challenging customer comes in.  No wonder most people don’t trust sales people…  In addition, you can only handle a finite number of people at the same time, your limited by your staff count.
• If you lose your physical media, chances are you won’t be able to re-download the package, you will need to buy an completely new product.

In comparison, with Digital distribution:

• You have a flat monthly rent for your storage space, and you could even “build” a small store as part of your warehouse…
• The customer is not expecting to be instantly gratified, so a cross-shipment or the product being shipped from your stock is expected.  Your total on call stock can be smaller, due to cross-shipping from the distributor.
• Your web site needs to be up to date, and have the information the customer needs to evaluate the products.  And your web site can interact with an huge number of people at the same time.
• The customer can download the packages as needed (Steam, and other digital distribution providers).
• In theory, the price is cheaper, since there is no physical media, manuals, etc…

So, what’s positives with physical distribution, verseus digital distribution in your opinion?  Feel free to let me know your opinion in the comments.