Digital-only gaming prepares for primetime despite the US' horrible Internet connections

By Nathaniel Mott , written on February 7, 2013

From The News Desk

It's no secret that the United States' Internet infrastructure is, well, shit. As Bloomberg's Susan Crawford covered last December, US Internet users are paying exorbitant fees for slow service that will be obsolete within a few years, and that's if they're lucky enough to have a high-speed connection in the first place. Poor infrastructure negatively impacts any Web-related endeavor, but one particularly affected category -- fully digital videogame consoles -- might be closer to becoming a reality than expected.

Consoles have been increasingly reliant on Internet connections for some time. The Xbox 360, PlayStation 3, and Wii U are less focused than their predecessors, morphing from specialized devices meant specifically for gaming into full-blown media devices with access to Netflix, Hulu Plus, and other streaming services. Videogames themselves are more connected than ever before, with services like Xbox Live and the PlayStation Network replacing the arcade as de facto gathering places for gamers. Pulling an ethernet cable from a modern console effectively quarters its impact on the living room.

Still, it's hard to imagine consoles adopting a fully-digital approach to gaming. (If anything, Nintendo's Wii Mini and its lack of Internet capability shows that some consoles could head in the opposite direction.) Downloading high-profile games like "Dead Space 3" and the dozens of gigabytes they're comprised of is different from streaming "House of Cards" on Netflix or even downloading the latest "Angry Birds" game to a smartphone. Having to move such large files over the standard (read: horrible) US Internet connection is enough to make any gamer scream obscenities -- not that that's hard.

But recent developments suggest that we'll be abandoning -- or, at least, starting to abandon -- disc-based games faster than you can say "I remember when games were played on cartridges!" (Maybe not that fast.) Whether it's efforts from up-and-coming console makers, like OUYA and Valve, possible contenders, like Apple, or developments at gaming's juggernauts, like Microsoft and GameStop, it looks like 2013 is the year that a digital console doesn't seem like such a pipe dream.

Both OUYA's console and Valve's Steambox will rely exclusively on downloadable games. OUYA will utilize its own games marketplace and Google's Play Store, among other services, to create a system that emulates Valve's own Steam platform, which already sells games and other content to PC users. Choosing OUYA or the Steambox is a vote for digital gaming by default.

Then there's Apple, which has been haunting the gaming market for years. Valve's Gabe Newell recently dubbed Apple the biggest obstacle to the Steambox's success, saying that he believes the company to have all of the pieces in place to "roll" current console makers (Sony, Nintendo, and Microsoft) and maybe even beat Valve to the living room. I have my reservations about Newell's assertion, as current console makers have too much skin in the game to cede the living room as easily as he predicts, but if Apple does enter the gaming market it will almost certainly do so with a digital-only offering.

Apple has no love for physical media. The company has systematically removed disc drives from its computers and still doesn't offer a Blu-ray drive 7 years after the format's introduction. If the mythical Apple television set or Apple console (which could be nothing more than a glorified Apple TV ) does enter the market it seems unlikely that it will embrace a format it's made a point of ignoring for almost a decade.

Even if none of these newcomers, either confirmed or rumored, make a dent in the market, there's still Microsoft and Sony. Both companies have made headway in the digital gaming space with Xbox Live and the PlayStation Network beyond their facilitation of prepubescent rage and vitriol. The Xbox Live Arcade and the PlayStation Store offer downloadable games for customers, ranging from blown-up versions of iOS games ("Jetpack Joyride") to indie titles ("Fez," "Journey") and high-profile games ("Dead Space 3," "Assassin's Creed 3"). Nintendo does the same with the Wii U and the original Wii with its Virtual Console, which sells "retro" games to cash in on nostalgia, and WiiWare titles that wouldn't be out of place on the Xbox Live Arcade or PlayStation Store.

It's possible to use any of those consoles without ever inserting a game disc. It likely wouldn't be ideal if one were obsessed with high-profile titles that don't make it to any of the marketplaces or with being able to play a game almost immediately after purchase, given those pesky download speeds, but it's doable. And if recent reports on the next Xbox are to be believed, going digital-only could be more viable than ever before.

Microsoft has reportedly added "anti-used-games" technology to its next console, which is expected to be announced-slash-released this year. This would prevent gamers from purchasing a game, finishing it, and then returning it to a GameStop (it's always a GameStop, and we'll touch on that a little more in a bit) to recoup some of the cost. The initial reaction to this news was harsh -- I referred to it as "completely fucked" when I first saw the report from EDGE -- but there might be more to it than meets the eye.

Question: When does not being able to play a used game matter? Answer: When you're meant to be downloading games anyway. You can't "turn in" a game on the App Store or the Play Store -- that would be ridiculous. EDGE believes that Microsoft is using the anti-used-gaming tech to push customers to downloadable titles. Rather than using the "carrot" to convince customers to switch, Microsoft decided to swing a rather large, contentious "stick."

There is one loser in this switch: GameStop. The company, which had previously reported that 48 percent of its gross profits came from used game sales in Q3 2012, saw its shares tumble after reports of Microsoft's new tech came out. Buying and selling used games is a money-making machine for GameStop, as it allows the company to profit from game sales without having to give a cut to the game's publisher. Blocking the practice is basically an early Christmas present from Microsoft to game publishers.

So what's GameStop to do? Well, it can get in on the shift to digital as well. The company already diversified its stores by branching out from selling just consoles and videogames to selling devices, like Android-based tablets and iOS products, and recently announced a $10 million fund for mobile game developers. And if the US' premier videogame seller starts pushing customers to go digital, well, chances are that they're going to do so.

It's going to take a lot for digital gaming to become the norm. Mentioning the state of connectivity in the US might seem redundant, but in this case it's necessary: If the Internet service providers don't improve their infrastructure (and remove data caps from customers' connections) digital gaming will have to constantly fight against the status quo.

[Image courtesy bobcat123]