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November 16, 2005

Electronic Arts to launch game distribution service

Rick Aristotle Munarriz at The Motley Fool:

You knew this was coming. Electronic Arts announced Monday morning that it’s launching a digital distribution service that will deliver complete games, demos, and updates to wired PC gamers through the users’ online connections.

It’s a logical move for the world’s leading video game maker. In theory, delivering games to users with high-speed broadband access is a beautiful thing. Margins run wide, since there is no inventory to stock and no physical product to press, package, and distribute.

Sounds good to me, but I can think of a fly in the ointment.

The only roadblock would likely be angry retailers like GameStop, which clearly would have plenty at stake if gamers could cut out the middleman.

Yeah, that’s it.

Will they retaliate? Will retailers yield more shelf space and in-store promotions to EA’s rivals?

That’s unlikely. EA is just too powerful. But that doesn’t mean it’s time to short GameStop, either. The video game chains aren’t going away. For starters, video game consoles and accessories will never be delivered digitally. However, it bears pointing out that companies like GameStop derive higher margins on the sale of software titles than on the hardware side.

More by following the link. EA is starting slowly with an expansion pack for Battlefield 2, but with widespread broadband, digital delivery of games is bound to arrive for both PC games and consoles. Another example is the Xbox Live Marketplace which was just unveiled and will be selling “arcade games” and add-ons for regular games, if not yet the games themselves.

Posted at 9:44 pm. Filed under Companies, EA, Microsoft, PC Games, Video Games, Xbox 360

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One Response to “Electronic Arts to launch game distribution service”

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