Newzoo, a games industry market research and consulting firm firm has published a report entitled "Newzoo Topic Report DLC, Pre-Owned & Digital Distribution". This explains the ongoing push towards distributing games online, as opposed to physical copies on disc. It explains that there are three basic reasons for this:

1 Free-Riders: Only 44% of US console gamers ever spends money on Console Games
2 Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
3 DLC: Americans will spend $950 million in 2011 on game and add-on content downloadsIn their "key facts" summary, Newzoo make the point that the retail channel will not go away, since this is an important outlet. Retail distribution has an important advantage when it comes to eyeballs, plus the box makes for a pleasing, tangible gift. What's nicer to receive: a scrap of paper with an unlock code, or a nicely presented gift box with the same unlock code and perhaps a collectible item? However, the crucial point is that the enclosed disc will disappear as superfast broadband becomes increasingly ubiquitous. For aficionados of tangible representations of their intengible computer games, having the presentation box can make for a satisfying addition to their collection.

In its second reason, the report points out that the games companies see no income or more appropriately, "kickback", from used games being sold legally in high street second hand shops or sold just as legally, directly between private individuals. These companies like online distribution, because it does away with this used market completely.

Of course, this little racket forces gamers to buy "new" games all the time at much higher prices, fattening the companies' bottom lines at the expense of their customers. Nice. This is exactly the kind of silver bullet technical solution that the big music and movie industries are looking for, but thankfully haven't found.

What the report doesn't say, is that this also does away with a purchaser's first-sale rights in the name of attempting to increase profits. The fact is that these companies have no right to a kickback from used sales and this loss of customer freedom and rights is a result of simple money-grubbing greed on their part and possibly a false sense of entitlement. They achieve this restriction through the DRM systems of the various online distribution systems, such as Steam and more recently, Origin, which deliberately disable the transfer of an unwanted game from one subscriber account to another. For a great deal of info regarding used sales and the blinkered approach of the games companies, please see some of the various articles published by Techdirt, by clicking on this search link here. An especially pertinent article from that search is, Video Game Exec Claims Used Games Defraud The Industry. There's also this important article, which explains How The Used Book Market On Amazon Helps The Sale Of New Books. While the story is about books, the principle is equally applicable to computer games.

The full Newzoo report is available free of charge online and is full of stats, figures and brightly coloured pie charts for the reader to chew over.

The report can be downloaded as a pdf here. Note that the file was not downloading very reliably at the time this news article was published. The same content can also be viewed as a web presentation, here. The "key facts" summary is at gamesindustryblog.com and the firm's home page is at www.newzoo.com