Electronic Media & Micro Transactions

Online media has taken on a new face over the past several years. Music, movies, a few books and most games now can be purchased in a variety of ways, that have replaced the retail model. You’re no longer forced to buy entire albums for “that one song” you like; or $6 to rent a single movie. Even the gaming industry has been forever changed by the likes of Steam and now, bundling services. Most of these changes have benefits that are foreshadowed by the cry of retail stores closing as a result, but if a system is broken, clinging to it is not the answer. By offering a far more versatile purchasing  experience, media industries have revitalized the market, encouraged growth of independent entities and I’ve become a fan.

Ever the cheapskate, I have rarely paid more than $20 for any movie, game, book or album. I simply can’t justify it. Now, I don’t have to. Instead, I subscribe to NetFlix, so that I can watch movies and television without commercials. That’s a value I can believe in. I have bought several Steam products and love that I have a permanent backup for all my games. I no longer buy any games for my console systems, but that’s not a huge loss for the industry, because I only ever bought used games and most of those from the discount bins.

In recent months, I have bought several game bundles, all of which are offered on Steam, or similar services like Desura, which caters to independent developers. The result is that the gaming industry is finally seeing money from frugal consumers like me, people from whom they had previously made very little money.

While I’m not a big fan of iTunes or music services in general, it’s because I already have a substantial music collection, so I don’t see personal value in paying e $1 per song. The marketing concept makes sense though and I support the change. I also hope the industry continues to thrive, grow and adapt, eventually eliminating ridiculous entities like the morally corrupt and hypocritical RIAA. The impact electronically downloaded music had on the retail industry is by now, very old news. People who worked for those stores have long since moved on and a few, specialized stores remain.

Audio books and e-books however, are still far behind the times. Charging as much or more for your electronic copies than you do for physical copies is ridiculous and I do not believe in or support these industries, whatsoever. Unfortunately, places like Amazon may be too big to fail, so it will be a long time before anything changes on that front. Yet, people clearly don’t mind throwing their money away on electronic copies, otherwise Borders would still be around. Don’t get me wrong, I enjoy reading as well, but electronic copies should cost less than physical copies for obvious reasons. The main one being that there is no manufacturing cost. Somehow, this industry continues to be successful despite it’s very old school approach. It’s a shame, really. I hope this changes, in the near future.

Netflix and similar services have made movie rentals an excellent value for the consumer and while they have shut down movie stores and taken away thousands of jobs, it has also kept money in consumers’ pockets. So, there is an upside. The challenge is in finding suitable employment for those who have been displaced by this changing environment.

Now, we have the gaming industry. When Steam first hit the market, the idea was novel and there were many skeptics, but now Steam is an unstoppable force. Gamers are a fickle lot. They are more willing than most consumer groups to pay more for their entertainment. This is a huge section of people who play for long hours, buy dozens of games, and also damage a lot of disks. So, the concept of having permanent access to a game, even if you change computers or damage a disk, is a huge benefit to these consumers. On the flip side, Steam games are no longer resold to secondary consumers, so the developers reap the rewards, as well. The idea has worked so well, that Steam’s catalogue has grown exponentially, prices have come down, and the industry continues to adapt and grow.

Always looking for new ways to benefit retailers and consumers alike, the Steam model has expanded to include older games, as well. Since there is essentially no inventory to handle, Steam started offering discounts on their existing library as games get older and sales drop off. This enabled them to maintain revenue and now, by offering bundled games at extremely reduced prices, they have even been able to breathe new life into long forgotten products, that would have otherwise, drifted into anonymity, without ever selling another copy. Add to this their seasonal sales and gamers just can’t get enough. Everyone wins.

In the portable world, high quality games started being offered for free, or for nominal fees. These game could be played effectively, whether or not the gamers bought the extra perks being offered in-game. While this concept sees the majority of its success in the portable market, it was originally offered on desktop systems through MMORPG games, like Eve Online. The gaming industry slowly realized that there was big money to be made through small sales and so the term micro transactions was coined.

It didn’t stop there, though. Humble Bundle arrived on the scene and started with just one package to offer. They introduced the Humble Indie Bundle. The concept was simple, offer a handful of games for no set price. Let the consumer choose how much they wanted to pay, distributing some of the proceeds to the Humble Bundle organization, some to a specific charity and some to the game developers. They crossed their fingers and waited. Unsurprisingly, the concept was a phenomenal success. The vast majority of people paid a reasonable price for the software, with a few philanthropists driving up the average and the concept worked. An extra twist was added, with consumers being offered additional games, if they paid more than the average price. Of course, the longer you wait, the higher that average gets, so the more you would need to pay, if you wanted the complete bundle. This has never gotten out of hand though and bundles continue to be offered and successfully sold at fantastic prices. Again, the developers, the consumers and even some charities win, along the way.

At this point, Humble Bundle is no longer the only player on the market. There are several Bundling sites that work on similar models, all of them offering several games for very low prices. Some support independent developers, others offer retail games from larger companies. Yet, others still offer combinations of the two. Meanwhile, Humble Bundle has now gone on to try the same concept with other media formats, such as e-books, movies and music.

There is no doubt in my mind that services that continue to provide value offerings in this way will thrive. They support smaller developers and artists and remove some of the power from larger corporations who have a history of trying to extort exorbitant amounts of money from consumers.

The benefits of having cloud backups for your various games and other media, also ensures that there is only one end consumer. The result is that consumers, developers, artists and authors alike, can all reap the rewards. It looks like we’ve finally found a common ground on which to build. Congratulations to these pioneer who have set the bar. I’m excited to see what new ways the market will change in the near future.