LA GAMES: ESA Exec Says Direct Download Market of Games is 5 to 10 Years Away

Authored by Jay Baage on November 8, 2006 - 11:39am.

[Coverage from the 2006 LA Games Conference] In his keynote Wednesday morning, Doug Lowenstein, President of the Entertainment Software Association (ESA), stated that the digital download market for video games will not grow big anytime soon. “We are a long way from online distribution of games. The direct download market is 5 to 10 years from being significant” he said to the audience of industry insiders.

Yesterday at the conference, one of the panels got into a heated discussions of when video games will start to be distributed online. “The reason we don’t have online distribution is because Wal-Mart and Target won’t let it happen, they will not sell the consoles if they can’t sell the [physical] games,” said Keith Boesky, Principal of the consulting firm Boesky and Company.

When asked about Boesky’s statement, Lowenstein recognized that this is indeed a hot topic, but said that online distribution is not something that gamers want right now: “The bandwidth, among other things, is just not there yet. Moreover, we see that people like to have a box and a physical copy when shopping for games.” Lowenstein’s keynote was otherwise on the topic of how the video games industry drives innovation and business, directly and indirectly, throughout the U.S. economy. For example, Lowenstein noted that many advances in the PC market are brought about by the powerful computer chips being developed for the new generation of game consoles.

“Video game investment led to innovation in the chip area for IBM, who built the cell processor for Sony’s PS3,” says Lowenstein. “Demand for high speed data and wireless networks is also driven by gamers who play online games”.

Another interesting keynote interview on Wednesday was held with Mika Salmi, founder and former CEO of Adam Entertainment. He talked about why last week he decided to take on the newly created position of President, Global Digital Networks, at MTV Networks:

“If I was asked to work for MTV ten years ago I would have said – no way. But now they seem to be genuine about changing into something new.”

Salmi also spoke about the jungle of brands that MTV Networks represents and how they are going to translate to digital platforms. “Consumers are less attracted to portals these days. Even YouTube does not have a lot of traffic to their homepage. People dive right into [the content].” Salmi also spoke about the importance of holding onto consumers across platforms and brands.

“MTV is not about music anymore, it is about targeted consumer engagement.” What Salmi thinks is cool about games in particular is the way consumers are engaged with them over time. “A TV show or a film you might watch one or two times. A game you can play hundreds of times.” He also talked a little about new and interesting game formats:

“We were surprised that news games are so popular online, even with some advertisers. I think that Sony sponsored our Dick Cheney Hunting Game that was pretty violent. It was not a lot of money, maybe $20,000, but still...”.

Joakim Baage