Saturday, April 30, 2011

Games on Demand

Been a while since I posted, and in that time things changed.

For one thing content is making a transition from physical media to on-demand digital delivery. What that means is that instead of buying a game or video by going to a store and purchasing a DVD, you purchase the content you want from an online source, with it delivered via the Internet straight to a storage device (Computer hard disk or game console).

Now this has massive potential, here are some points from an Industrial Engineers perspective:

Cost Reduction:

- No material needed, the industry will diverge from a product to a service industry.

- Logistics cost will decrease as content will be delivered via an online provider. This in turn will reduce actual costs by having one partner as opposed to working with 3PL and 4PL. It will also reduce overhead costs, and price fluctuations according to operational costs (i.e.fuel).

- Inventory will not be needed which saves warehouse costs.

- Manufacturing costs will be saved as physical materials are not used.

Revenue Increase:

- No lost sales, content will always be available.

- No commissions for distributors and retailers means more profit.

- Having the ability to directly access customer content means add-ons can be created and sold for extra revenue.

- Being able to send content through the Internet circumvents some taxes and duties (i.e. for example, customs duty is not collected)


- Having no set up costs and multiple markets means that customised version of content can be created to increase sales in individual regions or amongst certain demographs (i.e. changing locales, attaining to sensitivities among ethnicity's and faiths)

- Having access to previously unattainable markets due to cost prohibitvness of shipping means increased sales potential.

- Being able to offer discounts in return for in-content advertisments.


- Having one provider deliver content gives way to a monopoly.

- This also presents the problem regarding collective punishment (i.e. if another company releases offensive content, a GOV may decide to ban the entire service).

- Again, the problem of one provider means that if it experiences technical difficulties that may result in no sales until the problem is resolved.

- Shovelware overflow will cause quality content to be overlooked, as well as price selectivness among consumers (i.e. avoiding content over a certain price point).

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