The physical-digital turning point is right now - CI Games

CI Games CEO Marek Tyminski says digital distribution is changing the way his company does business. Speaking with GamesIndustry.biz last week, Tyminski talked about embracing the advantages of selling games digitally after a rocky release for what he called CI Games' first AAA title, the action-RPG Lords of the Fallen.

When the Xbox One and PlayStation 4 editions of the game passed the platform-holders' certification checks on the first attempt, CI Games figured it was well-positioned for a smooth launch. However, the variable hardware configurations of the PC platform posed a greater than anticipated problem, and the game launched with significant stability issues.

"We got slapped in the face after the launch of the game," Tyminski said.

In addressing the stability issues, Tyminski said CI Games relied heavily on the user forums on Steam. Even though the mid-size (about 100 people in total) developer/publisher thought of itself as breaking into the world of big-time AAA development, the rise of digital distribution was pushing its customer service approach in a more grassroots direction as members of the QA team engaged in direct dialogue with players. It was a time-consuming operation, and one Tyminski said delayed the studio from its plans to work on downloadable content. Having these dialogues pop up on Steam was also useful as it convinced Tyminski that the studio was going out of its way to help people who actually purchased the game instead of pirating it.

"With Lords of the Fallen, we're at 30 percent digital and 70 percent physical, based on global sales."

Tyminski said CI Games had never performed that much hands-on customer support for its previous games, but digital distribution is giving it greater access to its customers. And as more of its business comes from digital sources, that type of support is only going to become more important.

"The turning point is right now," Tyminski said of digital distribution. "Even a year ago when we were releasing Sniper: Ghost Warrior 2, the digital sales were so much smaller than we're currently seeing. With Lords of the Fallen, we're at 30 percent digital and 70 percent physical, based on global sales."

That's good news for CI Games, the CEO said. While he had nothing but positive things to say about his distribution partners, digital distribution gives the developer "much healthier" profit margins. And if at some point in the future the industry goes entirely digital, Tyminski said his company would happily follow.

"Wherever we have to be to reach our customers, we will be," Tyminski said. "Currently it means physical, mostly, but it's also digital. We'll try to support both channels the best we can. But selling games only digitally? I think it would be very good news for us. But on the other side, we still like to have the [retail] presence, and we want to be everywhere the gamers are."

Having a game on store shelves still has a certain amount of cache, Tyminski acknowledged, lending a touch of credibility that might help a worthy title stand out amidst the flood of new releases on digital storefronts.

"Perception is important, and being on the shelf just adds to that," Tyminski said. "But it's hard to say how the situation would look like when you have 70-80 percent of sales digital. Will that still be a factor or not?"

"Price promotions were always there, right? The difference is 10-15 years ago the prices were not going down so rapidly."

Tyminski pointed to PC physical game sales, which have been shrinking in the US for the last 10 or 15 years. Retailers saw that sales of PC games were down, so they gave them less shelf space. It was a self-fulfilling prophecy, he said, as games with less shelf space went on to sell less, and further erode the market. It's gotten to the point that the multiplatform Lords of the Fallen doesn't even have a retail release in North America, even though it has boxed copies on shelves elsewhere in the world.

Of course, every market shift brings with it challenges as well as opportunities. One such issue that developers have raised about digital distribution is price erosion. With no physical inventory to maintain, digital retailers can sell games for next to nothing without taking a loss. With Humble Bundles, Steam sales, and no shortage of games competing for the audience's limited dollars, is the perceived value of games declining? Tyminski downplayed those concerns.

"Price promotions were always there, right? The difference is 10-15 years ago the prices were not going down so rapidly," Tyminski said. "It's a trend, and from the publisher's perspective, it's hard not to be part of that trend. That's just the market; it's moved toward that trend... It was always like that; it's just the timing now is simply slightly faster than it used to be in the past."

Tyminski doesn't see that trend reversing any time soon because of the basic realities of the business. And while the CEO acknowledges that could make things difficult for all developers, he remains unfailingly upbeat about CI Games and its fortunes.

"At the end of the day, gamers are the winners," Tyminski said. "Because we all compete for making gamers happy. It's a tough industry, but I think we see the future in bright colors, and I can say that in all honesty."