Another significant roadblock is the simple issue of bandwidth. In the United States, the average downstream speed is around 5-6 Mbps[2], which is fast enough to download music and even some videos in a reasonable amount of time. However, it is still unsuitable for downloading full featured game titles, some of which are now sized at almost 20 GBs. In order to deliver a tolerable user experience, games would be need to be downloaded at least as fast, if not faster, than it takes for someone to drive to the store to purchase a physical copy. In response, many developers and publishers are now releasing smaller sized add-ons, game modifications and casual games for download. Especially interesting is OnLive, which is a service that streams video games over broadband, such that users don’t have to download any software to play. However, these solutions are still being perfected and, more importantly, average broadband speeds are still not fast enough to support the practical download of mainstream games.

Lastly, the issue of game resale is also a limit to the growth of digital distribution. Currently, over 20% of games are purchased on the secondhand market[3], accounting for a significant portion of the video game industry that digital distribution cannot currently address. Additionally, some digital distributors and publishers insist on enforcing DRM policies on their products, further reducing the ability of consumers to pass on used games. Such a limitation is bound to cause at least some resentment and would undoubtedly slow user adoption.  

Strategies for Providers 

Without a doubt, telecom providers should be able to play a key role in the development of gaming digital distribution. The important question is where in the actual value chain providers should be involved. Potentially carriers could participate in the aggregation, transport or distribution of digital content, but finding the most lucrative position in the value chain remains an open question. Some possible strategies for each position of the value chain are presented below (Figure D).