S2 to Offer Online-Only Distribution for 'Savage 2' Game

Video game maker S2 Games is testing a new delivery system that is beginning to catch on with both independent computer game makers and industry giants: Web downloads. S2 Games plans to sell its new title "Savage 2: A Tortured Soul" exclusively online when it is released in October.

High-speed Internet connections and cost savings are driving game publishers to the Web. Electronic Arts (Nasdaq: ERTS), the world's largest video game publisher, is experimenting with online distribution, as are Valve and NCsoft.

"Web distribution puts more profits in our hands. At the same time, it allows us to pass the majority of our cost savings along to our customers," Marc DeForest, S2 Games' co-founder and lead developer, told TechNewsWorld.

Dollars and Cents

S2 Games will slash its retail prices by 40 percent by cutting out the printers, publishers, distributors and retailers. The online channel also lowers the barriers to entry for smaller publishers, DeForest said, and it's all made possible by broadband.

"With broadband becoming so ubiquitous it becomes more feasible to download a full game from the Internet," In-Stat Senior Analyst Brian O'Rourke told TechNewsWorld.

Indeed, 42 percent of U.S. households have broadband Internet access, according to Parks Associates.

Lowering the Barriers

S2 Games' first title, "Savage: The Battle for Newerth," was released in 2003 and is sold through traditional retail outlets for US$49.99. The company makes about $20 on the sale of the game, DeForest said.

"Savage 2," on the other hand, will retail for $29.99 while still offering S2 Games a higher margin, he said. DeForest is hoping to see digital downloads make their way into the mainstream so smaller, innovative developers stand a greater chance of getting their games into players' hands.

"It's becoming so expensive to develop for consoles that the smaller publishers are getting completely squeezed out of the market," In-Stat's O'Rourke said. "If they can't get on the store shelves, this distribution method is certainly ideal for smaller publishers or game creators, but for companies who are on store shelves, this strategy could really alienate retailers."

A Bona Fide Trend

Valve, the maker of the game "Half-Life," has had success with the online model. Its service, called Steam, has more than 6 million registered users with games priced between $9.95 and $39.95 from various game publishers.

Meanwhile, Electronic Arts plans to offer expanded game content for its popular "Battlefield 2" PC game exclusively through its digital delivery service. Others are following suit, making digital downloaded games a bona fide industry trend.

Still, digital downloads of games are hardly mainstream, or even to the level of digital music downloads.

"Getting video game downloads into the mainstream is going to require substantial consumer education. The companies will certainly get some early adopters, but the core of their audience is going to have to be brought along," O'Rourke noted.