The gaming world is going through the very same disruptions from “Alien Invaders” that retail and other industries have experienced. The recent release of Diablo 4 from Blizzard is a good case study for some of the related examples. Diablo 4 was finally released in June 2023 after a long development cycle. Its sales and the manner of its distribution are dramatically different than the long tradition of PC and console-based games. In this post, EkaLore examines the shifts that have turned a former retail distribution model into a direct-to-consumer one.
The online distribution of games continues to drive market changes in the direct-to-consumer models and enterprise margins. Gaming and eSports are now larger entertainment and spending segments than traditional linear media for broadcast television and non-gambling games. As a standalone industry sector, gaming and eSports are now a larger segment than traditional movies and recorded music. Mobile and other computer-based gaming drives major consumption in telecommunications/mobile, smartphones, gaming platforms (consoles and computers), and creative works. The computer-based gaming industry has radically shifted from distributing physical media to online downloads.
The initial publicity relations positioned the game, depending on player choices for online involvement and collaboration choices, at consuming roughly 80 hours of playing time. Earlier generations of computer games were often targeted at 40-60 hours of playing time. An ‘average’ player targeted by the developers could easily see more than 120-150 hours consumed to get thru to the game's most difficult levels.
The developer offers ‘side missions’ where online attainment of bonuses eases gameplay modes. All of these monetization steps see players spending up to USD$70-$100 (plus access, expansions, and continuing online subscriptions to quarterly “seasonal” updates). The mobile app alone (and Diablo is primarily a computer-based gaming title) had more than 17M downloads for mobile for the prior release.
The first 100 hours of Diablo 4’s release for play saw more than 93M hours of gameplay – more than 10 player millennia (10 x 1,000 years of hours playing) – globally across PCs and consoles. This is even more remarkable when considering the downloaded content to install the game starts at 47GB of content with ‘’normal” downloads starting at 74-85GB of content. Expanded and installed, the game was set to consume 90GB (or more) on recommended solid-state drive (SSD) local computer storage (with different platforms consuming slightly different amounts of space). An estimate, based on Blizzard’s release stating that Diablo 4 was the ‘highest pre-launch unit sales” in the millions of units, has this consuming 250,000.000.000.000.000 download bytes (2.5 x 10^17 for short) – or more. This single release will stimulate upgrades for hardware, internet access, and subscriptions for the developer.
Blizzard will see revenues rise quickly past USD$1B for a single game title if the momentum continues (equivalent to approximately 12-15M unit sales depending on foreign exchange and marketspace take up).
Critically the key distribution method is downloads – not buying physical media at a store or mall. There is a 50,000-unit ‘Diablo IV Limited Edition Collector’s Box” (USD$96.66) featuring art and collectibles. Even at that price, there is no physical media included. The game must be purchased separately.” This key distribution method is in the direct-to-consumer model bypassing traditional brick-and-mortar merchants and giving up margins to “the channel.”
Alien Invaders in the games and entertainment markets have transformed from a bricks-and-mortar (with specialty retailers, “big box” distribution, multi-channel methods, and multiple platforms) to an online-distribution direct-to-consumer method. In the 25+ years of the Diablo computer game franchise, multiple technology shifts (including the Internet) have changed gaming. Microsoft’s offer in 2022 to buy Activision (who owns Blizzard) for USD$69B is an offer for traditional computer software (even a key enterprise seller) to continue to invest in the direct-to-consumer games sector than began with 8-bit computers playing cartridge games – 45 years ago.
If you’d like to read more stories about Alien Invaders disrupting marketplaces, head on over to www.ekalore.com/alien-invaders
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