Several publishers, running entirely below the industry radar, have found excellent business catering to the Wal-Mart demographic. Clay Dreslough, former executive producer at Midway Games, now runs Sports Mogul Inc. in Middletown, Connecticut. Dreslough's sports management sims, like the new Baseball Mogul 2007, are sold at Wal-Mart, though most of his sales are online. "I think people in the hardcore market are frustrated with Wal-Mart because they might only carry the very top-selling FPS or [MMOG] titles. But for small companies like us, Wal-Mart creates a lot of upside without much downside. That is, even if Wal-Mart drops us one year, we still have other retail outlets, and we still have a strong fan base online.
"I have heard a lot about Wal-Mart hurting the industry and hurting innovation," Dreslough says, "the theory being that you have to write a specific kind of game to get the scarce shelf space at Wal-Mart, and if you don't get into Wal-Mart, you can't be profitable. My experience has been different. I think there's tons of room for innovation without Wal-Mart. Specifically, even with retail distribution, we still make most of our money online, through downloads of the product and through our popular Baseball Mogul Online. Publishing online, without worrying about the retail market, gives you more flexibility to innovate."
The whole industry is learning that lesson. Game publishers are working hard to create online services that trump Wal-Mart the way iTunes has trumped the music cartels.
Many game publishers are already chafing to move to online distribution, not least because it cuts out the used-game market. They also believe online distribution will reduce file sharing - anyway, hope springs eternal.
As national availability of broadband grows, Valve has already started its Steam distribution network. Ritual Entertainment - which ran afoul of Wal-Mart not only for Heavy Metal, but also for its hyper-gory 1998 shooter SiN, is using Steam to distribute its new SiN Episodes, almost as if it had been waiting for online distribution before making a sequel. Lead designer Shawn Ketcherside blogged, "Episodic gaming, because of its faster turnaround, offers the ability to react to consumer feedback (this has been talked about endlessly already), but it also offers flexibility to try new and really innovative ideas. [...] Basically, it's giving all gamers more choice. Gamers can pick and choose titles, options and gameplay that really appeal to them."
All the next-gen consoles embrace online, to varying degrees. Xbox Live is already up and running, and Nintendo has said the Revolution will offer downloads of classic NES games. Sony's PlayStation Network Platform will offer a free service similar to XBox Live.
On a Gamasutra "Question of the Week" feature about digital distribution, most respondents predicted eventual victory for online distribution. BioWare's Rob Bartel wrote, "The shift to digital distribution is coming to all platforms, and we now find ourselves at the start of that lengthy transition. It will be complete within a decade." And where is Wal-Mart then? "The big players in the Digital Distribution Era will be those who own the unified portals that will serve as the digital marketplace, and those who own the big-budget games that will serve as development platforms and delivery mechanisms for future content."