A publisher's dream, a retailer’s nightmare, and a consumer caught in the middle; digital distribution is coming, but what form it takes is anyone's guess at the moment. For the moment though, digital distribution is an extra in the consumer market; with physical media still dominating most sales.

What needs to better defined if digital distribution is to succeed is ownership; who owns what, and what rights are given for the content. Currently, purchasing content - either physical or digital - grants the consumer rights for viewing or playing content. The consumer does not own the content. OK, so I don't own the content, but what of the viewership rights? Right now if I were to purchase Fallout 3 I would have several options: Xbox 360, Playstation 3, or PC (with PC having options to purchase the game at retail or digitally such as from Steam). The choice of platforms given to the consumer is good up to a point, but what is really happening is if I decide to purchase Fallout 3 for the PC at retail, I only have the rights to play that form of Fallout 3.

So lets say extra paid DLC content is made available exclusively for Xbox 360 version of Fallout 3, but I already had purchased the PC version of Fallout 3; that means if I want to pay for and play the extra DLC, I would have to repurchase Fallout 3 (or more technically, the license to play the Xbox 360 form of Fallout 3). This is the problem with the current model of digital distribution. If I truly am purchasing a 'license' to play a game, this license should extend to any platform the game is made available for within a certain form. Does this mean I should get to play the iPhone version of Fallout 3? Only if the form of play is the same as that found on other platforms. A service such as OnLive shows the potential of what a global license could be.

Ideally, the delivery mechanism shouldn't factor into the licensing of content. In the perfect consumer experience, I would only need to purchase the license to play Super Mario Bros 3 once, and any device capable of playing the game is something I could use. Unfortunately, the publishing industry does not see it this way; what they see is a means to make more money by selling the same game over and over across different platforms. In the publisher's case, they make money off the Nintendo version sale, the Gameboy Advance version sale, and the Wii Virtual Console sale; all of which are the same game. While it is understandable for a publisher to be in the business to make money, the consumer in the end is getting screwed.

The content is the selling point, and the means to protecting the rights of the consumer, while still allowing the industry to make money. So if a publisher wants to make the Ultra Super Mario Bros 3 with bonus levels, two forms of digital content should be made available for purchase: the full game with extra content, and the extra content only as DLC for those who already own the original title. A timed exclusive could be a marketing mechanism in this case to milk a few extra sales for those who can't wait. While I am aware there are plenty of loopholes in this scenario (just label the game as a sequel for example), it is at least a base to start from. Just as consumers should be trusted with the ability to make local backup copies of content, publishers should be trusted to offer new experiences at a fair price. Backstabbing from either end will only result in a crippled market.

Another aspect of digital licensing that will need to change is that of fair use. With the purchase of content, the consumer should also get the right to make a local backup copy. This is an important right for the consumer as it gives them a means to use content without the need for service reliability or publisher authentication. Network lag and bandwidth caps are just two problems that could arise when a consumer tries to use digital content; not to mention time itself. Is time a part of the license for using the digital content? What happens five, ten years down the line? The ability to use digital content locally from a backup is an important feature that will help smooth out the transition to a more digital marketplace.

And what of physical media in this new world of digits? It won't go away, anytime soon at least. There is still a certain satisfaction for having something to hold in your hands, something to add to a collection. The direction of physical media may need to change in order to compete with its digital counterpart. Special and limited editions is one area that could be expanded upon. Sure, you could get the digital copy of Starcraft 3 a little cheaper and instantly now; but this limited version comes with timed exclusive bonus content, as well as a behind the scenes making of video! The timed exclusive content would eventually make its way online as paid DLC, and the making of video is something offered as a bonus for the physical media (note that this is also something that does not affect the game in any way). Another reason physical media will stick around is due to B&M stores. Where else would you be able to hold a launch event or find someone knowledgeable in an area that could make other recommendations. And browsing just isn't quite the same with an online store; though many online retailers do offer suggestions of what you may like based off other customers purchasing habits.

Digital distribution will come, it's only a matter of time. However for it to succeed some compromises and changes will need to made on the publishing end of business. Consumers would do well to honor the rights given to them with content in order to foster a healthy ecosystem; and pirates will keep everyone on their toes. Oh, and by reading this blog post, you agree to the license that this was only read on Giant Bomb and not 1up.

tl;dr
Content licensing in its current form will not work for the emerging market in digital distribution. Compromises and trust is needed between both consumers and pusblishers for digital distribution to work.