Digital downloads vs physical media: How will developing countries keep up?

There was an article on today making note of EA – Electronic Arts CEO saying:

“When people think of games, they traditionally think, in the U.S., of what sells on the Xbox, the PlayStation, and the Wii, and they forget about all these online services that are out there… if you add all that stuff up, it’s almost half the industry now. It’s about 40 to 45 percent. Next year it’s likely to be the larger share of the total industry and it’ll be bigger than the console games all put together.”

Engadget went on to expand on the topic:

“Of course, he’s not just talking about XBLA and the App Store — this is an all-encompassing view of the digital market, including casual gaming, Facebook apps, and WoW transactions as well.”

This got me thinking about physical media (CDs, DVDs, Blue-Ray, etc) versus digital distribution.

Working in the technology field, I can see definite advantages to digital downloads for both sides – the company and the consumer. I think Apple’s App Store has been a tremendous push in the right direction for helping otherwise unknown developers reach a market they may never have been otherwise able to enter. And surely digital downloads can help stem the pirate market that’s so absurdly available in Asia. Side note – it’s actually easier for me to find pirated movies than real DVDs in both Jakarta and Manila.

When I’m lying on my couch with my iPhone and can purchase, download, and play a game without burning more than 10 calories or even breaking out my credit card, I smile in the knowledge that the future is washing over us like a warm wave of innovation. In the past few years, these type of digital delivery systems have become a welcome change for many people, and for those with fast internet access it encourages a new way of working and playing.

The rise of internet capable TVs, mobile internet access, media centers (Apple TV, etc), and services like Netflix have allowed us to watch what we want, when we want, and often where we want. In some ways perhaps it slightly diminishes pollution by reducing the need to drop by a physical store, reduces the plastic waste of DVDs, CDs, and games, and maybe even gives us more quality time with family. (ok, I’m reaching – as we’re also spending less time socializing if we’re glued to these easily accessible movies and games it seems)

But are we ready for all this?

Consider, for example, the fact that the vast majority of the world does not have access to fast internet (or any personal internet at all). Whereas these populations can currently enjoy CDs, DVDs, and games without the need for internet access, what happens when companies begin the shift to all digital distribution? Is the digital divide once again widened, and the rift harder to cross?

What happens to the second-hand market for games and movies? (I’m not talking about pirated media) Part of what I enjoy about books and movies is being able to loan out a favorite to a friend so that they may also derive similar pleasure. Is that destined to be a nostalgic memory of the past?

Also consider this: as HDTV sales explode and people are striving to fill these higher resolution screens with HD media and Blue-Ray movies, and PS3 games begin to head toward 40+GB of data, are we ready for downloads of this size? Perhaps in South Korea, Japan, parts of Europe, and the States this is currently possible, but it would take me literally days – even a week to download a file of that size – and I’m at the “top of the line” internet package in my area of Manila.

Physical media, basically etched plastic, are just modern phonographs. They scratch, break, scuff, get lost, and are generally easy to pirate. They’re limited by size (which is feeling increasingly tiny – 700mb CDs vs 32GB USBs?), they require moving parts to operate, the list goes on and on. CDs have been around since the early 80’s, DVDs for over a decade, and in many ways Blue-Ray feels like a last attempt to stave off the future. There are all kinds of reasons to move towards digital distribution. As cloud computing becomes the norm, and hard drives fade into history, the idea that we actually own copies of media and cart them around with us will feel as archaic as the notion of jogging with a 2lb CD walkman and a bag of discs banging our hips.

I support the idea of moving towards digital distribution and always-available media – it’s an exciting and inevitable part of the future, especially with the increasingly mobile lifestyle; it’s the infrastructure I don’t think is ready, nor will be any time soon. I also throw caution at fact that many, many people may be left behind. Having spent the better part of a decade living in developing nations, my perspective is quite different than it would be in the States. I’ve experienced, first hand, internet speeds that make a grown man weep, entire malls devoted to pirated media, and I own no less than 10 different devices that play CDs/DVDs/ or Blue-Ray. (no counting the solid state devices). Would I like to see some sort of simplification, convergence, and a more standardized method for media distribution? Bet your ___ I would.

What I don’t want to see is these developing nations left in the dust. If the world is indeed flat, and we raise the requirements of accessibility, are we doing more harm than good? If you’re reading this on your 50MBPS internet line, 3.5G mobile network, or happen to live in Tokyo, I’m guessing this isn’t much of a concern. But will a high school student in Java, Indonesia seeking documentaries be cut off from the opportunity to learn if physical media is no longer an option? I’m not saying we shouldn’t move forward – just that we should create accommodations for those less fortunate.

What’s the answer? How will we bridge that gap amongst countries? How should companies address developing nations as they move toward this model of distribution? When do you predict we’ll see the majority of our media consumption come from digital distribution?