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The Declining Retail Market and why Digital is Superior #972180
08/08/14 11:10 AM
08/08/14 11:10 AM
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BrownEyedTigre Offline OP
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This feature examines how the digital market is overtaking retail as the popular option for game designers.

This is reposted from Xsolla Blog here.

Quote:
Stardock, one of the longest running PC developers recently put out their annual revenue report. In it, they discussed something that has been brewing for several years now: The Retail Market is dead.

Digital distribution continues to grow and understanding the benefits and why retail is no longer a needed goal is a big deal for major developers.

The Old Days:
Retail channels for the 80s through the 00s were considered the gatekeepers for the Game Industry. Because the Internet wasn't mainstream at that time, the only way someone would know about your game was either they already followed you or they saw it in a store.

This gave stores like Wal-Mart, Target, Electronic Boutique and so on a lot of power when it came to negotiating with developers and publishers. Finding exact numbers of contract negotiations is difficult, but it's safe to say that stores would make at least five to ten dollars per copy of a new game sold. And we're not going to talk about used games which in of itself were and still are a major market for stores like GameStop.

"Only five years ago, our survey showed that 58% of our customers bought their software in a box, at retail. Further, 24% of them expected to be still doing so five years from then. In reality, it turned out to be 6%.

Retail disappeared even faster than our tech-savvy customer base imagined it would." Brad Wardell, Stardock

The point being was that as a developer, you had to deal with not only the cost of retail stores, but also the physical demands of making your game. All these costs equated to more money being spent on making a game and a lost of profit. And that brings us to why the digital market is killing retail and the advantages of it.

Digital Advantages:

Lower Cost:
Right off the bat, digital distribution is cheaper than retail by not having to deal with the cost per unit negotiation from retail markets. The amount Valve makes per game sold is a trade secret, but the fact that you do not have to print out physical copies is already a savings.

Many developers have been trying to get around this cost in retail for the last few years: Making cheaper boxes, smaller manuals and some just sell you a box with the game in it and have everything else online.

Availability:
Physical copies have the problem of being finite - IE when a store runs out, no one can buy that game until more copies are shipped. For AAA developers like EA or Nintendo, you can be sure that stores will buy as many copies as they can of their latest title, but AA and Indies aren't as lucky.

Thanks to digital stores, the amount of copies of a game becomes infinite as it is all data which can be replicated on demand. For studios who don't have the funding for mass producing their games, digital distribution offers a far cheaper alternative and makes sure that someone can buy their game no matter what.

Sales and Accessibility:
A major concept that was given new life on the digital market would have to be sales. Being able to quickly change the price of games allowed stores to instantly update their prices with the latest bargains making it quicker and simpler compared to retail markets.

Sales have come a long way towards being accepted by consumers and are now a very popular sales tactic.
And being able to buy a game from the comfort of your own home also helps cut back on outside factors affecting someone not buying your game: Having to drive to the store, dealing with the store and of course the store not having any copies.

Impulse purchases are very popular among digital stores thanks to sales and the ease of which someone can spend money. One click features from stores like Amazon and Steam allow someone to spend a lot of money very quickly.

Developer Control:
Wrapping this post up we can tie all the advantages to one major concept: Giving the developer control over how their game is sold. While you are still dealing with a storefront like Steam, you have far greater control over your game compared to the retail space.

There is no worry about a store putting your game on the back aisle or maintaining inventory when it's all handled digitally. This has also made it a lot easier for developers to sell games on their own sites which weren’t possible or viable five+ years ago.

"The barrier to entry for developers to create and sell software and games has been greatly reduced. This is a wonderful thing and has created a new renaissance in the making of innovative and interesting software.

On the other hand, it has also ushered in a flood of drek that has made it a lot harder for developers to get noticed." Brad Wardell, Stardock

Digital stores are far more open to games that aren't aimed at the mainstream. Titles like Hotline Miami or Binding of Isaac would not have been accepted in retail stores due to their strong content but were welcomed on Steam.

In fact, it's becoming more and more critical to have some form of a digital storefront for your game. If you are not familiar with or understand how to set up a storefront, third party companies can assist you with setting up and developing an attractive storefront for your site.

The rise of the digital market has been one of the biggest shifts in the Game Industry. And Stardock is correct about how it is taking over the retail market. It will be interesting to see just how far things go by the end of the decade and what capacity the retail market will be at that point.


Happy Gaming!

Ana wave



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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972233
08/08/14 03:13 PM
08/08/14 03:13 PM
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southeast USA
Jenny100 Offline
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Recipe for killing the market for physical discs:
  • Make sure only top-selling genres are sold in local shops (not adventure games). This will get people used to buying online, even if they're buying a physical disc.
  • Make sure the physical disc version includes no extras that can't be included with a download version -- none of those cloth maps or fat game manuals or company newspapers or figurines or coins or badges or anything else that might make the game more attractive as a collectible.
  • Load the disc version with undesirable copy "protection" that prevents some users from ever being able to play the game, interferes with other software, blacklists legitimate programs, and risks damaging the user's computer.
  • Prevent people from getting a refund on a physical game that won't play (at least in the US).
  • Publish articles about how online distribution is "the future"
  • Offer minimal customer support for physical copies of games.
  • Make the disc version no different from the online version, with online authentication and/or Steam required.
  • Publish articles about all the (supposed) advantages of online distribution
  • Don't offer patches for the disc version.
  • Publish more articles pushing online distribution. Do not mention any of the problems for people with slow or unstable connections, or who have to pay by the megabyte, or who have data caps. As far as "business" is concerned, they don't exist.
  • Publish more articles pushing online distribution, only get bloggers to write them or at least make them look like blogs.
  • Repeat often enough that people believe it

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972249
08/08/14 05:04 PM
08/08/14 05:04 PM
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I'd agree with this:

Quote:
...it has also ushered in a flood of drek...


"Bleat, Watson -- unmitigated bleat!" ~ Sherlock Holmes
Re: The Declining Retail Market and why Digital is Superior [Re: Rushes] #972264
08/08/14 05:58 PM
08/08/14 05:58 PM
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United Kingdom
Mad Offline
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Me too !! rolleyes

And whatever all the "ins & outs" of digital versus disk I still prefer a retail disk version of any game and do my utmost to get one laugh


Time : The Most Precious Commodity
Re: The Declining Retail Market and why Digital is Superior [Re: Mad] #972266
08/08/14 06:12 PM
08/08/14 06:12 PM
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I seen this coming for years. Digital over box versions. Its way cheaper for the developer, and the publisher.. Plus it gets the game faster to the consumer.

I do foresee in the future box versions will be obsolete unfortunately.


Luv Dar


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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972287
08/08/14 10:42 PM
08/08/14 10:42 PM
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Well I suppose that is the way of the world! duh

I loved the old days when the game came in a neat big box, with cool illustrations, a manual and maybe other goodies, like posters and such! hearts

Same with movies, I used to love after a hard week at work, wandering around Blockbuster like a lost soul to pick a title to rent or buy! Now I have to plow through Netflix!

So C'est la vie

But I am not complaining too much. I have 4 sites that I download them from, and rarely have any problems at all. And many of my older discs, over time, develop glitches and I have to download from a site if I want to replay them anyway.

And they certainly are less expensive, which is cool! (I worry that the developers are getting their fair share!)

An if you have the bucks, allvideo on Ebay will get you the older ones that play on newer computers!


"Everything changes and nothing remains still ... and ... you cannot step twice into the same stream"

Heraclitus headscratch


"Nobody murdered me. Or put me in a potato. Or fed me to birds. I had a pretty good life."

GLaDOS

Re: The Declining Retail Market and why Digital is Superior [Re: LeBelleRachael] #972355
08/09/14 10:19 AM
08/09/14 10:19 AM
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Darleen03 Offline
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I miss that fact that you can't trade a download. Years ago with the box version the Trading Post on this site was jumping with activity.

I do miss the trading sad


Luv Dar


GameBoomers
"Games Are More Enticing Because Of Our "MaG"nificent Efficient Radiant Site"
Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972373
08/09/14 12:43 PM
08/09/14 12:43 PM
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southeast USA
Jenny100 Offline
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Well, as Carrie said in the ***Carol Reed topic***
Originally Posted By: Carrie
It used to be fun to go to the store, check out the box art, buy the games, install the disks, and anticipate the adventures ahead. For me, this might be part of the reasons why I've bought and played fewer games of late. I thought that with time, I'd change (& thoroughly accept and enjoy the concept of download-only gameplay), but that hasn't seemed to happen.

Remember when physical disc versions were all you needed to play the game?
-- When they didn't need to get online to get some company's "permission" to run?
-- When the disc versions included nice fat manuals you could read in bed or bath to psych yourself up for playing the game?
-- When you didn't risk installing hidden "filter drivers" or monitoring software or godknowswhatelse that might compromise the security, performance, and stability of your computer when you installed a game?

It's no surprise that people are put off of buying physical disc versions, even when they're available, when the quality of what you get has deteriorated as much as it has. Pretty much the only advantage is that you don't have to download the whole game, which is a benefit for those with slow or unstable or capped or charged-by-the-megabyte connections -- people whose existence is denied or dismissed by these download-promotion articles that often masquerade as blogs.
But even avoiding a large download isn't a sure thing --
I remember buying a boxed game that turned out not to work on anything past XP (despite the requirements listed on the box). When I emailed their support about a patch, they said they didn't have a separate patch but that their online version had been updated and did I want to buy that? No I did not.

At least for some of us, having a download-only game will never be as fun as owning a physical copy used to be.
But today's physical copies are not the same product as a physical copy from years ago.

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972384
08/09/14 01:53 PM
08/09/14 01:53 PM
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sanford Offline
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I have bought quite a few games from STEAM, but I DO have a "gripe" against STEAM because it has become a monopoly. I cite the case of "Memento Mori 2". The only place you can buy it from is STEAM. I, unfortunately, don't have enough space on my hard drive in order to support the amount of filespace it would take to download and install MM2. I am using an external HD to store my games, but a STEAM game has to reside on my main HD in order to function. I am impatiently waiting for GOG or any other legitimate game selling website to be able to sell this game, so that the files can reside on my external HD.
Of course, I know I can buy another computer, or delete "stuff" from my main HD, but right now I am not prepared to do so. I and others should have the right to "own" our games outright.
Sandy

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972386
08/09/14 02:01 PM
08/09/14 02:01 PM
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MaG Offline
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Sandy,

Just to clarify - it is the publisher that decides which distributors they give their games to. If they give it only to Steam - then they are the only ones to have it. wink

BTW - All my Steam games are downloaded to an external drive. The files on my main drive that is steam - is the Steam program files only.
You have to tell steam program where you want the game to be installed.
It will then make a steam library on that stated place - like your external HD.

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972387
08/09/14 02:04 PM
08/09/14 02:04 PM
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Posts: 40,644
southeast USA
Jenny100 Offline
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Off topic, but...
How to move a Steam installation:
https://support.steampowered.com/kb_article.php?ref=7418-YUBN-8129

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972400
08/09/14 04:01 PM
08/09/14 04:01 PM
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I think games are a few years ahead of the book publishing scene. Everything will be digital except more expensive luxury editions in short print runs.

Re: The Declining Retail Market and why Digital is Superior [Re: AmunPtah] #972406
08/09/14 04:58 PM
08/09/14 04:58 PM
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Mad Offline
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Even though I realise the market IS heading more and more towards digtal, digital is certainly NOT superior as far as I'm concerned sad


Time : The Most Precious Commodity
Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972526
08/10/14 11:51 AM
08/10/14 11:51 AM
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I think Jenny100's observations are very astute and spot on. The only plus I can now see on digital downloads is when the copy protection is removed. I had a recent problem with the game Alter Ego which launched and played on my Windows 7 laptop when it was new in 2010, but now the game will not play on that same laptop...due likely to updates and other programs I may have installed over the years and their incompatibility with the copy protection.

Despite help from Encore/Viva Media, nothing worked and I was forced to play the game on my older HP laptop running Windows XP. The game played okay for the most part...except in one scene the characters were totally invisible and in another, partially invisible.

I am presuming the game would have played better and flawlessly on my newer laptop...but I will never know. At least I was fortunate enough still have my "backup" XP machine.

If downloads eliminate the copy protection, that is a plus!

Re: The Declining Retail Market and why Digital is Superior [Re: MaG] #972542
08/10/14 01:50 PM
08/10/14 01:50 PM
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sanford Offline
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Mag, it seems that I was a bit hasty in blaming STEAM for this situation, thanks to your explanation of the way things "work" in the gaming business. So now I will shift the "blame" onto the publisher who is doing a dis-service to the general gaming public, in my NOT so humble opinion.
Sandy

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972559
08/10/14 03:52 PM
08/10/14 03:52 PM
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BrownEyedTigre Offline OP
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Developers are happy if their publishers get their games on Steam. It means they are earning their money. Despite the fact that you may may not like DRM, portals like Steam give the exposure and money the developers/publishers which allows them to make more games. The key word is Exposure and Money. Two things that are much needed for success.

You may not like them, but if you care about getting more games you should at least appreciate the fact that some games would never be made if they aren't Greenlit and accepted on Steam. Why do you think they ask for your votes to help them get Greenlit? It is vital to their success. There is more to it than just DRM vs. No DRM.


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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972560
08/10/14 04:17 PM
08/10/14 04:17 PM
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sanford Offline
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I understand what you are saying, Ana, but wouldn't the publishers make more money if their games were sold by other legitimate game sites as well?. I think there would be a broader market for their products. At least that's the way I see it.
Sandy

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972561
08/10/14 04:23 PM
08/10/14 04:23 PM
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BrownEyedTigre Offline OP
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They do eventually get to other sites as well but since you do not know what the agreements are you should not be so quick to judge where you want them to appear. Some of the other sites have shoddy bookkeeping and insist a game is not selling well so they do not pay royalties, others give a pittance that would not buy your groceries much less put a roof over your head. These developers are not living high on the hog, most do other full time jobs to make ends meet. They do this because its their passion and they deserve to get as much as they can from it.


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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972576
08/10/14 06:21 PM
08/10/14 06:21 PM
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For PC, 1 release in 10 goes to retail now. There is a little PC game area in Target, but that is about all. Half-Price books gets them in also - but only used copies as trade ins.

According to one developer, they can sell a game now for $14.99 on digital and get $10.99 back easy as profit. Before, a $39.99 retail release would only net them $4.99.

I buy digital all the time - great games at great prices. I do miss collector's editions, but the PSVITA does still get those.


I love playing adventure games like Gemini Rue on my ipad mini and Gray Matter on my PC Netbook.

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972584
08/10/14 07:42 PM
08/10/14 07:42 PM
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traveler Offline
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Developers are also happy to get their games on Steam because they are allowed to sell Early Access to them, meaning they can sell games on Steam that are essentially unfinished: still in beta, buggy and in need of a lot of patching.

Gil.


"Best not to think about it. I don't want to fall to bits 'cos of excess existential thought."
Re: The Declining Retail Market and why Digital is Superior [Re: traveler] #972587
08/10/14 07:59 PM
08/10/14 07:59 PM
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BrownEyedTigre Offline OP
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Originally Posted By: traveler
Developers are also happy to get their games on Steam because they are allowed to sell Early Access to them, meaning they can sell games on Steam that are essentially unfinished: still in beta, buggy and in need of a lot of patching.

Gil.


I don't see them stealing anyone's money to do it. duh People want to do it, in fact they love finding bugs etc. It's clearly noted here what you get. I see this as a plus for all.


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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972598
08/10/14 09:34 PM
08/10/14 09:34 PM
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I don't believe I said anything about developers stealing money by giving Early Access to games.

In my antiquated view, it's shoddy to release a game that is not ready to be released and charge for it.
Once upon a time, a game was polished until it shone and beta-tested before it was offered to the public, but evidently we've got beyond such an outmoded idea and consider it a plus for all if it's released as a beta full of bugs while the devs "add content", which should already be in there if it was intended to be in there.

If people are willing to pay for a defective, unfinished product, that's their lookout, though I realize there are some people who enjoy the heck out of reporting bugs that are either just annoying or, worse case, make it impossible to continue a game.
I don't, nor can I imagine that the majority of players do.
Nor am I terribly impressed by Steam saying that Early Access is beneficial considering they're the ones allowing it.

Gil.


"Best not to think about it. I don't want to fall to bits 'cos of excess existential thought."
Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972599
08/10/14 09:50 PM
08/10/14 09:50 PM
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BrownEyedTigre Offline OP
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They aren't "releasing" the game, they are permitting you to get Early Access. It's a choice people make when they buy it (and some are free). Having choices is awesome, you are either in or you are out, but I can't see denying those that want in an opportunity to do so.


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Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972649
08/11/14 06:24 AM
08/11/14 06:24 AM
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Hillegom, ZH, NL
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I own a couple of Early-Access titles, but I try to be careful about which ones to buy (track record of the developer), same as with Kickstarter: I supported The Asylum (I own Scratches) and Delaware St. John IV (Own the previous games).

Re: The Declining Retail Market and why Digital is Superior [Re: BrownEyedTigre] #972727
08/11/14 02:34 PM
08/11/14 02:34 PM
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I used to work for a game development studio (back in the mid 1990s). At the time, we had terrible trouble getting publishers to look at our designs, and most of our work came from doing localization work for European languages, or porting games from one platform to another (or even one graphics card manufacturer to another on the same operating system!) Games we did write sometimes got canned at the last minute. Other games were significantly different from the original design by the time they arrived on the shelves. Basically the publishers had almost all the power; we never heard a peep out of the retailers.

With a digital model like Steam, or GoG, or Zodiac, or Arc, or GamersGate, or Origin or Uplay (all of which I've used, though I keep coming back to Steam and GoG), or any of the others, the publisher suddenly has a much reduced role. In theory, the developer can crowd-source (if they have the reputation) via Kickstarter (or one of the others), put a demo on Steam for green-lighting, or even just sell via their own website with Paypal handling the money side of things. All without a publisher to get in the way.

This process is called 'disintermediation' and it's great for both creators (music, video, books, games, you name it) and for listeners, watchers, readers, gamers and so on, because it greatly increases choice, flexibility and the slice of the purchase price that actually reaches those who do the hard work in the first place.

If you pine for the 'olden days' of physical disks, sorry, that's over. They were only ever a temporary sneaker-net method to get the game from the developers to your computer (on-line streamed gaming is another complex topic on the horizon, but for another thread, perhaps). Personally, I love being able to decide tonight that I want to play the latest AAA game tomorrow night (my connection isn't fast enough to download a 25GB game for 'later tonight') and not have to bother about going to the physical store (I work full-time, so a trip to the game store on a Tuesday is not an option where I live), and hope that the game is in stock, on a platform I own (rather than that lurid green platform I don't use).

The other major bonus for the developers is that the lower prices (because there's no physical disks/boxes to humph around the country/continent/globe) mean that I'm buying more games than I ever have before. And when was the last time you saw Myst, or Gabriel Knight, or Syberia on a disc in a physical store?
(hint: many years, and even if you did they wouldn't work on Windows 8)
(hint 2: they're all available on-line, and working in modern Windows versions)

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