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Bye-bye, game discs? Barry Diller's InstantAction aims to deliver instant gratification

March 11, 2010 |  7:48 am

Lou Castle CEO InstantAction The way things are going in the video-game business, you'd think the disc itself had a bull's-eye painted on it.

Game publishers have been actively exploring ways to get their wares directly to players, without the annoying expense of stamping millions of discs and shipping them to thousands of stores.

On Wednesday, for instance, OnLive announced at the GamesBeat conference in San Francisco that it would launch its gaming platform June 17 and charge subscribers $14.95 a month.The fee does not include the cost to rent or buy games.

Now comes InstantAction, a company owned by Barry Diller's IAC/InterActiveCorp. Diller in July tapped Lou Castle to help reboot InstantAction from a publisher of independently produced online games to a launching pad for AAA games developed by major publishers. The company announced Thursday that it was set to release its first major game at the end of the month.

Castle's grand ambition: Bypass retailers by letting players instantly try and buy major titles online that have thus far been distributed as shrink-wrapped discs.

Sounds simple, but it's not. Many blockbuster games are huge files that can swell beyond 10 gigabytes, an amount that could fill up two single-layer DVDs. Downloading these games can take hours. As a result, shiny discs live on as the most expedient way to get games into the hands of paying customers.

But it's not a perfect system. Of the $60 paid at retail, game publishers get less than half, on average -- about $27, according to Steve Perlman of OnLive. The balance is eaten up by retailers, licenses, the cost of goods and having to discount games that don't sell right away.

InstantAction and OnLive see an opportunity to change that. Both say they have figured out ways to deliver massive games online at the click of a button. Exactly how is a mystery, since their technologies are proprietary.

Here's what we know: OnLive relies on a walled garden model much like Xbox Live or PlayStation Network where players dial into a virtual environment controlled by OnLive. InstantAction, on the other hand, is more like Web 2.0, with hooks into social networks such as Facebook. Entire games can be shared either as a link or as an embeddable file, similar to a YouTube video.

But the advantages are the same: Instant gratification for players (hence the name for Castle's Las Vegas-based company) and more money for game developers, who can skip the middle man.

Another reason publishers have an uncomfortable relationship with retailers is that many, including GameStop and Amazon.com, sell used games. Publishers generally see no money from those sales, and many regard those transactions as cannibalizing the sale of new discs.

"Publishers are locked in a death embrace with retailers, who turn around and pick the pockets of game developers," Castle said. "I want to put an end to that."

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

Photo: Lou Castle, CEO of InstantAction, a fully owned subsidiary of IAC/InterActiveCorp. Credit: InstantAction.

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