With the popularity of the Internet and the ability to get most software
without a physical package (tangible product), it was predicted that
shrink-wrapped retail software would either become extinct or just made
available to those without the capability of obtaining it by another means such
as modem users.
However, the retail software publisher Avanquest has seen a sales rise of
20% over the last year and forecasts a 15% to 20% rise this year. It seems like some consumers and
software developers prefer to work with tangible products rather
than through complex paperwork.
Avanquest does the majority of its US business
with the big five US retailers, in the
UK mostly
through catalogues, in France with roughly half through corporate licensing and
about 10% of its globally business over the
Internet.
Avanquest's software developers get royalites of 15% to 20% of the
product retail price with typical developers receiving just under $ 5 million
per year. Developers also receive
marketing, localisation and various other support from Avanquest. Its software ranges from basic
'media-only' software to complex software with hefty manuals.
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But shrink wrap isn't dead. Software publisher Avanquest, the new umbrella name for US-based publisher Elibrium, which owns major publishers in France, Germany, the United Kingdom (Guildsoft and MediaGold) and South Africa, saw sales rise 20 per cent last year, and expects 15 to 20 per cent this year. How can this be so? It turns out people really do like buying something tangible, while for developers who don't want to be deluged in paperwork or start an empire, the model provides a steady royalty stream. Christine Seeleye, CEO of Avanquest USA, told us that retailers like boxed software too, because it provides a healthier margin than the big software companies. Avanquest offers a software developer everything from localization to marketing and support. In the US, it does almost all of its business in the retail channel right into the big five, which includes CompUSA, Office Depot, Circuit City and Best Buy. In the UK the mix includes more catalogs, while in France almost half of the revenue is from corporate licensing. The Internet accounts for about ten per cent of global business. We were curious what Seeleye thought of in-store burners. CompUSA has launched about 200 of these in its stores, which allow the punter to choose software and collect a CD at checkout. "The people who'll browse will browse from home," she reckoned. "It would make more sense at a McDonalds or an Internet Cafe - and you still don't get a manual." Office Depot had planned a similar scheme but abandoned it before launch. Software authors receive royalties of between 15 and 20 per cent of the sticker price, and the sweet spot is for developers grossing under m a year. Avanquest rejects about 50 titles a month, says the CEO, as many are "me-too" products. While some of the publisher's offerings include complex software which demands a hefty manual, not all of them are so complex - and yet there's a strong demand for buyers to carry home a tangible asset. It doesn't look shrink wrap is going away any time soon. |
It seems that each product product seems to work on a different
distribution method. For example
operating systems and development applications sell mainly by volume licenses
(particularly in large corporations) where as consumer products such as games
mainly sell by the retail package. Game packages can be considered more of
a physical package or item since most incorporates anti-piracy measures in
an aim to prevent users from making a duplicate (or backup) of the original
CD. If it breaks or wears out, the
user would often need to purchase a new
replacement!
Some software manufacturers including Microsoft and Veritas sell their
media kits separate from its licenses.
This means that if someone purchases a media kit such as Office 2003, it
will not function without purchasing a matching product license code to activate
it, even though a single license is often many times the cost of the
media kit!
Feel free to discuss and
read more about various types of software on our General
Software Forum. For copy-protection
issues or discussions, see our Copy
Protection Discussion Forum.
Source: The Register
