Xbox Addict

360 Games on Demand service in question.

 Microsoft is a "big believer" in digital distribution, but the Xbox house has no plans to begin releasing digital versions of a given game day-and-date with physical retail versions, according to Shane Kim, VP of Strategy and Business Development for Interactive Entertainment.

"...When it comes to us saying we want [the Xbox Live digital distribution service] Games on Demand to enable day-and-date release of new titles, then there’s certainly a lot of work we would need to go through. We’re not anywhere close to that world today," said Kim in an interview with tech business site Fast Company.

"There are a lot of complex issues to deal with here, especially if you start talking about day-and-date release with retail availability--which is not something that we’re talking about at all, today," he added.

 In June, Microsoft announced Games On Demand, a digital distribution service launching in August that will allow broadband-connected Xbox Live users to download full-scale catalog retail games such as Mass Effect, Oblivion, Crackdown, and Call of Duty 2.

 One of the main issues with releasing a digitally distributed version of a game at the same time the retail version hits shelves is that with a digital sale, retail partners don’t see a cut of the revenue. And Microsoft presumably doesn’t want to step on the toes of major retail partners like GameStop.

"It’s not about trying to share-shift from retail to direct online distribution. That’s not it at all," said Kim, who added that Microsoft is also a "big believer" in retail distribution.

 Instead, Kim said that Microsoft and external game publishers can utilize Xbox Live’s Games On Demand digital distribution service as a marketing tool for upcoming games. If a publisher is about to release a sequel to a game at retail, it can put out a digital version of the sequel’s predecessor to generate awareness.

"We have great relationships with the retail channel--they’re important partners. We sell a lot of hardware and software through retail channels. We have to be smart about how we approach this business," he said.

 Although digital distribution is growing rapidly, GameStop CEO Dan Dematteo has repeatedly said that digital distribution will pose no threat to his company’s physical retail business for the next several years.

 Microsoft’s Xbox Live general manager Marc Whitten told Gamasutra at the E3 expo in June, "This isn’t some zero-sum game where there is a winner or loser [between digital and retail sellers]. I personally believe that going into a store and seeing that back of the box of the game, talking about the game--that’s not going away."