“Built for the digital consumer,” Kaz Hirai mused when he unveiled the PSP Go back in E3 2009. This represented a significant step in the direction of a digital only future for games and other entertainment media, or so Kaz Hirai and the rest of Sony hoped. In reality, the PSP Go only served to show the world that we are not ready for a digital only future just yet, or if we as consumers even want one, but that doesn’t mean we won’t be at some stage.

Indeed, the seeds have definitely been sewn. Valve’s digital distribution service Steam has been making huge strides in the PC space, while Microsoft’s Xbox Live Arcade and Sony’s PlayStation Network have been leading the digital charge on the home consoles, especially the former, with its robust Games On Demand service. New movers in the cloud based business suck as Gaikai and, particularly, OnLive, show the future is bright for digital distribution. So, two years after the partial failure of the PSP Go, where do we stand with a digital future?

Despite the strong push in 2011, we’re still a fair bit off, actually. There are a number of factors that are holding us back from ditching retail stores and ushering in a digital future, some of them more obstructive than you might think.

For instance, let’s look at digital pricing compared to buying at retail. It genuinely shocked me to no end when I walked in to a Gamestop and saw Call of Duty: Modern Warfare 3 for €27.99. Hold on a second, this is the same game that is sold on Steam right now for €59.99! That’s more than a 100% mark-up on Steam or rather a 100+% mark-down at retail. I don’t know about you, but there’s no way I would pay more than twice the price for a game on Steam, especially if the retail copy of that game has Steamworks integration anyway, as is the case with Modern Warfare 3.

The PlayStation Network prices are a particularly egregious example of digital pricing gone wrong, as European PSN users will no doubt know all about. Whether it’s Need for Speed: The Run, ~€29 via Amazon, or €69.99 on PSN, Mass Effect 2, ~€18 on Amazon, as opposed to €59.99 on PSN, or even PlayStation Move Heroes, ~€18 on Amazon, or €49.99 on PSN, there are some serious problems with the pricing of retail games on digital distribution services.

This is a problem that quite clearly stems from an industry filled with publishers who simply don’t have a clue about how digital distribution should work. That, and a combination of retailers who have said publishers by the proverbials. Granted, Sony and Valve are complicit in this, their policy of allowing publishers to set the prices of games on their network simply doesn’t work, and allows publishers to make a mockery of consumers’ common sense. We’ve heard the usual spiel; “The publishers set the price, it’s not our fault, if you have a problem, talk to them”, but is that good enough?

With Sony taking a slightly different approach to digital distribution with the Vita, by putting and emphasis on it rather than making it the only option, one has to wonder how this policy will change, or if it will at all. We all know what Sony should do, give the publishers the stiff arm and put their foot down, tell them that they have to adhere to certain pricing structures, but that’s not really viable, when you think about it. Sony are pushing a new platform in a risky market, the portable gaming market, one that has seen a huge shake-up in recent years, and they need the support of third-party publishers.

Really, the only solution to this, probably the single biggest barrier to digital distribution, is on the publishers side. A huge step forward would be hiring people who seem like they have a clue about what’s going on with digital distribution and how they can make a profit, but keep consumers happy as well. Secondly, they need to stand up to retailers. Let’s face it, the retail sector for games is an absolute bloodbath at the moment, with specialist chains being muscled out of the market by supermarkets who can undercut like nobody’s business, and resistance will be strong, but publishers need to go on the offensive, and force at least parity between retail and digital prices. Unless that happens, the advent of digital distribution will forever be a distant possibility.

Of course, a lot of that still depends on broadband infrastructure. Broadband is still criminally limited, with 3.5 million people still on AOL dial-up, it doesn’t seem like everyone is ready to switch either. I’m running an 8MB line personally, a bad one at that, and it’s so much quicker for me to get in my car, drive ten minutes up the road and by a game with cash, rather than waiting for a game to download at home, and with file-sizes only getting bigger, that’s a huge problem. I really don’t fancy downloading Uncharted 3 or Final fantasy XIII on my console, that’s for sure.

However, there’s no sure way to rectify that quickly. We’re relying on broadband companies and governments to roll out sufficient broadband for everyone, something that takes time and a lot of money. I suppose all you can do is encourage your local provider to keep rolling out the coverage. If there’s demand for it, they will do it. Unless of course, like me, you’re in Ireland, and your country has no money. Spiffy.

Lest we forget however, what will really drive digital distribution is the content. Thankfully, this is something the industry has made a good push for, especially on the PC side, and it only seems to be getting better. With Steam leading the charge on the PC side, more and more developers and publishers are returning to PC development, with Steam providing a great platform for them to do so on. Other offerings like Direct2Drive and Origin are helping, and it’s great to see that. More and more content is being pushed onto PlayStation Network and Xbox Live Games on Demand, and that’s only going to increase. It’s still nowhere near there yet, but it’s a far cry from the availability of content for the PSP Go that was a huge factor in its demise.

There is no question that digital is the future, but it’s still a long way off. It may get a bigger focus when it comes to the next generation of consoles, though it’s certainly not going to take over anytime soon, not unless some key issues are fixed. However, all that said, there is still a bright future for digital content. With correct pricing, better infrastructure and more content, we’ll be ditching our boxes for bigger hard drives. Easier said than done, I suppose.