Why do games cost more to direct download on a console than to buy a disc? Surely direct download saves the manufacturer costs on transport, shipping, actual materials for disks and packaging, setting up deals with retailers etc…
In: Technology
Part of it is that digital stores rarely have an incentive to unload product. If you’re a GameStop and you’ve got 100 copies of Barbie American Ranger Firefighters on shelves, there comes a time when you need to get rid of BARF at a lower cost to make room for BARF 2. Even if you don’t make as much money selling them, at some point, those copies of BARF are costing you money to have around because they are taking up space. With digital distribution, there isn’t a physical space demand forcing your hand
This is pretty simple if you don’t overthink it. People aren’t only willing to pay for the value of a physical product and the labor used for manufacturing and logistics. People are willing to pay more for convenience.
There is a difference between a good and a service. In this situation, you see a combination of the two.
(value of ) Game + (value of) Instant Download + (value of) Convenience of not having to leave your home = higher price.
Because you can’t buy a digital copy anywhere else. Even if you get a code from the dev your still tied to the ps store/ xbox store. Plus its not taking up space on a shelf in a store that could be replaced by something that sells better.
I thought it was an agreement for shops to sell and market the products. If downloads were cheaper, shops would not stock them, and a large part of their marketing apparatus would disappear.
Seems to me you have that backwards if you’re talking about new, physical games. Digital is almost always the same price or cheaper than physical unless the store is clearing them out to make room for new titles.
Because it’s much more convenient to buy and download digitally. So they know they can charge more.
I am part of the problem here for sure. If I want a game I just buy it from the playstation or nintendo online store. No chance I’d go to a store or fiddle with physical mediums.
This should be flaired as economics. Pricing, of anything really, is not necessarily determined by the costs, although the costs give us a minimum possible long-term price. Price is mostly determined by supply and demand. In this case the reason is “people are willing to pay that price”, and then the next step is to try to determine *why* people are willing to pay the higher price for direct download.
There’s the fact that game companies are locked in to giving retailers a specific slice of their pricing. Distributors like Walmart or Steam automatically take about 30% of price. So a $60 game is gonna give up $18 to steam. Xbox takes 33% from developers. Epic takes 20%. Basically you’re still paying for the middle man to distribute the game.
20 year game industry vet here. It’s mostly because publishers and retail stores have mutual agreements with each other not to undercut.
Publishers need retail stores to sell their product. Retail stores need publishers to give them product to sell. Both of them share a cut of the profits, but both can’t afford to piss the other one off, or screw each other out of their profit per unit in pursuit of more customers.
So publishers agree not to undercut retail stores on their digital price. In exchange, retail stores agree not to undercut retail prices below a certain level. And this arrangement is why AAA game prices have stayed static at $50-70 for 30+ years even after inflation.
This is actually a huge problem for the industry. For comparison, in today’s money, Super Mario Bros would cost $153 retail. The post-inflation sale price of games has decreased by 60-70% at the same time the cost of making them has increased 100x.
It’s to keep physical disc sales competitive. We’re digital sales to reflect the lack of cost needed to print a disc and the accompanying materials, digital would vastly outsell physical.
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