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Sorry next-gen, digital game prices are still too high (updated)

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The digital future is here. Apparently. Xbox One launched last week, and Microsoft has unveiled the digital download pricing of its launch games. They are, once again, ludicrous. £54.99 / $59.99 for Battlefield 4, £49.99 / $54.99 for Zoo Tycoon, £44.99 / $49.99 for Ryse… Don’t think I’m picking on Microsoft either--Sony's digital PS4 titles are similarly expensive. £53 for Knack? £63 for NBA Live 14. It’s hugely disappointing. The dawn of the next-generation was the time to revolutionise the way we buy games.

Given the noise that both Sony and Microsoft have made about a digital future; about how you can play games while they’re still downloading; and about how PSN and Xbox Live are the shop windows of the modern age, the fact that neither are offering any real incentive to buy digitally is laughable. It’s not a new issue--most have been complaining about the prices of digital versions for years--but these high-prices point even more clearly towards short-sighted avarice in this brave, new console generation.

For those who haven’t considered it before, here’s the problem. While games cost plenty to make, it’s the hidden costs of creating and distributing a physical product that require shops to standardise the price. Remove the cost of the actual Blu-ray disc, the plastic box, the cost of shipping said disc in said box, the mark-up added by the shop that sells the game, and… you save a stack of cash. It’s tough to quantify exactly how large the saving is, but a quick look at the cost of PC versions of multiformat games on Steam gives you a rough idea. It’s maybe £10 / $15. Ish. And hey, Steam still makes a healthy profit.

So, with all those costs removed, why are console owners still forced to pay £54.99 for FIFA 14 on PS4? Official responses in the past have never really provided a justification. The simple fact is that Microsoft and Sony are happy to charge full-price for digital games because they make more money from each transaction AND they remove the potential for players trading their games in or selling them privately.

It’s an incredibly short-sighted way of doing things. Console gamers are savvy--they will always hunt for the cheapest option, and right now that’s buying from online retailers like Amazon. You’ll notice I use the phrase ‘console gamers’. That’s because PC users get their bargains on Steam, where games are more reasonably priced. And guess what has happened to the PC market? Actual sales of boxed games has steadily plummeted over the past decade, while digital sales have gone through the roof. Why? Because the pricing is fairer and it has become ‘the way things are done’ on PC.

Microsoft and Sony want to have their cake and eat it. They want a digital future, where players download all their games, but they still want to use the old, disc-based pricing model. It won’t work. Or rather--it won’t realise the true potential of digital buying--until the savings start to be passed on to us, the players. Buying digitally won’t become the norm until it starts to feel good, like you’re getting a proper bargain. And while downloading games continues to be viewed as expensive, the console makers will miss out on sales, and the industry will fail to grow as quickly as it should.

Now, one thing we can’t really quantify at the moment is how digital prices will reduce with age on next-gen. One of the best things about virtual stores is that you never run out of space in the stock room. You can offer games years after their initial release, at a reduced price, and anyone looking to pick up a ‘hidden gem’ is just a search away from discovery and download. There's no need to go second hand (so developers get a full cut of the proceeds here) because the price is low enough to be an impulse purchase. Again, well done Steam, you get it right--and you sell a huge stack of ‘older’ games. In fact, you get a gold star for drawing attention to older games with extensive sales and promotions. Developers must love it when their games appear in Steam sales and they get a whopping surge of people buying them, even if they make less money from each sale. That's still better than making no money off people who aren't impulse-buying games in sales.

Last-gen (that’s what I’m calling it now) Sony and Microsoft dipped their toes into sales, occasionally offering games a cut-down prices. Sony started giving away full games as freebies on PS Plus--good start--but it’s still not tackling the big issue of everyday pricing. Several years after release, most of Microsoft’s Games On Demand (again, I apologise for picking on Microsoft--Sony is equally guilty) are still £40-50, while their discy equivalents are sub-£20 in online (and actual) bargain bins.

Yes, I’m covering old ground. While the issue is back in the news, it’s an old problem being dragged needlessly into a new generation, and it’s something that needs to be resolved now. Because if Microsoft and Sony actually get digital pricing right, this could be the biggest and best console generation ever.

This article was originally published on 21 November, but has been updated with UK prices for PS4.

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digital sales

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71 comments

  • chunk-basker - December 6, 2013 9:51 p.m.

    Directly to consumer downloads should always be cheaper then the physical built in a factory shipped to retailer versions. If your bypassing 2 of the 3 steps pass the savings onto your consumers. Otherwise its the same as highway robbery. Just let them know that your furious they're fuckin you over by not using their service.
  • jazmineheard - December 6, 2013 1:35 p.m.

    I agree with article. The cost of digital games should gradually decrease. There should be some type of incentive to purchase to get the digital game versus a disc besides that you don't have to leave the house. Since the holiday season has started, B&M stores have offered deals and discounts on the disc games. The digital prices haven't really changed.
  • Doctalen - November 25, 2013 3:39 p.m.

    Gotta say the biggest reason as to why the xbone and ps4 digital prices are so high is from the lack of competition. Even though the xbone and ps4 are competing against each other in the global and physical markets, they each own their respective digital market. They can get away with this shit because they have no reason to make their prices competitive. Steam is applauded for its amazing selection of games and their discounts and sales and everything with a price slash. But in the beginning they had to do that to get the "street" credit to be a reputable storefront. Now they do it to slash their extremely small competitors (amazon/GOG/humblebundle/etc). Microsoft and Sony have no such competitive in the digital front and because of that they can afford to price their games at nearly full price forever. Steam only does it for a couple of months but again they have competition. Hell Origins, the last time I checked, pulled the same shit as Microsoft and Sony because EA controlled what was sold in their store and elsewhere; I.E. you will struggle to find an EA title in Steam. Off the top of my head its Battlefield, Mass Effect, and maybe some sports games. Whereas in Origins you have everything else EA.
  • Xtapolapopotamus - November 25, 2013 2:10 p.m.

    I really hope they can roll out Steam-esque sales at some point. I was excited to go all digital this generation, but the huge installation sizes and lack of price differences means I'm sticking with physical, against my will, for now.
  • paddyt007 - November 25, 2013 4:09 a.m.

    I'm probably wrong, but I always thought Sony and Microsoft had an agreement with retailers to never undercut them on New game prices, if they didn't agree retailers would have threatened to not stock their consoles.
  • Eightboll812 - November 25, 2013 8:56 a.m.

    If that was the dynamic, it's a hollow threat, and Sony/MS know it and could call the bluff if that was what the retailer was saying. It's like Gamestop pretending to be 100% supportive of the Xbone while getting boned by MS on used games. They can't eliminate half their store sales in boycott and stay in business. So they have to pretend to be in favor of everything and everyone, even if they are secretly pissed at MS or Sony.
  • paddyt007 - November 25, 2013 9:02 a.m.

    Is it really a hollow threat though, PS4/XB1 will sell more consoles if they are available on the high street/ game retailers online. Why else are they still making discs if thats not the case?
  • RayPaw - November 25, 2013 9:32 a.m.

    Agreed with this 100%. One need look no farther than Apple's App Store to see the software sales model Sony and MS wish they had but can't get because they are beholden to retailers to move the consoles.
  • Eightboll812 - November 25, 2013 10 a.m.

    So Apple doesn't sell their devices through retailers?
  • Eightboll812 - November 25, 2013 9:56 a.m.

    Well, first, they (Sony/MS) aren't making disks. It's the publishers choice whether they want to make all digital, disk-only, or both. Second, even though we are well over 10 years into the digital music era, you can still buy CDs. That should answer your question on why game disks still exist, and why Sony/MS would continue to support both formats. And if you say, "why not get rid of the disk drive..." it's not the same as music players because music players are supposed to be as portable as possible, and current gen consoles also advertise media playback (movies). So you already have a drive, it would be silly to not support disk games on the drive that's already there. So now that that sidebar is out of the way, to the heart of the matter...Sure Sony/MS rely on brick and mortar to push their consoles, but brick and mortar also rely on having consoles and games to sell. Hence either party saying they will pack up their toys and go home, is an empty threat. And it's not a two party discussion anyway. It's not like ALL retailers would all agree universally to boycott Sony/MS products, even if SOME of them wanted to. I mean really. You are saying that **Gamestop** might just stop carrying games completely because Sony/MS sells a digital game for $10 less than retail disk games? What would they do? Start selling cosmetics or something and change the name to BeautyStop? Similarly, if Best Buy decided to stop selling games, you'd just have Walmart fill the void. Me as a consumer, I'd just now have a slightly shorter list of retailers I can go buy a game from when I decide I want to buy at a local store. The only possible threat that would carry any weight to Sony/MS would be it ALL retailers universally agreed to boycott selling games. And when was the last time that ever happened? Again, I highly doubt there is some collective bargain between Sony and all retailers where all retailers have a single representative for bargaining such a deal on their collective behalf. I'd certainly like to see some evidence of retailers colluding before I draw such a conclusion.
  • paddyt007 - November 25, 2013 10:25 a.m.

    First of all I never said Sony/MS were making discs, it was just a general question. CDs are pretty much dead, dvds are going the same way but games are as popular as ever. My argument has some thought behind it, the PSP Go for example faced a revolt from retailers who refused to stock it if they weren't going to release physical copies of games for it. Again I never said game shops would stop selling games, where did I say that. I said they wouldn't stock the console if they didn't release physical copies of games for it, why should they? It's putting their business in danger. In case you haven't noticed shops that once relied on cds/dvds/games are closing. They will close for good eventually, I doubt they will move into cosmetics, pretty silly argument there. Why are you talking about retailers boycotting games? I'm saying Sony/MS or Publishers have an agreement in place to not undercut retail prices. This is sensible as retailers buy large quantities with no return option. Retailers are the biggest customers of Sony/MS/Publishers, not us. Why piss them off and stop producing the one thing that they make a profit on, games. PS4 and Xbox1 would sell less without retailers, thats a pretty good reason to negotiate with them. Give me one good reason why digital prices are more expensive than physical copies if my theory isn't true? If they wanted to they could crush the high street, but they haven't yet which is proof to me that they need them still.
  • Eightboll812 - November 25, 2013 11:21 a.m.

    The whole reason we are even having a debate here is because you insist on misunderstanding my point. Let's review: You said, you were *PROBABLY* wrong, but you thought there was some agreement between Sony/MS and retailers to not undercut them. And you also stated that retailers probably threaten to not stock their consoles if Sony/MS change their prices. I said that such a threat is a hollow threat. Retailers need Sony/MS as much as Sony/MS need them, and only an ORGANIZED boycott across all retailers would have any chance of success. Now I also presented a really strong example, because Xbone would have been the perfect target for Gamestop to announce they weren't stocking it. If anything would have screwed them, it was MS with the used game policy, and yet they were falling all over themselves to announce they were taking pre-orders too. So until you can explain away that, I really don't see how you can say threatening to not carry the console is anything more than a hollow threat a retailer can make. The second point you can't escape, is...if Walmart gets pissed and stops carrying the PS4 or Xbone, I just go to Best Buy. Or order it on Amazon. OR Gamestop. The only company that is hurt is Walmart. And since both Sony and MS also do other business with Walmart, you can bet Sony or MS will stick it to Walmart in another way. Threats between businesses who depend on each other sounds great in movies. It rarely works out well in reality. There's no heated conversations between CEOs in a board room somewhere over Sony offering a discount on a digital game. Another inconvenient point for you is that day-one digital harms retail disk based game sales too. Yet I know of no one who has carried out a threat against either Sony or MS over that. And yeah, I'll just keep pointing to what happened 5 months ago with Sony and MS. MS even admitted it was their plan to usher in an all digital generation. Retailers made no noise about it. It was consumers that got angry and forced MS to change. Retailers were too busy taking pre-orders of Xbones, which completely refutes your point entirely. And it answers your question about why parity ends up reigning supreme on pricing. The evolution to digital happens because of convenience more than pricing. Sometimes a mix of both but usually the primary driver is convenience. And if you keep pricing the same, you make more profit and you split it fewer ways. Hence pricing does stay the same, largely speaking, due to greed and desire for larger profits. Ebooks. I rest my case. Steam is a notable exception to most other industries that have moved to digital, in that Steam used sales rather than convenience as the incentive. And the Steam phenomenon is easily explained since they were one company of many offering digital on PC. They had to change the pricing model to stand out from the others. But seriously, at risk of starting another sidebar you will certainly misconstrue, you stated CD is a dead format, and YET statistics show otherwise. Again, more than ten years into digital music, CD is still the dominant format over digital. It's dying, just not dead yet. http://www.huffingtonpost.com/2013/01/09/music-sales-2012-digital-physical_n_2440380.html "Unsurprisingly, physical music continued its yearly decline, with sales down by 12.8 percent in 2012. Despite this big drop -- including a 13 percent drop in CD sales -- physical remained the dominant format for music purchases, the study found."
  • Eightboll812 - November 25, 2013 11:32 a.m.

    Your assertion that retailers boycotted and had some impact on Sony is false as well. The only thing I can find regarding this so called revolt is a Dutch retailer that refused to stock it, or threatened to refuse to. I see no other retailers mentioned in any of the articles that cover this. You must be Dutch where this was big news. This story escaped most of the rest of the world, for good reason. It was a non-event.
  • Eightboll812 - November 25, 2013 11:33 a.m.

    I'm talking about the "PSP boycott" you referred to.
  • LEGOMatrix - November 23, 2013 11:34 a.m.

    They should make the download price half the price of the boxed copy, but make every new boxed copy come with a free digital download. Everybody wins!
  • Pruman - November 22, 2013 5:57 a.m.

    Although I've got a whole mess of games on Steam, I'm still not all-in on digital distribution for the consoles. I'm old-school and like having the actual disc and box to line up on my shelf, and I'm against the idea of paying full price and not getting that stuff. I think digital distribution makes the most sense for the portable systems like the 3DS and Vita, since you can carry around your entire collection with enough storage, but it's still not where I would like it to be. I have a hacked PSP with all of my UMDs installed to the memory stick, which is awesome. I get to have all my games available at all times AND keep the UMDs in reserve if I need to clear some space on the memory stick. I would love the OPTION to install 3DS games to my SD card without needing to buy the game again. Ninty should create an online account system, put a code in every cart that allows an install, and associate it with the account for reinstalling and anti-piracy. The current binary choice of digital/no-digital is annoying. What Steam doesn't get credit for is removing a lot of the hassle that is inherent to the PC gaming experience. I use it for this reason more than anything, as I don't really have time for that BS these days. I've re-bought plenty of older games that I own on Steam mainly to avoid what I call "the UT 2004 situation:" The analog version comes on six CDs, takes a solid half hour of futzing with discs to install, and requires the play disc in the drive to launch the game. It's also the 1.0 version, and there's no auto-patch function (even if there was, there's no guarantee it would still be working), so have fun scouring the Internet for 9-year old patches and then downloading them from sketchy or defunct download sites. On top of that, Epic released a ton of free content after release, which you also need to go hunting for, since the in-game links to it are broken. With Steam? You click "install game" and pick the drive. The latest version is the one that comes down, the bonus content is all there, and any patches (more relevant for new games, obviously) are pulled down and installed automatically. Digital games on consoles are less of a value proposition because the very reason that consoles exist is to play video games hassle-free.
  • Shigeruken - November 21, 2013 11:57 p.m.

    They're at about 90 USD here in NZ. The service is dead on arrival to anyone who hasn't changed their account region.
  • brickman409 - November 21, 2013 8:36 p.m.

    Steam isn't the only place that has great deals for digital PC games. Right now Amazon is selling a digital download bundle of Bioshock 1, 2 and Infinite all for $14.99. While on Steam it's $39.99 for Infinite by itself. But, I think that's one of the reasons why steam is usually so cheap though, because they have competition. Origin and Games for Windows marketplace aren't much competition, but it's more than what the console's online shops have to offer. If I want to buy a download of a PS4 or Xbone game, my only choice is Microsoft's or Sony's online store. They get away with the high prices, because gamers have no other choice. If Sony or Microsoft make a console that is digital only, I'll never even think about buying it, just because of that lack of competition.
  • Twinkling82 - November 21, 2013 6:24 p.m.

    "With going for digital only sales, Microsoft will be able to dictate the prices online and because we all spell Microsoft with an $, we know for sure they will keep the prices inflated. Yeah, sure. But if you take a glance on the current XBLA Games on Demand section, there’s quite a few titles who either match up to or even are below the daily Steam prices(link below!). If that is not indicative of what COULD happen in the future I don’t know what is (big sales, albeit not in the same scale Steam does it), but with less net loss on each title, Microsoft and the game publishers can allow for digital sellouts, and probably decrease the prices in general because the middleman has been cut. Steam are the biggest digital games seller, they are certainly not only making these sales because of the competition from the other digital sellers." The consoles JUST launched, I think we should wait and see what happens down the road. http://gamingirl.com/wp-content/uploads/2013/11/steamxblpricecomparison.jpg
  • combatwars - November 21, 2013 11:12 p.m.

    You also have to understand that not all Steam users buy straight off of the Steam store. Rather, some trade with other users to get these games at a cheaper price because of regional pricing. Battlefield BC2 ROW - $10 on the RU Steam store Tomb Raider (2013) ROW - $20 on the RU Steam store Hitman Absolution ROW - $14 on the RU Steam store Mafia 2 ROW - $20 on the RU Steam store Assassin's Creed costs $20 on the RU + BR store so XBL is actually cheaper in this RE6 costs $20 on the RU store but is region locked to RU+CIS ROW means Rest of World so anyone can activate and play the game. So really, only 2 of the games listed are cheaper.

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