One thing I always hated as a digital buyer is the price. Yes the second hand portion is gone, yes there are a dozen other issues, but the one thing that bugged me was indeed the price. For some reason you are not getting material, yet the price remains the same? So I decided to look into someone breaking down just how much it is.
Lucky me, the LA Times actually broke down the cost of a $60 dollar game when it hits retail. This slide was from a few years ago when OnLive was attempting to sell their service to publishers. By showcasing the costs, they were capable of showcasing the savings.
So by breaking it down, it basically states retailers take a $15 dollar chunk of the game. Outright, the publishers never see this money. The other 45 dollars is given to the publishers, but then broken down due to licensing, packaging, etc…. at the end of the day publishers see about $27 dollars in revenue from the $60 dollar disc. Granted major publishers could easily mess with the numbers, squeezing any extra revenue it can from any area. Less licensing fee’s, timed exclusive deals, store cross promotions, etc….
So why bring that up? Well now from a consumer perspective you can easily see that they squeeze a ton of money out of digital. By going digital they easily cut out the retail portion, or at least cut it in half because they do indeed pay small fees to be listed on Xbox Live and PSN(but not their own services). Then they also cut their expenses because they no longer deal with shipping, cost of packaging, buying in bulk, returns, etc…. They come out of it maybe paying the retail fee.
They cut costs, raise their revenue margin, and yet here we are still paying for a $60 dollar game. A game that can’t be traded in, hardly ever will see a price cut (due to lack of demand and new games demanding the shelf space), and is simply a license that can be taken offline at any given moment for no reason. Granted Steam is by far cheaper than most digital services, but this is more directed at consoles and their markets. We basically see a $10 dollar price increase without ever actually noticing it entirely.
To me this is somewhat of a good thing too. With the added revenue, publishers don’t need to raise the price of a retail game again. $60 dollars is bad enough in this economy, and now publishers found a way to make the extra buck they’ve supposedly have been needing to develop modern games. The only downside is that while they cut costs, we still don’t see a digital discount…..at all. It would be nice of them to at least use the added leg room to put on some sort of promotions for, at minimum, early bird buyers.
Now that is something to think about next time the “all digital future” hits your news feed. Heck, take this same formula and apply it to other industries. It makes that $25 dollar digital movie burn even more, doesn’t it?