Digital Distribution pricing needs to evolve

I've been thinking a lot about Steam and digital distribution in general lately. I believe, it was the most significant gaming trend of 2009, as it allowed us to enjoy games like Shadow Complex, flower and the near-endless amount of Fallout 3 DLC content - things that would have never seen the light of day had it not been for services like XBLA and such. In general, I'm really happy with the way it all works. I prefer managing my game library online and its more convenient to buy too. But I do have one big concern for the current model - pricing (for retail games specifically).

 This pricing model doesn't work for everyone
You see, Steam is an excellent example of what we can expect on the consoles. Maybe it will happen this year or maybe it won't happen until the next generation. But I'm sure that eventually most games will end up on digital distribution service like Games on Demand (Xbox 360), Playstation Network, etc. The problem is that publishers are still charging full retail price on Steam for new games, in spite of not providing any physical product. While games like MW2 will easily sell for even $60 on the PC, this pricing model really hurts other good but not blockbuster titles like say Bionic Commando or Red Alert 3.

Both those titles would've been amazing buys if there were cheaper on Steam at launch. Ask yourself, would you give Bionic Commando a try if it was say $20 (or $30 on consoles) ? The game certainly had some issues but at that price range, it's an outstanding buy. I can't speak with any authority about sales figures and the accounting behind it all but I just wonder if Grin would still be around if that had been the case. This analogy/supposition goes double for Dead Space and the demise of Visceral Games.

Runic Games had the right idea with Torchlight. The game has been selling extremely well, partly due to its sweet price range. They even have a solid fan base now to launch their MMO on and it's a great success story that most publishers can learn from.

These guys have the right idea
The thing that really stumps me is why don't more people do it ? I understand they won't want to kill their retail business but how about you drop the price after two-three weeks of release ? If the game doesn't do well at 40, drop it to 20. If the crazy steam sale figures for Crysis or Dead Space are anything to go by, people are willing to try new things at that range - even if they are not part of the original target demographic. The best part of digital distribution is that it doesn't cost you anything to generate out more keys ( Prey "sold out" being the sole exception somehow). Even if Valve/MS/Sony get a sizable chunk of the profits, you're still making money and at no extra cost.

If you look at all the lay offs last year, the game industry is really hurting right now. Production costs are upwards of millions with everyone trying to score the next Modern Warfare. It's about time some of them realized that not everything is going to sell millions. If anything, learn from the success of all the small download-only games from 2009. Maybe they can achieve more by just lowering their expectations. I realize that digital distribution is not part of the problem here but it can be part of the solution.
3 Comments
3 Comments
Posted by Spacetrucking

I've been thinking a lot about Steam and digital distribution in general lately. I believe, it was the most significant gaming trend of 2009, as it allowed us to enjoy games like Shadow Complex, flower and the near-endless amount of Fallout 3 DLC content - things that would have never seen the light of day had it not been for services like XBLA and such. In general, I'm really happy with the way it all works. I prefer managing my game library online and its more convenient to buy too. But I do have one big concern for the current model - pricing (for retail games specifically).

 This pricing model doesn't work for everyone
You see, Steam is an excellent example of what we can expect on the consoles. Maybe it will happen this year or maybe it won't happen until the next generation. But I'm sure that eventually most games will end up on digital distribution service like Games on Demand (Xbox 360), Playstation Network, etc. The problem is that publishers are still charging full retail price on Steam for new games, in spite of not providing any physical product. While games like MW2 will easily sell for even $60 on the PC, this pricing model really hurts other good but not blockbuster titles like say Bionic Commando or Red Alert 3.

Both those titles would've been amazing buys if there were cheaper on Steam at launch. Ask yourself, would you give Bionic Commando a try if it was say $20 (or $30 on consoles) ? The game certainly had some issues but at that price range, it's an outstanding buy. I can't speak with any authority about sales figures and the accounting behind it all but I just wonder if Grin would still be around if that had been the case. This analogy/supposition goes double for Dead Space and the demise of Visceral Games.

Runic Games had the right idea with Torchlight. The game has been selling extremely well, partly due to its sweet price range. They even have a solid fan base now to launch their MMO on and it's a great success story that most publishers can learn from.

These guys have the right idea
The thing that really stumps me is why don't more people do it ? I understand they won't want to kill their retail business but how about you drop the price after two-three weeks of release ? If the game doesn't do well at 40, drop it to 20. If the crazy steam sale figures for Crysis or Dead Space are anything to go by, people are willing to try new things at that range - even if they are not part of the original target demographic. The best part of digital distribution is that it doesn't cost you anything to generate out more keys ( Prey "sold out" being the sole exception somehow). Even if Valve/MS/Sony get a sizable chunk of the profits, you're still making money and at no extra cost.

If you look at all the lay offs last year, the game industry is really hurting right now. Production costs are upwards of millions with everyone trying to score the next Modern Warfare. It's about time some of them realized that not everything is going to sell millions. If anything, learn from the success of all the small download-only games from 2009. Maybe they can achieve more by just lowering their expectations. I realize that digital distribution is not part of the problem here but it can be part of the solution.
Posted by EpicSteve

I think Steam is doing great. Holiday sales, bro! I just wish Games of Demand were cheaper. I mean, $30 for Monopoly!?

Posted by raddevon

What most upsets me about the consoles' digital distribution services is that, not only are new games retail price; older games also sell for the retail price. This is insulting because these games are often being cleared out at retail resulting in digital prices far exceeding actual retail prices. At least older games on Steam go on sale often making them genuinely good deals. Take a look at the current price of Psychonauts which is available on the 360's Games On Demand as well as Steam. On 360, the game is priced at $15. On Steam, the game is currently selling for $2!
 
I agree with everything you're saying. Publishers are saving money by distributing this way. I am entitled to a share of that savings because I cannot resell the game nor do I get a box and manual. Once the publishers realize this and deliver reasonable savings, they will be able to sway most anyone with fast Internet access to purchasing games this way. After that, it's just a matter of time before everyone has the access.