Pricing: Digital vs Retail

So, I've been playing an XCOM clone. And its alright. But it really makes me want to play XCOM. So I started looking around at picking up the game again. And this lead me to realize that pricing for games is way out of whack when it comes to digital versus retail copies. Using this game as an example, I can pick up a physical PC copy for $9. Digital download is $30 (mulitple sites). I can get a physical PS3/360 version for $10 or less. Digital on both platforms is $30. The expansion version is the exact same pricing. Which is even more odd. The version with more content is the same price as the version without? Who controls this stuff?

What in the blue hell is going on here. Why can I pay less for a full packaged retail copy than I can for a digital file. This is backwards to me. The game is old now. And that price point for digital is banana pants. And this wasn't the only game I noticed this for. The worst offenders are sports titles. Who in their right mind is paying $30-$40 for last years (or in some cases two years old) digital sports titles? You can get disc copies for $10-$20. Its just bonkers.

If publishers and developers think that used games hurt them so much, why are digital games prices so messed up They should be trying to sway all of us to buy digital. They are not doing a very good job of doing this. Video games is the only media where you pay twice the price for the convince. Digital books, movies and music are for the large majority cheaper than a physical copy. Games just don't get this apparently. And its mind boggling.

Anyways, after typing this all out I had a light bulb go off and I remember XCOM was free at some point on PS+, so I have it already. But, still. This needs to change. Pricing on digital games are just insane for the most part. Especially for consoles. PSN and XBM(?) are crazy for older games pricing. Why anyone would pay those prices for older games over getting a disc is mental. I know steam and some other sites sell cheap now and then. But overall, even on steam most games are overprices for older titles.

@sterling: Retail for old games is always way cheaper unless there's a big sale going on; digital prices often never get adjusted at all from a $30 price point. This is even more drastic when it comes to PC games; where you can find them for 25% or less of the digital price (i.e. 75% off). DLC that's years old will frequently have the same price point as when it was released.

One of the more amusing purchases I've made was Mass Effect 2 for 12 bucks on PC when it was released on PS3 for $60.

@fredchuckdave: I've just never really payed attention. I have never even considered buying a digital copy of a console game until this gen. Dark Souls II was the only digital game I bought on last gen (that wasn't an arcade or indie title). And I've only ever bought a digital PC game during a sales event. So this while thing is just baffling to me. Unless there is a large portion of consumers out there are paying these prices. I can't imagine why it hasn't been "corrected" to sway more people to buy digital. But again, maybe more people are buying digital and wasting their money?

The way I see it, digital prices being lowered are reliant on the publishers of those games. It requires someone to be paying attention to what their games are actually worth at that point in time and change the prices on their own, as I'm fairly certain Steam can't do it on their own. Also, it requires publishers to not all think "our game is always worth full price" or take the risk that fewer people might buy it at a higher price.

Retailers, on the other hand, are used to moving product off the shelves when they need to. This means that a retail copy of a game, having already been purchased directly from the publisher and then able to resold at any price, can attain a far lower price in most markets. They know how to sell things when shelves need to be cleared, so prices are (almost) always much more competitive.

It's something that will likely not change in the future, unless publishers dedicate part of their staffs to keeping abreast of pricing and adjusting them as needed.

@sterling: In the case of next ("current") gen games the downloads are extremely large so there's an active reason to not buy digital right now; but other than that I just tend to go for whichever has the best price. Usually the best price is amazon randomly, but every once in a while steam will have a game I'm interested in on sale and new games occasionally get really good PS+ discounts (Tomb Raider was 25 bucks a month after launch or something). Digital can be convenient for console games and is especially useful for PS1 classics that would otherwise be ridiculously expensive, but on the whole the pricing model isn't particularly smart.

I Imagine one of the original larger drives for making the shift to digital (which indirectly led to the PS4's success because of E3) was that they could set the price of games and keep them there, but with a used market you have to adjust your prices more frequently to compete; hence why the vast majority of games will drop to half or less than half of their original price within 3 months (sometimes within 1). 13-14 years ago the retail price of Final Fantasy IX stayed at $40 (the full price) for over a year. Unless you're buying games right when they come out all the time games are extremely cheap right now as long as you wait for the right time/look at the right places to buy stuff.

Low physical prices for old games come from the fact that Brick And Mortar retailers have limited shelf space and have to regularly purge under-performing inventory to free up space. Every old game that isn't selling is taking up valuable real estate from ones that could be.

Digital doesn't have such constraints and thus has less incentive to lower prices.

Totally agree OP. It's fucked up, and is one of the reasons why I will always buy physical.

That's it exactly, and that's why I will be sticking with physical media until I no longer have any choice to do otherwise.

Physical copies take up space, so the price is lowered to move the excess stock when they decide to stop carrying it.

Sales on physical goods generally happen for one of two reasons:
1) To get customers into the store in hopes that they'll also purchase other, non-discounted goods
2) To clear out shelf space because a newer product needs that room

You're mostly seeing #2, obviously.

What is even worse, when a game is priced at 49.99$ on steam and free on PS+ or GwG .

Digital games are still knew to publishers which means that they still need time to adjust their policies to be reasonable enough .

When digital goes on sale, it goes for crazy cheap, at least on the PC although this generation of console is showing improvement. For example, Saints Row 3 is on sale for $4 and Saints Row 4 for $7. Both run approximately $20 retail (new). Darksiders I and II can be picked up digitally for $7.50 for the pair, while ordering a hard copies will run about $35.00 today - these are the sale prices both digital and retail. I tend to wait for sales of any PC game I am interested in. And, as I mentioned above, the consoles this generation are showing improvement. I usually take a look at Sony's Flash Sales which can be quite competitive. The issue I have is with DLC, though. That stuff can wind up costing more than the game itself if bought individually even during a sale. In some cases, it's cheaper to buy the "complete pack" with the base game and all/most of the DLC than it is to just buy the DLC. If I am looking for the DLC, I already have the base game, so buying another copy of a game I already own irritates me.

I suppose it's understandable with older games (stock clearing) but it's ridiculous that it's usually the case with new (PC) games too. It's especially frustrating when you actively want to support the publisher by buying direct from them, but can't because for some reason they always fail to compete on price... for their own product.

The standard edition of Dragon Age Inquisition is £50 on EA Origin, which is 70-100% more expensive than I am used to paying for physical copies of brand new pc games. Physical copies of DAI are widely available for £40 and other places have the digital version available for £35 (even less than that if you go to the places that rip codes out of physical copies from different regions).

How is it that Origin always seems to be the most expensive place to buy EA games, even when there's no retailer cut to come out? I guess they're just relying on people not even bothering to look elsewhere? I want to support them by buying direct but I'm not going to pay £15 extra for the privilege.

@jimbo:

It is indeed crazy. Another similar example is Sunset Overdrive. You can get it for $15 off with free shipping from the Microsoft Store online but no savings if you order it on the XBOX online. This is a brand new game so it's not like Microsoft is trying to clear out the stock, and in this case it's the same retailer and publisher in both scenarios, the physical copy is just $15 cheaper (technically $15 rebate but still.)

What it comes down to is 2 things, I think

A) Retailer competition. There's no competition online so no force driving down the price, while the Microsoft Store has to compete with Best Buy and Amazon (similarly whatever British shops are selling DA have to compete with each other while Origin competes with nobody.)

B) Fear of souring relationships with retailers. Most games are still bought retail, so EA and Microsoft are afraid of reducing the prices of the digital version and pissing off the big retailers, who then might not push or even carry their games. Better to keep the retailers happy and inconvenience the customer because look at you, you're not going to skip the game over this, you're just going to buy it at retail, so the publisher will still get your money.

You should take a look at the digital console game prices in the UK sometime if you think that's bad.

Still, overall nearly every game I've gotten on steam I've gotten for dirt cheap because of sales. The best deals are generally available on digital, just have to wait for them.

Also I tend to find price drops on steam happen far faster than retail. I remember some PS3 games that I was kind of interested being still full price or nearly full price over a year later, whereas on steam I expect a markdown within a year. Sometimes (like with xcom) with particular publishers it'll take oddly long for it to get real cheap, but with the steam sales it more than makes up for that.

I mean I just got saint's row 2, 3 and 4 with all the DLC for under $15.

@jimbo said:

I think it's less about being competitive with digital pricing and more about placating physical retailers. The fear among publishers is that if their games were cheaper digitally on day one, retailers would flip out and refuse to stock them in stores. Until that power dynamic changes, you'll probably continue to see a price disparity in favour of retail.

@sterling: I agree with you, but to counter your point about other media types, music is usually the same price as a CD. Amazon uses has the MP3 album for $12 and my local Target or Walmart will mark it to $10 on release. The reason games and music do this is that with books and movies, the large portion of people are less likely to buy digital because we've all been buying tapes, DVDs, and blu-rays for nearly 30+ years. Books have been bought as paper for centuries. So, to get people to buy a new format of those things, they had to offer a price incentive. My grandmother is still skeptical of e-Books despite the discounts.

With games and music, the people buying it would rather often have the immediate access that digital offers. So they don't have to lower the price to get people to buy. They are more interested in targeting the release week crowd with those formats.

Unfortunately the likelihood of a digital rights evolution evolution occurring in the near future is somewhere between "not happening," and "not happening in our lifetime." The biggest move to shift digital right management was during the initial announcement of the Xbox One. That was quickly killed due to the gripes with proposed infrastructure. In my opinion, that blow back set back transference of digital rights and digital rights resale 5 to 10 years. If one of the largest corporations in the world with an established track record was not able to deploy digital rights management, it's unlikely to occur until a publicly acknowledged consortium actually provides an outline (keep "publicly acknowledged consortium," in the back of your head). In it's current incarnation, digital rights are convenient, however the most quickly depreciating purchase ever. It's worth nothing immediately after your ownership has been conveyed in exchange for money. The only slight benefit to the end user is the Steam presence due MSRP not being so hardlined - personally, I'd rather pay more than deal with the quick markdowns, I feel as though that erodes the opinion of market value for product (race to the bottom). Continuing in that manner will be unsustainable, at some point, developers will reach a point in which outsourcing development offshore is the only profitable way to maintain.

I feel that what I've presented is largely irrefutable fact. On the opinion portion of it, I personally blame Sony for the inflexibility of digital MSRP and transference of rights (which would actually allow for a more stable environment, providing a more consumer benefited environment). I have absolutely no evidence to support this theory, other than my observation. I have no inside knowledge and I know of no one who has made statement of this previously. I don't think Microsoft was building a digital rights infrastructure which would be utilized both online and at B&M stores if they hadn't received commitments towards it becoming an industry trend. This may not have meant the same service being utilized for multiple console manufacturers, but would have likely provided a similar, parallel ecosystem for each of the manufacturers. It's my personal opinion that Sony likely had something similar in the works (I'm not suggesting collusion), which would have been the benefit to both the manufacturers and the consumer - they just decided to cut the nose off of the consumer at the point that they had realized there was initial backlash towards Microsoft's plans. I feel that it was PR motivated and that it set my ability to properly manage digital rights back, which in turn has a similar effect on the OP's concern about digital MSRP. The reference to "publicly acknowledged consortium," is in the fact that once it's been put out there by 2 of the big 3, there's really no backtracking on it.

Expect a more parallel pricing structure once our digital rights have PROPERLY been commoditized as the products you're purchasing at the store have been. Moving away from that was anti-consumer. There's no other way to put it, there's no incentive until then. Until then, I will purchase digital for multiple reasons - I do enjoy the convenience, despite it being locked to my possession; I am willing to pay that premium MSRP so that it can properly support the industry (think of the premium paid for buying domestically produced goods for the good of said GDP and domestic workers).

@kdm: Outsourcing may be an inevitability for the US but it's hard to speak for every European country, Australia, Japan, and so on. Ultimately if studios keep getting larger and each individual's role in the project becomes more replaceable (i.e. the push continues to be for better graphics first and foremost) it's not going to be profitable for companies to have a literal army of coders in the US.

@fredchuckdave: I agree with you to a certain extent. Over the prior 10ish years, you've seen consistent push to move certain "virtual," labors offshore, however I've also personally witness blowback which has transitioned back to domestic employment. Except for very particular instances, I think the quality of operations being elsewhere is a noticeable deviation (not necessarily quality or ability, however cultural deviation is a factor as well) is such that you're likely going to to see a developer choose to close their doors before outsourcing their vision. At the end, you are right and all of these factors contribute to accelerating that race to the bottom.

The pricing for some games such as Madden/COD etc on the PS Store leave a lot to be desired indeed...I think I will only buy smaller titles digitally because the retail games are priced as if they don't want you to buy them.

You can use a site like IsThereAnyDeal to see where a game is the cheapest at any given time. For instance, XCOM: Enemy Unknown Complete Edition is $16.50 on Newegg right now. It was $12.49 10 days ago on Steam.

Don't think it's race to the bottom per se, it however requires a different business approach to content creation. You mention the overseas outsourcing, others stay within local and go indie. The game industry is getting bigger and the medium is seeing a schism of either going multinational giants or going indie and staying small and fleet of operations. The medium sized developer is where the current situation is hitting very hard, there is hardly a studio not vulnerable of surviving to their next projects. But then again, Kickstarter throws in another kink to the usual retail model and although not entirely successful has become a way to survive in this climate. What I think has happened is that the gaming audience, once very specific and experienced in their tastes has reached mainstream critical point and is diverging in many maturing ways, with prices becoming a big attraction due to the situation with economy. The result of this change in demographics can be seen in recent developments that previously were considered unthinkable : Origin and GOG offers no question asked refund policy. The gamers have become more selective with how they dispense with their money although their Steam libraries have become full of games they bought but never touched. There should be a balance in how the game prices are set, but with DLCs and whatnot inflating the price of the original game, the gamers have become a lot more shrewd in sensing the true value of a game, so I'd say it is the ironically the pricing scheme and botched digital rights management by the publishers, to maximize profits and bottom line, managed to drive down the price of games.

Imo it's because there a lot of individual brick and mortar stores and just plain individual people who have more control over prices especially as more time goes by.