Sony Says Game Industry Needs Retail to Survive

[Andy Chalk]

Sony Says Game Industry Needs Retail to Survive

Despite the drive to digital, Sony says a strong retail market will be vital to the next generation of consoles.

David Darling, the co-founder of Codemasters who now heads mobile game developer Kwalee, made a bold statement yesterday [http://www.mcvuk.com/news/read/ps3-xbox-720-will-fail-if-they-let-retailers-dictate-game-pricing/099051], claiming that the PlayStation 4 and Xbox 720 - his terms, not mine - will fail if they are not exclusively digital. Not that they should support digital distribution, mind you, or need to embrace it, but must be "digital only, or they will fail."

"If the next generation consoles have media drives like DVD to keep distributors and retailers happy so they can sell physical product this will make the machines uncompetitive," he said. "The retailers will say to Sony and Microsoft, 'You can't sell game X at retail for $60 and then sell it in your App Store for $2.' However, console-makers will need to sell games for $2 or else they will not be competitive with Apple."

Sony sees things different, however. Its recent acquisition of Gaikai [http://www.escapistmagazine.com/news/view/118212-Sony-Buys-Gaikai-Cloud-Gaming-Service] indicates that the company recognizes the importance of digital to its future, but Fergal Gara, the head of Sony Computer Entertainment in the U.K. and Ireland, said that despite the bumpy ride of the past year, the next generation of consoles needs retail in order to survive.

"Coming down off that 2008 peak has been a steep ride for many and has involved fallout on many levels, not least of all retail. So what we're seeing is not really a surprise, a bit of a readjustment if you like and it isn't just happening to the specialists on the High Street. There is a bit of a reappraisal around space and the commitment from other retailers," he told MCV. "We'd love to see as many of those retailers as possible maintain their interest in servicing the space because clearly down the road many of us are going to be doing our best to give another injection into the market whenever the next cycle starts."

The industry's current retail pricing model may be broken, but there's no rational reason to suggest that retail and digital can't co-exist, at least through the first half of the next generation, especially based on the idea that the same game that sells for $60 at retail will sell for $2 on XBox Live. How important retail will remain to the console market over an entire ten-year cycle is impossible to predict, but calling for doom and gloom if it supports physical media is just flat-out trolling for attention.

Source: MCV [http://www.mcvuk.com/news/read/sony-we-need-retail-for-next-generation/099146]


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[wooty]

I likes my physical copies, not just because I'm "old" and stuck in my ways, but because it actually feels like you own something.

Besides, I still like the current system to be honest. I can pick up a physical copy of games I want, but I can also download digital copies of games I want. Its all about personal choice really and wiping out one of the options is just bound to piss off a large group of people and bring in months (if not years) of digital shit slinging.

 

[getoffmycloud]

I'm sorry did some bloke suggest that AAA games need to sell $2 to compete with the app store or am I reading that wrong?

 

[Ken Sapp]

I agree that digital distribution needs to be at a much lower price point than is currently normal for the medium. However, there are plenty of people like myself that enjoy having physical copies of games. I will plop down the extra dough in order to get the collector's edition of games. And physical copies give me that feeling of permanence. I don't have to worry about them disappearing if a publisher goes under and would feel no guilt using cracks to play my games in the case that a publisher like EA voids my account because of a forum comment(hasn't happened to me, but it has to others).

 

[Ken Sapp]

I'm sorry did some bloke suggest that AAA games need to sell $2 to compete with the app store or am I reading that wrong?

Not that I have read. Even I would say that that is too low a price-point given the cost of development for most AAA titles. $10 dollars would be reasonable, considering the lack of packaging costs and lower cost of delivery via the internet vs putting it on store shelves.

 

[xxBucdieselxx]

No you are not reading it wrong getoffmycloud. I would love to see a AAA game sell on XBLA for $2, however I have yet to see that. This bloke is just trolling for attention. Which I guess kinda worked because I am commenting on his comment. The fact of the matter is I am a fan of both. Digital Download is cool in the have it now and play way, but you aren't getting that Skyrim Map with digital download, along with tons other other things they are adding in with games now. I don't think that games will necessarily stay on a disc medium. Maybe they move to flash drives, or SD cards or something new that comes to light in the future. But it is just plain ignorant to say the next generation of consoles will fail if they are all digital. That is like saying opening a retail outlet for anything is stupid because you can just get it on the internet. Different avenues of commerce still need to exist.

Also why do they need to compete with Apple? Last time I checked you can't play Battlefield 3 on an ipad or Gears for that matter. People are making the comparison between Apple and Microsoft & Sony, like they were competing on the same level. I have yet to hear anyone say "I spent all last night on my iPhone/ipad playing X game with my friends and we had a blast!" So I am having a hard time seeing where the comparison comes in, PC and Console still reign when it comes to playing games with loads of content, not games that can be beaten over the course of a week on the hopper.

 

[vxicepickxv]

I'm sorry did some bloke suggest that AAA games need to sell $2 to compete with the app store or am I reading that wrong?

Not that I have read. Even I would say that that is too low a price-point given the cost of development for most AAA titles. $10 dollars would be reasonable, considering the lack of packaging costs and lower cost of delivery via the internet vs putting it on store shelves.

It would be somewhere closer to 50 dollars, based on the old 60 dollar figure. Of the breakdown, most of that 10 dollar gap is in shipping and retailer price markup.

As a retailer, it's generally not advised to carry products that aren't going to make you money, unless it's a loss leader.

 

[grigjd3]

Well, they both seem like crazy remarks. Clearly Steam shows you can have an all-digital distribution brand but including a physical media option doesn't spell death. Now, ten years out, I foresee very little physical media being out there, but that's still ten years out.

 

[NightHawk21]

I actually somewhat agree, but I would revise the title. The "CONSOLE game industry needs retail to survive". Like I said before in a different post, going all digital would essentially make consoles just low end computers (too a greater extent than what they are now), except you'll be limited to a shitty OS, and other nonsense. At that point choosing between say steam and the psn store will be essentially a no brainier (also given that for some reason steam seems to download stuff at like twice the speed of the psn store and can update in the background).

I mean if you take a look at what the main argument over pc vs consoles was (IMO at least), that "the game will definitely play on consoles while you're pc has to meet certain standards", even that is becoming obsolete. Now most developers are making their game with "poorer" gamers in mind and adding graphics settings that will allow the game to run on just about anything. For example, the laptop that I'm writing this from cost me bout 450$ Canadian at bestbuy (taxes and stuff already included in that price). I have so far managed to play every new game I was interested in, and all the F2P games that were interesting to me (Skyrim, Diablo, Dota2). Granted they weren't in the best quality, but I usually run them lower for a more stable experience.

 

[Threeseventyfive]

Wait, didn't Sony JUST buy Gaikai?

Mixed messages, much?

 

[Ken Sapp]

I'm sorry did some bloke suggest that AAA games need to sell $2 to compete with the app store or am I reading that wrong?

Not that I have read. Even I would say that that is too low a price-point given the cost of development for most AAA titles. $10 dollars would be reasonable, considering the lack of packaging costs and lower cost of delivery via the internet vs putting it on store shelves.

It would be somewhere closer to 50 dollars, based on the old 60 dollar figure. Of the breakdown, most of that 10 dollar gap is in shipping and retailer price markup.

As a retailer, it's generally not advised to carry products that aren't going to make you money, unless it's a loss leader.

When you are considering that several layers of markup are no longer happening, there is no scarcity based upon how many discs you can press and put in boxes, and the fact that there is no second hand market to contend with in digital distribution then $10-$20 per game is eminently reasonable likely very profitable considering that more copies of the games will be sold.
Steam does sales all the time where games (even AAA) are sold for under $20, well below the current standard of $60, and yet they continue to turn a profit and grow far in excess of expectations year over year last I checked. On the other hand we have GOG which sells pretty much everything for $9.99 or less and they are growing and making a profit. Two examples of Digital Distributors that have realized that since the majority of the cost chain has been removed, they can lower prices drastically, keeping current customers happy and drawing more in, and yet still consistently turn a profit.