I've been checking out the early preview of the next dashboard update (which looks to be an excellent update so far), and I've been paying close attention to the Games on Demand feature.
This feature is now where the "XBox Originals" were found. I'm confused because as far as I can tell there is only one place this can end up, and I don't understand why Microsoft would intentionally fail like this.
Think about it. The concept is great: eschew the trip to the store (sometimes several stores) looking for that hot new title by downloading it immediately from the Live service. Sounds great, right? Except its not, because first of all MS decided to launch the 360 with a pitifully small 20gb hard drive. Personally I went ahead and dropped the $150 last year to get the 120gb drive, so storage isn't an issue for me anymore. But for those who adopted early and have the 20gb (and who may not want or be able to afford the upgrade) that leaves them most likely not using this feature much if at all. I know you can delete and re-download any time you want, but I don't want to wait half an hour or more to download a game if I want to play. Gaming is pretty much an instant gratification hobby.
The biggest problem I see, however, is the price point. This is where Microsoft has little choice but to fail with this service. I was looking at the games currently available, and the first one I noticed was Lego Star Wars: TCS. This game retails new for $19.99 (I just bought it recently) and yet MS is selling it for $29.99 on their service. There are some other Platinum hits titles up there for $20, but why would you pay the same amount for digital distribution that you would retail?
If I order software online I get the option of digital distribution or having a disc mailed to me. The hard copy feature is more expensive. If I buy that same product in the store I'm paying more than the digital distribution price because there's overhead (middlemen) to account for, and they all need to get their slice of the pie.
If you buy a game right now at a retailer...let's say for the sake of argument Gamestop...then you are going to pay the MSRP of $60. You are paying for the game, but you are also getting other types of value for purchasing that hard copy of the game. You can loan it to friends, you can trade it in. You can nail it to your little brother's forehead if you desire (not that I recommend this, of course). Point is, its not just attached to your hard drive. You have the value of flexibility in that green case.
When you purchase a game via the Live service, you lose all that value. You cannot trade it in, you cannot let someone borrow it. So why should we pay full price from the Live service for something that has less value than the same item bought in the store in hard copy form?
And this is why I think Microsoft is going to fail with this. Their only option to really make money here is to reduce the cost of buying games on their service, and they really can't do that without upsetting (read: bankrupting) a lot of their business partners. I think a fair price for a new game via digital distribution would be roughly $39.99 vs the $59.99 you pay in the stores. To me, that price point makes the value lost by not having a hard copy worth the purchase. But if Microsoft did that, they would put franchises like Gamestop out of business probably within a year, if not less. No more trade-ins. No more new game sales. No more Game Informer subscriptions, cause we don't need the Edge card anymore. And this would affect pretty much all of the retailers out there who sell Microsoft. And then of course Sony would be right on their heels with this once they saw the profit in it, so that would hurt retailers even further.
So where do they go with this? To be honest, I was excited about this service until I realized there would be no price reduction. Now there's no point in it because there's no value to it.
Or will there be? Do you think at some point Microsoft will say screw it, lets make some money...and cut out the middleman costs of retail and pass the savings on to us? They would make a ton of coin that way, being the main retailer of all these games. But they would do this at the expense of a lot of their business partners.
This feature is now where the "XBox Originals" were found. I'm confused because as far as I can tell there is only one place this can end up, and I don't understand why Microsoft would intentionally fail like this.
Think about it. The concept is great: eschew the trip to the store (sometimes several stores) looking for that hot new title by downloading it immediately from the Live service. Sounds great, right? Except its not, because first of all MS decided to launch the 360 with a pitifully small 20gb hard drive. Personally I went ahead and dropped the $150 last year to get the 120gb drive, so storage isn't an issue for me anymore. But for those who adopted early and have the 20gb (and who may not want or be able to afford the upgrade) that leaves them most likely not using this feature much if at all. I know you can delete and re-download any time you want, but I don't want to wait half an hour or more to download a game if I want to play. Gaming is pretty much an instant gratification hobby.
The biggest problem I see, however, is the price point. This is where Microsoft has little choice but to fail with this service. I was looking at the games currently available, and the first one I noticed was Lego Star Wars: TCS. This game retails new for $19.99 (I just bought it recently) and yet MS is selling it for $29.99 on their service. There are some other Platinum hits titles up there for $20, but why would you pay the same amount for digital distribution that you would retail?
If I order software online I get the option of digital distribution or having a disc mailed to me. The hard copy feature is more expensive. If I buy that same product in the store I'm paying more than the digital distribution price because there's overhead (middlemen) to account for, and they all need to get their slice of the pie.
If you buy a game right now at a retailer...let's say for the sake of argument Gamestop...then you are going to pay the MSRP of $60. You are paying for the game, but you are also getting other types of value for purchasing that hard copy of the game. You can loan it to friends, you can trade it in. You can nail it to your little brother's forehead if you desire (not that I recommend this, of course). Point is, its not just attached to your hard drive. You have the value of flexibility in that green case.
When you purchase a game via the Live service, you lose all that value. You cannot trade it in, you cannot let someone borrow it. So why should we pay full price from the Live service for something that has less value than the same item bought in the store in hard copy form?
And this is why I think Microsoft is going to fail with this. Their only option to really make money here is to reduce the cost of buying games on their service, and they really can't do that without upsetting (read: bankrupting) a lot of their business partners. I think a fair price for a new game via digital distribution would be roughly $39.99 vs the $59.99 you pay in the stores. To me, that price point makes the value lost by not having a hard copy worth the purchase. But if Microsoft did that, they would put franchises like Gamestop out of business probably within a year, if not less. No more trade-ins. No more new game sales. No more Game Informer subscriptions, cause we don't need the Edge card anymore. And this would affect pretty much all of the retailers out there who sell Microsoft. And then of course Sony would be right on their heels with this once they saw the profit in it, so that would hurt retailers even further.
So where do they go with this? To be honest, I was excited about this service until I realized there would be no price reduction. Now there's no point in it because there's no value to it.
Or will there be? Do you think at some point Microsoft will say screw it, lets make some money...and cut out the middleman costs of retail and pass the savings on to us? They would make a ton of coin that way, being the main retailer of all these games. But they would do this at the expense of a lot of their business partners.
