Why is digital distribution so expensive?

[luke10123]

Topic.

Was pricing Battlefield 3, and it's about £10 more expensive on Origin than it is for a physical copy. Always see the same thing with Steam as well, games are almost always more expensive than most good online retailers. Is there something really obvious that I'm missing here? Surely not having to produce so many physical copies and reducing outgoings to retailers, publishers can reduce prices AND still make a bigger profit per item (or at very least, match the lowest prices).

Battlefield 3:
£39.99 on Origin
£29.91 on Amazon

Is it worth £10 MORE to NOT have a physical copy? I really don't understand this at all, I don't see why EA wouldn't want to push Origin by undercutting retailers...

 

[gmaverick019_v1legacy]

steam deals.

they are infinitely cheaper than their physical counterpart most of the time, which is what 90% of digital consumers wait for (we wait for massive sales then buy 5-10 games at a time)

the physical copy is bought by the stores, and they want to move the stock, so they generally have to have it at a competitive price to get that shit outta there, while digital copy is accessible everywhere so they keep it at a general price depending on the publisher.

like i said though, steam deals, they put a small dent in your wallet for 3x the amount of games.

 

[luke10123]

steam deals.

Yeah they're pretty good (got every GTA for a fiver, thought that was pretty damn cheap).

what gets me is that it seems like the whole point of digital distribution is to sell to the customer directly, not incurring the costs of a shop. It just makes no sense to me that they would set prices so high, why would anyone pay the extra? It's like those people who sell games on eBay for £10 - £15 more than the RRP. how can they ever hope to be competitive in a highly competitve market...

I dunno, it confuses me...

 

[Redweaver]

It's only expensive to the consumer. It's stupid cheap to produce. Does it really confuse or surprise anyone that amoral, profit-driven entities don't drop their prices even when their costs go down?

 

[gmaverick019_v1legacy]

steam deals.

Yeah they're pretty good (got every GTA for a fiver, thought that was pretty damn cheap).

what gets me is that it seems like the whole point of digital distribution is to sell to the customer directly, not incurring the costs of a shop. It just makes no sense to me that they would set prices so high, why would anyone pay the extra? It's like those people who sell games on eBay for £10 - £15 more than the RRP. how can they ever hope to be competitive in a highly competitve market...

I dunno, it confuses me...

i absolutely love the 'no hassle' that is involved with steam/Digital distribution, i have my account whenever/wherever i want and i don't have to worry about stupid CD's or anything, i just download and play, and on top of that like i said, most people wait like crazy for steam deals around holidays to buy massive amounts, in which the publisher drops the prices to what they SHOULD be.

and they are in it as a business, so for every 3 people that buy it on a steam sale, there is that 1 person who buys it full price on steam, so multiply that by 1,000,000 copies and you got yourself quite a decent profit off that 1 guy...in theory of course.

 

[Something Amyss]

Because they can and we'll pay.

Or, alternatively, they're whacking you with aconvenience charge, which is absurd, because their convenience was supposed to save us money.

 

[Woodsey]

Because they can make more without noticeably raising prices.

 

[evenest]

I seem to remember a discussion that happened over at paizo.com (creators of Pathfinder) where they pointed out that the costs of any one published book are greater on the development side than on the printing side. That discussion came about because most of the pdfs of the books were barely cheaper than the physical copies. Recognizing there are differences between the two formats, I wonder if it doesn't have something to do with the upkeep of the servers and the costs of data transfer. They can burn a single dvd and ship it and there are no additional costs involved once it is out the door. But if someone needs to download a game multiple times, the servers must be kept up and running for that ability.

For my part, I still prefer the physical disc and won't be downloading anything until there is no other alternative.

 

[Something Amyss]

I seem to remember a discussion that happened over at paizo.com (creators of Pathfinder) where they pointed out that the costs of any one published book are greater on the development side than on the printing side. That discussion came about because most of the pdfs of the books were barely cheaper than the physical copies. Recognizing there are differences between the two formats, I wonder if it doesn't have something to do with the upkeep of the servers and the costs of data transfer. They can burn a single dvd and ship it and there are no additional costs involved once it is out the door. But if someone needs to download a game multiple times, the servers must be kept up and running for that ability.

Paizo is full of crap. This wouldn't even be the first time they lied to their fanbase.

RPG books actually used to be notably cheaper. The only thing that seems to have changed is they've noticed they can get a bigger piece of the pie, as Wizards started charging almost full price (before yanking their products altogether) and White Wolf followed.

Pretty sure the same has happened to games, too.

Servers are nonsense. You can download dozens of times for far less than a physical pressing plus shipping once. Actually, dozens is probably short-selling by far. Even constant availability is not that big an issue.

The difference between a physical game and a downloadabe game is pretty big in terms of cost, because it requires no shipping, negligible storage space and no physical presence (in any meaningful sense). This is a big block of the final cost of ANY product, be it a game, a CD, or a chair. of course, a chair can't be sold digitally, but the point remains, it's a hefty part of the markup.

Game companies have discovered they can pocket the difference and people will still pay.

And what a surprise. Paizo lies.

 

[luke10123]

Battlefield 3:
£39.99 on Origin
£29.91 on Amazon

Its called recommended game prices. EA cant tell people how much they are allowed to sell games for. All they can do is set a recommended price and hope distributors use it. Most of the time they do but sometimes certain distributors/retailers will sell it for less.

The point was that it just seems daft for them (in this example) not to sell it for £30 themselves. I assume most gamers would rather give money to the people who made the game (here, buying through Origin) rather than them and a retailer (like Amazon) because it puts more cash straight back into the industry.

Using a digital platform like Steam as another example, they really have no excuse not to be one of the cheapest on the market, their costs will be a fraction of those of high-street stores (= more profit/unit) so all they need to do is price competitivly to dominate the market. They'd make more money shipping a lot more games for less, compared to selling fewer games than the cheaper alternative for more money.

ach well, chalk it up to one of life's great mysteries i guess...

 

[cefm]

Same question was asked re: CD prices vs. cassette or LP prices. Should have been a massive drop in the price of the item due to reduced production costs......but that never occurred.

I would propose that at least some of the difference is eaten up by inflation. There's something in the mind that recoils at the thought of paying $100 for a game. Yet 25 years ago a Nintendo cartridge cost $40-$50, and adjusted to today's prices that should be about $100. So maybe they're making more on the e-sales to balance out the lower margin on the physical sales?

At the end of the day if a lot of people are buying it they have no reason to drop the price.

 

[MowDownJoe]

Battlefield 3:
£39.99 on Origin
£29.91 on Amazon

Its called recommended game prices. EA cant tell people how much they are allowed to sell games for. All they can do is set a recommended price and hope distributors use it. Most of the time they do but sometimes certain distributors/retailers will sell it for less.

And since Origin is EA's platform...

 

[Something Amyss]

Same question was asked re: CD prices vs. cassette or LP prices. Should have been a massive drop in the price of the item due to reduced production costs......but that never occurred.

You kidding? Adopting new technology, costly and untested manufacturing equipment? That's pretty expensive.

The prices should have gone down, and eventually did, but we're comparing apples and oranges here.

 

[badgersprite]

Money, dear boy.

[sub]Unrelated picture of a greedy businessman.[/sub]

They're just making whatever financial decision they think will be the most profitable in the long run. Whether they're actually right is a different story.

Besides, not all digital distribution is that expensive. In my experience, it's mostly just Origin, Xbox Live and PSN that have really excessive pricing.

 

[Rack]

Mostly it's because retailers strong arm their way into the field. If you want to sell your title in their stores then you can't sell it cheaper in yours. Without that, well look at the app-store for how unregulated prices work with stiff competition. Developers would want to sell at a slight discount compared to retail because they like money and there is a vast amount of it to be made doing things this way. But for the time being they need retailers and that means playing ball. It also means the market is so small they will often overprice to catch people who actually prefer digital copies.

 

[Jadak]

Physical copies are a liability. Pretty sure that's the wrong word for what I'm getting at, but whatever. For someone to have a physical copy, it has to have already been paid for to be produced. Because of that, sooner or later the best thing to do is cut your profits to get some of the excess stock off your hands. Otherwise, they end up with even more copies that they can only sell for even less, making even less money.

Digital Distribution has no such issues. The company can match demand exactly and only when needed and as such, they have no pressure to drop prices to get extra product off their hands.

 

[dickywebster]

Cause EA are money sucking vampires?

But really, theres no good answer, in theory digital games should be a fraction of the price of physical copies of the games as they dont have to make box art, discs or the boxes themselves. But this doesnt happen that often, though steam seem good for cheap digital games with regular sales and all.

But on the flip side, games only get decreased in price or put on sale to encourage sales and stock clearance, a problem you dont have with digital copies. So there is less reason to reduce the price of digital games, but they really should be lower anyway.

So in theory, digital copies should be the cheapest but never change price unlike physical copies, but instead they often cost as much and ive often found physical games cheaper, but thats second hand which you just cant to with digital. Which is another problem cause you can never get rid of or sell on a digital game if you wanted too, which considering EA is so anti preowned games that theyve risked alienating gamers over it doesnt surprise me with this new push for digital games.

 

[Smooth Operator]

Because they can, the convenience of getting it right from your couch at the click of a button means you are more likely to buy it even with a the higher price, and they will make millions for zero work right there.