Why are Disc games and DLC games the same price?

March 8th, 2010 -

The Los Angles Times recently had an interesting article about where your money goes in a $60 disc based game, and the shocking truth as to how much of it actually goes to something worth while is ridiculous. But then you have ask yourself: “where does my money go in a downloadable game?” Let’s take a look..

Looking over the pie chart above, it makes you think about buying games from a download only medium. First off, since it’s not shipped to a store, we don’t need to be paying for a “Retail Margin”. The retailer (Gamestop/Wal-mart/Best Buy) does not exist anymore, so that removes $15 right there. Then we have a “Returns Margin”? This is a fail safe in case the game “tanks” and is returned to the publisher. So since you can’t return DLC, subtract another $7. As these games are distributed digitally there is no need for packaging cost or shipping, thus we remove another $4.

After we remove all those costs, what are we left with? Platform Royalty and Publisher. The Platform Royalty goes directly to any of the big 3 console makers for rights to officially publish a game on their system. Granted, if this is developed in house or by a console exclusive company, you can then remove another $7. But since most games are not console exclusive, we will keep the Royalty cost in the Pie. Then we are left with the Publisher; these are the guys who front the money to make the game, market the game, and so forth.

So lets do some math from the last 2 paragraphs; $60-$15-$7-$4 = $34. So based on some simple logic and math we should be paying about half of what we pay for a disc game for a digital game. In doing so, the the publisher should be receiving the same profit. Obviously this isn’t a perfect science, as the LA times did forget other costs like ESRB rating costs, localization costs, and so on… but that’s just splitting hairs for the point I’m really trying to make.

Lets take a look at a few real world examples here. We will start off with the PSP as there aren’t very many $60 console games released digitally on a regular basis. Socom Fireteam Bravo 3 was released 2/16/2010 for $39.99 in both UMD form and as a digital game on the PSN for the same price. All “Games on demand” from the Xbox Live Marketplace reflect the current selling price, and Everquest 2: Sentinels Fate released 2/23/2010, is $39.99 in store as well as $39.99 on Steam.

Where do these publishers get off expecting us to pay for a Retail Margin, Distribution costs, and a Returns Margin on something that doesn’t even apply to it? Every where you look, everyone you talk to says “digital distribution is the future”… the future of what? Higher profit margins for publishers? Why wouldn’t I just go buy it on a disc if it’s the same price? In some cases like with GT5P, I can buy the disc version which plays exactly the same for the same price and then take it over to my buddy’s PS3 and play it over there for a bit and then take it home. I can’t do that with the digital version of the game, I cant trade it into Gamestop for a credit towards a new game when I’m done with it. So how is it the future?

If companies like Microsoft and Sony honestly feel that the future is in digital distribution, then they need to give us an incentive to buy into this. Microsoft doesn’t want to add blu-ray to their console because they feel by the time the Xbox needs a hardware upgrade it will be all digital. If Microsoft thinks we’re gonna buy a system that we are forced to buy digital games at full retail disc prices and wait for the enormous download times, then I think they need to have a meeting with Sony and ask them how successful the PSPgo has been.

 

The conclusion I’m trying to draw here is awareness. I bought into the PSPgo thinking Sony would give me a break being digital, and they haven’t. Learn from my mistakes, and show these companies that they can’t just take advantage of us like that. Digital distribution will be a success when it’s priced accordingly and internet download speeds have been driven leaps and bounds over what we see now. Don’t buy into the marketing giant that is DLC, because at the moment anything released digitally is just an extra way for the companies to make a profit. A $5 key to unlock “this”, extra content that should have shipped on the disc, and an excuse to release an unfinished product in order to meet a deadline.

Someday, in the future, we will see DLC become a resourceful means of buying and distribution of content, but as it is right now, it’s just a waste of money.
P.S. In a world torn by the abuse of the convenience of digital content, there are a select few who vow to use this power bestowed onto them only for good. However, these “Heros of DLC” are few and far between. This is because there are far too many EA’s, Activsion’s, and Ubisoft’s flooding our “information super highways” with shit we don’t need.

Source:
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html

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