Why do digital versions of games cost more than physical ...

259 26/11/2021

One of the great mysteries of modern gaming is why do digital versions of games consistently cost more than physical ones? I ask myself this question every time I go onto the Xbox Store – (or ‘Microsoft Store’ to use its proper noun) – and I take a look to see how much Sekiro: Shadows Die Twice costs nearly a year after its release. Spoiler: it’s still £60.00. And yet when I take a look at the price on Amazon for a physical copy of the game, it’s only £29.00. Why is this the case when digital versions should be cheaper for a variety of reasons?

There is an argument that game prices should be more expensive in general due to the high demand of all creative, physical, financial and emotional energies that video games take to make; we’re now looking at not a 3-4 year development cycle, but rather one which takes 4-6 years. But that is another article for another time. In terms of digital games costing the same as physical versions, it seems that there are a few main drivers to why digital games are at least the same price or more expensive than physical copies.

To begin with, they cut out the middle-man; that being the wholesaler (or reseller). Typically, we know them as GAME (in Britain) and Gamestop (in the US). Cutting out this stage of the process, from getting the game from the developer to the consumer, means that more money will be going straight to the developer and publisher. My apologies, I have forgotten to put the word *should* into that sentence. More money *should* be going straight to the developer and publisher, but Xbox isn’t going to cut out the middle-man without taking some of the revenue, rightfully so.

Xbox receives around 33% of all revenue from games purchased on the Xbox Store (bear in mind that the fairly new EPIC Games Store takes pride in its 20% cut it takes from games sold on their platform). But thanks to their [email protected] program, and similar initiatives they’ve done previously such as Xbox Live’s Summer of Arcade, Xbox has helped a lot of indie developers get their games to their online store through various programs of support. Incorporating all of this from the two options that publishers have: selling their games through resellers or directly in the online store, it seems to me that games should at least be the same price digital as physical.

Secondly, the online stores and platforms have a monopoly of the market, so to speak. If you want to buy Sekiro: Shadows Die Twice digitally for your Xbox then you will go to the Xbox Store and purchase it. There is no other place you would go to buy that copy of the game aside from a few dodgy online marketplaces selling digital copies of games that seem too cheap to be legitimate. The same can be said for PlayStation and Nintendo, but not for PC. Not since the launch of the EPIC Games Store.

When more competitors are offering the same capabilities that the Xbox Store is, then we may see some more competitive pricing on the horizon. The issue with this line of thought, however, is why would Xbox allow a competitor to exist, let alone flourish, in the market in which it dominates?

Further to this, and this does link to the first point I made, physical video game stores will cease to exist in the way that we know them now, or the way they used to operate 10, 20 or 30 years ago. This is because people prefer to consume digitally. Gamers prefer to buy packages such as Xbox Game Pass to purchase their games online, and to stream them both for entertainment and personal consumption; though the latter has many needed improvements yet to be made. Because of the rise of the consumer’s desire to play digitally, Xbox has no reason to lower their prices when people are willing to pay their prices. Especially when it allows them to play the game at midnight on launch, hassle-free, without leaving the comfort of their own home.

For what it’s worth, the revenue madefrom purchasing a game in-store is divided into a fair few more parties thanone which is purchased digitally. When you purchase a game in-store you’rehaving to pay the cost of goods for distribution, the retailer, the platformand of course the publisher. You would also have to incorporate the cost ofreturns and the time it takes to deal with any customer queries etc. When youpurchase a game digitally you’re paying the publisher (who in turn will pay thedeveloper a share) and the platform. That’s about it. As well as this, shopsonly have a finite amount of space to display their games, whereas the onlinestores are seemingly infinite in their capacity.

So while the process of purchasing a game digitally is becoming more popular by the day, the cost of the game is not decreasing nor usually matching that of its physical incarnation. Of course, there are many sales throughout the year on the Xbox Store – most notably the Xbox Live Deals With Gold and Spotlight Sale – where you can purchase games at a severe discount, similar to that of Steam though not to that extent. Most of the time when these games go on sale they do match the cost of the physical version, but apart from this short window digital games seem not to have the adaptable pricing which exists within retailers.

I hope in the future that this changes. Most of all because digital consumption is now the future, and old hoarders like me, while our game stores will exist in the same way that vinyl records make a stand even today, their presence will likely diminish to a degree where the dynamic pricing is all but forgotten. I shouldn’t have to wait for a digital version of a game to go on sale, but I do. I would probably consume more digital versions of games if Xbox was better at matching the price of the physical format. Until then, I’ll take a small amount of pride in owning every physical copy of every Assassin’s Creed game.

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