With the dlc and microtransactions model most games are employing this is likely to happen to some extent.
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EA CFO:Digital margins over x2 physical; DD is 20% on PS4\XB1,expects 40% in 4 years
- Thread starter Saty
- Start date
With the dlc and microtransactions model most games are employing this is likely to happen to some extent.
Lol what? Why would a company devalue there own product AND undercut there brick and mortar partners?
An items price is optimized base on how much it takes to produce AND how much people are willing to pay for it. A cheaper distribution method doesn't nullify the fact that companies seek profit, on top of covering all of their other operation costs.
Just because it's cheaper to ship a digital item doesn't mean that item is worth less to consumers.
And there goes our last shot at making them sell DD for cheaper than physical. We all begrudgingly bought them (myself included) at inflated prices and now there is literally no reason for publishers to reduce them in comparison to physical. We've shown our hand 
Future generations will look back on us with shame. We could have changed things; made the world a fairer place. But we just rolled over and took it.
Future generations will look back on us with shame. We could have changed things; made the world a fairer place. But we just rolled over and took it.
/jk - We're already a 1/4 mile down that particular rabbit hole. Convenience>Value all day long.
Welfare
Member
Well personally, unless the Xbox One flops this holiday season or the PS4 does less than expected, I see combined sell through for both to be closer to 55 million than 50 million.
Split would be ~34 million for the PS4 and ~19 million for the Xbox One
CosmicQueso
Member
The 2x digital margin thing for EA is on the high side because they own their own digital distribution platform.
But now we all know why Origin exists.
But now we all know why Origin exists.
iTunes albums are generally $3 or so less than CDs and a solid $10-25 less than records.
I'd be interested in seeing a regional breakdown for this kind of thing. I believe that with games there are countries where digital sales overtake physical by a large margin.
Anecdotal, but I live in Brazil and all of my friends who own PS4s buy digital exclusively (I game primarily on Steam/iOS, so digital all the way for me too). Resale of physical games isn't really a factor here like it is in the US.
Anecdotal, but I live in Brazil and all of my friends who own PS4s buy digital exclusively (I game primarily on Steam/iOS, so digital all the way for me too). Resale of physical games isn't really a factor here like it is in the US.
huntingzibod
Member
It does seem to suggest that.
All IMHO:
- No figures released by MS for ages
- Focussing on Xbox Live concurrent subscribers
- the language used by MS execs recently about not competing, focusing on delivering experience and games etc.
The thing is, not being no1 isnt a problem in and of itself. Even having relatively low console sales compared to last gen isnt. Look at nintendo, the Wii U is doing even worse despite the popularity of the Wii.
However, unlike Nintendo, MS dont have any 'USPs'.
Mario, Yoshi, Pokemon, StarFox, Kirby, Zelda, etc - are unique properties that Nintendo do masterfully well at. Each title they have released has sold millions of copies despite the low install base. People buy Wii U to play Nintendo games, somthing they simply cannot get anywhere else.
However, MSs 1st party titles, while excellent and well crafted, and their 3rd party titles, are on not unique.
What sets Halo5 apart from other FPSs?
What sets Forza apart from other racing sims?
What sets Gears from other 3rd person shooters?
Etc, etc.
Sales of Halo 5 and Tomb Raider, and Forza 6 have not set the world on fire.
halo used to sell consoles, - people bought it in the millions. Now Halo will be lucky to ship 2 million by the end of the year - a massive drop off for the franchise, especially when the likes of COD and Battlefront are shipping tens of millions of copies.
I'm not deliberately belittling the critical success and playability of these games, but in what way - other than franchise names, do they distinguish themselves from other Sci-fi shooters, jungle adventure games, racing games, and 3rd person shooters that Sony has also got access to?
You cant the unique Nintendo experience anywhere but Nintendo consoles, but you can get a very similar experience to Halo on Destiny, for example.
So it's a bigger problem, IMHO, that MS dont have the clear runaway success of the XBONE this generation, if the figures tally and the indications are correct.
Teletraan1
Banned
Brick and Mortar retail is on the decline as well. More and more people are shopping online. I rarely ever buy anything in a store. It appears at my front door and I didn't need to leave the house. Caring about what a fading relic is doing much less letting them have so much control over the industry is silly to me. The quicker more people shop online and buy digital goods the quicker we can move on from this outdated model.
It is worth less though, once purchased a digital product has no resale value verses a physical one.
CosmicQueso
Member
I should probably install Linux too and cast off the Windows yoke.
B&M ain't going anywhere in the near future.
Vanillalite
Ask me about the GAF Notebook
Apple has fucking redonkulous markup on their products though. Hence retailers loving to sell Apple products because they make money up front on each device sold.
Sure they don't make any cash from iTunes, but Target or Best Buy already brought the cash in.
Consoles on the other hand have always had notoriously shitty margins.
Plus Vinyl is a niche market. Companies know this and price/produce accordingly.
Another way of phrasing this is to say: If consumers are dumb (read: passive) enough to keep buying something, keep selling it. It's business. Publishers don't owe consumers anything whether we like to create that illusion or not. 'Fairness' is a word you likely won't find in many consumer electronics business models.
It will always feel icky though. The only way it would ever have changed is if consumers (read: general consumers) were informed enough to realise they were paying over the odds. Too late now though
Of course it is. But we are in the informed minority.The vast, vast majority of consumers aren't armed with that level of knowledge though.
It's worth less TO YOU because you value the idea of reselling a physical copy over the convienience of digital. Not everyone feels that way. That's why there are options.
If companies lowered the cost of digital to bring it in line with YOUR INDIVIDUAL values, they'd be devaluing their IP potential as a whole.
Another way of phrasing this is to say: If consumers are dumb (read: passive) enough to keep buying something, keep selling it. It's business. Publishers don't owe consumers anything whether we like to create that illusion or not. 'Fairness' is a word you likely won't find in many consumer electronics business models.
It will always feel icky though. The only way it would ever have changed is if consumers (read: general consumers) were informed enough to realise they were paying over the odds. Too late now though
Why do they have to be dumb? Why can't you just recognize and appreciate that people value things differently , and any smart company will position their products to capitalize on people values, whatever they maybe.
I haven't resold a game in 15 years. Why? Because I stopped buying games that I don't want to play for a long time. By the time I'm done with my games, they have no resale value. So resale value means jack shit to me. Does valuing the ability to carry all my games with me on a single hard drive make me a dumb customer? Or valuing the ability to pre-load. Or not having to worry about my discs failing or being lost or stolen? Or the ability to share games with my brother 500miles away? Or not having to swap discs...
Sheesh
This would absolutely tank the next Playstation for instance in emerging economies across Asia, Middle East etc. These are now growing as important markets for Sony and helping cement their global position as the No.1 console manufacturer.
People aren't going to want to be paying monthly fees for a video game console and then have digital forced down their throats when internet speeds are not universally amazing everywhere.
So yeah that sounds like a terrible idea.
The XB1 would have been dead of arrival if they stuck to their original plan. They would have done significant damage to the Xbox brand and would have been used as proof that all digital is a negative thing. It wasn't a good plan and they did a terrible job convincing gamers that it was. They would have been the opposite of a driving force for change.
There are people on here who work in retail that still regularly hear customers telling other people not to buy XB1 because it doesn't support used games. They delivered their message so poorly that inaccurate statements like that became fact. Even Jimmy Fallon said the PS4 was the only one that supported used games to an audience of millions.
MS was nowhere near prepared to make any positive changes for anyone.
Vanillalite
Ask me about the GAF Notebook
The whole thing about Amazon and its stock pricing over the past decade is wtf is the PE ratio when they never fucking make any money cause of their pricing model.
Jet exists now and they are trying to be a competitor (see my thread in the OT about funding), but that's really it. Even in the online space companies can't afford or won't cause it isn't worth their time to try and pimp someone else's hardware that they get shit margins on.
Plus as much as I also shop online your delusional if you think B&M is just gonna vanish. Walmart sales are fucking BOOMING still in the US.
http://www.cnbc.com/2015/11/17/walmart-quarterly-earnings.html
Earnings just came in this morning. Stock up 3%.
In Service
Member
I can agree with the intent of your comment but it's not going to be quick in coming.
Even increasing the 20/80 split that EA see on sales it's going to be a while before you see a 50/50 split.
InsaneTiger
Member
I think this shows that all games and companies are either succeeding in monetizing their users or just trying to get it right. The days of pay $60 and call it a day are over for the pubs and devs. They want you engaged long after.
Destiny is frequently thought of on NeoGAF as a money grab but EA shows that post release content is popular. What about T2 and the Shark Cards? Konami with MB credits and insurance?
Despite the grumblings about DLC and microtransactions on NeoGAF, we are the minority. The whole "decide with your wallet" has been decided by the fact that none of it has gone away. It has only evolved.
This is the future we chose, they offered, we paid.
We need a much better pricing structure for digital in UK, sure it's convenient but not when the prices are £10-£15 above retail.
All that does is drive people to buy things from other countries' stores, inflating their sales numbers and decreasing ours (not by that much but still)
All that does is drive people to buy things from other countries' stores, inflating their sales numbers and decreasing ours (not by that much but still)
But with Phil Spencer they could do it, I tweet him about it every 3 months, when I have free time I'm going to make s thread about the original vision.
People see me as this anti Microsoft person here but that's just because I'm still mad they buckled under the pressure.
They can slowly introduce those features over time, it's just a switch
Zombie James
Banned
And some people argue that digital games have the same value as physical, ha.
dead monkey uk
Member
I would think the majority (casual) would pick their games up from GAME (or similar) and will be all too aware of trading in games. Is the majority of gamers even going to think about buying a digital copy. On the rare occasion I go to GAME there seems to be as many people trading in games as buying them.
Until digital prices are the same or less than physical I cannot see adoption rates improving much.
I clearly said "Dumb (read: passive)" for a reason. Yes perceived value plays a part, but its an unarguable fact that a physical copy of a game costs more to produce, ship, stock and sell than a digital copy. This comes down to consumer knowledge. It's not a slight against consumers, its just the average consumer has no need to think about that.
I am simply pointing out that selling digital products for less than physical doesn't represent some sort of illegal activity or go against any regulations as the previous poster indicated it might. Digital movies are all sold much, much cheaper than physical as well for the record. It is the norm in every field but video games.
Vanillalite
Ask me about the GAF Notebook
Every field but video games doesn't have proprietary device hardware IE the PS4 or Bone or Wii U that is sold at razor thin margins.
You can't just do half the comparison.
All publishers set their own prices on PSN and XBL right?
I've noticed EA, Konami and Ubi are always on the high end with their game releases compared to Sony first party or others studios for example.
A consensus between all pubs to lower their prices seems wishful thinking
Firstly how can ANYONE know 100% that a digital purchase will be worth it, it's a risk and physical gives you the option to not take a ~£50 'leap of faith' (not to mention I can buy the thing physically cheaper anyway.
Secondly, how is it devaluing the IP by selling for less (read; makinig the same profit)? If I go to a wholesaler I expect not to pay retail, is that devaluing a product? No, it's paying a fair amount because I've cut in one level before another layer of profit is added.
I'm just asking for fairness in digital pricing, you're making it sound like I want it half retail price...and I can assure you I'm not alone in this thinking.
Knowlegable consumers should know that the cost to produce, ship, stock, and sell an item is not what determines the upper limits of its price. Those things are essentially irrelevant to the value of an item when compared to other factors like, supply, demand, and development costs.
No one bases prices on how much it costs to distribute them. It's based on how much people are willing to pay. That's how you run a successful business.
Everything you've said is completely irrelevant to any discussion of regulatory issues.
Sorry, I was A) referring only to digital margins and B) not saying this would actually happen because C) I was spitballing when I said that. Of course I don't think the sales would literally increase by ten times if they reduced the margin on digital titles.
Should have hedged my post more - my bad. I was simply positing the idea that if they brought their digital margins down, more people would buy digitally. In the UK especially (and I imagine in Canada/Australia), the added cost for digital is just enough more than retail that it doesn't make the convenience worth it. If they were £5-10 cheaper digital, I would happily buy for the downloaded-game convenience. As it is, it's £10-15 more expensive than retail, which outpaces the convenience factor.
Maybe. I hope so.
1) there are various ways people can inform their decision before making a digital purchase (previews, reviews, lets plays, demos, trials, etc. AND it's possible to seek refunds.
2) it's devaluing the IP, because you are selling it for less than people are willing to pay. That's the definition of devalue... If publishers cut the price of digital titles to match the margins of physical, they are simply conditioning their consumers to pay less for their products. Essentially cutting their earning potential in half AND putting downward pressure on the cost of physical titles. Would GameStop be willing to pay the same wholesale price or order the same number of copies for a game knowing that they are going to be undercut on XBL/PSN? Absolutely not.
Digital pricing isn't unfair since you don't HAVE to buy digital. You as a consumer have an opportunity to decide if convienience is more important to you than resale value. when you buy from PSN/XBL you think EA owes you wholesale prices simply because they traded one middle man (GameStop/Game) for another (Sony/MS) and picked up some efficiencies along the way? That's not how business works. That's actually how to NOT run a successful business.
In this thread, it actually sounds like consumers want to have their cake and eat it too (physical prices with digital convienience), not the businesses.
Vanillalite
Ask me about the GAF Notebook
Who said its about regulations?
The whole thread is about the move to digital and the hurdles that are out there.
Seriously who the fuck in this thread is talking regulatory nonsense?
To be fair, this says nothing about the increase in development costs. Perhaps it takes "nickel and diming" and a shift to digital to offset those
I think the retail industry is a lot more powerful in the videogame space than in the music space.
In this situation, that's exactly what it means. In terms of monetary value, it's literally worth nothing as soon as you buy it. The physical one drops maybe 10% if you sell it close to launch. I bought BlopsIII for £40, then sold it for £35. If I'd bought it digitally I'd have lost £40 and been stuck with it.
justsomeguy
Member
Hopefully increasing revenue from digital increasing helps offset the increasing costs of games dev without needing to increase retail price or shove microtransactions even further down our throat.
Very interesting. Having moved over to full digital on the PC a couple of years ago I am more willing to purchase digital product on my consoles (and handhelds) nowadays but I still don't think I am 100% ready for digital unless prices come down on certain things.
On a game that I am unsure of I go physical. If it doesn't click with me or has major issues I can always resell it and get a portion of my money back. Not so with digital. And as long as a $60 retail game = a $60 digital game then only the safe purchases will be digital.
On a game that I am unsure of I go physical. If it doesn't click with me or has major issues I can always resell it and get a portion of my money back. Not so with digital. And as long as a $60 retail game = a $60 digital game then only the safe purchases will be digital.
As someone who works in Product Design, that's incorrect. Manufacture & Distribution form a very important part of any design process at every level and therefore influence the price heavily from the off.
But we're getting off topic - My point is simple: A physical copy of a game/music/movie costs more to get to market than a digital copy. Ergo, to a 'knowledgable' consumer (ie enthusiasts, most of us) it does not represent good value to have them both available at a similar price point - because we know full well (see the OP of this very topic) that the margin on DD is much bigger than Physical given their current price ranges. HOWEVER; all of this is null and void if the majority of consumers are either willing to gloss over that or are not invested enough to consider it, and continue to buy DD at a pace (which is what has happened). So as far as Johnny Publisher is concerned, the average consumer now values DD at this price point.
Doesn't make the average consumer correct though
Wise words.
Before I got my gaming PC, I was buying PS4 games physical-only and selling them 1-2 months later for a new release. Due to the value of the physical (i.e. limited) item, I was matching the cost of games digitally on PC (avg. £30 instead of £50).
The only exception is Destiny which I bought digitally at £50, regretted spending on within one month and will never get back.
If they want to Wii U their console, sure.
As digital is supposed to be significantly more popular in the US than EU (can't seem to find that thread now), then we should expect it to be above 20% in US and below 20% in EU. Maybe something like 25-30% in US and 10-15% in EU?
Incoming Data Caps are whats going to hold people or cause the switch off digital instead of going on or staying. People are not going to want to waste 25% of their monthly bandwidth on one game in the future. They are only going to get bigger.
They certainly are now because the music industry has seen such a drastic shift, but things were much closer 10 years ago. In 2005, the industry did about $12 billion in sales in the US.
I'm just eyeballing this chart, but it's at about roughly $12.5 billion over the past year here in the US from August 2014 to August 2015.
Using this comparison, it actually would be a very ripe time to see a transition to digital.
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