One thing that puzzles many of us when purchasing a game is why digital versions of video games are generally more expensive than the retail versions. While retail games see extreme price drops on a daily basis, digital games generally retain their pricing and are only discounted occasionally. Ubisoft CEO Yves Guillemot has explained why this is.
“Digital is more reactive than what we put in stores, but at the same time, it doesn’t react as fast on consoles than it does on PC,” Guillemot said. “What we can say is that when games are older than one year, digital is a lot more dynamic on console because there are less units in stores. It’s a new business, a new trend, and we think all this will get more in line with time, but for sure, at the moment you see all sorts of prices depending on who is doing a promotion for that specific week.
“If you look at the PC [post-release discount] trend, I think you will see that on consoles, but you will have to wait a little bit of time for that to happen with the same speed,” he continued, suggesting Ubisoft could become more aggressive in discounting digital console games in the future.
“On digital we will not sell [a game] for a lower price compared to physical. After a few weeks or few months things can change, and as Yves has been saying, sometime you might have a promotion on Amazon [that is] not on GameStop, but we can also react on the digital side.
“We are actually more aggressive on the PC side where digital is very, very strong. We tend to be more conservative on the digital side for more console and more flexible on PC.”
In a more than welcome move the European Commission has said that it wants to remove regional limits on digital goods. The new strategy is titled the Digital Single Market and in essence it would allow you to watch US Netflix from the United Kingdom. It would also hopefully eventually remove region locking from consoles which has been a sore point for many gamers who want to play games from other regions, but are unable too.
Think regional locks on movie streaming and other digital goods are silly? So does the European Commission. It’s outlining a new strategy (the Digital Single Market) that would prevent companies from geo-blocking online services when it’s not truly necessary. This kind of arbitrary limit “cannot exist” in a single European Union-wide digital marketplace, officials argue.
It’s not clear what rules will be involved (you’ll likely hear more about that when the full strategy is due in May), but the implication is that you wouldn’t be forced to download or stream from a country-specific service. If you wanted to watch French Netflix from Germany, for example, you could.
Popular US retail chain GameStop has revealed some interesting information about the state of physical and digital video games based on DFC data. The retailer says that only 5% of digital downloads are sold to the consumer for AAA games. That means that 95% of purchases are for physical based games. That’s a shockingly low figure for digital games. It could well be due to their expensive pricing and average broadband speeds.
Slide 7 shows some key statistics based on DFC data which analyzes the AAA games sold in 2014. You can see that DFC estimates that of the total number of AAA videogames sold last year 12% were downloaded and 88% were physical. Of the 12% downloaded, it is estimated that 60% were given away in hardware bundles, that means about 5% of AAA titles were downloads, but were actually paid for by consumers. DFC estimates that full game downloads of AAA titles paid for by consumers made up only 2% of the total physical and digital software market.
Nintendo really has been pushing digital sales this generation and it shows as the company is apparently edging towards $250 million in annual revenue from digital sales alone. If charts and statistics are your kinda thing then be sure to check out the sales data charts over at Gamasutra. It’s only recently that Nintendo has been pushing digital sales hard and it really seems to have paid off.
Thanks, White Eagle
The digital business model was always going to be a sore point for GameStop which relies heavily on the sale of physical games. GameStop’s company’s president, Tony Bartel, has spoken about his fears that digital titles could become too cheap and deter consumers from buying the games at retail. Here’s what Bartel had to say.
“We want to help ensure that our industry does not make the same mistake as other entertainment categories by driving the perceived value of digital goods significantly below that of a physical game. When the free digital token programs end, we believe that the industry will need to work together to continue to price goods in a way that sustains profitability and encourages a great innovation that this category needs.”
Bartel also said that recent research indicated that the average price a consumer pays for a full, AAA game download is $22. When asked what price consumers expected to pay for a full game digital download, they said approximately $35.
Digital purchasing has seem a massive boom over recent years with consumers opting to purchase their games direct from their console rather than purchasing them from stores, due to convenience. Nintendo of America president Reggie Fils-Aime says that the majority of software sales for Nintendo are physical copies especially for those game which have a large file size like Bayonetta 2. Interestingly, Fils-Aime pointed out that Super Smash Bros on the Nintendo 3DS had extremely high digital sales presumably due to its small file size. Here’s what Reggis Fils-Aime had to say.
“Retail still is the majority of the business for us. But what’s interesting is, game by game and at different points in time, you see a different consumer reaction. Smash Bros. for 3DS, consumers wanted that game immediately. They didn’t even want to spend the time to get in their car and drive to retail to get it, so our digital percent for that game is quite high — about 20 percent of the games sold here in the U.S. were digital, which is a pretty significant piece. Compare that to Bayonetta 2. That’s a huge game, and could take up a large part of the memory in the 32-gig Wii U. That’s a game with a digital percent on the lower side, today about 10 percent or so. Our mentality is, we want the consumer to have the choice based on what makes sense for you, what makes sense for the type of game it is.”
The NPD’s Core Gaming 2014 report reveals that around 75 percent of gamers surveyed in the United States prefer physical copies of their games, rather than digital. People are starting to embrace digital titles, as the report shows that digital acceptance is up five percent over last year.