Why Are Digital Games More Expensive?

You hop on the PlayStation store, Xbox Live marketplace, or Nintendo eShop in hopes of picking up a new gaming obsession.

After a few minutes of browsing, you’re not quite sure what’s going on – why are all of these digital games so expensive?

Read more: How long will PS4 be around?

The truth is that digital games, across all platforms, are more expensive than physical discs for a few different reasons:

  • The need to foster brick and mortar retail
  • The infancy of digital storefronts on console
  • The lack of competition 

Going all digital isn’t always the more costly route, and it’s becoming the preferred method of playing for more people everyday, but you’re generally paying a premium when opting for bits and bytes on consoles (and to a lesser extent, PC).

The Slow Fading Day of Discs

slow fading day of discs

It wasn’t too long ago that the overwhelming majority of Xbox One and PS4 players chose physical over digital.

In 2019, player preference has changed dramatically as digital sales statistics are quite impactful when charting overall revenue from one month to the next.

According to the Entertainment Software Association, digital video game sales make up 74% of the US market.

As Jeff Bezos’ plan of world domination comes to fruition, and players continue to seek out the convenience of digital consumption, the position of stores like Best Buy, Walmart, and GameStop becomes increasingly constrained.

While Sony, Microsoft, and Nintendo may not be eager to cut the head of brick and mortar retail, companies like GameStop are well on the way to becoming an avenue of the past. The company posted a $673 million loss for the 2018 financial year.

As is the case with PC players using the likes of Steam, there will come a day that digital is by and large the only way to purchase games.

Today is not that day.

It would be very unwise for major players like Sony, Microsoft, and Nintendo to edge out the pricing of the biggest retailers.

The big players in the console industry are still largely reliant on brick and mortar to move console units, and next-gen systems are just over the horizon.

You can already enjoy deep discounts via Flash Sales and Xbox Live Deals with Gold, but the majority of the time the baseline price of games is lower at places like Best Buy and Amazon. 

Brave New (Digital) World

The start of digital marketplaces on consoles began last generation on the PS3, Xbox 360, and Wii, but these were still very much the early days.

The idea of buying a digital copy of a game is still relatively new, only now heading towards normalcy.

As a result, we still have yet to reach full pricing maturity. PC enjoys a wide variety of pricing simply because digital is now de facto.

If you were an Xbox 360 player, you might remember the Xbox Live Arcade. For the unaware, it was an incredibly novel section of the Xbox Live Marketplace that offered bite sized experiences, and was arguably the start of the indie push on consoles.

PC also enjoys a competitive marketplace, another thing that console storefronts lack.

Some of the more popular PC storefronts include:

  • Epic Games Store
  • Steam
  • green man gaming
  • Humble Bundle
  • GOG

Consoles haven’t had the time to mature, grow, and evolve in the same way that PC storefronts have.

PC is still growing as well – the Epic Games Store has only recently come into the fold and there is always room for improvement as far as user experience and features are concerned.

Digital Doesn’t Exist

Another reality of storefronts like the the PlayStation Store, Nintendo eShop, and Xbox Live marketplace is a lack of literal supply.

Does the PlayStation store sell physical discs?

No, and neither do any other console marketplaces.

Brick and mortar, on the other hand, has to deal with the realities of surplus when met with very little demand.

If a game performs well under expectations, like Battlefield 5 did late last year, stores like Best Buy need to move copies out of their warehouse.

The solution? A deep discount.

It’s also the most likely reason as to why the majority of physical games find a new baseline of $20 after 1-2 years while digital copies still sell at the recommended retail price point.

There is no inventory to manage for digital games in the traditional sense. Game prices can and will reflect the demand of players, but it’s never a matter of accounting for logistics. 

No Competition

competition breeds better pricing

If you want to pick up the latest and greatest AAA release on PC, you’re most likely going to have multiple options for doing so.

Each of the available PC game stores are in direct competition with each other, and this competition naturally drives pricing down.

It also facilitates purchase incentives.

Sony has announced that it will stop selling digital game codes at retailers. It will still continue to offer voucher credit for the PlayStation store.

Just recently I picked up a strategy based Humble Bundle that included Civilization 6 among other games, and I only ended up paying $12. Civilization 6 would have costed me a full $60 had I opted for Steam.

It’s this type of competition that just doesn’t exist on PS4, Xbox One, and Switch. The only real “competition” offered is via digital codes for games and voucher credit for each respective store.

No matter your console platform of choice, you’re stuck in a walled garden.

The All Digital Future

Luckily, despite the introduction of game streaming services and the adoption of digital games, physical discs won’t be going away anytime soon.

Mark Cerny commented that the PS5 will support discs in his recent Wired interview, and it’s more than likely that Microsoft will follow suit with at least one SKU.

Nintendo generally straddles 10 years behind the line, so physical media, whichever form it takes, is here to stay for the time being.

Will physical games disappear at some point?

Sure.

But we still have at least another console generation until that happens.


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