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Because compared to the development costs it's insignificant?
According to Forbes:
$3 on manufacture
$12 to the retailer
If we assume absolute best case, with none of what would have gone to the retailer being kicked back to the online service (ie XBLA, Steam, Impulse, D2D, whatever) that's still only $15 out of $60.
But the online store will still eat some, because it has to have overhead, tech support, server maintenance, etc.
I'm going to guess wildly and say that all of that comes to $10 per game.
So, DD will save about $5 per game.
EDIT:
I mean, shipping a thousand units of something across the ocean is amazingly cheap in the modern world. Much less shipping it to a hundred thousand Walmarts. We've developed incredibly efficient systems to accomplish this task.
The you are absolutely positively wrong.
Warehousing cost is ABSOLUTELY a factor in the pricing of physical goods.
It is very simple economics. The ammount of games out there doesn't make a difference for some one who only wants one specific title, but then again, that person isn't the concern here because some one that driven is probably buying on or around launch. The quantity matter for some one who is buying "a game". They see shelves full of games of all prices, why are they going to pay $60? And, of course, keep in mind that buying price-dropped new game is technically worse than buying a used game at launch, because game companies don't make any money off of ANY sales directly.
why would this be?
it strikes me that if you buy a price-dropped new game from a retailer, the retailer may have to restock the game, thus giving another potential sale to the publisher.
how does buying a used game help the publisher in this micro-scenario?
If they are selling it marked down, they are almost certainly selling at a loss. They are not going to restock a game they had to sell at a loss.
EDIT: And furthermore they will stock fewer copies in the future.
If you ascribe to Tycho's insane "buying games for any reason other than to support the developer is the same as piracy!" mentality, then yes. Buying a game at any point after launch day is piracy.[/hyperbole]
whereas not buying it, thereby forcing the retailer to eat the full cost of the game or discount it further, would lead them to stock more in the future?
Whereas buying a used version means a retailer got paid full price for that game at some point.
So a used game market is better for developers than lots of copies not selling at full price.
I'm going to guess wildly that your estimate is horribly wrong.
$10 sounds way too high.
Judging by steam sales, they're taking some sort of percentage, which if there's some sort of promotional sales will mess with your sales price and reduce your digital store costs (while also screwing with your unitary cash flow).
at which point you're really messing around with volume economics, which make perfect sense for digital items since the cost to copy is ridiculously low, so even really small prices will tend to make profit.
The remaining question for games is market size and capture rate for the individual game.
You still have to pencil out how to spread your expenses over the captured market, but in this case bigger is better.
technically, assuming cost to manufacture will drop to zero for digital is flawed. the cost to manufacture for digital is the cost to copy. it'll be a function of game size crossed with bandwidth cost. I don't know if current digital stores cost this to the publisher.
so feasibly, the retailer cost is whatever percentage cut the store is taking, plus any charges they assess for hosting you, which I'm unaware digital stores do.
Hosting will come out of their cut, just like shipping and overhead come out of the retailer's cut.
Even if we assume a $5 cut for the digital distributer, that's $8. This is obviously less than even a conservative estimate of resale value (let's say $10-15, though you could get more if you weren't going through a middle man). So the value in real terms of the game has gone down.
I'm largely a PC gamer these days. 90% of my patronage of the industry is done via Steam, and there are no warehouse costs there.
Now, I'd say the difference between a AAA game and shovelware is that the AAA game sells so, since we're discounting shovelware and saying it isn't competing (for the sake of argument; I don't actually agree with that), I'd say the warehouse cost for a game that flies off the shelves is fairly nill.
The argument you and Ham seem to be making is that there are so many good games on the market right now that they're past the point of saturation and that people are regularly totally forgoing one game in favor of another.
While that may be true in the under 15 market, I can't see someone with an actual job having the problem of too many good games. I find there is quite the opposite problem, really. There are only so many games worth getting a year.
"There is not a man of us who does not at times need a helping hand to be stretched out to him, and then shame upon him who will not stretch out the helping hand to his brother."
that's a much stronger argument for your original point.
from a consumer standpoint, no matter how little DD costs it'll still be no better than a used game market.
which is i think:
>C) Digitally distributed games actually cost more in real terms.
using steam as a profitable counter example is flawed as PC doesn't have a viable used market to compare against.
However, from a publisher's standpoint, those used sales are lost. you'd hope you can increase sales by capturing a portion of that used market by dropping below your 60 minus 15 point and hope you're rewarded with higher sales. There's some risk, so adopting a promotional sales tactic where you hold at a higher 60 minus 10 level and then drop much lower for limited periods may be better, because some people have poor impulse control and may buy at a higher price anyway.
I can't go to a town with a lower cost of living and find brand new games for cheaper. I can, however, go over there and watch a movie for cheaper. Games are not priced like movie theater admissions.
if the retailer is slashing the price, it's because they want to clear their stock of the product. they don't want to restock that product at the price the publisher is insisting on.
if it's a publisher initiated price cut, like players choice discount, yeah, sure, the retailer will probably restock because the publisher is offering a discount on it.
Actually you can. Just go to a different country. Games in Asia especially are 50% or less than what they cost here. The interesting thing is the hardware isn't any cheaper there than here.
MH3U Veggie Elder Ticket Guide
Yeppers. Hence region locks.
what? no. the used copy has been sold back regardless of whether you buy it or not.
the big one will be piracy
but then again, they're looking towards heavier-duty verification systems, so piracy will have to work to keep up with this on any kind of large scale
i'm not really sure that there are clear ways to subvert a subscription system. you don't hear a whole lot about people really figuring out how to get their WoW subs for free, for instance.
Looks to me like the reasoning here is:
Videogame companies think secondhand sales are bad and want them to stop.
Videogame companies don't like Gamestop's business model that encourages trade-ins and second-hand sales.
Videogame companies are too afraid of losing revenue from actually opposing Gamestop so they target the consumer instead of the broker.
Therefore, Videogame companies appear to be acknowledging that Gamestop is overall having a positive effect on their profit margins.
Therefore, Videogames companies are acting not out of concern that they might go out of business, but rather just ordinary greed and trying to force a fantasy business model on consumers instead of negotiating with retailers/resellers.
Is there something I'm missing here?
Considering the large number of developers and publishers that have either gone bankrupt or drastically scaled back over the past few years, your final assumption doesn't even begin to logically follow from your previous ones.
Yes, most console game publishers are not willing to commit economic suicide by getting into a pissing match with the largest console game specialty retailer in North America.
But hey, good to know it's a "fantasy" business model being "forced" on consumers. Are elves forcing you to buy the new UFC game at gunpoint or something?
Of course not, everyone knows elves prefer bows.
Maybe I didn't say it quite the right way. But the industry appears to be trying to start just such a pissing match, it's just doing it guerrilla style, trying to erode the market for secondhand games instead of tackling the issue head-on.
Aren't Gamestop and the videogames industry mutually dependent? Why are measures being taken that affect the quality and value of the product the consumer ends up with, instead of negotiating a better system with the retailers? If it's about survival rather than profit, they seem to be feeding the hand that bites them.
They've been subverted for a long, long time. There are lots of free MMO servers. Hell, the WoW free server population alone is bigger than EVE, Warhammer Online, LOTRO, etc. They outclass anything but Runescape and the Lineages.
They're also a fundamentally different beast from most piracy. They're quasi-legal, and generally sit in the crossroads of homebrew, mods, piracy, and for-profit-competition all at once depending on game/server. The biggest reason people do not hear about them is because they're inherently fractured. Instead of 10,000,000 people on Blizzard's WoW, you've got 2000 people to a server on 200 different little servers. Thus, no advertising for each one and no social networking critical-mass.
I'm sorry, how is it cheating the system for me to sell something that I own to a pawn shop and buy something different from them while I'm there? Yeah, the dev/pub doesn't make any money on the transaction, but the manufacturer doesn't make any money when I sell one car to a used car lot and buy a different one either.
what?
No, because exercising your consumer rights is not "cheating the system".
Really? Because, as a consumer, I sure like the selection and pricing on Steam a whole lot more than working through the used section of a Gamestop and hoping they have a reasonable copy of what I want. It's like saying iTunes is totally inferior to a record store because I can't easily sell my purchases back later.
Don't ignore the lower prices, better selection, and ease of use.
But I'm a freak and I actually prefer my games digital nowadays.
Aaaannd....we're back at page 50 of this thread. o_O
No, but there are unofficial servers for WoW.
Obviously it takes work to circumvent things but anyone who's willing to sit patiently and use the right tools will eventually find a way around.
But from the sound of it you are not buying games at full price. You are getting them at a significant discount.
Possibly at enough of a discount to keep the price in real terms equal or better than a retail copy.
Your myopic-ism knows no bounds.
Physical goods and their associated costs matter to the market even if they don't to you personally.
The majority of consumers consumer fewer games than the average member of this message board.
Stop trying to envision an entire market made up of consuimers exactly like you, and take a good look at what the market actually looks like.
Show me some statistics on what the actual market looks like, then.
You're telling me that excess supply is pushing game prices down. I'm looking at the shelves and games still cost 60 or so bucks new. I'd say the Onus is on you to prove your position on that one.
Physical shelf-space is relevant, but companies are moving toward pre-order and direct download has taken a hold in the PC market. Remember, we're talking about the best games here; we already excluded the shovelware.
The argument that you're making is that there are too many good games and it's driving the price of those games down. Prove it. I see games the same price, and I see good games that sell the same price for quite a while. Hell, Diablo 2 is still relatively expensive and that's been out forever.
"There is not a man of us who does not at times need a helping hand to be stretched out to him, and then shame upon him who will not stretch out the helping hand to his brother."
The big thing is WoW private servers do not offer the same game experience, like used game or piracy (for single player games anyway) do. It's a distinct enough experience that I feel most of the players on free servers really would not play on the official servers if they did not have the option of private servers.
I have to, I'm working within someone else's argument.
I'll note that the stated figures operate on the $60 price point and assume fixed sales numbers to account for development costs. The argument was why a publisher's DD offering can't be price competitive with a retail model including resale value.
I'll grant I failed to consider usability, but doesn't factor. The price under consideration is full retail less resale. no digging through racks.
I may have mistakenly used the phrase consumer standpoint, but if you warp it enough i think it could still work
iTunes is interesting. the power to pick and choose songs isn't a feature matched by CDs and the price point I believe is competitive. Also, the sales volume because the low price changes the cost equations, pretty much just printing money near as I can tell. which is exactly the sort of situation you'd want for games digital distribution and evidenced for PC by steam.
The lack of resale and potential risk of library to corporate action does devalue the product though, which is why the sales are so effective. They overcome resistance with brute savings.
http://www.superhappyfuntimeawesome.com/
I was talking to a buddy who said that the reason why WKC and SO has a higher price than FF XIII was because those two sell better and are popular than FF. I find that hard to believe but then again he works at Gamestop. Can anyone confirm this? If it is true, then could popularity be a factor for more people buying used when the price of new is $60-$70 thus providing GS with its profits?
They're a higher price likely because the company has fewer copies of them. Lots of copies of FF XIII get traded in, so GS can't offer as much for the titles, nor can they sell them for as much. Used prices have little to do with popularity, and everything to do with scarcity of supply.
It's both.
The market for game collectors is astonishinghly small for all but a few select titles. No one is really buying up awful, but rare, games in order to complete a collection.
Other than something out of an urban myth, like E.T. Atari, no one is going to buy a high price for a scarce but awful game, so the prices on those goes down. Meanwhile, Halo took forever to drop in price, even though the market was flooded with copies, and that was because everyone wanted the gaem enough to pay the higher price for it.
Basically, they are ALL factors.