Retailers in the games industry have it tough. Because games are a commodity, the only real way they can compete with one another is by price, and throw in online retailers and digital distribution channels, and their margins are hit even harder. While there’s the occasional attempt to modernise the in-store experience, the fact remains that games retailers are being driven down two paths – slash the price on new games, and supplement the income with pre-owned games.
But this isn’t actually healthy for the industry, which has become too price competitive to be sustainable. Consider this: if the price set on a digitally downloadable title is representative of a reasonable margin for the developer, publisher and seller (PSN/ XBL/ Steam/ whatever), then if someone goes and finds a retail copy of the game for half that price, then no one on the supply chain is getting a good deal.
Now, it might be that the publisher/ developer is ‘gouging’ when they sell the game via those ‘high’ digital distribution portals, but I don’t tend to believe this. Portals such as Steam and the PlayStation Network function much like a physical store front. There is still competition for the consumer’s dollar between rival companies. This means there are still sales, special deals, and a downward pressure on initial release date.
On the other hand, the controls exerted by Sony, Nintendo, Valve over their networks and licensing prevent the App Store free for all that plagues Apple’s products. Publishers that have to sell quality content at $0.99 to be noticed are also doing themselves no favours.
As budgets for the big blockbuster games continues to spiral, publishers and developers need a degree of price certainty for their products to accurately map expected profits and sales. The movie industry, for instance, has a fairly standard asking price for both movie tickets and
DVD sales. The music industry long ago moved to digital distribution and too has standardised pricing. In neither are the producers really competing with second hand sales from their major retail partners.
Without that price certainty, a publisher’s profits will always been up to scrutiny by shareholders, and the publisher will by necessity need to be more risk adverse – that means we’ll continue to see promising projects shelved. When publishers begin to make reasonable profits, we’ll see a greater investment in games, which means more (and better) games for us all.
And let’s not forget, video games remain a relatively inexpensive form of entertainment. An $Aus100 game that provides a relatively low 10 hours of entertainment is better value than a movie ticket. The same game that provides 100 hours of entertainment in multiplayer replay value is cheaper than literally anything else.
So it’s worth supporting the publishers by paying the ‘proper’ price for a game.
What do you think? Do you think the downward pressures on price in the games industry, as well as the second hand market, is a good thing, or would you prefer to see a relatively stable price which filters money back to the publishers to invest in more games? Let us know in the comments below, or join our forums to have your say!