I think digital downloads should be cheaper, maybe even 50% and this is why.
Buying a physical game.
Cost of Bluray Disc
Cost of printing onto Bluray Disc
Cost of manual (which now is like only 2 pages)
Cost of extra inserts in the case
Cost of Bluray Case
Cost of Bluray Case sleeve
Cost of Shipping it to store
Cost of machinery to burn/print the discs
Buying a Digital game.
Cost of converting it to digital
Cost of keeping it on the server
With every game you download it is just about 100% profit, so they make a steal when people buy online. Vs. Physical games.
What we loose by buying digital vs physical is HDD Space.
45 PS3 games physical = just updates
45 PS3 games digital @ 2gb per game = 90Gbs
45 PS3 games digital @ 10gb per game = 450Gbs.
I compared with 45 physical games because that is how many I own. With everything going digital we WILL run out of HDD space one way or another. Once HDD is full you have to upgrade.
Actually let me give you a breakdown of what actually goes into those physical copies....
PHYSICAL COPY ($60)
- $5 to $15 = Sony royalties (varies within the range due to things like exclusive content...etc)
- $10 to $15 = Retail Store ( the retailer gets a cut off every game obviously, and its usually wthin this range, lesser known titles usually have to give them more for better shelf placement or more agressive instore marketing. Sometimes, for the really big games, the retail stores may offer to take less from the publisher to ensure te game is made available to their store for midnight launches and the like)
- $10 = R&D ( this is basically the development cost of the game. A publisher has a development studio and pays the entire staff of that studio a certain amount every year. If that studios bill is about $10M a year, then that studio working on a game for 2 years would basically mean that game cost $20M to develop.)
- $15 = Publisher Profit ( this figure varies; basically this and what goes to the developer is typically grouped together. If a game costs $20M to make, then after that game has sold 1M copies they would have at least made $25M and thus have at least broken even. Everything sold after that point could be considered profit to the publisher... who may choose to give the development studio certain bonuses for a successful game)
- $5 to $10 = Packaging/ distribution/ marketing (the more spent here the more ads of the game you see on TV.)
That right there is basically what makes up that $60 physical game price tag.
IF DIGITAL ($25 - $30)
- $15 or so is instantly already cut off cause there is NO RETAILER.
- Sony could drop their cut to a fixed $10 and maybe even thrown in a $5 discount for every PS+ subscriber which would really mean that they are getting $5 from those games as opposed to $10. Also a really really really good way to bring more people onto PS+. Even better way to help publishers "stealth market games". Everyone signs onto PS+ cause that means I buy games for $25 as opposed to $30. Like you have to be crazy not to sign up.....
- The publisher of the game could group their R&D/ Marketing costs together along with the projected profit (which typically oesnt start counting until the R&D costs are made back) and call it all a pretty $20.
1M downloads = $20M, just $5M shy of what they would have got from the same 1M physical purchases. But the thing is, at $30 per game? At least 3 times moe people could potentially buy each game.
So basically. $30 for a game, $25 if you are a PS+ member.
In relation to the HDD space; why would you want to keep 45-50 games saved on your HDD when some of those games may have very well seen 2-3 years of no activity. You can always delete them and just redownload them if ever you want to play them again.
I would get on board with digital downloads at a reduced price. But to pay full retail for a digital version the same as a hard copy I cannot nor will not ever do. There's no cost to package, provide game covers for, no shipping, no paying staff to receive it when it arrives, that all cuts costs right there and just that alone I will never support paying the same price for digital as hard copy.
I can get on board with all of the above statements. Sell by volume by reducing the price. I know I would personally get into way more games than I do if prices were lower out the door. I am also not a fan of having to pay for an online pass for muliplayer play if a game is used. That's just big money trying to hurt your game rental stores/companies way of making a living.
This is business though... forget about what your consume wants (which may acutally lead to making more money) and do what you can to lock yourself into some niche and hope that making yourself look "exclusive" is going to garner sales.
Get rid of online passes, don't charge the same for digital as hard copy, drop overall price. It sounds simple and I am sure there is more to it than that. Just my two cents.
Realistically, here's what I see happening.
Let's say Sony starts out charging the same for DLC as a hard-copy game. It is the distribution method of the future, as Napster proved 13 years ago. The question is how to do it legally and profitably.
Eventually there will be some kind of secret code or online coupon that you can use to get DLC for $10 off or whatever. Companies put this out there to test the markets. Sony will ba able to control the timing of the inevitable price drop. If it's a super popular game, it could remain at $60 with no discouts for two years. If nobody likes it, the price will start creeping down. By end of year, the price could go as low as $20.
There is some math to it, but the bottom line is it's better to sell a million copies at $20 each than a thousand copies at $60 each. They will take into account things like popularity, market saturation, corporate public image ("Sony just wants ALL our money!"), whether it might drive sales of PS4's, whether they want to use the game as a "loss leader", and whether they want this game to break a sales record. If they are not doing this, they don't deserve to be in that position. Period. This is a common marketing practice, and Wal-Mart has been successfully doing it for decades.
By tweaking the price of the games when indicated by these forces, they could potentially double or triple their revenue. Ideally, you want to keep the prices high as long as possible, then start dropping them to drive up residual sales and profit, time it all with big events like Christmas, use the games to drive up demand for PS4's and especially to drive down the demand for hard-copy games in favor of DLC, break a few sales recods to make the XBox look like a bad investment, and all the while project an image to the consumer that the PS4 is a great value and that Sony is interested in saving you money.
Do all this Sony, and your PS4 success will make the PS2/PS3 success look like nothing. It can be done, if you put some really smart people in charge of the marketing and pricing.