18 March 2008

Pricing problems with Steam...

While i'm at least partially for the digital download revolution, three sides really stop me from embracing it completely.
  1. Eroding consumer rights
  2. Rising costs of games
  3. Regional discrepancies

The first i've discussed elsewhere and perhaps i'll discuss in the future... the second is leading to gouging of customers.

The problem is that digital distribution costs are negligible in comparison with having to print discs, manuals (not that all games even have non-electronic manuals anymore!) and produce CD/DVD cases. This means that when a game is released for the same price as in the shops on a digital download service, the amount of revenue generated by that sale is larger in comparison with the physical copy's.
In a perfect world this would mean that prices could be lower for digital downloads however, we live in the real world; planet Earth and there are certain factors such as retail outlets not stocking the boxed copy of a game for fear of losing sales to a cheaper alternative, publishers/developers wanting more money to cover the (sometimes) increased cost of producing a game... to the digital distribution service taking their cut. All well and good.

Except it's not. Any game that i can buy on Steam is cheaper at retail: maybe not always at launch but definitely within a few months.

Digital distribution, due to its cheaper stocking costs, is not affected by market demand. If the market demands something then the price will increase and vice versa. However, publishers/developers will sit on that release price for longer than if the game was at retail.

Let me give some examples from Steam from different publishers: (all compared with the retail PC prices in the UK from GAME - though i'm not sure how the prices are rounded in the transition from currency to currency)

Universe at War: $49.95 - £24.88(11) + ~17.5% = £29.234 Current price at retail: £14.99
Sega Rally: $49.95 - £24.88(11) + ~17.5% = £29.234 Current price at retail: £9.99

Unreal Tournament 3: $44.95 - £22.37(65) + ~17.5% = £26.29 Current price at retail: £19.99

Frontlines: $57.95 - £28.87(89) + ~17.5% = £33.92 Current price at retail: £19.99
DoW Soulstorm: $39.95 - £19.90(29) + ~17.5% = £23.38 Current price at retail: £19.99

2k Games:
Bioshock: $54.95 - £27.35(75) + ~17.5% = £32.14 Current price at retail: £17.99
Jade Empire: $39.95 - £19.90(29) + ~17.5% = £23.38 Current price at retail: £14.99

Call of Duty 4: $69.95 - £34.78(68) + ~17.5% = £40.86 Current price at retail: £29.99

Now i realise that there are certain things that might affect this and they probably don't apply to US retail stores:
  • Retail outlets like GAME take in a substantial amount of money from re-selling used games
  • PC games cannot be brought back (if opened) to be re-sold or part exchanged
It's feasible to think that retail outlets are losing money on the new games sold but that this is compensated by the used game market. However i have some doubts on this theory - mainly that these prices are all online and in store. They are not store-only which would make sense if this was the case. Therefore i cannot reconcile the disparity between US prices, charged UK prices and retail prices of the games. There is no reason for me to buy a new or recently released game on steam... and i only buy old games due to the difficulty in finding versions of them in retail outlets.

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