It's hard to love digital prices

Article originally published on www.untoldgaming.com and is republished here (in a slightly updated form) with permission.  Why not check out their site for more gaming news and features.

A little while back, I laid out the five reasons why it’s time for console owners to “ditch the disc” and embrace a digital gaming future.  But while I’ve found myself converting almost by accident (with around 90% and growing of my collection being digital), I appreciate that’s largely down to my specific circumstances and slightly weird gaming habits.  Would I be so keen if, for example, I bought more games at launch, wasn’t fortunate enough to have superfast broadband and had sole use of the main TV?  I suspect I would not.

No, what digital games need to do is to win over both the vocal hardcore and the mass market.  The people who screamed blue murder at the Xbox One launch and the people who still pay full price at a specialist store rather than shop around and save themselves a packet.  No-one was forced into downloading music or streaming movies.  They started doing it in numbers because the experience was easy and reliable, and when digital became the cheaper and more convenient option.  Isn’t there a clear lesson here for gaming?  Here’s my three-point action plan.

Change 1 – Digital pricing must come down

Pricing is surely one of the biggest sticking points, but is also the easiest and quickest thing to fix.

In the UK for example, new digital releases typically seem to command around a 10% premium over the disc-based pricing.  For big releases, where retailers are competing hard for your business, that gap only increases.  But most shocking is that for some pre-orders the digital price even exceed the disc price being offered at Microsoft’s own online store!  At the time of writing this it was a 17% premium for Titanfall 2 on digital – versus an item that needs to be produced, stored, and transported.  And that disc price includes free shipping.  That makes zero business sense.  Similarly, those recent limited-time “Ultimate” sales might have seemed appealing but a quick Google shows that many, if not most, of the titles on offer were available cheaper on disc (where the option is available).  And that’s before considering any second hand options or taking any trade-in value into account.

The reason Microsoft or Sony have given is that they don’t want to undercut (and therefore alienate) retailers with cheaper digital pricing.  They argue the need to keep stores sweet to a) sell their consoles and b) sell their games.  But consoles can be sold directly or by supermarkets and general electronics stores.  And as for software, if we aren’t already at the point where those stores need Microsoft and Sony more than they need the stores then we will be very shortly.

According to CNBC, global digital games sales on console increased 30% last year

The CEO of Industry Analysis firm Superdata is expecting digital sales to overtake physical sales sometime in the coming year.

The quicker this happens, the quicker digital prices can fall so, in this sense, the power is in our hands.  Console gamers regularly cite Steam prices as more competitive and an example of “digital done right” and it would be encouraging to see this as what happens when digital sales dominate a market.  But it’s also just one (albeit dominant) seller in a competitive market.  To bring digital prices down and for them to stay down, we need competition not just between formats but also between sellers.  Amazon already sells digital codes for games in the US although it doesn’t look like there is much price competition at this point.   Smaller sites however, like CDKeys already offer some incredible deals and demonstrate the potential for gamers.  Even bricks and mortar retailers like Game already sell digital codes, demonstrating that they could still have a place in a market dominated by downloaded titles.

So consumers could benefit, publishers and developers would certainly benefit and the retailers that evolve would not be left behind.  This change is now well overdue.

Likelihood: High (it’s in nearly everyone’s interest)

Expected timescale: 0-2 years.

Change 2 – Technology needs to evolve

There are lots of bigger questions here – such as broadband availability, adoption, speeds.  Game file sizes are massive and they are only going to get bigger.  To take advantage of Halo 5’s recent free play days you first had to download a 90GB file.  Even putting aside some of the taller tales on twitter (it took you 3 days to download it – really?) there is no getting around that not every gamer is yet ready or able to abandon discs completely.  With the need to install everything on hard drive, some commentators have described the current generation’s discs as nothing more than a digital licence key.  But while this has some truth to it, it ignores the major benefit for those with slow or no access to broadband.  For the first group, discs are a valuable shortcut – restricting the download to “just” the day one patch.  For the second, they are a gaming lifeline.

So what is the answer?  Well, honestly, I don’t know on this one.  Film providers looked at the file sizes involved for their product and opted for streaming.  Services like Sony’s PS Now and Nvidia’s GeForce Now show that this is possible but also highlight the problems involved with getting the resolution and latency up to the standards gamers expect.  Pre-downloading is a workaround but doesn’t solve anything and though it removes the problem of waiting for a new release it also removes the spontaneity and immediacy that are some of digital’s benefits.  Without a solution that works for everyone I see the need to keep some kind of physical media option for some time to come.

And that’s a pain, for sure, but shouldn’t mean that digital is held back.  Again, taking inspiration at music and movies shows that it’s possible to run different formats simultaneously and play to each ones strengths.  Bundling a digital copy with a Blu-ray offers consumers choice and flexibility.  Allowing consumers to stream a title when connected or download it if they prefer is something that has evolved over time (hey, even Netflix is now looking at it).  As with music, movie-streaming offers convenience, flexibility and choice at the expense of a bump in quality that some aficionados will rule out but many will barely notice.  In terms of music, digital downloads went from an expensive DRM-infested sideshow to the cheaper, simpler and more flexible option.  Movie downloads are slowly but surely going in the same direction, why not games?

But that’s all probably for the future, what could be done now?  Well, in my opinion, digital needs to stop just offering a more restricted version of the same product (a “disc minus” option) and start playing to its strengths.   As I’ve said elsewhere, this is an area on which I really believe that Microsoft are starting to lead.  “Play anywhere” is great for anyone with an Xbox and a high-end PC but it also says something positive about the direction they are heading – chasing sales by enabling gamers not restricting them and hoping they will buy twice.  I see backwards and (soon) forwards compatibility as a huge benefit and an essential part of the same idea.  And like with game streaming, the experience is just flat out better with digital.

Sure, they might be doing this out of necessity with PS4 so far ahead but that doesn’t stop it being a positive move.  I also expect them to go back to the idea of digital loans and digital trading – ideas that were first floated as part of the fateful Xbox One launch so the technology certainly exists.  Yes that was a disaster and yes, I would expect the team to be nervous but it was also a great idea that got thrown out with all the stupid ones.  Offering it for digital titles on an opt-in basis and you give gamers a choice.  The challenge will be communicating this potentially confusing message – the Scorpio announcement shows both the risks and that they have the appetite to take it on.

Likelihood: Inevitable, but what? and how quickly?

Timescale: A continuous process.  I expect digital trading in the next 1-2 years.

Change 3 –  Earn gamer trust

However, I’d suggest the most important and most intangible thing to overcome is not pricing or technology – it’s a (totally deserved) lack of trust.  The first questions that need clearing up are who exactly owns a digital copy and what can you do with it.  As I’ve described above, this is an area that has been and will continue to evolve for games companies, just as it has and will for the people who supply our music and movies.  For example, until earlier this year “buying” a digital movie on UK site Wuaki actually only definitely meant having access to it for a minimum of 3 years according to their Ts and Cs.  It’s far from the only example.

Maybe gamers are just more vocal.  Or maybe they are more savvy having seen collections become paperweights as new generations were born, or more suspicious of the platform holders who wield much more control than anyone in other media where the technology is standardised.   Maybe they have been burned by experience, remembering the ruthlessness that Nintendo dropped the Virtual Boy, the Jaguar went as quickly as it came and Sega dropped underperforming accessories one after the other before leaving the hardware game entirely (yep, I’m still bitter about the Dreamcast).

And having praised Microsoft earlier I have to call them out specifically on this one as their record is pretty dreadful in terms of both software and hardware.  Just ask anyone who bought into the Kin, Zune or, shudder, pretty much any iteration of Windows Mobile.  Or the original Kinect, or the second one, or bought into the idea of Xbox as a TV and media hub, or based on the proposed and then cancelled DVR capabilities.

Kin

Most recently it was the turn of Xbox fitness for the horribly named “sunsetting” process.   After a horribly short-sighted first attempt (explaining that people would be losing content they’d paid for because, well, it was never clear), Microsoft only added a scheme to give back credit after a thoroughly predictable and totally avoidable backlash.  For a business that looks like it learnt a lot from the Xbox One launch and is much more consumer-focused, it shows they are still capable of making some pretty crappy decisions.

With behaviour like that from Microsoft, Sony have been able to stand out just by being less awful.  Did they use PS+ as a way to sneak in an online subscription always planning to scale back on the games on offer?  Should you really call a limited selection of previous generation titles “backwards compatible” if gamers have to pay for them again?  Are you “for the players” if you turn down EA Access as being poor value rather than let them decide?  Or if you are blocking the possibility of cross-play on third party titles so that friends can play together regardless of the format they own?

Will gamers ever be able to trust these companies enough to be happy handing over their cash for a digital key and some terms and conditions?  That, to me, is the hard part.

Likelihood: Low.

Timescale: Long-term.  Gamers have long memories and platform holders have done little to help them forget.

Wrap up

Does a digital future still fill you with dread?  Well then the good news, whatever happens, I can’t see any of the console makers going totally disc-free just yet (unless they, you know, go back to cartridges).  But just as with CDs, Blu-rays and hardback books, I expect this to become an increasingly marginal case – for the collectors, gift givers, technophobes and less-well connected.  Meanwhile, I see most console gamers joining me and our PC cousins and moving over to a digital gaming future.

Given that digital has huge financial advantages for Sony and Microsoft, it’s a surprise perhaps that they seem quite so intent on making it as hard as possible for us.  However, recent noises and announcements make me believe that they finally get it and that changes are coming and may be coming soon.  Once prices start dropping we’ll know that it’s on.  And if they can earn my trust too and sort out the technology then I personally can’t wait.

But what about you?  Are you a digital convert or is your motto “disc-based ‘til I die”?  What one change would win you over or is there nothing they could do?  Let us know in the comments section.  

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