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Interesting editorial from gamesindustry.biz
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Member since May 2011 · 2485 posts · Location: Brisbane
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Subject: Microsoft's Games on Demand
Over on gamesindustry.biz there was a recent editorial looking a little deeper at Microsoft's recent 'games on demand' service allowing users to buy and download full retail games.  It's well worth a read but I'll summarize what I took away from it:

  • This allows Microsoft to enforce the RRP for games, which typically retailers ignore.
  • The actual price is much higher, if you factor in the massively overpriced harddrive needed for these huge game downloads, and the sad fact that you can't on-sell the game to recoup a portion of the purchase cost.
  • Microsoft considers these more convenient, but in fact it's less - you can't loan them to friends, and I'd say that it probably takes longer to start playing once you decide to purchase...  Five gig doesn't download in the 20 mins it takes me to run to EB and back.

In this fantasy, second hand sales are an aberration, a negative force which damages the market. Heavy retailer discounting is a mistake, a foolish move that allows consumers to buy games at lower prices when they'd be perfectly happy to pay more otherwise. Needless to say, this is the same fantasy which causes publishing executives to seemingly believe that everyone who pirates a game would buy it at full price were the pirate copy unavailable.

This is not only a fantasy, it is patent nonsense. SRPs are consistently set at a level which the market would not support. The second-hand market, and retailer discounting, have been absolutely essential in driving the expansion of the games business and the high sales of modern games. Publishers under the sway of this appealing fantasy consistently misjudge the perceived value of their games, believing that consumers will honestly pay GBP 45 for a game experience with a Metacritic rating in the 70s or 80s.

[...]

Digital distribution will support marginally higher prices than retail, because it offers instant delivery - but it will never, ever support a wide market paying anything close to the SRPs publishers believe in so fervently. Until that lesson is learned, services like Games On Demand are doomed, if not to failure, then at the very least to utter mediocrity.
BLEARGH
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Member since May 2011 · 2485 posts · Location: Brisbane
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Over on cnet.com, a recent editorial talks about the prices of ebooks, and the discussion is definitely related to Games on Demand.

Amazon's hardcover price is $15.57, while the Kindle edition sells for $14.01.

[...]

E-books, on the other hand, consume zero trees. They weigh nothing, occupy no physical space, and don't get shipped in the traditional sense. Middlemen are few and far between. So you're left with, what, editing costs and the pittance you pay the authors?

He doesn't touch on the same conclusion reached by gamesindustry.biz, that publishers were attempting to assert pricing control, but no doubt that's part of the equation.  I have to believe that these high prices will prove to be a short-lived phenomenon, 'cause let's face it - more people will buy more books (and games) when the price and convenience start to make sense.
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