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Morning Consolidation

[Jul 05, 2012, 10:09 am ET] - Share - Viewing Comments

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23.

Re: Morning Consolidation

Jul 7, 2012, 23:36

Jerykk

With digital distribution the saved costs in physical media are overtaken by server and bandwidth costs and administration (remember back in 2003 we all thought that Steam would mean lower game prices, but it became pretty apparent that maintaining the systems was just as expensive as preparing game boxes and media for retail sales). You're neglecting the fact that most publishers don't host their own digital distribution services. Steam/Gamers Gate/GMG/Gamefly/GOG/Impulse/GetGames handle all server and bandwidth costs. The only thing the publisher has to do is provide them with the game files and activation keys. Also, digital distribution has led to lower prices. On GMG, you can routinely pre-order games for 20-40% less than MSRP. Digitally distributed PC games go on sale sooner and more often than the physical copies. All of these discounts and sales are permitted by publishers because they know that the profit margin on digitally distributed games is higher than physical games. They also know that the ease of digital distribution, combined with significant discounts, means that the sheer quantity of games sold more than compensates for the lowered prices. Digitally distributed games also have an infinite shelf life, unlike physical games which have a shelf life of a few months at best. If publishers know that their games will continue to generate revenue for years, they are more open to early discounts.

Subject

Comment [quote="Jerykk"Jul 7, 2012, 23:36]q[With digital distribution the saved costs in physical media are overtaken by server and bandwidth costs and administration (remember back in 2003 we all thought that Steam would mean lower game prices, but it became pretty apparent that maintaining the systems was just as expensive as preparing game boxes and media for retail sales).]q You're neglecting the fact that most publishers don't host their own digital distribution services. Steam/Gamers Gate/GMG/Gamefly/GOG/Impulse/GetGames handle all server and bandwidth costs. The only thing the publisher has to do is provide them with the game files and activation keys. Also, digital distribution b[has]b led to lower prices. On GMG, you can routinely pre-order games for 20-40% less than MSRP. Digitally distributed PC games go on sale sooner and more often than the physical copies. All of these discounts and sales are permitted by publishers because they know that the profit margin on digitally distributed games is higher than physical games. They also know that the ease of digital distribution, combined with significant discounts, means that the sheer quantity of games sold more than compensates for the lowered prices. Digitally distributed games also have an infinite shelf life, unlike physical games which have a shelf life of a few months at best. If publishers know that their games will continue to generate revenue for years, they are more open to early discounts. [/quote]

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