Publishers are Poisoning the Digital Distribution Well

Sir_Brizz · Jul 23, 2011

I know this is not Unreal related, so shut up in advance. Destructoid ran a great article today on Digital Distribution. It kind of covers why people are hesitant to jump into the Digital Distribution pool, and I'd be lying if I said I didn't agree with most of these points about it. I tend to wait until games are under $20 before I buy them these days, and part of the reason for that is the ridiculous pricing.

See, here's the thing: When I pay $59.99 for my copy of a game at GameStop, I know I'm paying $59.99 not just to the publisher. No, that money is split between a variety of companies which have allowed the game to get to my hands. The publisher sells the game to a distribution company for at a lower cost, trading the convenience of a bulk purchase for a reduced price. Typically the publisher gets between 40%-45% of the final retail cost, meaning for a game which costs sixty bucks, they typically see about twenty-four to twenty-seven bucks per unit. The distribution company charges companies like Walmart, GameStop, and your local game store a moderately increased fee, probably in the neighbourhood of ten to fifteen bucks more. So by the time GameStop has it, that copy has cost them between thirty-four and forty-one dollars per unit.

[...]

So why does a digital copy, which we've established does not have the same distribution costs as a retail copy, cost us, the consumer, the same amount? The simple truth is that publishers, bless their coal black hearts, have got a greedy streak a mile wide. They'd love for their consumers to switch to digital distribution, bypassing the need for GameStop, which would eliminate the used game market overnight... But they're not willing to give us an inch on the pricing in order to coerce us into going along with them.

I had a REALLY hard time picking a quote for this, hopefully that is good enough to get you to click on the freaking source link and read the rest of the article. It makes tons of great points. Then, please, come back and discuss it in the comments thread!

[NBK]Rattman · Jul 23, 2011

I agree with what you and the article are saying...but I will say that I have an easier time finding online deals for games versus buying them in a store

For example, I preordered Brink online for 36.00 while the game in retailers wouldn't be sold for less then 50.00, so digital distribution does offer some relief if you can find the right deals

Kyllian · Jul 23, 2011

What's a bit annoying is that some of the devs that have gone to purely digital distribution haven't seen massive returns
2 games I play that are purely DD only with no publisher to get in the way. Section 8 Prejudice and MondayNightCombat
Both have had their issues with low playercounts since release(tho S8P has had a harder time) and neither have a publisher to get in the way(MS/GfWL is more of a backer than a publisher for S8P)

In my opinion not only are publishers/distributers part of the problem, so are consumers that seem to think that cheaper = crappier

Another thing annoying me about the consumer is it seems like a bulk of the gamers out there don't like "thinking man's" games like the 2 I mentioned
It seems like everyone wants something like CoD where all you have to worry about is who shoots first
Take MNC, at just about any point you could be faced with the option of defending your bots, turrets or teammates or attacking the enemy's resources
I even seen CoD mentality in S8P with people trying to set up sniper dens on various parts of the map to camp from instead of attacking control points or dealing with DCMs

213 · Jul 24, 2011

I still remember Steam being billed with tidbits like "cheaper games, due to lack of distribution costs" etc.. and at first it seemed true, then suddenly all prices started showing up as full retail price, with the exception of the meager little discounts for pre-ordering.

A couple mistakes there taught me never to pre-order anything, ever.

Eventually the sales started showing up more frequently or else my library would be a lot smaller. But still, with everyone wanting to out-greed each other, it's a wonder anything gets bought.

elmuerte · Jul 24, 2011

I buy most of my games via online retailers. They are much cheaper than brick and mortar stores, and much cheaper than digital distributes.

Kyllian · Jul 24, 2011

Autopsy said:
then suddenly all prices started showing up as full retail price, with the exception of the meager little discounts for pre-ordering.

I can't help but wonder if that's more the doing of publishers/distributers than Steam itself
Frankly that wouldn't surprise me

BITE_ME · Jul 24, 2011

If it not on a disc, then I don't buy it.
The people that are buying the DD games, should be getting it much cheaper.
And.
They are not collectors, like me

Kyllian · Jul 24, 2011

One of the reasons I like DD is there's no disc check
I have a handful of games that require having the disc in the drive to be able to play and with most of them the dev never included a no-CD patch

GreatEmerald · Jul 24, 2011

What I didn't really like in that article is that the term 'publisher' was used for 'developer', 'publisher' and 'distributor' interchangeably. It kind of made it hard to understand which ones they are talking about, even if the actual publishers are probably the ones getting the most profit out of it.

But yes, it would help if the prices were decreased. A long time ago they promised that this initiative would indeed lower the prices, but apparently nothing of the sort happened. The fact that some distributors even force a DRM program on you is also not helping the case. That makes physical media and distributors like GOG.com a lot more attractive than the major ones.

Vaskadar · Jul 24, 2011

Kyllian said:
What's a bit annoying is that some of the devs that have gone to purely digital distribution haven't seen massive returns
2 games I play that are purely DD only with no publisher to get in the way. Section 8 Prejudice and MondayNightCombat
Both have had their issues with low playercounts since release(tho S8P has had a harder time) and neither have a publisher to get in the way(MS/GfWL is more of a backer than a publisher for S8P)

In my opinion not only are publishers/distributers part of the problem, so are consumers that seem to think that cheaper = crappier

Another thing annoying me about the consumer is it seems like a bulk of the gamers out there don't like "thinking man's" games like the 2 I mentioned
It seems like everyone wants something like CoD where all you have to worry about is who shoots first
Take MNC, at just about any point you could be faced with the option of defending your bots, turrets or teammates or attacking the enemy's resources
I even seen CoD mentality in S8P with people trying to set up sniper dens on various parts of the map to camp from instead of attacking control points or dealing with DCMs

Codfish kiddies... this past couple years of gaming have really gone... bad. Camping is an extremely prevalent strategy in games these days because people have become obsessed with their e-peen and how effectively they can camp.

I must say: regenerative health + loadout systems in games is really not conducive for players moving about the map, or utilizing mobile strategies, etc. the fun has been taken out of it because people have become try-hards who all use the same cookie-cutter strategy. It's because they have either no imagination or no real skill.

I honestly can say now that the codfish series has ruined the MP FPS community. And yes, games should be less expensive through online distributors, not only because there is no hard copy production and any real distribution cost to the publisher/developer whatsoever.

Hourences · Jul 24, 2011

So why does a digital copy, which we've established does not have the same distribution costs as a retail copy, cost us, the consumer, the same amount? The simple truth is that publishers, bless their coal black hearts, have got a greedy streak a mile wide. They'd love for their consumers to switch to digital distribution, bypassing the need for GameStop, which would eliminate the used game market overnight... But they're not willing to give us an inch on the pricing in order to coerce us into going along with them.

This is not entirely true. It is a lot more complicated than this. This was true to an extend a few years ago but these days the retailers feel the heat of digital distribution. Even if you would WANT to price your game cheaper online, you probably wouldn't even be able to do it as you would endanger your contracts with the retailers. When we did The Ball we had originally set out to do it digital only. And we had said "20$ is about fair for a Steam title like this". And then the retail distribution deals came. If we would have told them "Yeah you can distribute our game but we want you to price 35$ for it while we will sell at 20$" they would have laughed at us and we would have never been able to sign such deal. And this is even true for large publishers. They may have their own distribution networks, which takes some of the difficulties away, but they will still have to talk to Walmart and such. And they cannot possibly tell Walmart "please sell our game for us and give us a really good location in your shop but you must sell it at 150% our price"... Not going to happen.

If multiple companies are involved in the distribution process you will never be able to make them agree to different terms. It would be like selling your game for 20$ at Steam and 10$ at Direct2Drive. It is going to piss someone off, and it is going to hurt your business.

Kyllian · Jul 24, 2011

Vaskadar said:
I must say: regenerative health + loadout systems in games is really not conducive for players moving about the map, or utilizing mobile strategies, etc. the fun has been taken out of it because people have become try-hards who all use the same cookie-cutter strategy. It's because they have either no imagination or no real skill.

Actually Section 8 had regenerating shields and 6 loadouts you could customize, Prejudice added in not only regenerating armor with the shields, but extra weapon(4 each)/equipment(avg 3 each) types and more passive modules so you could tweak the loadouts even farther
Someone did some calculations and it was either over 1 million or 1 billion different possible loadout combinations

Anyway, my point is with Section 8 and Prejudice, you pretty much have to keep moving. Camping in one spot aiming for just kills won't get you very far, even if noone comes landing on your head

haarg · Jul 24, 2011

Hourences said:
This is not entirely true. It is a lot more complicated than this. This was true to an extend a few years ago but these days the retailers feel the heat of digital distribution. Even if you would WANT to price your game cheaper online, you probably wouldn't even be able to do it as you would endanger your contracts with the retailers. When we did The Ball we had originally set out to do it digital only. And we had said "20$ is about fair for a Steam title like this". And then the retail distribution deals came. If we would have told them "Yeah you can distribute our game but we want you to price 35$ for it while we will sell at 20$" they would have laughed at us and we would have never been able to sign such deal. And this is even true for large publishers. They may have their own distribution networks, which takes some of the difficulties away, but they will still have to talk to Walmart and such. And they cannot possibly tell Walmart "please sell our game for us and give us a really good location in your shop but you must sell it at 150% our price"... Not going to happen.

If multiple companies are involved in the distribution process you will never be able to make them agree to different terms. It would be like selling your game for 20$ at Steam and 10$ at Direct2Drive. It is going to piss someone off, and it is going to hurt your business.

anyone who didn't figure this out 20 seconds after thinking about the impact of digital distribution is an idiot

ambershee · Jul 24, 2011

elmuerte said:
I buy most of my games via online retailers. They are much cheaper than brick and mortar stores, and much cheaper than digital distributes.

Bingo, with the exception of my (sadly now long departed) local indie retailer. I remember picking up UT3 release week for £16.99 off the shelf. I usualyl go with Play or Amazon. Amazon because they are outright cheaper than the competition by about £15-20, or Play because pre-order bonuses often include whole extra games (like pre-ordering Vanquish for £35, and getting Bayonetta for free).

Hourences · Jul 24, 2011

Haarg said:
anyone who didn't figure this out 20 seconds after thinking about the impact of digital distribution is an idiot

So the author of the article is an idiot you are saying? Because I don't see this mentioned in the article, and publishers are to blame but it is unfair to put all the blame on them as the situation is more complicated. I am trying to expand on the discussion and widen it. You cannot discuss digital pricing without also covering the whole retail-digital market share aspect of it as it is all interconnected. There are nicer and more constructive ways to respond to that than how you did.

Reminds me again why I never post on public boards. Have fun.

haarg · Jul 24, 2011

Hourences said:
So the author of the article is an idiot you are saying?

Yes exactly.

ambershee · Jul 24, 2011

It's still not quite right though. Taking the Ball into example, I pre-ordered a boxed copy cheaper than the special offer through Steam. Go figure.

shoptroll · Jul 24, 2011

I skimmed the article and all I saw was a lot of repeated whining about "Waaaahhhh digital distribution isn't cheaper for me", "waaaaah publishers are getting more money from digital distribution than retail". I was expecting something a little more substantial (walled gardens and the lack of features like trade-ins or family accounts would be great places to start).

Then I saw what Hourences wrote and all was good with the world.

Hourences said:
This is not entirely true. It is a lot more complicated than this. This was true to an extend a few years ago but these days the retailers feel the heat of digital distribution. Even if you would WANT to price your game cheaper online, you probably wouldn't even be able to do it as you would endanger your contracts with the retailers. When we did The Ball we had originally set out to do it digital only. And we had said "20$ is about fair for a Steam title like this". And then the retail distribution deals came. If we would have told them "Yeah you can distribute our game but we want you to price 35$ for it while we will sell at 20$" they would have laughed at us and we would have never been able to sign such deal. And this is even true for large publishers. They may have their own distribution networks, which takes some of the difficulties away, but they will still have to talk to Walmart and such. And they cannot possibly tell Walmart "please sell our game for us and give us a really good location in your shop but you must sell it at 150% our price"... Not going to happen.

If multiple companies are involved in the distribution process you will never be able to make them agree to different terms. It would be like selling your game for 20$ at Steam and 10$ at Direct2Drive. It is going to piss someone off, and it is going to hurt your business.

Well put. Article author isn't an idiot, but they're not seeing the entire picture here, which isn't surprising given it's a community blog entry which was promoted to the top page.

This might be slightly biased since it's coming from Telltale which does most of their sales in digital distribution but it gives a more accurate picture of the retail money breakdown than the blog's image.

The blog also made one other fatal flaw in their argument. Steam/D2D/GamersGate don't sell other companies' games for free, so you're just swapping out GameStop/Wal-Mart/Target/etc. for a different entity. But you don't have to pay sales staff, or warehouse fees, or printing fees, etc., and it just so happens that bandwidth and data storage is fairly cheap right now. So it allows Steam and the rest to work out a better distribution deal with the publishers.

jjensson · Jul 24, 2011

It's quite easy actually. If one decides to do without a physical copy of the game (which alone is a huge drawback for most of the people in my social circle), he/she sould be rewarded by a price tag of ~50% of the original price. It's a win-win. But the greed prevails... Well, there are other things one can do in life besides gaming - cheaper or even for free... :lol:

Sir_Brizz · Jul 24, 2011

Hourences said:
This is not entirely true. It is a lot more complicated than this. This was true to an extend a few years ago but these days the retailers feel the heat of digital distribution. Even if you would WANT to price your game cheaper online, you probably wouldn't even be able to do it as you would endanger your contracts with the retailers. When we did The Ball we had originally set out to do it digital only. And we had said "20$ is about fair for a Steam title like this". And then the retail distribution deals came. If we would have told them "Yeah you can distribute our game but we want you to price 35$ for it while we will sell at 20$" they would have laughed at us and we would have never been able to sign such deal. And this is even true for large publishers. They may have their own distribution networks, which takes some of the difficulties away, but they will still have to talk to Walmart and such. And they cannot possibly tell Walmart "please sell our game for us and give us a really good location in your shop but you must sell it at 150% our price"... Not going to happen.

If multiple companies are involved in the distribution process you will never be able to make them agree to different terms. It would be like selling your game for 20$ at Steam and 10$ at Direct2Drive. It is going to piss someone off, and it is going to hurt your business.

You make good points, however, I think this culture is what is fostering the growth of the used games market (which makes Gamestop profits soar through the roof) instead of putting money where it actually belongs: in the pockets of the content creators.

Also, the music and movie industries have already gone through this painful shift and it took them FAR too long (and a lot of complaining about huge downturn in purchasers). Now you can get a CD from iTunes for significantly less than you can get it at Walmart. You can get a digital movie on iTunes for less than a movie at Walmart (except maybe during release week).

But I certainly do understand and sympathize with where you are coming from.

Publishers are Poisoning the Digital Distribution Well

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