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I was about to buy StarCraft 2 in a digital version when I noticed it's about €15 more expensive than my local stores which are selling retail copies (€59.99 vs €44.99). These are Irish prices.

This is something I've seen several times over for PC games in the last year. Digital copy's cost far less to produce I'm sure as packing and distribution or none-existent once the IT expenditure for the online platform is establish.

Why is there such a price difference?

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6  
What the...? The pricing for digital games should be lower, not higher, since one doesn't even get a nice box and manual etc. That's really weird – Zommuter Jul 30 '10 at 10:41
Since companies are greedy and customers are dumb? I doubt it will be possible to give any objective answer to this question. – MRA Jul 30 '10 at 10:51
Kinda reminds me when Nintendo Magazine said discs would be cheaper than carts. I remember thinking as soon as I read that, "Yeah, Right!" and sure enough - they were the same price, if not higher. Slower loading times and easier to copy, too. – Wayne Werner Jul 30 '10 at 14:42

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4 Answers

up vote 11 down vote accepted

You need to take into consideration the longer term costs of digital distribution. Yes, the game doesn't have the packaging costs associated with buying the game in the store, but packaging costs are mostly offset by the retailers who sell you the game. The retailers take no the burden of shipping the product around the globe to their stores, they take on the burden of advertising and retail-staff costs, as well as building rental of course.

With digital distribution the retailer is generally the games developer so they have to shoulder the cost of distribution themselves. What costs you might think? Surely it's cheaper to just download ... maybe not as cheap as you think.

You need to factor in costing for:

  • Datacentre Rackspace
  • Datacentre bandwidth (not cheap)
  • Hardware costs
  • Developer time to build a platform for delivery
  • Designer time to make that platform look pretty
  • System Administration cost to keep that platform online
  • Customer Support and Service cost to handle returns, refunds, complaints etc.

I'm sure there are a dozen other things which cost money. Consider that Steam was transferring 1000 TERABYTES of data a month 5 years ago, long before digital distribution really took off - imagine what it is now? Imagine how much Rackspace, bandwidth and associated support costs they are now incurring.

All things which in the past, Retailers (Game etc.) handled themselves.

Lastly of course you need to factor in convenience. You pay more on a Motorway service station because it's convenient, you don't have to drive 5 miles into a remote village to get that cup of coffee at 9am on a Sunday morning, just pull into the service station and pay an extra £3 for your mug. Same applies here. They know there are people who are lazy enough to not want to leave their rooms whilst playing the latest shootemup or racing sim - they're taking advantage. Rightly so. Welcome to Capitalism :)

That might help explain why costs are a little skewed.

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For me, the convenience is the best justification to the customer, actually :) We pay for what we like. Good reply in general. – NPC Jul 30 '10 at 11:47
Capitalism also states that in the long term economic profits goes to 0. So a few years down the line, it should be really cheap. – Mechko Jul 30 '10 at 13:13
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If I buy from a store I still pay for the distribution costs, I just pay it to the store. The question for me is: why is digital dist more expensive to the consumer than real-life dist? I think the answer is that it is not but companies can charge more for the marketing reasons you indicate. – monorailkitty Jul 30 '10 at 13:34
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This is a good answer, but there are even more factors to consider. One big factor is that a publisher CAN NOT undercut a retailer if they want that retailer to keep stocking their game. It actually is quite a bit cheaper to release on a digital platform, but if you were to charge $10 or $20 less for the digital version the retailer would almost immediately pull your game from the shelves. It's as much of a business decision as it is a cost decision. – hokiecsgrad Jul 30 '10 at 14:19
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Besides not undercutting retailers, they may not have anyone to undercut them. If they're the sole source of digital distribution (ignoring piracy), then they don't have competition, and can price solely vs. demand. The converse of that is that retailers have to price-cut to stay competitive. – Merlyn Morgan-Graham Jul 31 '10 at 10:25
up vote 2 down vote

This is a new release, the publisher may be setting the price just as high as it will go in order to not undercut the retail channel. That's why there's no DISCOUNT for buying on-line. They can always lower it later when the product is out of the stores.

My guess is that there's some oddity in the pricing in Ireland relative to the pricing in Great Britan and that they are setting the prices this way so that they don't get too many people going from one to the other to save a little money.

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up vote 1 down vote

I think part of the difference is because of currency differences. In America, it's $60 digitally or at a retail store. Maybe the person in charge of european pricing didn't realize that the dollar has dropped as much as it has, so set the online pricing at 60 Euros, but the person in charge of the boxed version, he deals with retail stuff more, so he knew the "right" price.

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It's more likely that they know perfectly well about it and use this as an excuse to milk customers... </conspiracy-theory> – badp♦ Jul 31 '10 at 9:43
up vote 1 down vote

It is way less expensive to sell via the net. ID use to make a killing selling DOOM.
They broke it down and basically said if they could knock 15.00 off a 30.00 game.

Gas and trucks are not quite as efficient as digital. Color manuals, directions, help phone numbers etc. Much more money doing the boxed version. 1. The box with all the cool colors 2. The manual which is usually glossy 3. The CD and the color print on the disk 4. The CD case 5. The retailer has to make money so they get a cut. 6. Shipping costs 7. Probably more..

They have deals set up with retailers not to undercut them.

I'm not too happy they took the guest coupons off the digital version. I bought two Boxed copies and had 4 guest passes and 2 WOW passes.

The only thing I can think of is they promised the retailer the exclusive rights to have the guest passes which would drive retail sales. Blizzard does not make as much money on the Retail version.

It would easy for blizzard to honor the guest passes on the downloaded version. Its just a key.

If I had known that I would not have downloaded my third copy. Well, you do save about 4.00 in tax so its not all bad.

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