The debate of digital pricing is one that has been raging for as long as the digital market has existed. As early as 2007, when Steam was very much taking its early steps towards online domination, it was EA’s now-former CEO John Riccitiello who claimed that the $60 price point was, and still is, too expensive. Four years later, when Origin was still in its cradle, consumers were shocked to find that EA was still charging games at full-price.
And now, in 2015, we see that Nintendo, somewhat late to the game, has found itself in a similar situation. During this year’s annual shareholder meeting, company CEO Satoru Iwata was asked about this discrepancy, or lack thereof. Buying Splatoon on Amazon US will set me back $60, while buying it digitally will cost me just as much, and will eat up a chunk of that precious 32GB memory the Wii U ‘boasts’, as well as missing out on that sweet, sweet plastic I can put on my shelf and behold. So how can it be said of digital games that they should cost just as much, when all they really do differently is inconvenience me?
Iwata’s defense of the $60 price point is a familiar one, albeit predictable: he acknowledges that going digital means missing out on some crucial privileges, such as re-sell value. However, as far as Nintendo is concerned, the $60 price point is a representation of value of the software:
“As for the prices of the packaged versions and download versions, we, at Nintendo, cherish the value of our software and believe that we should sell both versions at the same price because they have equal value (as software products). However, there are various viewpoints on this matter. For example, some software publishers lower the prices of download versions, giving weight to the fact that download versions cannot be sold to secondhand stores or that download versions are rarely sold at reduced prices in retail stores and even sometimes never discounted in the case of direct sales by the publishers. While the prices of packaged and download versions reflect the attitudes of software publishers, Nintendo would like to offer these products to our consumers at the same prices given that their software value is the same.”
— Satoru Iwata
Indeed, it’s an argument that I very much can sympathize with. Nintendo has a long-standing—I dare call it—
tradition of fiercely defending their intellectual properties, and in one way, a $60 price-point is merely one more way of presenting that tradition. Nintendo is letting the two markets, digital and retail, compete on the merits of the two systems, rather than inciting every costumer to always go for the cheapest option, regardless of their actual preference.
However, there is another, arguably far more sinister aspect of it all that must be considered. Like my colleague pointed out in his side of this argument, with the aid of a 2010 research study courtesy of the Los Angeles Times, over half the revenue from each sold game disappears to the likes of distribution, production, eventual platform royalty (which, admittedly, is a fact that is less important when the publisher owns the platform), and of course, lest we forget, retailer margin forever sacrificed to the ever-looming shadow of GameStop.
GameStop is oft-forgotten in this discussion, but it nevertheless remains one of the most powerful forces in the market. Publishers are quick to decry used games (and it is worth mention that used games remain GameStop’s biggest source of revenue by far). The last console generation may well be remembered for EA’s
“crusade on used games”, with various forms of DRM, Online Passes, and thingamajigs—I still shudder when I reminisce over SimCity—that in one way or another, all tried to kill used game sales, and in doing so, tried to kill GameStop.
Naturally, GameStop was displeased. Having already been forced out of the lucrative digital market, the last thing GameStop needed was publishers going after their precious used games. The solution? Retailer-exclusive DLC! Such is the retailer’s influence that it has been able to persuade the likes of Warner Bros., Sony, and Activision to develop game content that remains exclusive to those who buy their games from GameStop. In fact, the company went as far as
moving to get involved in the very early stages of game development, saying that “future models may include GameStop offering exclusive gameplay.” And GameStop is not joking about this; why else would it be the case that Batman: Arkham Knight comes with story-exclusive DLC?
Having failed to escape the retailer’s powerful grasp, Nintendo now sits in that very unenviable position. The developer has long been known for its solid lineup of first-party titles, and its general respect for the consumer, but it has faltered in very recent memory. Hyrule Warriors, admittedly a joint operation with Koei Tecmo, has already seen a fair share of its DLC content locked away to GameStop, and the horrifyingly rare Shulk Amiibo can only be found on GameStop’s shelves.
It may very well be the case that Nintendo wants to slash down on the eShop prices. After all, like it has been so correctly acknowledged, buying games directly from the eShop lands publishers a vastly more sizable share of the cut than swearing fealty to GameStop, with $15 pocketed by the retailer on each purchase. However, it’s easy, trivial even, to see, by the very reaction of publishers, that the prospect of losing GameStop’s support is far worse than losing those handful of dollars on each game. For that reason alone, Nintendo’s eShop prices can’t go down.