Video games have gotten ridiculously predictable. Not in stories, writing, or mechanics (although sometimes those, too) but in release, pricing, and distribution. When it comes to the big-budget blockbuster console-ready games, by now pretty much every player can recite the pricing timetable by heart.
First, the game releases at $60, maybe with a collector’s edition for somewhere between $70 and $100. Over the next 6-12 months, a couple of downloadable content packs drop, at $10-$20 each. Between 8 and 12 months after launch, an ultimate or game of the year edition — a repackaged omnibus including some or all of the DLC — shows up on shelves for between $30 and $50 before quickly dropping to $20, where it comfortably settles into the back catalog for as long as its console hangs around.
That very sameness is unnerving. As a rule of thumb, the pattern holds no matter what studio designed the game or what publisher marketed it. It doesn’t matter if you’re playing an Ubisoft game on a Microsoft console or an EA game on a Sony one. It doesn’t even matter if you’re buying it at Target or Walmart or GameStop or Amazon: the pricing, to within just a couple of dollars, is the same.
Since the launches of the Xbox 360 and PlayStation 3 in 2005 and 2006, that’s the track we’ve settled into. The still-new era of the Xbox One and PS4 is starting off in the same shape. But there’s one huge exception: players who tackle tomb raiding from their computers, instead of from their set-top consoles, can see enormous discounts that sometimes completely, if temporarily, disrupt the pricing pattern. So what gives?
Price-Fixing That Isn’t
There’s a reason that pretty much every retailer in the US charges $59.99 for a new video game on the week of its release. It’s a price point that comes from the publisher, and all the retailers that sell the new product to consumers agree to abide by it.
Stores that choose not to abide by the price agreement quickly find themselves out of favor with the publisher for future shipments. So if Big Game Store wants to get players in the door for next year’s Call of Duty iteration, they won’t drop below the publisher’s guidance for this year’s.
That kind of agreement is called minimum resale price maintenance. From a retailer and publisher perspective, that flattening out of competition has a bunch of positives. Publishers know what their cut of the game will be. Stores know that they don’t have to cut into the bone on their own profits to try to get shoppers in the door. Retailers compete on convenience, other available goods, and other factors that aren’t price. From a consumer perspective, well, consumers are utterly unable to make decisions based on price, and sometimes that really stinks.
Those fixed prices mean that retailers who sell new game discs and consoles don’t make much money on them, comparatively speaking. Big-box stores like Target and Walmart can afford to sell some low-profit-margin items like PlayStations since they can make up cash elsewhere; GameStop, meanwhile, makes close to half of their profit from used game sales.
That might sound like price-fixing, and it sort of is. But it’s the legal kind, not the illegal kind. Basically, the Supreme Court, interpreting anti-trust law over the last century or so, has determined that manufacturers can impose price floors or price ceilings for their goods on the retailers who sell them, but that the retailers can’t conspire among themselves to set specific price points.
So: if GameStop, Target, Amazon, and Walmart all had a clandestine meeting over cigars in a mysteriously dim room and agreed between them that they were going to sell all new video games at $60, that would be super illegal. But a game publisher like EA can say to all retailers, “We will wholesale our shiny new game to you, but the terms of the deal are that you do not resell it for less than $60,” and that’s fine.
While it might seem suspicious that all of the blockbuster game publishers arrive at the same price point at the same time in the same console generation, there’s no collusion there, either. At least not legally. For the law to get involved, there’s a high bar to meet. A conspiracy must be “knowingly formed” and must “substantially affect” commerce to be illegal price-fixing.
Realistically, publishers are all looking at the same kind of market research, the same target demographics, the same retailers, and the same platforms on which to run their software. They also know that they’re all in competition with each other. If they all come to the same conclusions about price, and nobody wants to blink first, legally speaking that’s just the marketplace in action.
When you get away from the discs and into the digital marketplace, though, one particular retailer has managed to throw a fairly substantial wrench into the system.
The Long Tail And The Big Sale
The online marketplace for digitally-distributed PC games has been evolving since families started hooking their computers to their phone lines en masse in the 1990s. Valve’s Steam platform first launched over a decade ago, in September of 2003.
What once began as a way for some folks to be better able to play and to update CounterStrike has since become an absolute behemoth. In 2013, as The Verge reported, Steam crossed the 65 million user mark — as compared to Xbox Live’s 48 million.
Steam might be huge, but it’s also not the only game in town. There plenty of online storefronts for PC gaming. But Steam has thrown one big wrench into the online marketplace that nobody yet has matched: the vaunted Steam Sale.
Blockbuster games usually launch on Steam at the same price as their console counterparts, or sometimes $10 lower. But the launch price, on Steam, is never the price for long. The major sales are now so regular and so massive that they have taken on an iconic status of their own. Gamers can all but mark the seasons by them.
And so, too, can competing online game sellers. Smaller gaming-focused sites like GamersGate, GOG, GameFly, Desura, and plenty of others also now tout regular deep discounts to subscribers — but it’s not just the specialty shops. Amazon, too, has developed a habit of pushing major game discounts with remarkably coincidental timing to Steam’s big sales.
Digital storefronts for consoles are only just now starting to catch up to the PC’s decade-long lead. The console generation on its way out launched in 2005, which means plans and designs for it were mostly generated and finalized between 2001 and 2004. Early in the century, home broadband service and limited console hard drive space weren’t going to support taking high-detail, blockbuster games off of discs and into the ether.
Nearly a decade later, in 2014, Xbox Live and PlayStation Network do have robust digital offerings, and both offer monthly sales and occasional promotional discounts. Same-day digital release is a reality for more and more games every month. The tech is ready… but the element of competition is still missing.
The digital storefronts for both major consoles are walled gardens: Sony and Microsoft have the final say, and you’re not going to see a Steam app hawking relatively new games for $5 on the Xbox One anytime soon.
Right now, though, you can at least buy digital download codes for PlayStation games from Amazon, the same way you can buy PC download codes. Maybe an era of competition for controller-wranglers finally is on the near horizon.
by Kate Cox via Consumerist
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