3 ms·

Did you read the link? The point is that they AREN'T really worth that much. My brother buys his xbox games (I stick with PC/Steam mostly) from gamestop and tra

by scld 13y ago

Did you read the link? The point is that they AREN'T really worth that much. My brother buys his xbox games (I stick with PC/Steam mostly) from gamestop and trades them in within a week or two if the multiplayer isn't exciting. So, to him, a game is NOT worth 60 bucks. The 60 dollar price point has nothing to do with him. He pays between 30 and 40 max, usually only playing B rated single player games years after the fact. Adding DRM isn't going to magically increase the value of a game to the customer. That's not how a market works. The market currently has decided that a video game is worth something per person, on average. Let's call that $40 per game (just an example). So, with the DRM, you sell two $60 games for every three $40 games. Still the same $120 except it all goes to you instead of the first sale to you and the next two to Gamestop. If MS can assume (or predict, or hope, or whatever) that more of their sales will go directly to them, then they have an incentive to drop the price of their copies of the game because they know that a gamer probably has a fixed budget for gaming and they want to maximize their value. I don't have numbers but I would be interested in seeing what the average price per console game actually paid by a customer is. My hunch is that the DRM isn't expected to increase the overall sales, in fact they might decrease BY DESIGN. But MS doesn't care about overall game sales. They care about 1st sales. So they might get a bigger piece of a smaller pie and still make out in the end. Sidenote, Steam's success came from no legit competition, better prices (allowable, in part, by their DRM) and great marketing but I agree that Microsoft's strategy is more likely long term. ....all in all, though, it just feels shitty to have something physical in my hand that I can't really sell to someone if I want.

sirclueless 13y ago
This is price discrimination at work. It's basic economics 101 that monopolists or duopolists (such as Steam in PC games, or Microsoft and Sony in consoles) in a market will price their goods above the actual marginal cost of their goods, thus undersupplying the market. They would like to charge lower prices to some customers -- they are happy to sell to your brother for $30 because it's certainly well above their marginal costs. Unfortunately, it takes an awful lot of market power to be able to charge different prices to different consumers. Otherwise you will just have people arbitraging away all your profits (case in point, the folks who do a thriving business buying Steam games in the US region and trading them to folks in Australia and Germany). Anyways, long story short, it's really hard to price discriminate in typical markets, because it's both really hard to figure out which of your customers will pay full price, and it's really hard to stop the people who get discounts from reselling to the full price folks. But, if your market is digital, flash-in-the-pan pop culture items, then you have a market that's pretty much tailor-made for price discrimination. Who will pay $60 for a game? Well, the ones who buy it on launch, or pre-order for nominal bonuses. How do you stop the the people who buy at a discount from selling to those who pay full price? Two ways -- you attach the game via DRM to an account that is inconvenient to transfer, and you only sell the discounted copies 2 years later. Sales are also a good way to do this -- many people who buy games in sales either were waiting for a sale because the price was too expensive, or heard about the game because of the sale and wouldn't have bought the game otherwise. The current status quo is that all the profit from the $30 customers is going to GameStop. Microsoft would rather it go to themselves and their developers, so they would rather have digital downloads. Not so they can stop games from being sold at $30, just so that they can sell games themselves at that price without killing their market.

by scld 13y ago

sirclueless 13y ago

This is price discrimination at work. It's basic economics 101 that monopolists or duopolists (such as Steam in PC games, or Microsoft and Sony in consoles) in a market will price their goods above the actual marginal cost of their goods, thus undersupplying the market. They would like to charge lower prices to some customers -- they are happy to sell to your brother for $30 because it's certainly well above their marginal costs. Unfortunately, it takes an awful lot of market power to be able to charge different prices to different consumers. Otherwise you will just have people arbitraging away all your profits (case in point, the folks who do a thriving business buying Steam games in the US region and trading them to folks in Australia and Germany). Anyways, long story short, it's really hard to price discriminate in typical markets, because it's both really hard to figure out which of your customers will pay full price, and it's really hard to stop the people who get discounts from reselling to the full price folks. But, if your market is digital, flash-in-the-pan pop culture items, then you have a market that's pretty much tailor-made for price discrimination. Who will pay $60 for a game? Well, the ones who buy it on launch, or pre-order for nominal bonuses. How do you stop the the people who buy at a discount from selling to those who pay full price? Two ways -- you attach the game via DRM to an account that is inconvenient to transfer, and you only sell the discounted copies 2 years later. Sales are also a good way to do this -- many people who buy games in sales either were waiting for a sale because the price was too expensive, or heard about the game because of the sale and wouldn't have bought the game otherwise. The current status quo is that all the profit from the $30 customers is going to GameStop. Microsoft would rather it go to themselves and their developers, so they would rather have digital downloads. Not so they can stop games from being sold at $30, just so that they can sell games themselves at that price without killing their market.