Digital Vs Physical: Something is Broken

You know, I think I see the reason why there’s a push to digital media: no inventory. No costs associated with inventory. No need to ever have a clearance sale.

Let’s take a case study.

Mario Kart 7, being one of Nintendo’s staple games, is going nowhere price wise if you walk into a brick and mortar store. Even Walmart.

Now take a walk down digital lane.

The price on the 3DS eShop right now is the same as you’d expect to find it most places if you got in your own kart and drove there: $39.99.

(As an aside, anybody have 3DS screenshot tips?)

Now that’s just fine. That’s the normal MSRP of the game. Let’s turn from the digital copy to my favorite (heh, former sponsor) Amazon.com:

Something is fishy here.

Fortunately I’m a student of business and economics.

What does Amazon have to pay for with a copy of a game released December 4, 2011? I have no clue. Let’s say to buy cartridges Nintendo charges retailers $30. I’m making this number up.

So because of the cost of packaging, booklets, shipping to distributors, etc. Nintendo wants to make a profit too. Or they could sell you the same game for the same MSRP and make double the money with fewer costs.

Sure there’s the digital distribution cost. The bandwidth to download from their store, but I’m somewhat doubting that cost is comparable to the distribution and production of the physical copy.

So why would Amazon sell for $10 lower? Because at this point, based on how many copies they have, they’re losing money because of the inventory. They’re gaining money (or saving it) by selling the game at a break even (based on my made up numbers) since it’s sat on their shelves for so long.

Nintendo, and other physical game publishers, on the other hand laugh to the bank when the prices are the same.

Laugh. To. The. Bank.

Oh, and you can’t sell a digital copy either. You’re stuck with it… until the distributor decides it’s not worth their server space to host that particular file anymore.

It’s a rant, I know. Sure you can (and should) shop around. You also have to ask yourself “is an always available game worth that $10?” It’s a valid question. Maybe it is to you. The convenience of having that game always available to you in your pocket. Especially a timeless one like Mario Kart. I know it’s almost worth it to me.

Almost.

Then I consider Duck Tales though. $12 for Playstation Plus, $15 for not, and $20 for a disc. That’s how it should be. That’s the dynamic I expect from digital vs physical. (I’ll be buying the physical copy because I hope for a good booklet and a case that I can caress lovingly).

People ask me occasionally why, as a gadgeteer and technology fan why in the world I haven’t embraced eBooks or digital distribution as much as some others. This is why. The economics of it. When I buy something I want it to be mine forever. It’s not when you buy in the digital world (unless you have an utterly amazing backup system).

Looks like when we get the kids their own copies of Mario Kart I’ll be looking at Amazon first again.

-FF

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One thought on “Digital Vs Physical: Something is Broken

  1. Pingback: Episode 115 Notes: The Water Boils | FlameFlash.net

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