Tobold's Blog
Tuesday, May 15, 2012
 
How not to do digital distribution

Diablo III Digital Purchase on Battle.net for Europeans today: €59.99
Diablo III retail version at the Media Markt in Belgium today: €39.99

Why does Blizzard think that I am willing to pay a full 50% more for the digital version?

Comments:
Especially since the retail version allows the digital download too once you enter the code. So if you bought a localized version and want to play the english one, just download it after you entered your code.
 
Perhaps a concession to retailers? "Convenience fee"? Clearly Blozzard thinks some people will still get the digital copy to be the first out the door in game. Sometimes you aren't the target market.

For the record, I ordered my copy off Amazon and am waiting for the box to arrive still. I like the visceral feel of opening a box for many of my games. Kinda like how I still buy books in dead tree format.
 
It's actually a simple reason.

Blizzard controls it's digital distribution, and sets a MSRP. The publishers selling the title can sell at the MSRP, or below depending on how much they paid for it.

They probably have an agreement that they have to keep their download at X price regardless what their publisher/distributors do.
 
Yeah, this is the same basis I use to predict that GW2 will be much cheaper if you buy at retail after release.
 
It's the same problem Steam has. The game is $59.99 in the US, and for Europe they just swap the $ for the € without actually doing the conversion.
 
I ordered my copy off Amazon and am waiting for the box to arrive still.

Don't worry, you're not missing anything. Login servers are down due to "high concurrency", and nobody can get into the game.
 
You can thank retailers making highly protective agreements with Publishers, forcing them to keep Digital prices at a set amount, typically matching the "normal" retail value of a boxed game.

Being from America, I'm not sure how prices pan out in Europe and the wierdness that spawns things like Australians paying out the nose, so I can't say how much of that silliness comes into play.

And no Dev/Publisher right now is willing to risk losing all Box retail avenues by spurning Retailers and going 100% digital, not even Blizzard or Value
 
I thought you were going to creep in a comment about the numerous download, installation and login issues.
 
This comment has been removed by the author.
 
As Talarian said: "Sometimes you aren't the target market."

Besides the various legal agreements that may exist and force the price they use, ultimately Blizzard isn't a digital retailer and they don't demonstrate they want to be one through their prices. They sell games through their "online store" because they can.

Who knows? Maybe there is some bizarre use case where it makes financial sense to use it. But there has to be cheaper ways to acquire Blizzard games.
 
It's not that Blizzard wants you to pay 50% more, it's that Media Markt wants to charge 33% less to get you to come to the store and hopefully buy other things as well. Clearly this is a loss leader strategy in effect. Fry's Electronics here in the US frequently does the same thing. They'll discount a game or movie by 10 to 15 dollars for the first week of release, then bring the price back up to MSRP. In same cases, the manufacturer encourages this in order to boost release sales numbers. I'm willing to bet that Media Markt's price will go back up within a week.
 
How much money and time (= more money) does it cost you go to MediaMarkt?
 
It's on my way from work to home, so added cost of going there is significantly less than $20.
 
It's not that Blizzard wants you to pay 50% more, it's that Media Markt wants to charge 33% less to get you to come to the store and hopefully buy other things as well. Clearly this is a loss leader strategy in effect. Fry's Electronics here in the US frequently does the same thing. They'll discount a game or movie by 10 to 15 dollars for the first week of release, then bring the price back up to MSRP. In same cases, the manufacturer encourages this in order to boost release sales numbers. I'm willing to bet that Media Markt's price will go back up within a week.

Except that at least in my country (Sweden) that's pretty much the standard retail pricetag of games not matter where you buy them. So I don't really expect them to raise the price after a while. :)

To buy a digital download is quite often much more expensive than buying retail, unless there's a sale of course.
 
Working as designed.

For longer than personal computers have existed, there is tension between the retailer and the manufacturer. The retailer does not want Ralph Lauren or Bertlesmann selling cheaper than they can. A $100 MSRP item might cost the manufacturer $20-30 to make and they sell to the retailer for 50-75 who'll sell it to the public for 80-100. If the manufacturer ran an ad that the cheapest place to buy was direct, how long do you think it would be promoted or even stocked at Macy's and Amazon let alone WalMart? And what if the retailer says that if you do this we will pull all AB games?

And there are people with download caps, gifts from non gaming spouses and parents, and impulse buys that currently use stores so game studios need stores. (For now: not that much longer till they join music retailers and movie rental stores.)

For most of my life, RPM (retail price maintenance) by a manufacturer to a retailer was a "per se" anti-trust violation in the USA. Intent or affect did not matter; illegal. IIRC, it is no longer per se but could be problematic.
 
Low digital prices = physical stores death. That's all. Blizzard simply cannot provide a game for a "lower" price because it would make a LOT of "real" shops angry.
 
The only reason is if you want to play it *the second* it comes out.

Now, I've done that with Cataclysm. After logging in for an hour, I gave up (half an hour to log into my server, half an hour to see how hundred people try to beat ten mobs) and started playing in the morning.

Next time I'll just go to Mediamarkt Belgium in the morning and buy it there.

Bought my Diablo 3 copy from Play.com three years ago for €32.50. Next time I think I'll just buy it in Mediamarkt, €7 more to be playing right now is worth it.
 
Darn, didnt know that. I bought it for the higher digital download USD/EUR 1 to 1 price..duh. I did save the environment some wrapping paper and plastic thoug, not sure that is worth Euro 20.

I did DL it without issues.. on monday. no errors what so ever installing.. got to play it on the 15th too for a few hours in the afternoon and evening with no issues. Lets see how it will be today when I get home from work.

Will be more aware for the GW2 release.
 
It's about maximizing revenue.

The retail boxes have to be sold or they are a direct loss. They intend to move 100% of this inventory and more importantly it is the only way to target impulse buyers. They need a retail presence to get sales from people they never otherwise could.

The digital copy starts at the highest possibly price point. They know that only hardcore players are going to go this route anyway, and so can charge higher.

However,. As time passes this price will lower. In this way they get the max amount from early adopters, then slowly lower pice to get the max amount from the max number of people.

What's interesting is depending on initial sales/word of mouth/reviews/trending they will alter this plan of attack. If demand shoots up they maintain high prices...and of course the reverse as well.

Also, for physical boxes, they obviously cost much more (compared to virtually nothing for digital) to produce. They sell them at wholesale prices to retailers to ensure they can move their inventory. Although to the consumer they are more valuable to the company it's the opposite. However digital sales offset the production costs for the very necessary retail presence.
 
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