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Why do digital versions of games cost more than physical?


One of the great mysteries of modern gaming is why do digital versions of games consistently cost more than physical ones? I ask myself this question every time I go onto the Xbox Store – (or ‘Microsoft Store’ to use its proper noun) – and I take a look to see how much Sekiro: Shadows Die Twice costs nearly a year after its release. Spoiler: it’s still £60.00. And yet when I take a look at the price on Amazon for a physical copy of the game, it’s only £29.00. Why is this the case when digital versions should be cheaper for a variety of reasons?

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There is an argument that game prices should be more expensive in general due to the high demand of all creative, physical, financial and emotional energies that video games take to make; we’re now looking at not a 3-4 year development cycle, but rather one which takes 4-6 years. But that is another article for another time. In terms of digital games costing the same as physical versions, it seems that there are a few main drivers to why digital games are at least the same price or more expensive than physical copies.

To begin with, they cut out the middle-man; that being the wholesaler (or reseller). Typically, we know them as GAME (in Britain) and Gamestop (in the US). Cutting out this stage of the process, from getting the game from the developer to the consumer, means that more money will be going straight to the developer and publisher. My apologies, I have forgotten to put the word *should* into that sentence. More money *should* be going straight to the developer and publisher, but Xbox isn’t going to cut out the middle-man without taking some of the revenue, rightfully so.

Xbox receives around 33% of all revenue from games purchased on the Xbox Store (bear in mind that the fairly new EPIC Games Store takes pride in its 20% cut it takes from games sold on their platform). But thanks to their ID@Xbox program, and similar initiatives they’ve done previously such as Xbox Live’s Summer of Arcade, Xbox has helped a lot of indie developers get their games to their online store through various programs of support. Incorporating all of this from the two options that publishers have: selling their games through resellers or directly in the online store, it seems to me that games should at least be the same price digital as physical.

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Secondly, the online stores and platforms have a monopoly of the market, so to speak. If you want to buy Sekiro: Shadows Die Twice digitally for your Xbox then you will go to the Xbox Store and purchase it. There is no other place you would go to buy that copy of the game aside from a few dodgy online marketplaces selling digital copies of games that seem too cheap to be legitimate. The same can be said for PlayStation and Nintendo, but not for PC. Not since the launch of the EPIC Games Store.

When more competitors are offering the same capabilities that the Xbox Store is, then we may see some more competitive pricing on the horizon. The issue with this line of thought, however, is why would Xbox allow a competitor to exist, let alone flourish, in the market in which it dominates?

Further to this, and this does link to the first point I made, physical video game stores will cease to exist in the way that we know them now, or the way they used to operate 10, 20 or 30 years ago. This is because people prefer to consume digitally. Gamers prefer to buy packages such as Xbox Game Pass to purchase their games online, and to stream them both for entertainment and personal consumption; though the latter has many needed improvements yet to be made. Because of the rise of the consumer’s desire to play digitally, Xbox has no reason to lower their prices when people are willing to pay their prices. Especially when it allows them to play the game at midnight on launch, hassle-free, without leaving the comfort of their own home.

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For what it’s worth, the revenue made from purchasing a game in-store is divided into a fair few more parties than one which is purchased digitally. When you purchase a game in-store you’re having to pay the cost of goods for distribution, the retailer, the platform and of course the publisher. You would also have to incorporate the cost of returns and the time it takes to deal with any customer queries etc. When you purchase a game digitally you’re paying the publisher (who in turn will pay the developer a share) and the platform. That’s about it. As well as this, shops only have a finite amount of space to display their games, whereas the online stores are seemingly infinite in their capacity.

So while the process of purchasing a game digitally is becoming more popular by the day, the cost of the game is not decreasing nor usually matching that of its physical incarnation. Of course, there are many sales throughout the year on the Xbox Store – most notably the Xbox Live Deals With Gold and Spotlight Sale – where you can purchase games at a severe discount, similar to that of Steam though not to that extent. Most of the time when these games go on sale they do match the cost of the physical version, but apart from this short window digital games seem not to have the adaptable pricing which exists within retailers.

I hope in the future that this changes. Most of all because digital consumption is now the future, and old hoarders like me, while our game stores will exist in the same way that vinyl records make a stand even today, their presence will likely diminish to a degree where the dynamic pricing is all but forgotten. I shouldn’t have to wait for a digital version of a game to go on sale, but I do. I would probably consume more digital versions of games if Xbox was better at matching the price of the physical format. Until then, I’ll take a small amount of pride in owning every physical copy of every Assassin’s Creed game.

Nick Burton
Nick Burton
Believer in the power of video games and the conversations surrounding them. Writer, creator, and thinker above all else.


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1 year ago

Depends where you buy. I usually buy games at https://royalcdkeys.com. Thanks to this, I can be sure that I am buying the best games at a great price. That’s why I recommend this store.

Jason Parmar
Jason Parmar
2 years ago

I’m quite late on this, but I do prefer digital to physical. For two reasons.

Firstly, I used to live mostly in Germany and a bit at my parents in the UK, I was between 3 different Xbox Ones as there was one at work. The ease of never carrying physical discs and just logging into a console to play and pick up instantly was extremely useful.

Secondly, and more importantly, you own those games in perpetuity, and this is what I assume the article might miss too. Have you ever purchased a game twice, I know I have, I think I did Crash Bandicoot on PS1/PSP/PS3. Backward compatibility is talked about a lot, but the PS5 is only back to PS4, not PS3, making your PS1, PS2 and PS3 games useless/worthless unless you have a vintage console that still works – and space for all the discs and consoles that most people really don’t have. I think trade in culture is cool in physical defence and I actually do kinda like it sometimes (tbf, they could re-create that digitally, but probs not a good idea) but with digital I can always access and play my full back catalogue instantly and I think for the next 5-20 years that’s clearly better than something that in practice just loses value (unless you buy physical and instantly trade in, in which case, stick to physical for that discount).

Sam Hofman
3 years ago

I don’t know anyone who prefers digital downloads over a physical release.

3 years ago

yes he did in away that Microsoft , Sony and Nintendo can charge more for a digital copy people are will to buy it at that cost where a physical copy has to deal with if a game doesn’t sell it become a cost to every one the chain a physical copy take up space and so the retails need to shift it has quick has possible

Justin Retzlaff
3 years ago

You’ve done a great job explaining the difference between digital and hard copy but have failed to answer the question of why the huge price difference. It obviously costs a company more money to produce a game disc than it does a digital copy.

3 years ago

Yeah, I find it infuriating. I haven’t bought physical media for my console in years. Every single time though I get annoyed that I’m paying more than those who are buying them on physical media which costs MS more.

4 years ago

“There is no other place you would go to buy that copy of the game aside from a few dodgy online marketplaces selling digital copies of games that seem too cheap to be legitimate.”

With all respect but do your homework. Companies like CD Keys aren’t dodgy. They just use the market and are able to buy keys from legitimate sources. The only dodgy companies are G2A and Kinguin who aren’t resellers but marketplaces for other buyers and that could form a risk. But buying from CD Keys is not risky, they are normal resellers.

Reply to  Rob
4 years ago

Cd keys is dodgy. The will ask for copies of your ID to verify purchases in some cases, even when using paypal as a service. What online store does that? No store should need you to send them digital copies with picture of your licence or ID to buy a game.

Reply to  Samalo
3 years ago

No…they don’t. Ever. I’ve purchased no less than 40 games off cdkeys.com for myself and friends. Never been asked for anything other than normal payments. Stop spreading misinformation about things you clearly don’t know about.

Edgar Wulf
4 years ago

Physical until I kick the bucket.

Reply to  Edgar Wulf
4 years ago

I tend to agree with you, but as someone who has never purchased a digital game, I feel that will change with the xbox series x/ps5 generation, for a few reasons. If the new consoles allow for multiple games to be kept open at once, where you can pick up right where you left off with little to no loading times, at that point digital becomes much more attractive to me. I contrast that ability with having to swap discs every time I want to switch games, and even though I prefer physical, it’s getting to the point where the convenience of digital is becoming too good to pass up.

I don’t love the thought of giving up discs (I still buy 4k uhd movie discs for the films I really like instead of streaming, primarily for the marginally better picture quality and significantly better audio), but I feel like the new consoles will make digital purchases so much more appealing it’s going to be hard to pass up going that route.

Edgar Wulf
Reply to  medman
4 years ago

True. And I don’t deny the appeal of the digital format. Changing discs and cartridges — what used to be mundane — has now become a chore. It’s much more convenient to quickly browse across your digital catalogue and boot up a game in seconds.

The new consoles will definitely further push towards this, but unless they make a leap from the meagre 1TB storage space, physical media will still be relevant. Even though there’s rarely any difference now between the size of installed data.

What bothers me the most is DRM and the fact that I don’t own my purchase. This gives the publisher more control over how the product is distributed. In some cases, too much control. Like what happened to Scott Pilgrim vs. the World; it’s an excellent beat-em-up, but there’s no longer a way to purchase or play it — none.

Companies like GoG are taking a stand against this, but that affects the PC scene for the most part. If Sony and Microsoft took a similar approach, I would be more open to digital. But that’s unlikely to ever happen.

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