If these people exist they should be so few in numbers that it doesn't warrant launching DD for them. People buy digital (both MP3s and games) because they can save money. I can't think of any online store I'm buying from where prices are on par or even higher than the actual prices for physical copies at retail stores.
That is backwards as historically speaking it was the other way round.
Ha ha - you seem to be arguing strongly for something where we largely agree. I'm used to arguments where I'm actually on the other side of the person I'm debating.
Maybe your words are just coming across differently than you intend them to...
But yeah - the number of people buying DD on impulse or convenience right now is pretty small. The number was between 5-20% for the two titles they just launched, and many of those people would have still picked the game up at retail anyway if that was their only option.
But digital transactions are becoming more and more common, and it's an option that the Big 3 are going to have to provide as we move forward - so Nintendo/MS/Sony need to get the infrastructure and systems design in place regardless. And considering that Nintendo just sold those 5-20% of sales at a pricepoint considerably higher than wholesale - I'm sure the option was worthwhile for those sales from Nitnendo's standpoint - even with the small numbers involved.
As for DD pricing vs. retail - I've seen numerous instances where you can get something cheaper at retail than DD, but you have to be willing to look around for various sales, 2-for-1 deals, rebates, etc. But generally speaking, yeah, DD is often comparable/cheaper in price than the regular retail price.
But that is the point that you seem to keep glossing over. The dedicated gaming device is a very different business ecosystem than mp3s/mpegs/PC games/etc. The same rules don't apply. Music/movie publishers don't need to sell the hardware to establish their product. There are a gazillion different devices by a trillion different manufacturers that will play their digital content. Steam/iOS/Android game publishers don't need retail to sell their games, because people buy those devices for a million different reasons and uses.
Gaming dedicated devices need strong retail partnerships to sell the hardware. Unless/until Sony/MS/Nintendo change the requirement for a dedicated piece of specific hardware (which would be a radical overhaul of the entire ecosystem that exists for dedicated gaming devices), they need retail to be a very important partner in the process.
I'm not disagreeing with your points. I think the current strategy that MS/Nintendo are using with the DD/Retail comparisons leaves little to be desired by the consumer who would prefer to buy their retail games digitally. I'm just trying to explain why Nintendo/MS have chosen this course of action at this point. They need to find a way to offer the digital option for the ever-growing audience that wants that choice, but they can't do so in a way that leaves retail feeling disadvantaged by the DD options. Retail WILL just pack up and bolt from the dedicated gaming business if its not a worthwhile place for them to be. They pulled right out of gaming altogether back in the early/mid 80s when there was no money in it, and they'll do the same in a heartbeat today if there's no money in it for them. Retail only bothers with the hardware because the software makes it worthwhile. If the software is no longer worthwhile - retail is gone, and there goes the entire distribution network for selling tens of millions of pieces of hardware every year for every platform.
If you have an idea for replacing retail from the distribution side of gaming, and hardware in particular (although as I mentioned before, I still don't see any viable means of replacing the massive retail software sales that come from the holiday season every year for the dedicated gaming system business either), then by all means let's hear it. That would go a long way towards solving this issue, and towards giving the Big 3 more leverage to really be aggressive with their DD offerings.
Nintendo doesn't want to be stuck with an inflated DD strategy. They would love to ditch all of their cartridge/disc manufacturing, eliminate all of their shipping/inventory/overhead costs and pass some of those savings on to their customers. But they can't just piss off their retail partners in the process. That's the balancing act that I keep referring to. This is all still pretty new territory for all 3 companies, and their strategies will keep evolving and changing over time as they try to find the right balance.
Sony's prices are not lower than actual retail prices thus they simply compensate for price reductions common in the retail space. I already pointed that out. Sony isn't undercutting retail. Nintendo is anti-advertising retail DD.
The wholesale prices that retailers pay are based off of MSRP pricing. So yeah - if Sony has lowered the MSRP of the DD offering without lowering the MSRP of the retail offering - then yeah, they are undercutting retail. The difference between the wholesale and MSRP pricing is the retailers' margin. If you drop the MSRP without dropping the wholesale price, then you've cut right into their margin (and they use that margin to compete with sales discounts, etc. - once you've slashed the margin between MSRP and wholesale, you've slashed their ability to compete on price). It's a game that Sony seems willing to play with their retailers - and I don't doubt that it is leaving retailers far less interested in carrying/promoting those products where Sony is playing this game. But that is a risk that Sony seems willing to take, whereas Nintendo/MS haven't wanted to risk pushing their retail partners that far.
Iwata's comments about lack of inventory concerns for download cards vs. retail software and that that would be taken into account with Nintendo's pricing led me to believe that the wholesale price (which isn't charged until the card is activated, remember) would be higher than for normal retail games. Wasn't said specifically, but that was how I interpreted those comments.
Yeah, I don't know the specifics of the wholesale model with the DD cards. But if it is structured as you just said, you can be sure that it was at the request of the retailers themselves.
