What’s in a price
14 Mar

Whenever you purchase a game, you pay for a number of things, the most costly being the development costs, the cost of paying all the developers, designers, testers, animators, etc. to create the game that you’re about to enjoy. You also pay for the marketing department who spent money to give you an incentive to buy by showing you ads on the television, on the websites you love or in magazines you read. However, these are about the only costs that really are about creating a game and making you buy it.
Whenever you buy a game in store or online, the costs of delivery vary a lot, but most of the time the price is the same. Sometimes it’s the physical retailer who puts pressure on the publisher because he’s afraid of losing sales. Sometimes, it’s just the publisher wanting to make a bigger margin, expecting people won’t notice. Here’s my analysis of how the price differs for these two methods of selling.
Physical retailer
There are some obvious costs like the packaging which includes the box, the disc or cartridge and the printed manual. Then you pay for the people working at the store, for the shelf space (bigger titles pay to be at eye-level and have more copies in front). You also have to consider the transportation of the game and the storage. These are all unique to a physical store. However, buying a physical disc does have some advantages: you can lend it to people, you can resell it and you have a sense of ownership (if that matters to you). The reselling part is actually a big factor here, even if you just sell it at 20% of the cost, that’s a pretty decent rebate over an online version that you can’t get rid of.
Online retailer
Online stores are not without expenses though. The publisher has to pay for disc storage (which is arguably pretty cheap), bandwidth (also kinda cheap) and the people managing the online store (not as cheap). The advantages of buying online is that you can redownload the game at any time on any computer or video game system (I hope) and the game will never wear down or get destroyed by a pet or little brother.
The costs appear to be tremendously smaller when buying online, why is that not reflected in the price of games? Fortunately, there is hope: Steam and indie games are demonstrating regularly how good games at reasonable prices can be an excellent business model.

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