Ubisoft’s recent financial earnings report revealed that the company’s digital sales helped weather the storm of a massive drop in overall revenue, along with the fact that the PC and PlayStation 4 are their most important platforms. During the Q&A session with journalists and analysts listening in to the conference call discussing the report, Ubisoft’s Yves Guillemot answered a question about their prices of games available on their digital platform, and the answer was somewhat revealing! Guillemot’s answer finally gives insight to something that I’ve been wondering for a while – why don’t EA and Ubisoft lower their digital console sale prices over time, especially in the year following a game’s launch? Hit the jump to see his answer.
This is probably the first time anyone’s actually posed this question and put a game company’s CEO on the spot to answer it. One of the analysts asked why Far Cry 4 on the PlayStation store was still retailing for $60, the same price it was in stores in the first weeks after the launch, while a physical copy of the game could be bought at Amazon’s online store for $24. Whenever this question has been posed to other publishers, the response has always been something along the lines of not angering their partners who distribute and put the games on sale in retail stores, which makes sense – the retail arm of the videogame, music, and film industry is huge. But, its also a dying business model, as Steam perfectly illustrates all year-round with their season sales and flash sales on weekends.
“Digital is more reactive than what we put in stores, but at the same time, it doesn’t react as fast on consoles than it does on PC,” Guillemot said in response. “What we can say is that when games are older than one year, digital is a lot more dynamic on console because there are less units in stores. It’s a new business, a new trend, and we think all this will get more in line with time, but for sure, at the moment you see all sorts of prices depending on who is doing a promotion for that specific week.”
“If you look at the PC post-release discount trend, I think you will see that on consoles, but you will have to wait a little bit of time for that to happen with the same speed. Also, one thing to consider is related to stocks; if we have stock in stores, we tend to make sure we decrease the quantity of units in stores before going digital with lower prices.”
Ubisoft’s CFO Alain Martinez also chimed in with another statement, saying that “we are actually more aggressive on the PC side where digital is very, very strong. We tend to be more conservative on the digital side for more console and more flexible on PC.”
So, for Ubisoft at least, they wait until the retail channel has mostly depleted itself before they look at selling games at lower prices on the PC. On the console side, as Yves plainly stated, they don’t drop prices as quickly because people who can’t find the game in stores are more likely to buy them on the stores for the consoles themselves – its a win-win for them regardless. Given the choice of either netting less profit from a physical disc sale, or netting more profit from a digital release that carries way less cost to the publisher, I think we can see where Ubisoft’s thought train is going.
Now, look at the example of Assassin’s Creed IV: Black Flag on PS4. The Deluxe Edition on PS4 was available on the console’s launch day. It was also a tad above R799, if memory serves me right. You can also stroll into BT Games today and pick up the game on the PS4 for that same R499, but it won’t be the same edition, it’ll be the vanilla version. The PC version? Its R99. I’m not joking. I can accept that the continuing relevance of the brick-and-mortar-walk-in industry will mean that digital sale prices for games available as a download will continue to be artificially high, but seeing this happen to a game that is easily almost two years old is pretty sad.