Sony’s PSN Day 1 Digital program may provoke ire of retail partners
Sony has become aggressive with selling games digitally through the PlayStation Network, but the company has announced a new program called “PSN Day 1 Digital” where big-name games will be released as a full download the same day the game is available on retail shelves.
The list of games that will be available via this program are impressive: Resident Evil 6, NBA 2K3, Dishonored, Doom 3: BFG Edition, 007 Legends, Medal of Honor: Warfighter, Need For Speed: Most Wanted, and Assassin’s Creed 3. That’s a nice list, and NBA 2K3, Dishonored, Doom 3, and Most Wanted customers will be able to save 10% off the normal price by having a PlayStation Plus account. A comment under the article also stated that many games will be available at midnight as well, negating some of the timing advantages of buying a retail copy at a midnight event. Well, at least depending on your download speed.
These advantage may anger retailers, making this move by Sony bolder than it first appears.
The power of retail
Retail brick and mortar stores are where people buy their systems, and those systems are sold at margins that are slim to non-existent; GameStop and Walmart want a reason to stock hardware, and that reason is usually games and accessories. It’s hard to underestimate the power of retailers in the gaming industry; Sony increased retail margins on the PSP Go so brick and mortar stores would stock the all-digital system. When free copies of the OnLive version of Deus Ex: Human Revolution were included in retail boxes, GameStop instructed employees to open each box and destroy the voucher. The game was then yanked from shelves until Square Enix killed the promotion.
Have you ever wondered why so few systems come with HDMI cables? They’re an easy add-on sale for retailers, and they help to offset the cost of stocking and selling consoles. Sony’s use of proprietary memory cards in the Vita helps retailers up-sell accessories when they buy the portable. If you buy certain developers or publishers a drink at E3 you may hear some stories, off the record of course, of concessions made to that game or that piece of hardware to get the stores to carry them. Retail is powerful in the gaming industry, and Sony seems to be willing to tempt fate with this promotion.
Digital copies of games are better for everyone in the industry (except, arguably, the gamers). No one has to pay to ship a physical product, and they can’t be traded in or resold. GameStop all but relies on used sales and pre-orders to keep the company’s profits high and to manage inventory, and this move robs GameStop of both sources of data and revenue. If the program continues, gamers will have a powerful reason to sign up to PlayStation Plus and pre-order their games through Sony directly, cutting retailers out of the picture all together.
This isn’t the first time Sony has tried this, as Borderlands 2 was also available via the PlayStation Network on the first day of release, as was Mass Effect 3. Vita games are also usually available on the first day of release, but portables have the advantage of a high rate of add-on sales with memory sticks, cases, and other fun, high-margin stuff. In this case Sony isn’t just offering a high number of popular console games on day one, there is also a discount involved that directly undercuts retailers.
It’s going to be fascinating to see how this move plays out, and I’m curious if Microsoft is watching to see if they can get away with the same thing. We’ve laid out the reasons why we don’t think an all-digital console is workable in the next generation, but Sony seems increasingly willing to push towards a digital future despite what might be intense pressure from its retail partners. The last thing GameStop wants is Sony to put a toe in this pool, only to find the water quite warm and inviting.
We contacted Sony for comment, and have yet to hear back.