The Electronics Entertainment Expo (E3) of 2013 featured Microsoft introducing its perception of the digital future. Due to a communication failure, this was met with immediate disdain and blow-back from a consumer base the likes of which the gaming had only seen once before (Mass Effect 3). In case your memory is fuzzy, Microsoft would allow you to share your digital games with up to 10 friends. Two players could concurrently access the same game but it required a perpetual online connection. The 24 hour check-in requirements and inability to access any games because of a downed internet line rightfully raised an eyebrow. Unfortunately, Microsoft threw the baby out with the bathwater. This article is not about looking back. This article will highlight some things Sony, Microsoft and Nintendo can do to expand their digital downloads moving forward.
1) Perceived price advantage
A digital game does not incur the same shipping, stocking, and box art costs as their physical counterparts. Why not pass those cost savings on to your consumer?
Counterpoint: But console manufacturers and publishers have to keep retail spaces happy.
Really? Then how does Black Friday strengthen that relationship? Retailers slash console and game prices, add customized bundles, and attempt to price match to retain lost sales to lower-priced competitors. At what point does the retailer take their upstanding relationship with manufacturers and publishers into consideration? Each retailer, generally operates at a loss the first 9 months of the year. The holiday season is the time the company must turn a profit. Hence, the only bottom line retailers are concerned about is their own.
Moreover, have you ever heard of Amazon? Online retailers are racking up profits and the gaming industry utilizes those avenues. While a physical presence in brick-and-mortar retailers is a plus, many items sell well with virtual presence only. Some examples of this phenomenon are the Kindle and Kindle Fire products, the OnePlus One, Netflix, Hulu Plus, Amazon video and iTunes. Check out Amazon’s profits below.
2) A legitimate rewards program:
If the manufacturers digital games prices matched physical prices, a digital store credit would work wonders. Assuming storage space was not an issue, how often would you buy a game if you knew you had a $1 0-$15 (16-25%) discount awaiting redemption on your account? Quite often right?
Counterpoint: But that’s not discount.
Perceived price advantage is they key takeaway here. Most people view post-purchase rewards/benefits as a value*. This generates a value proposition not only for the current purchase but a realized value on the next one. A rewards program’s purpose is to influence revenue-generating purchasing behavior. If a marketplace gives you reason to return there, the rewards program is effective.
*Kotler & Armstrong, (2013) Principles of Marketing, Prentice Hall
3) All entertainment is competition
In 2009, the online news source The Guardian highlighted videogames’ outperforming movies in revenue. Even if you summed the article up to conjecture, the fact is time and money are always limited resources. An episode spent watching The Walking Dead is 43 minutes spent NOT watching The Blacklist nor playing Diablo 3. Also, playing Diablo 3 on Xbox One is time not spent playing it on PC. This is, perhaps, the strongest reason for improved digital marketplaces. Green Man Gaming (GMG), Gamersgate, CheapShark and Steam all compete with ridiculously low prices on PC games. I just recieved a 20% off coupon from GMG just for being a customer. That 20% coupon definitely help me pre-order games for $12 off. That’s a fantastic incentive and something that console digital games must match.
Summarily, I want to consume current games digitally. The ease of installation and initiation without moving off my couch is great. Right now, I can get all of these benefits from my PC even though I want them on my console. These were some the ways I believe Sony, Microsoft, and Nintendo can shape my digital future. Let me know what you think.