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DIGITAL RETAIL FOCUS


The price of digital


The download marketplace can be just as competitive – if not more so – than the High Street when it comes to pricing. James Batchelor looks at how promotions and steep discounts fuel the growth of this burgeoning sector


IT COSTS less to buy games from Tesco than it does via Steam. Retail price wars and general cost depreciation means that, on average, games lose 25 per cent of their value in just one month on the UK High Street.


And that just doesn’t happen in the same way in the digital space. Whereas Bethesda and GAME cut Skyrim’s price to just over £22 before Christmas, over digital platforms it held its £34.99 RRP. Retail naysayers would have you believe that digital distribution will dominate the industry. But surely consumers don’t want to pay more for a product that, in theory, should be cheaper with no physical component? “Sometimes the fact that digital prices don’t drop as quickly as physical becomes a problem for our retail clients since the end consumer clearly disapproves of the large price gaps between the two,” says Anders Emblad, CEO of Gem-owned white label digital providers Ztorm. “It can make the retailers look bad.” Metaboli’s European sales director Mario Utz adds: “We face


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The fact that digital prices don’t drop as quickly as physical can make retailers look bad.


“ Anders Emblad, Ztorm


Skyrim has held its value much better in the digital space –and still continues to sell well


a situation where the prices in physical retail are often lower than digital. We are trying to reduce this gap but we have to react differently with each individual title.”


Of course, discounting does happen in the download space. And these deals can be more ad-hoc and flexible than they can on the High Street.


BUILT ON BARGAINS Steam’s much-lauded sales often see hundreds of pounds worth of games bundled together for the same price as a single boxed title. Gamersgate’s business developer Gustav Nisser says that while price cutting on the High Street can effectively ‘kill’ a game, that’s not the case in the digital arena.


“If we discount a game – even by 80 per cent – over a weekend, it doesn’t kill the game,” he says. “In physical stores it does. In digital stores, we’ve seen it breathe new life into the title and its franchise, subsequently increasing its sales even when back to full price.” It’s not just the latest releases that enjoy healthier sales. Back catalogue titles that would be relegated to pre-owned shelves in


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