Nintendo is getting serious about online!

[Mnementh]

wfz said:

RolStoppable said:

MasterVG71782 said:

I still think the lack of a game case, instruction manual and no disc having to be made should reduce costs and they should move that over to the consumer.

Going digital also means that the retailer cut vanishes, so all things considered, downloaded games should be significantly cheaper than at retail.

The problem is that retailers won't like such a pricing strategy (being severely undercut by download prices) and thus limit shelf space for both the console and its games. Retail presence is still incredibly important for console manufacturers, so they absolutely need to appease retailers. This is also why PSV games only have a 10 % discount as downloads, because otherwise retailers may refuse to carry the system altogether.

I don't understand that logic, so if you could let me see that clearer I'd really appreciate it. This is how I see it:

1) Physical.

Physical copies cost more to produce. By the time retailers like GameStop get these copies, they hardly make a profit out of selling them. Instead, they make most of their profit by re-buying them cheaply from consumers and then selling them for a higher used price back to other consumers. When GameStop sells a new copy of a game for $50 dollars, they probably make less than $8 on it (I think i'm being generous, but I genuinely don't know).

2) Digital.

Retailers pay only Nintendo's basic fee for having digital copies, as there are no other costs involved. Retailers simply have codes and they can sell them at whatever price they want. If Nintendo takes even $20 for each digital copy sold, that leaves GameStop with every single extra penny as profit. That means if GameStop sells it for $50, they gain $30 profit! And they don't have to worry about supply constraints or shelf space.

 

Now, can you tell me where my logic is wrong and how this is bad for retailers? I'm confused.

If games are sold as download, the customer can do it from home instead of going to Gamestop. If the download is too attractive, nobody will care to visit the retailers.