Downloadable “Pricing Parity” Doesn’t Make Sense

Okay. This really has been bugging me lately ever since the PSP-Go came out. Everyone that follows Sony pricing knows that their US downloadable prices are usually never comparable with their boxed UMD (or even non-UMD pricing). And if you think about the entirety of how the distribution model works, it’s insane that downloadables are not cheaper than boxed. It’s easy enough to calculate after all.

If you do a break-down of the cost by percentages in a rough scale, you would image that:

Development Studio: 50%
Publisher: 25%
Operations: 10%
Retailer: 5-15% (including discount)
Discount: 10%

Here is where it’s strange. In both Operations and Retailer, Sony basically absorbs most of the cost here since bandwidth is cheaper than creating packaging and distribution. Not to mention that you basically cut out the retailer altogether which means there’s at least a 5% savings. So why is it that downloadables never see this particular savings being passed on? Let’s be frank here, if you look at music CDs that you buy through iTunes, generally they’re about ten or eleven dollars compared to the retail thirteen or fourteen when they come out. That markup is what is being cut out.

With Sony’s PSN, it doesn’t seem to be the case until after the item is out for a long time, which means not only do they shoot themselves in the foot for adoption rate, but the actual break down shows that they’re basically taking out the retailer and taking that chunk too. Nice. Doesn’t make you want to go buy anything online, now does it. For me? If you’re going to make me buy it for the same price, I’ll take the pretty box and booklet any day of the week.