On Amazon, digital copies of a game usually cost $10 more than an identical physical copy. Why is that? It doesn’t make sense. Physical copies have material cost, storage cost, handling cost and transportation cost. Digital copy requires none of these you get a code directly and you download it yourself. Digital therefore should cost less and certainly not more. So why is digital more expensive?
It is not uncommon for game companies to have agreements with retailers that they would not sell cheaper digital download copies thereby stopping potential buyers to go to the retail stores.
After all retailers invest a lot to setup the games in their store.
There are probably other reasons too, but if I buy the digital copy, I can get it right now. Amazon’s free shipping takes 7-10 days most of the time. If I want it right now, getting it right now is more valuable to me, and Amazon is betting that it’s at least $10 more valuable.
A higher price doesn’t necessarily represent a higher cost to the retailer.
Amazon is online merchant not a store…
Yes but the game company sell to both Amazon and other stores. If the game company allowed the digital download to be cheaper they would be hurting their other customers who own said stores. So it’s set up, want it now, you will pay the most, willing to drive to the mall you should save some money and can still play it later today, or get it in the mail in a few days.
Real items are typically retail, with the price being set by the store. Digital items are usually direct from the developers, and they control the price.
Also, digital is more in demand, so prices stay higher. Supply is irrelevant.
It’s both. Companies sell products to Amazon, who stock them in their giant warehouses all over the country. That makes them a store.
True, they also act as a middleman for others and that might be the larger share of its business.
Amazon covers all the permutations.
This sort of thing happens sometimes with all sorts of things that are available in both physical and digital forms, like books, music, and movies as well as games. (In fact, thanks to Amazon’s “AutoRip” feature, once in a while the cheapest way to get a digital copy of an album is to order the CD, even if you’re not going to do anything with it when it arrives in the mail.)
Possible reasons for this (as others have mentioned) include:
- The prices for the two different formats are set by different entities that don’t necessarily consult with one another.
- Customers are willing to pay a higher price for the digital download due to the convenience.
- There are special limitations, regulations, agreements, promotions, or sales that apply to one format but not the other.
In general, it’s a fallacy to assume that retail prices for products necessarily are or should be proportional to the cost of producing and providing them.
The above is true, but Amazon is rarely the best-priced digital reseller. There is in fact huge variances in digital games pricing, and different digital resellers will have the same game – even on the same platform, e.g. Steam – at prices that differ from 20%-90%.
Amazon in particular has the occasional good sale, but usually they pretty much just sell at the digital MSRP. I suspect this is because they’re too big to give a damn and modify pricing on a regular basis, whereas the other (all tiny) digital resellers are constantly competing with each other.
When you want to buy a digital game or do a price comparison, don’t just look at Amazon, look at a website like www.isthereanydeal.com that aggregates pricing information from multiple digital resellers (including the big boys like Amazon, Steam itself, Origin, Humble Bundle, and various smallers players). Almost always you can find prices 20-30% cheaper than Amazon’s digital pricing, and once in a while you can find games for like 90% off what Amazon or Steam charge you directly.
Digital games very often ARE cheaper than their physical counterparts, just not from Amazon. Amazon’s digital pricing doesn’t make this apparent, but that’s only because they’re resting on their laurels and not engaging in the cutthroat pricing that other digital resellers are.
So check out the small guys instead; that’s where most of the savings are.
I’ve read a number of posts from Amazon’s old guy in charge of digital games on other forums so this is based on that:
Amazon’s digital games department (PCDD – PC Digital Downloads) is a separate entity from it’s physical games department. So a copy of “The Evil Within” on PC-DVD is bought by a different department than “The Evil Within” via PCDD from Amazon despite the fact that both instances ultimately just get you a Steam activation key anyway. You have different people making different deals so the guy calling Bethesda about PC-DVD copies might be talking to someone different than the PCDD guy. And, as others noted, boxes take up space so the publisher has incentive to move out excess copies of a slow selling game and Amazon has the same incentive to get the boxes out of their warehouses. But the simplest answer is that, unintuitively, Amazon’s physical game media pricing and PCDD pricing aren’t related much at all, even for the same game.
Amazon used to be much better about their PCDD pricing but their old guy was moved to another department and his replacement was nowhere near as effective in convincing publishers to discount stuff. Now they mainly just have seasonal sales (Summer, Christmas) and pricematch Steam when they have the same product. Digital game pricing as a whole has experienced a pullback from a few years ago when stuff was often deeply discounted early on. Now it takes longer for stuff to get a deep sale and even that’s more likely to be 66% off than 75-85%. I think as publishers were less interested in giving Amazon deep sale prices, Amazon pretty much wrote off trying to enthusiastically pursue the PCDD market.