they no longer have to worry about printing games (so that cost is gone)
While digital distribution is definitely cheaper, it isn’t free. The cost of printing games got replaced with the storefront’s cut. Steam takes 30%, for example.
I’m not defending the $80 price tag, but the storefront cut is a personal concern for me as an aspiring indie dev. Sadly, the 30% cut is also being pushed as an “industry standard”.
While that is true, from what I understand from reading up on this topic some more, Nintendo (for example) has always taken a 20% cut, even on physical games and retailers would take ~25% in addition to another ~5% by the manufacturer. With physical sales, the publisher could expect about 50% of the sales while with digital sales you can expect roughly 70%. Of course, this doesn’t even take into account things like licensing fees. I am sure this is all very simplified and subject to change, but it gives us a rough idea of where the money is going - in the pocket of the publisher.
While digital distribution is definitely cheaper, it isn’t free. The cost of printing games got replaced with the storefront’s cut. Steam takes 30%, for example.
I’m not defending the $80 price tag, but the storefront cut is a personal concern for me as an aspiring indie dev. Sadly, the 30% cut is also being pushed as an “industry standard”.
While that is true, from what I understand from reading up on this topic some more, Nintendo (for example) has always taken a 20% cut, even on physical games and retailers would take ~25% in addition to another ~5% by the manufacturer. With physical sales, the publisher could expect about 50% of the sales while with digital sales you can expect roughly 70%. Of course, this doesn’t even take into account things like licensing fees. I am sure this is all very simplified and subject to change, but it gives us a rough idea of where the money is going - in the pocket of the publisher.
Sources (not the best but there isn’t a lot of public data on this): https://www.konvoy.vc/newsletters/evolution-of-console-business-models https://www.serkantoto.com/2020/12/30/price-video-console-game-digital-physical/ https://www.zeldadungeon.net/forum/threads/game-price-breakdown-digital-vs-physical.62076/ https://globalxetfs.co.jp/en/research/video-games-esports-building-on-2020s-rapid-growth/index.html