GameStop thinks that cheap digital games are a ‘mistake’

The president of GameStop has warned the games industry that it risks repeating the mistake of the music and film sectors by devaluing its main commodity.

The average price being paid by a customer rate full game triple-A download is $22,” president Tony Bartel told investors, as transcribed by Seeking Alpha. When asked what price a game expected to pay for a recently released full game digital download, the answer in these surveys was approximately $35.

We want to help ensure that our industry does not make the same mistake as other entertainment categories by driving the perceived value of digital goods significantly below that of a physical game.

When the free digital token programs end, we believe that the industry will need to work together to continue to price goods in a way that sustains profitability and encourages a great innovation that this category needs.”

Bartel also slammed the amount of software being bundled with hardware and argued that GameStop plays a key role in keeping prices at a premium.

It is important to note that like the industry, much of our full game digital content was given away at no cost to the consumer with the hardware bundle,” he added. In fact, year-to-date, we estimate that over $100m worth of games have been digitally delivered for free in hardware bundles.

Our buy-sell-trade model has enabled videogame customers to purchase a full game physical disk for full price, believing that they have a $20 residual value for that game. Since, this residual value is 100 per cent funded by GameStop, publishers benefit by maintaining a higher retail price and our able to remain financially viable.”

On the one hand, none of this should come as a huge surprise owing to the fact that these comments come from a business whose main revenue source if physical games.

On the other hand, here in the UK, GAME has done a decent job of forging a firm foothold in the digital market. Indeed, it estimates that in 2013 some 35 per cent of digital console games were purchased at retail.