Codemasters STEAM Pricing

Indeed.

My point is, surely Codemasters can see that the retailer selling it for £17 will sell more than the retailer selling it for £30 so why do they insist on their current pricing structure which means they sell less via a channel which could potentially give them BIG rewards. They could sell for £20 on STEAM and still maybe double their profit compared to the standard retail version.

You have to ask yourself WHY a company will go out of it's way to force customers away from a more profitable channel thus REDUCING its bottom line, especially when it has shareholders?

Maybe it is the retail channel causing the problems, who knows. In the meantime, they obviously have their own agenda.
 
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It would make more sense for them to sell online at cheaper than retail. if the shops buy 100,000 copies for £15, then you undercut them at £10 online, and 100,000 customers buy your copies rather than the shops' copies, you're essentially shifting double the sales, or getting £25 per customer. Once it's gone to the shops, from codemaster's perspective it's sold, whether the shops sell their stock or not.

I'd assume the reason they don't sell cheaper than RRP is because if they recommend that retail price to resellers, and then undercut them, it's not exactly moral business practice. Sure the resellers could lower their prices, but recommending a price and then forcing them to lower it is a good way to avoid future business. It's a shame and doesn't seem to make sense that retail is cheaper than downloads, but, meh.
 
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Or maybe they have enough sales on Steam with their big markup that they don't care about potential loss of custom - which as you've already pointed out, is potential custom which will buy their game anyway. No one cares how many people buy the game, they only care about total profit.

If they make £5 from a sale in a shop and £20 from a sale on Steam, they need only sell a quarter as many games on Steam for the platform to prove more profitable to them - especially if you consider that 'lost' custom is only people who will go to their local shop and buy the game anyway.
 
Killerkebab said:
Or maybe they have enough sales on Steam with their big markup that they don't care about potential loss of custom - which as you've already pointed out, is potential custom which will buy their game anyway. No one cares how many people buy the game, they only care about total profit.

If they make £5 from a sale in a shop and £20 from a sale on Steam, they need only sell a quarter as many games on Steam for the platform to prove more profitable to them - especially if you consider that 'lost' custom is only people who will go to their local shop and buy the game anyway.
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I think the point to be made is that lowering the prices could actually increase total profit.

For example, say 100 people are planning to buy your game. 10 of them are willing to pay the £20 for online purchases, and the other 90 would pay £5 from the shop. That's £650.

Now say you lower your online price to £10, and some people would find it simpler just to pay the extra £5 and buy online. Now if 40 people pay £10 to get it online, and 60 pay £5 at the shop, you have £700. Well technically more, since you are selling in bulk to the shop, and not each individual customer at that shop. So it wouldn't matter if their sales dropped.

Or you have people like me, who have to buy a game online, because there's no way I'd be able to walk into GAME and pick up Left 4 Dead at 15. If they don't lower prices, I can't buy it. Right now for example. If L4D was £15, I'd snap it up, however, at £27, I can't afford it with inFamous coming up, and the need to buy a sound card and a good set of headphones.

This is the whole idea of sales, usually. Reduce the price, so more people buy it and you get more money.

Normally, it'd be about hitting the right balance to get the maximum profit, but in this case, undercutting your own RRP is a bit of a dirty tactic and resellers are less likely to want to purchase your product in the future if you're going to sell for cheaper than them and steal customers. Especially considering with a digital download you can ALWAYS undercut what it would cost for a disc based copy. More than likely, the price will come down after a while, to below RRP, to reflect what the shops are charging. This way they can have all money from the initial buyers, willing to pay full price, and still get the people that were uncertain and wouldn't pay that much. Also, you don't risk upsetting the retailers.
 
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Good post.

If they were keeping prices high to appease retailers, could that be classed as price fixing or against some other law? Can you be anti-competitive against yourself? Keeping your RRP high as to sell your digitally distributed games at a price not to upset the traditional retailers? (I know nothing about LAW so that maybe totally wrong).

Also, being honest, YES, I do feel sorry for the independents trying to make a living but we all know that game sales on the high street are DOMINATED by 1 maybe 2 companys at a push. Maybe they have a hold over the publishers which itself would be wrong and in nobodys interests as you have to question what else they are upto were this to be the case?

Or, maybe it is just that the publishers are greedy but they cant be as they would make more bottom line profit if they reduced their digital distribution prices so it can not all be about the profit.

Either way, something just does not seem right.
 
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Gimpymoo said:
Good post.

If they were keeping prices high to appease retailers, could that be classed as price fixing?

Keeping your RRP high as to sell your digitally distributed games at a price not to upset the traditional retailers.

Also, being honest, YES, I do feel sorry for the independents trying to make a living but we all know that game sales on the high street is DOMINATED by 1 maybe 2 companys at a push. Maybe they have a hold over the publishers?

Either way, something just does not seem right.
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Yes, it is a bit annoying for them to keep RRP's high, but unfortunately, unless we could get EVERYONE to boycott them, which is neither practical nor really possible, that isn't going to change. Plus I'd rather either buy a game full price or wait a few weeks than boycott a company for months just to make a point. I suppose this is what is stopping them dropping prices. They know it won't happen.

And yes, GAME do seem to have a hold on the UK game sales market. If I'm not mistaken, don't they actually own gamestation, under a company called Gameplay (which also dominate europe, too)? Apart from online shops, Gameplay do seem to have a monopoly over high street game shops.

Edit: yeah, after checking, it seems both GAME and GameStation are under the company Gameplay, and are both registered to the same address.

Cheeky really. I remember staying away from game after they tried to sell me a clearly taped up broken case, and I went to gamestation instead. Turns out it all goes to the big guy at the top anyway.
 
I think people forget that game companies have a responsibility to their retail customers not to totally kill off that market, that said pc games on shop shelves are becoming harder to come by these days.

Id like to see a fixed price policy for software, new game, £20 retail, £15 digital for pc stuff. I do now prefer to buy things on steam, but like others find it frustrating that games are kept high.
 
That is exactly is how I feel.

Shelf space for PC games is becoming smaller and smaller which I imagine indicates that PC games only make up a small percentage of their overall sales, right?

In which case, surely they no longer have a right to moan about publishers plying their trade elsewhere instead of the apparent situation of them holding them at gunpoint?

Sure, if they had loads of shelves with PC games to sell and the MAJORITY bought their games at retail then fair enough but (I dont have exact figures), I guess the majority of PC game sales are now via digital distribution or etailer.

Digital distribution is big business nowadays, it is not just some new technology in it's infancy yet I feel some companies are afraid to fully embrace it for one reason or another, Codemasters being one of them.

Also, the "RRP, Recommended RETAIL price" takes into account the entire supply chain to get an item from developer to store. How is it fair that a digital copy of the game is automatically slapped with the same RRP when it has none of the overheads? Codemasters admit this is their current policy.

Just posted this on their forum:

Gimpymoo said:
The Recommended RETAIL price is what you recommend all retailers, including bricks and mortar retailers sell your item for, for which I assume in return will give a reasonable profit margin.

This price WILL factor in the cost getting the said item from the developer to the store and covering the associated overheads.

How is it fair that you admit to AUTOMATICALLY tagging on this same RRP to digital distribution when it has NONE of the overheads associated with the traditional RRP? You are making these customers pay for additional costs which are NOT present.

So, should it not be the case that maybe there are 2 different "RRP's", one for digital distribution, taking into account its own LOWER overheads and one for traditional retail taking into account its HIGHER overheads?

The profit margins on both can be the same but the two prices should be different.

A response would be appreciated.

Thank you.
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I have read this thread through several times and I really dont understand some of the arguments here.

Why on earth would steam choose to lower their prices when they don’t have to? As a profit making entity they have a responsibility to make the primary objective of the organisation to 'maximise the wealth of the stakeholders' - that’s pretty much how every company operates.....I could be wrong but isn't that integral to the (financial) definition of a company?

If Steam offered games at half the price of retail stores people would complain that the retailers don’t have the long term customer servicing requirements of steam and that they are over pricing their product.

I maintain my initial point, steam will not drop its prices untill a half decent competitor comes along. They have obviously sunk a huge amount of money into developing their platform and now they are making a health return. Good on em.
 
I am trying to get my paws on Valve's financial statements....anyone know where I can peruse a copy? Whats the intangibles balance on their Statement of Financial Position (Balance sheet)?

I would love to know how the company is doing.
 
Aloreth said:
I have read this thread through several times and I really dont understand some of the arguments here.

Why on earth would steam choose to lower their prices when they don’t have to?
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If you have read the thread several times, you will understand that VALVE do not make the decisions to lower the prices, that is down to the publisher. VALVE may SUGGEST to a publisher but ultimately, it is at the discression of the publisher what prices they sell their games for.

Valve take a % of the sale regardless of how much the publisher wishes to sell it for.
 
Will try and find some info for you.

The thing to remember is that it is a totally different system to the "Traditional" method which people have burned into their brains, this is why they work soo differently.

First of all, there are "Unlimited" copies on STEAM, unlike traditional retail where you are governed by the number of "units" you have.

There are no "tangible" assets for Valve to distribute so how would it work, do Valve buy "10,000" downloads from the developer at a certain amount? Of course not, that would be silly.

The developer gets their money as soon as their game is sold, Valve obviously take a percentage as their cut, that is how they make their money.

This gives the Developer/Publisher MUCH MORE CONTROL over their product compared to retail.

If they want, they can even (For a fee I assume) give their COMPLETE game away for a weekend if they want, VALVE can not say "Hey, lets give someone elses work away for free".

If an item is not selling too well for a publisher or they have released a MAJOR patch which fixes game breaking bugs and they want people to try the game, half the price for a week, why not?

With the traditional retail method, this cannot be done as the retailers have allready paid for the stock and the publisher cannot tell ALL their retailers, "Hey, forget about your profit margins, half the price of this game", the stores cannot as they have their own overheads to consider, plus has mantioned, they have allready paid upfront for the item.
 
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Gimpy, you have to quote thisd post
"Satine : As with any retailer, Codemasters do NOT control how retailers price their goods. The RRP is set and after that it's up to the individual retailer to decide how much they want to charge for goods - hence why you see such varying prices from retailer to retailer."
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and say that steam don't set the price for non valve games.

See what she says then :p
 
It boils down to supply and demand at the end of the day - if people weren't buying it, regardless of whether Valve or Codemasters are setting the prices, the price would get reduced as they both have an interest in seeing the product sell.

For the price to be staying that high you can only assume people are buying it in quantities sufficient to be pleasing both Valve and Codemasters.
 
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