The other day I wrote about how in the UK at least the digital asset of music seem to have become more expensive that the physical assets you can buy in-store or online (how many of you have bought 3 CD‘s for 20 quid at HMV??) and how the consumer losses a lot of the appreciation factor of holding a physical item in there hand and placing it into their CD player….
This morning while flicking through a magazine, I read a short article about how Microsoft will be offering games via it’s Microsoft Live service, yet again the digital media supplied via a download service is more expensive than buying the physical copy online an having it delivered for free….
So why would people do this? I can completely understand the convenience factor of going to an online service such as Microsoft Live and downloading the digital copy directly onto your PC or Games Console, but were is the appreciation of the of the physical printed parts, the junk that they ship with the copies (you know the A5 leaflets about stuff you don’t want to know) and the booklet that contains the story of the game…. How does all the work the marketeers, copy editors, pre-media companies and printers get appreciated in a digital download?
With games there is also a resale value with the physical copy, not only do you pay less, but when you have completed it you take it back in-store and get a discount on your next purchase (or sell through marketplaces like ebay, Amazon and Play!)
So suddenly the print volumes are declining, the replicators are screaming and the manufacturer (software houses) are laughing all the way to the bank…. or are they? If we remove the physical packaging as our ability to purchase disposable consumer items like music, film and video games there is also the knock on effect to the retail stores, these stores spend millions in our pre-media market on advertising with point of sale material and their own pre-media advertising channels such as TV, Radio and Publishing, now the software houses can do that themselves and reap the rewards of a higher slice of the cash. I really don’t need to spell it all out to you, especially if you have been affected by this already and your business has suffered at the hands of digital download.
As a consumer though, I like to touch something I have purchased, even if it is just a 5 inch silver printed disc and a piece of packaging that will clutter up my house, it gives it a sense of meaning, something I can account for when I wonder where all the cash in my bank has gone.
This isn’t the first time I’ve thought about this, I’ve illustrated in my first post about how in the UK it is affecting the sales of physical media in Music, now I’ve shown the same in the Video Games market, not that digital downloads of Movies has taken off yet, but you know it will at some point (how BT is going to manage it’s stupid fair usage policy when consumer Movie downloads hit the big time I have no idea, when you consider a HD movie is around 10gig you will soon have your bandwidth throttled to 1 meg after a couple of viewings!)
For the last 6 years I’ve been purchasing Norton Internet Security, wow what a business model they have, annual subscription that you have to renew to stay current, now these guys produce plenty of software and plenty of packaging which equals plenty of design & print. But I wonder if as part of their wonderful business model they actually keep the price of online subscription renewal higher than going out and buying the boxed product? Is there some sort of deal they have with the retail network that gives them the ability to push the product? Each year when my subscription is coming up to renewal I pop down to PC World and pickup my new version for under £25 where today online renewal is £54.99 – ouch over double the price for a renewal over a new boxed copy!
At the moment the artificially inflated digital prices are playing into print & pre-media hands all the time the printed packaging is cheaper, but at some point that will change as the next generations of youngsters only use download services providing a new paradigm of business opportunities.
For those companies currently diversifying their service offerings make sure you consider how your target market is moving in these digital times.
Author: Gary George
This work is licensed under a Creative Commons Attribution-Noncommercial 2.0 UK: England & Wales License.