Topic: The 3DS Download Card Mark-Up Absurdity

[the_dan_x]

How in the world can digital copies cost retailers more than packaged copies?

http://www.nintendoworldreport.com/blog/31190

The next wave of a completely digital Nintendo future has just started in the Land of the Rising Sun. The release of both New Super Mario Bros. 2 and Oni Training on the Nintendo 3DS have helped usher in this era but not without a few hiccups. When it comes to the price difference between the physical versions and the digital version, there is a disparity. Probably not in the way that you would assume, either.

I used to live in the United States, so I have a pretty good idea of how pricing on game software usually works there. Games are typically what the suggested retail price is and that’s that. In Japan, it’s a completely different ball game. For example, the list price for New Super Mario Bros. 2 is 4,800 yen ($61) and Oni Training is 3,800 yen ($48). If you purchase the titles directly from the eShop, you’re going to be paying the exact price no matter what. If you opt to get the packaged versions, you will typically be paying less money. At my favorite local electronic store in town, I can go out and buy NSMB2 for around 4,100 yen, 700 yen less than the list price! You would think that this would also apply to the digital download card that the store carries as well, right? WRONG! From my experience today, I can tell you that definitely is not the case. Of course, I can only report on the store that I went to, but from other articles I’ve read online, this is not just a local issue at my store, but an issue occurring all around the country.

Finding the digital download card for Oni Training was no easy feat for me. After walking into the store, it was easy enough to find copies of the game sitting on the shelf. After scanning the entire handheld gaming section of the store for about five minutes, I had no idea where they were keeping the download cards or even whether or not they had them. Instead, I just took the physical copy up to the counter and asked there. At first, most of the workers didn’t seem to know what I was talking about, but after some searching (apparently in the same area that I previously investigated), they managed to procure one and brought it to me. I noticed that the price on the download card was different than what was on the packaged version. The packaged version was right around 3,100 yen while the card was 3,600 yen. Begrudgingly, I pulled out my wallet and forked over the cash. For a moment, I thought about asking the clerk who was assisting me why there was a difference in the price between the two but decided against it. A part time high schooler probably doesn’t know much about financial decisions for that chain of electronic stores anyway.

I had been reading news about this for the latter part of the week. A digital card for the same damn game costs slightly more than a packaged version. I don’t even need to go into details as to why this is ridiculous. The digital distribution of all of Nintendo’s first party titles is perhaps one of the most forward thinking decision the company has made in years but aside from people like me (and you, too), who is going to choose a more expensive version of the same game? There should be absolutely no reason why the download card for either of these games should be sold at a higher price than the packaged versions. I mean, why in the world are they? If Nintendo were to be giving some kind of a kickback to the retailers for selling the physical copies, that would kind of make sense, but at the same time go completely against Nintendo’s new initiative. None of this makes any sense to me. For the retailers, it doesn’t really matter either way which version of the game they sell, just as long as they sell SOMETHING. Even though Nintendo has control whatsoever of retailers’ software prices, this is not a good start toward a digital future in Japan.

[Pixelated Pixies]

First of all let me just say that I agree that the situation you describe is ridiculous.
 

"There should be absolutely no reason why the download card for either of these games should be sold at a higher price than the packaged versions... None of this makes any sense to me. For the retailers, it doesn’t really matter either way which version of the game they sell, just as long as they sell SOMETHING."
 
Well, there are two reason I can think of for why retailers would price the digital versions more expensively. Firstly, it's not in their long term interests to push the digital versions. Although they will get a cut of that first sale of NSMB 2, what happens when that consumer becomes more comfortable with digital games? When NSMB 3 comes out they might just decide to cut out the middle man and purchase it directly from Nintendo. Secondly, retailers (at least in the West) make a good deal of money on trade in's and re-sell's, which of course isn't possible with digital games.
 
It is a bonkers situation and I don't agree with it, but I understand the motivation for it.

[famicomplicated]

The download cards take up less storage/shelf space too!
They could store thousands more games this way.

[tendoboy1984]

Stuff

You're only in high school? What made you move to Japan? Is the gaming culture in Japan radically different than the West (Europe and North America)?

[supergtt]

If I had to guess, I would feel like there is some shenanigins going on, with nintendo not allowing them to price them lower.

[famicomplicated]

You're only in high school? What made you move to Japan? Is the gaming culture in Japan radically different than the West (Europe and North America)?

Danny was referring to the clerk. Unless that was a joke, then disgard what I just said!
As for gaming culture in Japan, I hope you at least listen to the Famicast! 

[NeoThunder]

One important note is that manufacturers arn't allowed to sell items below MSRP to customers.  It might have something to do with why eShop games are the same price as a physical copy at the store

[ymeegod]

Markup.  Some retailers run specials to get people in the door sometimes even selling the game at cost or below.  In the states for example they had prepaid DL code cards for Star Wars KoTOR but the retail package game was $10 less.  The reason why the store didn't discount the digital card was it only had an 5% markup vs the 15% it on hard copy.

[UncleBob]

One important note is that manufacturers arn't allowed to sell items below MSRP to customers. 

Is that a Japanese thing?  Because here in America, that's called price fixing and will get you in trouble.

As Nintendo found out years ago.  I have the coupon hanging on my wall to prove it.

[Chocobo_Rider]

Don't care about digital.  They could make it $150USD for all I care.  There just aren't nearly enough pros compared to physical.  Looks like the retailers feel that way too.  Once the technofiles get over the fact that new methods of technology are not automatically better, retailers won't be scared of it and the matter will settle itself.

[Fatty The Hutt]

Do you need a card to download or is it just available for purchase in the e-shop catalogue? If its just on the e-shop too, is the price there the same as the download card?


I wish there was a premium bundle where you could buy the cartridge and for $10 extra get the option to download too.

[UncleBob]

There just aren't nearly enough pros compared to physical.

As someone who really dislikes digital downloads at this point, I have to disagree with your statement.

There are many, many pros to a digital download.

There's really only one con... and that's the fact that (with most digital downloads, Nintendo in particular) you don't OWN the game.

Now, that's something that I just *can't* get over.  I like owning my stuff.  I like that I can put my original SMB or Zelda cartridge in my original NES (or, for that matter, any *working* NES) and play it whenever.  I don't own my downloads, so I can't do that.  That's really the only flaw... and if I or Nintendo could somehow reach an agreement on this that would allow me to get over it, then I would be more inclined to embrace the digital era.

But let me assure you - it's coming.  You and I may see the lack of ownership as a "con", but the content makers - they don't.  At all.  There are virtually no downsides for the makers to go completely digital - and the few that exist are simply things that will get better with time (for example, download speeds and accessibility).

[TJ Spyke]

Do you need a card to download or is it just available for purchase in the e-shop catalogue? If its just on the e-shop too, is the price there the same as the download card?


I wish there was a premium bundle where you could buy the cartridge and for $10 extra get the option to download too.

You can just buy it right on the eShop the same way you can any other eShop game, you don't have to buy the card to do it.

[Ras]

That's probably the answer right there.  Digital means the end of going to the store to buy a game, and the card is Nintendo throwing the store a bone.  The stores know that's only a temporary situation, and that once most people become accustomed to downloading, they'll just do it from home.  If they can make the cartridges cheaper, they'll continue to encourage their customers to buy from them. 

It's encouraging that the clerks in Japan are just as clueless as American kids.  The media acts like it's only us who would have clerks who wouldn't know where things are located or even what they are.

[soberanalyst]

That's probably the answer right there.  Digital means the end of going to the store to buy a game, and the card is Nintendo throwing the store a bone.  The stores know that's only a temporary situation, and that once most people become accustomed to downloading, they'll just do it from home.  If they can make the cartridges cheaper, they'll continue to encourage their customers to buy from them. 

CORRECT

Consider the retail store that sells-out of packaged versions and only have digital cards available? ... or what if the store gets the digital cards first? ... or consider a game-release which is digital-only but still available in-store? ... it's the best-of-both-worlds for nintendo and gives them the most flexibility while making transition to digital-only in my opinion.

[Chocobo_Rider]

@Bob

So what are all those pros you mentioned?

Newspapers, magazines, music radio and soon, physical media.

What do they all have in common? Things the media promised would SURELY be things of the past, yet, are still around and show no signs of ever leaving entirely.

[TJ Spyke]

Newspapers are getting thinner and more expensive (my local paper is now like 20 pages long total and $0.75 Mon-Sat, $1.50 on Sun) and less relevant than ever. They are not gone, but they are endangered.

[UncleBob]

Newspapers are going the way of the dodo.  The music industry is virtually digital - CD sales don't even compare to what they used to.

As for pros, depending on the particular service - the ability to easily back up the media, the ability to play on multiple setups easily, the ability to carry your entire collection on a tiny chip (seriously, I would have *loved* to have been able to carry my entire music collection on me in high school/college)...

Of late, I picked up Heroes of Ruin - but I have to bring Mario Kart with me to work daily to play against coworkers.  I'd love the ability to have it "installed" on my system so I can be more mobile with Heroes of Ruin without having to carry multiple cartridges with me.

[NeoThunder]

One important note is that manufacturers arn't allowed to sell items below MSRP to customers. 

Is that a Japanese thing?  Because here in America, that's called price fixing and will get you in trouble.

As Nintendo found out years ago.  I have the coupon hanging on my wall to prove it.

I was talking about laws here in the US. I understand that when manufacturers make a product (Nintendo). They assign an MSRP or Manufacturers Suggested Retail Price to that item so when retailers like  GameStop or Walmart sell the item, they usually sell that item at that price. As I understand it a manufacturer, in this case Nintendo, could sell that item to the public too, but they are not allowed to sell it for less than the MSRP that they have set. Since, the ability to do so would allow them to undercut retailers and put them out of business. Retailers don't have to follow this rule of course.

This reason is why I was saying I don't think we will ever see retail eShop games be any cheaper than they are in stores

[Kairon]

One important note is that manufacturers arn't allowed to sell items below MSRP to customers. 

Is that a Japanese thing?  Because here in America, that's called price fixing and will get you in trouble.

As Nintendo found out years ago.  I have the coupon hanging on my wall to prove it.

I was talking about laws here in the US. I understand that when manufacturers make a product (Nintendo). They assign an MSRP or Manufacturers Suggested Retail Price to that item so when retailers like  GameStop or Walmart sell the item, they usually sell that item at that price. As I understand it a manufacturer, in this case Nintendo, could sell that item to the public too, but they are not allowed to sell it for less than the MSRP that they have set. Since, the ability to do so would allow them to undercut retailers and put them out of business. Retailers don't have to follow this rule of course.

This reason is why I was saying I don't think we will ever see retail eShop games be any cheaper than they are in stores

I'm really curious about this! Can you help me track down that law NeoThunder? It sort of suggests that we won't see any eShop sales on retail games due to legal reasons!

[NWR_insanolord]

Since that happens on Steam all the time I don't think it means that.

EDIT: Although, since sales are usually on Nintendo software, and Nintendo never discounts their retail software, I wouldn't expect sales on the eShop either way.

[Kairon]

Since that happens on Steam all the time I don't think it means that.

EDIT: Although, since sales are usually on Nintendo software, and Nintendo never discounts their retail software, I wouldn't expect sales on the eShop either way.

But Steam isn't the manufacturer?

[TJ Spyke]

Neo, I don't think any such law exists. You see video games, books, DVDs, cars, etc. all sold below MSRP all the times. After all, it's just the manufacturer's SUGGESTED retail price. They can't force retailers to sell it for that. A retailer could sell a new $50 game for $1 if they wanted, but they would only be hurting themselves. A retailer pays the publisher for the game, then sells it for what they want. The lower that the retailer sells it for, the less profit they make. So whether Target sells NSMB 2 for $10 or $40, Nintendo makes the same amount of money since Target already paid them for it.

[NWR_insanolord]

Since that happens on Steam all the time I don't think it means that.

EDIT: Although, since sales are usually on Nintendo software, and Nintendo never discounts their retail software, I wouldn't expect sales on the eShop either way.

But Steam isn't the manufacturer?

For certain things Valve is both the publisher and the distributor, and Portal/Left4Dead/whatever are routinely on sale on Steam for less than the MSRP of the boxed product.

[Chocobo_Rider]

Newspapers are going the way of the dodo.  The music industry is virtually digital - CD sales don't even compare to what they used to.

As for pros, depending on the particular service - the ability to easily back up the media, the ability to play on multiple setups easily, the ability to carry your entire collection on a tiny chip (seriously, I would have *loved* to have been able to carry my entire music collection on me in high school/college)...

Of late, I picked up Heroes of Ruin - but I have to bring Mario Kart with me to work daily to play against coworkers.  I'd love the ability to have it "installed" on my system so I can be more mobile with Heroes of Ruin without having to carry multiple cartridges with me.

@UncleBob

The dodo, eh?  So when should we expect that? 5 years? 10? 20?  Cuz people said it would have happened as early as 12 years ago.

That's nice about CDs.  Now what about the things I was talking about, magazines and radio?

As for your

many, many pros to a digital download.

Let's take them one by one.  I know there are a whopping 3 you listed but I'll try to address them all ...

1. Back-ups

How many companies are going to legally allow you to digitally backup software compared to ones that WOULDN'T let you make a backup of the same physical media*?

2. Multiple setups

Sounds good, but ... *

3. Tiny Chip Storage

Sounds great, but ... *

* Think about it.  Is that an advantage of purely digital releases, or is what you (and I) really want a system in which you buy the physical version and have the option of INSTALLATION to our devices (plural if possible)?

In other words, since those features are NOT mutually exclusive from physical media, it's not really appropriate to list them as an advantage of one over another.  A nice feature? Yes.  But not in a comparison sense.

Building on all of these points, let me ask you this ... which do you think would be easier to implement and more likely to happen given the corporate issues others describes above: software goes all digital or companies begin making those features you described standard on physical media?

I know the software providers would love to go all digital so that they don't have to pay to produce anything.  But would they love losing customers left, right and center who prefer OWNING the things they buy?  I know the internet is full of technofiles willing to make any sacrifice for "progress," but that is small, small fraction of the audience.  Would they like pissing off retailers? Or are they all going to drop out of the hardware/accessory/merchandise businesses too?  Yea, I don't think so either =)