Competing for Cash-Bucks; The Future of Online Marketplaces

A lot has been said about online marketplaces in the videogames industry and whether they are good, bad, or somewhere in between. You can probably find various well written articles out there fighting on either side. I just happened to notice something the other day which prompted me to throw my virtual hat into the ring, (a Panama Hat if you were wondering). 

I purchased Titanfall on PC a few days back and if I find the time, I will almost certainly be writing about it. However it was the way that I went about buying it, that caused me to think about the issue of online marketplaces. Initially, the Steam marketplace was my first port of call, everything is on Steam these days. Except, everything is not on Steam these days. For the most part, the publishers of Titanfall, EA, chooses to sell it's PC games through their own online marketplace, Origin. This makes business sense, Valve, (the company who run the Steam marketplace), take a cut of all sales made through Steam, whereas if a game is sold through Origin, all the profit stays with EA. It would be nice then, if EA passed some of the savings they're making through selling games on their own marketplace, to us, the consumer, however most new, triple-A games on Origin appear around the £40-50 mark, Titanfall for example on the date of writing is £45 for the standard edition. Yet, this is business, EA is a  large company, wanting to make as much money from us as possible, to expect anything better is at best, hopeful, at worst, downright ignorant. The same goes for Valve, any company trying to sell a product has the aim of making money. So moving the issue of pricing aside, let's focus on the next topic. Presentation.

Upon opening Steam, you are taken to the 'Library' tab whereby all your games that you own are presented to you in a list, ready to play. Very user-friendly, very convenient, and gives the impression that despite what I just said, Valve aren't all about the money. Even if they are, it's nice to be deceived sometimes. However, when I opened Origin, wanting to find Titanfall, I found Titanfall straight away. Hurray! How convenient! It's as if EA were reading my mind! These were my first thoughts, and then I took a second to think about it. When I opened Origin, the first place I was taken to was the store-front. Advertisements for Titanfall and Battlefield 4 were blasted at my face. Admittedly, it doesn't take much to then click the 'My Games' tab where I'm presented with all of my games, but it still leaves a bitter after-taste of corporate money grabbing and burned toast in my mouth. Admittedly one of those things may have been my breakfast but EA is probably in some way at fault for my poor breakfast making skills too.

These were just some comparisons I noticed and thought would be interesting to write about, so before EA take notice and decide to shut my ass down, let's move on to the wider subject of online marketplaces. I decided against buying Titanfall through Origin and instead found a discounted copy for an Origin code on another website. But this got me asking, why is it that stores like Amazon were selling Titanfall for around the £30 mark, yet Origin, who are owned by the people publishing the game, couldn't match their prices? The same goes for a lot of online marketplaces owned by games publishers, for example Ubisoft's U-play often suffers the same pricing problem, as does the PlayStation's and Xbox's marketplaces. Surely if companies receive the most profit through selling their games on their own marketplaces they would entice customers through competitive pricing? It's common business sense, right?

Well, yes and no. The simple answer would be sure, price retailers out of the game so you can maximise profits on your sales. However this ignores one key fact. The majority of gamers still purchase either in-store or through online retailers such as Amazon, and whilst more and more people are purchasing through marketplaces such as Steam, retail still holds a lot of power. If a company such as EA priced them out of the market, retailers can simply threaten to no longer stock their games and then a massive chunk of their audience will no longer know where to buy their games, not to mention the advertising that physical stores provide for games. Next time you walk into your local games store, notice how many boards, videos and those big cardboard cut-out thingys there are, all advertising games at you. If a retailer stopped stocking a game, the advertising space would then open up for a rival company's game and that alone could significantly damage how well a game's release would do financially. Platform holders such as PlayStation and Xbox are in an even worse situation. They rely on retailers to sell their consoles. In the current situation, platform holders simply cannot risk losing retailers, for if they can't get their consoles into stores, people simply won't buy them. 

So the more complicated, business-y and downright dull answer is that business practices and the hold retail has on the market means that currently, competitive pricing through online marketplaces isn't a realistic option, and that's a shame for us consumers. The only marketplace that seems to get away with this is Steam, the Steam sales are well renowned amongst gamers and you can often come away with some incredible deals there, (totally not sponsored by Steam at all). Steam has nothing to fear by offering this service as they very rarely make games in comparison to other similarly sized companies, so it's not often that they have to worry about how well their new games sell. Additionally, whilst the individual games publishers do control how much their games cost on Steam, as the Steam catalogue is so wide, and as the Steam sales are such a regular occurrence, publishers don't have to worry about standing out as directly competing as much as they would if making their game a lower, more competitive price in their own marketplace. 

However, it is my belief that soon we will see a change. As evidenced by GAME and other game retailer's shaky financial positions, physical game retail is dying, or at the very least becoming harder to sustain. After games retail dies, I wouldn't be surprised if the only place to buy physical copies of games were supermarkets. That would be the time whereby online marketplaces could really fill in the gap left by games retail, and start to become truly competitive. Additionally, as PC gaming becomes more and more a viable option; with cheaper PC's becoming more available and with gaming on PC becoming less awkward to set up, awareness of online marketplaces will surely rise. The only place to buy many PC games, (especially indie titles), are online markteplaces, and so I predict at some point in the next 5-10 years, certainly before the next console generation, a large shift towards gamers only buying games digitally and leaving physical retail behind, whether it be on their console or PC. This is something that is beneficial to both games publishers and consumers as it creates more profit for publishers and offers more competitive prices to consumers. The only adversarial voice that would appear in this scenario is physical retail, and their grip on the market becomes weaker by the day. 

In the end I really liked Titanfall,

9/10

Sorry if all this talk of business bored you, I promise this will be a very rare occurence, in the meantime enjoy a very funny video about Titanfall by the chaps over at Videogamer. 

     

(Disclaimer, all pictures and/or videos used here are not my own, they are courtesy of, in top to bottom order: Shushans, Ask A Medic, Kotaku Australia and Videogamer not that any of those people will actually see this blog but yeah, please don't sue me.)