What does digital distribution do to a supply/demand curve?

[J T]

In any basic business course, you will learn about the relationship of supply and demand to pricing. Pricing goes up with more demand and/or less supply. Pricing goes down with less demand and/or more supply.

When products (like games) are sold digitally, supply is theoretically infinite. So is pricing determined entirely by demand?

[CFFJR]

I suppose that it is, and some models for distribution (Steam and its many sales) are more realistic about it than others.

I sometimes get the feeling though that pricing for digital games is determined merely by whatever they feel like charging, and damn any logic that tries to intervene.

The fact that I can buy new copies of games in stores for cheaper than they sell on Xbox Live for example, illustrates that pretty well.

If Target sells Game A for 20 bucks, but XBL sells the digital version for 30, why on earth would I buy the digital version? "Convenience"? Even if they're the same price, I would go hard copy when pressed to choose.

Though I think its more complicated for games that were developed specifically to be released to a download service. The prices for these are far cheaper, and the gap between them and retail releases in terms of what they offer is getting a lot smaller.

[Cronozilla]

I'm not sure the standard supply and demand model is really even relevant anymore.

Most pricing models seem to be more per chain of store selling them. All their prices seem to be rather secluded based on how many are selling in THAT store. It has nothing to do with how rare it is or how much people are paying for it elsewhere.

However, it's important to note that digital supply is, in fact, not infinite. They DO only allow a limited number to be sold and new keys are licensed out periodically. But if they are not, the game becomes digitally "sold out". It's purely a license issue.

It's also important to note that most of these pricing issues .... have absolutely nothing to do with how the game was made. They're purely philosophical implementation. They're a choice the studio heads pull out of thin air. Sort of like review scores

They calculate things in that maybe make no sense ... like they'll distribute all costs related to the game over all avenues of sale. Which means, technically, when you buy a digital copy you're also paying for the manufacturing of the physical copies ... just like you're also paying for their license on the system and when you buy a physical copy you're paying for their overhead on using digital. It's all very messy the way it's lumped together. They do this because it costs more to segregate it out and they can abstract statements about a title's performance without necessarily having to divulge details that matter (like source of sales figures)

[sabrage]

I consider all digital download games rentals, and I pay accordingly.

[CFFJR]

I consider all digital download games rentals, and I pay accordingly.

You know, that's a good way of looking at it, and now that I think of it, my upper price limit on digital games is pretty low, so I behave much the same way.

[MrPopo]

I consider all digital download games rentals, and I pay accordingly.

GOG.com says hi.

[vlame]

if DD is the way of the future or if XBOX makes games on xbox 3 need a fee to register on a new console then this will abruptly kill of gamestop's used market.

but yes i think price will be determined by demand. popular games will cost more and shovelware will be shit cheap.

1st party=$$$
3rd=$$
games people know are crap=$

[Vita Mayo]

In any basic business course, you will learn about the relationship of supply and demand to pricing. Pricing goes up with more demand and/or less supply. Pricing goes down with less demand and/or more supply.

When products (like games) are sold digitally, supply is theoretically infinite. So is pricing determined entirely by demand?

I think server costs and licensing fees drive the prices. Isn't the reason why some PSP games (notably Kingdom Hearts) and PS1 games cannot find their way into the PSN Store because developers / publishers must find the people who worked on the game and negotiate yet another contract? In Kingdom Hearts, I think it's the music people in Disney who are being uncooperative.
There is even a game that the voice acting was redone because the actor won't allow his voice to be used in the digital version of the same game.
This is why Sony made it mandatory that Vita games that are sold in physical copies should have digital copies on day one so that the devs/studios would license all of the game resources in physical and digital formats during production.

[DinnerX]

I consider all digital download games rentals, and I pay accordingly.

GOG.com says hi.

Indeed.

[sabrage]

I consider all digital download games rentals, and I pay accordingly.

GOG.com says hi.

I've yet to pay more than $3 for a game on GoG.