The Economics of Call of Duty

The Economics of Call of Duty

Disclaimer: the title of this post may be a little misleading but it’s late at night and I can’t think of anything more fitting. Specifically, this is a rant concerning the pricing strategy of the PSN Store (and presumably the XBox store) when it comes to new games.

Earlier on today it became clear that I would be pre-ordering Black Ops III so that I could access the online Beta, which goes live on 19th August for PS4 users. At first I went to Amazon.co.uk but – come on – this is 2015. Why would I want to queue up at midnight when I could just download on the PSN store?

One reason would be to save myself a tenner. It turns out that Call of Duty: Black Ops 3 costs is a full £10 more on the PSN store than on Amazon.co.uk. Sadly this isn’t a scenario that is specific to Black Ops 3 and I seem to recall paying a £15 premium to download FIFA 14 last year.

The question is: why is it more expensive to download games from PSN that it is to buy them in the shops? Clearly Sony have adopted a “charge a premium for convenience” pricing strategy and from an Economics perspective, this makes sense.

If we consider the case with FIFA 14, I signed into PSN to play some Call of Duty: Ghosts, only to see a good friend of mine playing FIFA 14. A couple of messages later and I was about to shoot off to my local Tesco to pick up a copy… but that would have cost a couple of quid in fuel and taken at least 30-45 minutes. The alternative was to download from PSN at a cost of (IIRC) £60. Is £15 premium worth it? I obviously thought it was as I paid the premium and was playing FIFA 14 less than 10 minutes later.

Whilst it makes sense, the premium pricing strategy is a little annoying. What is also annoying is that Sony appear to blame others for this. I did some Googling and found this Eurogamer article, in which Fergal Gera, head of Playstation UK, tries to blame the fact that Amazon et al. can set their own pricing where as Sony aren’t allowed to.

If this is the case (which I find hard to believe!) then Sony needs to grow a pair and do what Apple did with iTunes – pass on the cost saving for downloaded content, thus making gaming more accessible.

/rant.

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