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The Downsides to Digital Distribution
The gaming industry's ongoing shift from physical media to direct downloads has made buying new titles much more convenient, and in some cases cheaper. However, as this article in The Escapist notes, there are downsides as well, such as an increased dependence on console makers and the inability to sell your used games. Quoting:
"Microsoft and Sony might end up charging publishers an arm and a leg to enable game downloads, especially as they gain more and more control over distribution. Think about it: What if, 10 years from now, 50 percent of software sales for Microsoft's latest console come through Xbox Live? Or, in an even scarier scenario for consumers, what if there is no physical media drive at all, and everything goes through Xbox Live? Sony's marriage to the Blu-ray format ensures its continued support of game discs, but Microsoft has no such restrictions. They could cut console production costs and take control over the entire supply chain in one fell swoop. There would be zero room for publishers to negotiate anything in such a de facto monopoly. The perfect comparison is Wal-Mart. As the world's largest retailer, Wal-Mart is able to demand pretty much whatever it wants of suppliers because it grants access to such large numbers of consumers."
Or, in an even scarier scenario for consumers, what if there is no physical media drive at all, and everything goes through Xbox Live? Sony's marriage to the Blu-ray format ensures its continued support of game discs, but Microsoft has no such restrictions.
That "something" being the handheld market. Sony is going to do pretty much exactly as this describes with the PSP (despite their "marriage" to UMD), so there's no need to make hypothetical arguments; we can simply see what happens there in a few years.
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You should consider "Wal-Mart is able to demand pretty much whatever it wants of suppliers" a little more. Wal-Mart demands what IT wants of suppliers, not what the consumer may need or want.
Specifically, Wal-Mart writes the specs on items, such as computers, lawnmowers, etc, that they want to buy. Often times, the specs are lower quality than the supplier might wish to offer. Briggs & Stratton suffers from this. Briggs builds some very high quality engines, but Wal-Mart doesn't want to pay for that quality. Wal-Mart wants an engine that can be reasonably expected to last one season, under moderate use. And, that is exactly what Wal-Mart gets. Wal-Mart puts a price tag on these lawn mowers, allowing you to compare them to lawn mowers that APPEAR to be similar, and allowing you to believe that you are getting the same product at 1/2 or 2/3 of the price.
It just ain't so.
If you want a good quality lawnmower that is going to last as many as 5 years, with a minimum of maintenance, you will purchase your mower from a reputable lawn care equipment dealer. Yes, it will likely have a Briggs engine that looks almost like the one Wal-Mart offers - but if you strip it down, you WILL find differences. A lot of differences.
Ditto with computers, and any other high dollar items.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Wal-Mart also pays cash upfront for every shipment they recieve, meaning that they get discounts on the merchandise from the manufacturer, etc and thus the savings are passed to the consumer. Most other retailers use credit to purchase their inventory. The only thing about Wal-Mart i somewhat dislike is that it destroys Mom and Pop retail stores in rural communities.
By the time it gets here, it is unloaded, sorted, placed into a pick-to-light lane (PTL), blah blah blah (see here.) All to the tune of 0.22 USD per pair of shorts or 7.04 USD per box.
It is shipped out, taken to a Wal-Mart DSDC (which is also the name of their software for handling this, fun!), sent to a Wal-Mart via whatever method, and then some lacky getting paid around 9.00 USD an hour places it on a rack for your greasy hands to purchase.
Wal-Mart sells the standard sizes at 10.00 USD last I checked and plus-sizes at 12.00 USD. That would equal 320.00 USD per box for regular size and 384.00 USD per plus-size. Adding what I can see, 8.20 USD has been spent to get it out the door to Wal-Mart. That leave them 311.80 USD for regular sizes and 375.80 for plus-sizes to spend to get it to their store.
I do not know how much is spent getting through the Wal-Mart Network of warehouses, but I doubt that it is over 100.00 USD. I am sure you can see how much is left in profit.
But that is neither here nor there.
either the product quality suffers
Oh please, that is a wonderfully large understatement! I do remember a day where thirty-six cuts were released by the vendor QC department because Wal-Mart demanded that the products be at their stores, now. However, if someone notices that the product is faulty then Wal-Mart blames the vendor because they told them to "get the product in the store, now" not "send us crappy clothes outside of spec."
It is a fun game that Wal-Mart plays with their vendors. At any rate the vendor went bankrupt, the 3PL dropped the account, and I went on to find a better job.
No one said that anything had to be fair, might as well be professionally unfair while you are at it.
Yes, many manufacturers fall into this trap. Walmart demands a particular price point for "Brandname A Model X". The company that makes that product can't make a profit on "Brandname A Model X' at that price point, so, in order to get it into Walmart, they create a version of Model X that is not up to the normal quality standard of Model X that they sell only to Walmart. The consumer has heard good things about Model X. They see it at Walmart for significantly less than anywhere else, so they buy it there. The Model X they bought wears out/fails sooner then they think it should. This consumer decides that Brandname A is overrated and won't buy it ever again.
I worked for a company that made the correct decision when put into that situation. The company I worked for (let's call it A & Sons) was a small local manufacturer of a food product in high regional demand. A large regional distributor to restaurants asked A & Sons to sell them the equivalent of their then total production at a 15% discount over what they then sold it for. A & Sons was in a position to ramp up their production to meet this additional demand. But when they ran the numbers, they realized that they could not meet the proposed price point without reducing the quality of their ingredients. They told the distributor that they could provide that quantity for slight discount over the price they normally charged but not 15%.
The distributor went with one of their competitors. A & Sons is still going strong, the competitor is out of business.
The truth is that all men having power ought to be mistrusted. James Madison
Have you comparison shopped lately? I buy from Wal-Mart less and less because I've noticed something lately: they're not so cheap anymore on a lot of stuff. Shop around. You may be surprised what you find.
They do let you give the games away dumbass.
You might want to tell them that. Here's their response to my support request (from Jan 30, 2008; admittedly a while ago):
"The gifting system you are referring to - which allows you to gift games between accounts - is only a feature of 'the Orange Box'. This system allows you to gift your extra copies of 'Half-Life 2' and 'Half-Life 2: Episode 1'; assuming you already owned them.
"At this time, there are no gifting systems implemented into other titles. With that in mind, please purchase your titles accordingly. We are unable to gift any other duplicate titles."