The difference is that Steam has to compete with other online retailers as well as hard media. Consoles are more of a captive audience... obviously some folks have multiple consoles, but most of the core audience will only be buying one console at launch. So even if MS grossly undercuts the competition in their e-shop like Steam does, game prices don't appear to be a big point of competition in the console-vs-console war. And either way, developers doing cross-platform releases don't let Steam do those kind of deep cuts on new titles. If they're only reaping the benefits on older games? That could be a hard battle to win.

I don't believe Steam has their crazy sales with the primary focus being on undercutting competition. Generally, the sales are for slightly older games (1 year or older). These games have likely seen a dramatic drop in sales. Even as low as Steam reduces the price point to, I'm willing to bet the revenue bump is huge. It's an effective way to derive profits from otherwise low volume titles.

"Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40." http://www.geekwire.com/2011/experiments-video-game-economic...

Steam's sales have nothing to do with competition and everything to do with leveraging digital distribution and maximizing benefit for everyone, including publishers.

MS might be too wedded to old norms to understand that being able to lower prices can actually dramatically increase total revenue in a digital world but Valve very much does.

Here, read this: http://www.geekwire.com/2011/experiments-video-game-economic...

That's some background about Valve's early experiments with Steam sales. Early on their preliminary research indicated that sales would pretty much leave total revenue unchanged, with the increase in purchases balanced by the reduced per-game revenue. However, they found out quickly they were very wrong. What they found was that with a 75% reduction in price their total revenue increased by 40 times. Not 40%, a factor of 40, 4000%. And not sales volume, total revenue. Which translates to much higher profit in the digital realm where per-sale overhead is small.

Game makers and publishers who actually understand economics, instead of companies like MS who merely pretend to, have the opportunity to greatly advantage both consumers and game makers. Cheaper games means more people can play them, but it turns out it also means more money in the hands of people who make games. Which helps those companies survive and makes it that much more possible for them to make more games.

How would this have moved the pricing meter at all? Major games are available for download on PS3 and Xbox 360 and they cost the same/more than physical media!

Looking at similar markets, movies cost about the same for a physical copy as they do on Google Play, books tend to cost the same digitally as they do physically, CDs cost about $11, which is what albums tend to cost on Play.

Basically I don't buy that argument. I wish I could, it's a great idea - and only fair considering the lack of transferability and the fact that there is no truck driving goods cross country to get them to me.

It would have been unlikely they would have adopted Steam's pricing structure with a mix of physical and digital distribution, but it would have been far more feasible if it was full digital.

Your comparison to similar markets may be valid, however if you're familiar with Steam (a far more direct comparison) and their sales, you'd know that radical pricing changes are possible. It's fairly common for major titles to go on sale for $2.50 - $5.00. I just got an email last week that said The Witcher 2 was on sale for $6.79.

I don't know for sure that Microsoft would have gone down this route, but deprecating physical media would have been a step in the right direction.

> but it would have been far more feasible if it was full digital.

How so? I don't see the difference. Most of the games in my Steam library I could also have purchased on Amazon and received a disc within 2 days.

Why would console players want to be weened off, given the advantages they have? Ease of trading/reselling. Put the disk in and play. No need to bring your console to a friend's house to play.

If the price is the same, I prefer physical media on the PC as well. I still feel cheated that Skyrim required a Steam activation.

Well that's the thing. The old authentication scheme would have you log in to your friend's Xbox One and then you have access to your entire game collection.

No need to lug anything to your friend's house. It all happens in the cloud.

You are assuming that there is a fast internet connection available at all times. If I put a disk into the console, I can play it immediately. If I start a download of a 2-layer DVD's content, 9.4 GB, then that is 10 hours to download it at a 2 Mbps connection. Even on a 25 Mbps connection, that is 50 minutes. These times aren't prohibitive if you have just bought a game and are downloading it overnight, but they are not sufficient to have it immediately ready.

Or, consider a LAN party. 5 people each bring their consoles, and 3 games per person. Using disks, you put whatever disk into whatever console, and start playing. Using download-only games, you need to wait until the correct console is available to use.

IIRC, the Xbox One has a similar download scheme as PS4, in which it will download while you play. So you'd be up and running before the whole thing is downloaded.

I'm focusing more on the pricing model that Steam has. Sure, physical media has its benefits, but I'd give them all up for the equivalent of Steam Sales on Xbox. To be fair, I never trade or resell my games anyway.

http://cdn.leviathyn.com/wp-content/uploads/2012/06/steam_sa...

True enough. The sales on Steam are what make the DRM be bearable. That said, should the DRM become intrusive, or should Valve go out of business, I feel no moral requirement to pay for the game again in a different medium instead of pirating it.

As I've said elsewhere, there's no reason MS can't have the best of both worlds. A disc-based ecosystem and a digital, online based ecosystem can co-exist peacefully.