Why digital-only consoles aren’t the ‘cheaper’ option

Is the future completely digital? Sony and Microsoft would like you to believe so.

With a PS5 Digital Edition already announced and a discless Xbox Series S almost certainly in the pipeline, it’s definitely a tough choice we all have to make. The major incentive both companies will give to consumers is that these consoles will be cheaper. This will be especially enticing if the full-fast disk versions of the consoles are over £450, as some expect. But would this one-off discount benefit consumers in the long term? 

At first, it seems going all-digital is a straightforward decision, Sony has already revealed that over 50% of software sales for the PS4 were digital for the past year. PC gamers have almost completely transitioned to digital purchases, and disk drives in new builds are increasingly uncommon. Microsoft previously released a cheaper Xbox One S ‘All-Digital’ (Xbox SAD) in 2016, seeing the same trends Sony is now utilising. The yet-to-be-announced Xbox Series S is said to be a lower-powered version of the Series X, and with this lower power comes a lower price, while the omission of a disk drive would help reduce the cost. 

This is simply a business strategy to increase the share of digital sales where the revenue share is higher

But it is exactly those who cannot afford the flagship consoles that will end up paying the most. I’ve noted in a previous article that, while on PC, where there is a range of platforms to make purchases from, consoles are limited to the respective online stores of the platform. This means that there is no competition between stores, and therefore no incentive to remain price-competitive. Therefore, digital games have traditionally been more expensive than physical versions. This is simply a business strategy to increase the share of digital sales where the revenue share is higher, as it isn’t shared with brick-and-mortar stores. 

In its current state then, I wouldn’t recommend anyone purchasing the digital edition of either two consoles. If you can save more money for the main next-gen console, you’ll save even more in the long run. 

There are, however, a few things PlayStation and Xbox can do to make the proposition of a fully digital console more enticing. To create more competition, retailers should be able to sell digital download codes for games, Nintendo already allows this, so it’s not an unprecedented move from console creators. This does, however, remove the incentive to sell a cheaper console in the first place, so don’t be too surprised if this doesn’t happen. 

What might be more palatable is to align the pricing of new games with retail copies. Currently, digital versions tend to be £10-£15 more expensive than physical versions, despite the higher margins of profit. Sacrificing that margin by a few pounds per game would go a long way to increase consumer satisfaction and may increase system sales.