Gaming consultants and analysts have revealed what the company's numbers could look like: playstation And Xbox suggests that moving to a discless industry in a fully digital future could increase profits by up to 54%. It's no secret that video games and gaming consoles are becoming more and more expensive to produce, and major companies are looking for ways to improve profit margins. One recent example is PlayStation's sudden decision to stop printing new video game discs starting in January 2028.
PlayStation's announcement sent shockwaves through the gaming community, with many predicting that Xbox would give up on physical discs in the near future. One of the early arguments in favor of PlayStation was that with over 80% of gamers already purchasing digital games, the move seemed inevitable. However, analysts later disputed this claim, claiming that digital purchases accounted for the largest share of sales because they included a much wider range of content such as DLC. They believe PlayStation is giving away discs only to increase profits.
PlayStation will continue to support physical games beyond 2028
Sony's controversial decision to stop making physical PlayStation games after January 2028 comes with a prominent asterisk that allows it some leeway.
According to an analysis by Dr. Serkan Toto, CEO of KantanGames Inc., about 35% of the revenue from physical disc sales of its games goes toward production, shipping and retail costs. Third-party studios cost about 50% more to print discs. That's because platform holders like Sony, Xbox, and Nintendo also pay licensing fees. For digital games, the only extra money third-party publishers pay is a 30% in-store discount, or about $21. That would net you about $49 in profit on a $70 game. Our studio does not pay these fees and keeps the full $70 for each digital sale.
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“From a purely financial perspective, this means there is more incentive for Sony, Microsoft and Nintendo to avoid physical media on both an absolute and relative basis,” says Dr. Serkan Toto. Industry analyst Piers Harding-Rolls also points out that selling digital-only games presents an opportunity that could benefit developers and publishers in the long term. The numbers suggest that dropping discs could increase the amount of money publishers keep. But the key question is whether focusing solely on profits will help the industry grow, or risk harming it in the near future.
Digital Vs. Actual first-party game sales revenue
|
Cost/Price |
first-party digital games |
first-party real games |
|---|---|---|
|
price |
$70 |
$70 |
|
Retail/digital store cut ~30% |
-$0 |
-$21 |
|
License fee ~15% |
$0 |
$0 |
|
Manufacturing ~5% |
$0 |
-$3.50 |
|
Publisher's share (profit) |
$70 |
$45.50 |
with GTA 6 If they've already raised the price to $80, the industry may be seeing more AAA titles priced at that level instead of sticking to the traditional $70 standard. Therefore, the overall profit that a business can make from digital sales could potentially exceed the given figure. That said, there are a few key points to consider. According to Dr. Toto, the discussion can be almost endless, so elements like sales tax, deeper economic comparisons of physical vs. digital, and the sea of other details like which retail box contains the download voucher are left out for the sake of brevity. For example, revenue figures comparing physical and digital sales are calculated excluding taxes. Second, there may be additional production costs depending on each country's market that are not fully accounted for, as publishers and sellers typically do not disclose these. Additionally, each platform may have its own privacy policies and fees, which may affect the final figure. So, as Dr. Toto said, his analysis “is not an exact science.”
To be fair, the costs of running, maintaining, and scaling platforms like PlayStation, Xbox, and Nintendo have actually become higher in today's economy. Additionally, ongoing RAM and storage shortages are raising concerns about the future of gaming hardware. However, some argue that large companies such as Sony and Microsoft are focusing more on increasing profits for existing customers rather than reducing costs or improving production efficiency. As a result, many people believe that games are becoming more affordable for the average player every year. And it remains unclear whether these trends will improve over time.
