The news that Sony is surveying its development partners to get their input on its decision to end support for physical game releases (first reported by Moore’s Law is Dead) is a little odd, at least from a sequencing perspective. You’d generally imagine that talking to your most important business partners would be something to be done before making a major public announcement of an enormous change that will impact all of them. Better late than never, I suppose, though exactly how much better remains to be seen.
What this belated consultation hammers home is just how unilateral the decision to end physical game distribution has been. It’s not that it was a particularly surprising decision – it always looked likely that physical media support in the next generation of console hardware would be an afterthought at best. It was, however, a poorly handled one. There were ways to do this that showed more flexibility and encouraged more buy-in from both industry partners and consumers; it didn’t have to be quite so high-handed.
The consultation, for all that it amounts to conducting a listening exercise about barn door security long after the horse has bolted, suggests that Sony is realising it may have overstepped somewhat. I don’t think it will result in much of a change to the company’s announced policy – the timing makes it feel more like a PR sop to the unexpectedly strident backlash the policy has received than a genuine reconsideration, though some additional flexibility (perhaps allowing companies to optionally do physical releases for the rest of the PS5’s lifespan, for instance) might end up being put forward as a compromise.
There were ways to do this that showed more flexibility and encouraged more buy-in from both industry partners and consumers
That would be something, I suppose, though it doesn’t change the medium- to long-term calculus of the decision, and is unlikely to really quiet down the opposition to it. Sony appears to have been slightly blindsided by the vehemence of that opposition; its announcement, and I suspect the received wisdom within the company’s own corridors, hinged on the understanding that physical sales are such a small and shrinking portion of the market that hardly anyone would care about that side of things being quietly shut down. There would always be some die-hards, but by and large I imagine that the people in charge of the decision at Sony expected to be able to record an hour of death for disc-based media without much fanfare.
The extent to which consumers are upset about the decision likely exceeds what Sony expected – but the extent to which some pretty prominent industry figures have come out to publicly express disappointment about the decision absolutely wasn’t part of the plan. A lot of the disagreement comes down to personal preference for physical media, of course, but there’s also a really strong current here – especially in the comments from developers and publishing executives – that implies that Sony has overlooked, or perhaps simply disregarded, a really genuine commercial concern about this decision as well.
The idea that digital game sales are simply steadily displacing physical game sales in a clean, linear fashion is, after all, vastly too simplistic. Nobody can deny that digital distribution is now the dominant mode on consoles, just as it has been on PCs for decades, but the role that digital and physical games play within the commercial ecosystem isn’t a straight one-to-one swap. Consumers with a clear preference for one form or the other certainly exist, but a mixture of both formats is pretty common as well – with physical game purchases occupying notably more of the market at both the high-value and low-value extremes.
Sony has overlooked, or perhaps simply disregarded, a really genuine commercial concern about this decision
The low-value aspect is well understood, and has been an argument within the industry for a move to digital distribution for more than a quarter of a century now. Physical games can be resold by consumers, creating a second-hand market that holds prices down and provides excellent value for frugal gamers (often younger consumers or those with less disposable income). Without physical games, that low-cost end of the market will dry up; pricing power will lie entirely in the hands of Sony and the publishers.
The high-value aspect of physical media, however, is also very important and seems to have been largely overlooked in Sony’s decision-making. For a lot of gamers, digital game purchases are the workhorse – month-to-month subscription payments or picking up digital games when they’re on sale or otherwise discounted. Physical purchases, meanwhile, are special. They might be preorders for major games they’ve been looking forward to, often with a special edition or pre-order bonus of some kind; or in the case of many indie titles, limited edition physical runs aimed at the game’s biggest fans.
This separation isn’t specific to games – it’s found across every form of media right now. In an era of Spotify and Apple Music, more and more people are opting to buy vinyl records (and lately, even cassettes). They’re a tiny sliver of the market compared to Spotify listeners, but a pretty solid chunk of the revenue for many musicians and smaller labels. Special editions of books in beautiful bindings and slipcases do remarkably well despite the convenience of e-readers. High-quality releases of movies on 4K Blu-Rays, meanwhile, remain a lucrative sideline for Hollywood – enough so that restorations and remasters of classic movies often get a limited theatrical release largely designed to promote the physical media release itself.
It’s smaller titles and publishers that often do the best from physical distribution if measured by revenue percentages
A key thing to note here is that the value of physical media is unevenly distributed. It doesn’t matter a great deal to a big blockbuster or an artist doing billions of streams on Spotify; but to a niche movie or artist with a loyal following, or a smaller label or studio, physical releases can add up to a massive part of their business. The same holds true for videogames. While major titles can earn a solid amount of revenue from physical sales in spite of their being a relatively small percentage in unit terms, it’s smaller titles and publishers that often do the best from physical distribution if measured by revenue percentages.
Of course, it’s possible to sell a special or collectors’ edition of a game online – most games at least attempt to do this – but with the exception of bundling a DLC season pass or something along those lines, the actual value and appeal of those editions is questionable. It’s obvious to everyone involved, after all, that a “collectors’ edition” you buy digitally isn’t actually being “collected” in any way; and if you had any doubts to that end, media companies including Sony quite regularly pop up in courtrooms to make the blunt argument that consumers don’t actually own their digital purchases at all. That doesn’t matter too much to the average consumer buying something from the PlayStation Store – one could argue that it should matter more, but it’s obvious that it’s not a consideration for most. For a devoted fan with a collector’s mindset and deep pockets to match, though, it’s anathema.
Sony’s mind is unlikely to be changed, at least by anything short of the baleful eye of regulators in the EU or elsewhere falling on what’s about to be something that looks awfully like exactly the kind of walled garden that Apple, Google and others were recently forced to open up to the world. The PS6 (and Microsoft’s next-gen Xbox) are very unlikely to support any kind of physical media; if they wanted to, they could at least have copied Nintendo’s game-key cartridge approach (which gives consumers a physical asset that can be loaned or resold, even if the game data itself resides in the cloud), but the will to do that clearly doesn’t exist.
Every other medium has held on to an element of physical distribution, valuable in its capacity to cultivate super-fans as much as for its revenue
Yet for all that Sony might have expected this change to pass without much fuss, the reality is that it will leave games – the youngest of the major entertainment media – in a unique and not entirely favourable position. Every other medium has held on to an element of physical distribution; vestigial, certainly, but lucrative in a way that punches beyond its weight, and valuable in its capacity to cultivate super-fans as much as for its revenue streams. Within a few short years, the only equivalent of that for videogames may indeed be Nintendo’s key-cards. The industry would have thrown away an entire segment of its business largely on what appears to be a technical whim, and with minimal proper discussion of what value that segment holds and what might be lost by its passing.
The fact that some kind of consultation may now finally be happening at least suggests an understanding that this is a big decision, not just a change to be made casually. What opportunities to change path actually remain at this point is unclear, but at least we’re going to have some kind of conversation about the ratio of baby to bathwater that’s being thrown out with physical media.
If nothing else, the voices of publishers and developers who have spent years figuring out how to boost their games’ revenues by offering desirable special and limited editions to their most dedicated fans should be heard. The best time to hear those voices would have been before pulling the rug out from underneath them; but listening now could at least offer chances to soften the blow.