Talking Point: Nintendo's Catch-22 With Retail Game Pricing
Posted by Thomas Whitehead
Go high, get criticised. Go low, get criticised...
This week Nintendo UK launched its own online retail store, stepping into the market typically occupied by the likes of Amazon, Gamestop, GAME and various others; even the bricks-and-mortar retailers mentioned have an increasing reliance on web sales. It's a more up-to-date, relevant proposition that the Nintendo of America equivalent, while other European nations don't currently have stores of the same style; if it's a trial run, it's revealing.
The reaction among the Nintendo Life community typically revolved around one thing — pricing. The Nintendo Store has opted for the widely-considered recommended retail price, even if that as a concept doesn't exist in the UK and Europe as a whole to the same degree as in North America. Beyond retail terms, it basically means that all of the products are full price, with the exception of one promotion for a discount when buying a limited edition Pokémon X & Y 3DS XL with a copy of either game. That pricing policy, it seems, is widely considered to be a mistake.
Key questions spring to mind, however. What should Nintendo do instead? What are the options beyond selling these products at the prices that the company originally sets?
Its easy for anyone, including us here at Nintendo Life, to bemoan pricing either on the eShop or on the fledgling Nintendo Store. At times we feel justified, such as Ubisoft's decision to price Splinter Cell: Blacklist at $59.99 / €69.99 / £55.99 on the Wii U eShop — that seems beyond what we'd consider to be a standard retail price in Europe, even if $60 can be the norm in North America. Breathlessly ambitious pricing, at best.
And yet, whether with the eShop platforms or, now, Nintendo's own service that delivers physical copies of games, charging the official price seems to be regarded as coming in too high, pushing a rate that in many eyes seems unreasonable. For Nintendo, however, it's difficult to determine the best option — undercut or challenge retailers and you risk alienating them and damaging business relationships, while charging full price doesn't go down particularly well with savvy gamers.
It's a challenging scenario. One argument goes that Nintendo should price competitively to satisfy consumers, and let retailers worry about themselves. While a nice thought that Nintendo has the stature to maintain its market presence primarily off its own brand-power and platforms, that's not the reality; despite troubled times and plummeting profits, retailers are still needed. We'd suggest that it may be the majority, not minority of game console owners that have relatively little knowledge about their hobby beyond what they've decided they enjoy and what's grabbed their attention. To expand on that point, it seems like a reasonable assumption to say that the majority of the hundreds of millions of Nintendo, Microsoft and Sony gamers don't pore over their favourite websites every day. They may like certain genres or brands, and still walk into a store and ask for advice from staff, or simply grab anything with FIFA, Call of Duty or Mario on the box.
Another argument defends the full-price strategy, and there are multiple angles to that perspective. One is the flip-side of that mentioned above, that Nintendo should offer alternatives while maintaining relationships with retail partners, especially with new systems and a raft of high-budget releases landing in time for the Holiday season. In addition, there's a chain of thought that says Nintendo, like its contemporaries in the retail space, should strive to maintain the value of its products — when you lower the cost of a major release, you set in motion a race to the bottom.
It's easy to sympathise with that view, especially as it permeates the whole of the game industry at various levels. Small developers publishing on the eShop platforms and equivalents such as PSN have to face up to the deluge of apps on Android and iOS that are either free or cheaper than a newspaper. Retail games face off against both realities and sets of download-only services, offering increasingly bombastic or impressive experiences — in the case of good games, that is — to justify the investment for the consumer. There's a continual battle against those that say "why should I pay X for Y when I can get Z for less" — that's hypothetical, not a Pokémon reference — and a headache for all concerned.
For its part, Nintendo has flirted with various angles in selling its games directly to consumers. In many cases it charges full price, meaning that less expensive opportunities are available for those happy to browse online retailers or hit select stores out on the street. On occasion Nintendo does run a promotion that could potentially undercut some competitors; Europe had a 30% off opportunity with eShop copies of Pikmin 3 and The Wonderful 101, while in North America there was $30 of eShop credit up for grabs for those that picked up Fire Emblem: Awakening and Shin Megami Tensei IV. There's also been clear wriggle room with retail prices, which we'd suggest is a positive when applied sensibly, but these can be endlessly debated — titles such as Pikmin 3 and Game & Wario have lower asking prices than The Legend of Zelda: The Wind Waker HD and the upcoming Super Mario 3D World. Valuing games depending on their audience and content is a sensible, and obvious, thing to do.
The debate can certainly be had about whether retail pricing is still correct — one to tackle in detail another day — as some may feel that the days of requesting $60 for a game are passing. While we all have our opinions, it's not as cut and dried as saying "games should cost less and that's beyond dispute" — there's a whole eco-system to consider in that argument, as consumers demand the best yet want to pay less, when blockbuster HD games cost more to make than ever before, and developers are entitled to make a living. It's an argument with lots of complicating factors, but what is simple is that consumers will always be happy to pay less; that doesn't mean it's the right thing for the retail game industry.
For Nintendo, a perfect pricing model for endeavours such as the UK online store or even the eShop platforms will continue to be elusive. If Nintendo decides a product is worth $60 but Amazon or other retailers sell them for $40, simply lowering its own prices to match aren't the simple answer, as that sets a precedent. When Nintendo releases a brand new major Mario game for a price like $30, the dye is cast and it's difficult to go back.
As gamers, we always want more for less, but it's not that simple. Is it?