Will retail downloads be golden?

This week we’ve been given a glimpse of Nintendo’s plans for retail download pricing and incentives, both for Japan and North America. It all begins with New Super Mario Bros. 2 and Demon Training in Japan on 28th July, with North America and Europe joining in with Mario’s title on 19th and 17th August respectively. For the first time Nintendo gamers are faced with a choice: do they buy the physical retail version, or do they go for the download version? Many will have faced that choice on other platforms, but for those that get their game on exclusively with Nintendo, it represents a new buying option.

First up, let’s break down the options for retail download and what we know about the pricing and incentives so far. The option that’s most convenient, from a consumer standpoint, will be to download new titles directly from the 3DS eShop. The process will be like downloading any other title, albeit with a longer download time and a retail-sized price, of course. New Super Mario Bros. 2 will cost ¥4,800 in Japan, which is the same as a full-priced boxed copy from a store. As an incentive, Nintendo will offer bonus Club Nintendo Points and Donkey Kong: Original Edition to sweeten the deal, with the free game known as the closest arcade port that was released with limited edition red Wii systems in Europe. For those that care about and want that version of Donkey Kong on their handhelds, we’d argue that this is a reasonably attractive offer.

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A devilish download

While Nintendo of Europe is yet to show its hand, Nintendo of America has confirmed that eShop downloads will receive double the normal Club Nintendo Points, though there’s no free Virtual Console goodies in the deal. This offer is less than impressive, especially if the download is sold for $39.99 as expected, as Club Nintendo points simply aren’t a big attraction at that level. It’s better than nothing, undeniably, but it’s the coin equivalent of little more than a screensaver, based on current rewards, and the equivalent monetary value is rather low. We’d also expect the pricing in North America and Europe to be at the full retail rate, based on the precedent in Japan and Satoru Iwata’s previous comments on retail download pricing.

We do not hold such a premise that digitally distributed software has less value. In fact, as we have discussed this with a number of software publishers around the world, we have found that their opinions are completely divided on the topic of the price points of the digital distribution of packaged software. Some publishers believe that the digital versions should be cheaper while others insist that both versions must be set at exactly the same price. So, it is not only Nintendo’s idea. Each publisher has various ideas on this point and, among them, Nintendo is now offering both versions at the same price point (the same suggested retail price).

Assuming the eShop prices remain stubborn to this policy, the second option for retail download will be code cards from retailers. This option has been devised by Nintendo to appease and keep retailers on side, and indications from Japan suggest that the codes will be on physical cards, kept in stock, rather than being generated by the store on site. How that influences issues of prices and inventory at an industry level – ie, do stores only pay a larger rate for each card sold, rather than upfront stock? – is a little unclear.

A sign of progress

In this case we’re more interested in the consumer angle, however, and as reported today the Seven-Eleven chain in Japan is currently selling the New Super Mario Bros. 2 download card at a slightly reduced rate, around 6% cheaper than the eShop alternative. On the flip side, it seems likely that redeeming one of these cards in the eShop, as opposed to downloading from the product page, may mean that you don’t get the rewards mentioned earlier. Those incentivised promotions refer to buying from the eShop, not merely downloading as you would with a download card, so it may be the case of saving a small amount but giving up extra Club Nintendo coins, for one example.

The big question is whether these promotions, and the over-arching pricing policy, will attract many people to the digital options. We should also take into account the fact that Nintendo’s audience is notoriously shy of online connectivity: that may not apply to many people reading this article, but figures in 2010 showed that Wii was the least connected US console at 54%, comparing poorly to 78% for PS3. A 70% 3DS connection rate — as reported by Reggie Fils-Aime this year — is a success by comparison, but underlines that there's progress to be made. It’s also a simple fact that any shopper willing to browse a few major online retailers, or even trade-in old games on the high street, will quite easily pick up the boxed games for less money.

Downloads can make life easy

There are some titles where retail downloads will undeniably be attractive from a perspective of convenience. Titles that require daily or brief interactions, such as Demon Training or even upcoming releases such as Animal Crossing on 3DS would be ideal download games. It can also be said, with justification, that complaining about full price downloads is unfair. New titles on the PlayStation Store and PC services such as Steam often charge full price for new games: subsequent sales and promotions are often applied, however, and we don’t know whether Nintendo will go that far at the moment.

Opting for downloads is all about choice, no-one can deny that. We would argue, however, that just because other platforms initially sell downloads at full price, doesn’t mean that’s correct or the best strategy. Nintendo’s in a tough spot, no doubt, as it seeks to make retail partners happy and grow its digital business, but the early signs suggest that it hasn’t quite found the right balance.

What do you think? Do you agree with the current retail download plans that we’re seeing from Nintendo, or do you think it needs to offer a better deal? Let us know in the comments below.