The gaming consultant and analyst shed some light on what the numbers could look like for the companies PlayStation and Xbox in an all-digital future, suggesting that the move to a disc-free industry could boost profits by as much as 54%. It's no secret that video games and game consoles are getting more and more expensive to produce, and big companies are looking for ways to improve their profit margins. One recent example was PlayStation's sudden decision to stop printing new video game discs from January 2028.
PlayStation's announcement sent shockwaves through the gaming community, with many expecting Xbox to follow suit and ditch physical discs in the near future. One of the initial arguments in PlayStation's favor was that more than 80% of gamers already bought digital games, so the move seems inevitable. However, analysts later disputed this claim, claiming that digital purchases account for the largest share of sales because they include a much wider range of content such as DLC. He believes that PlayStation is abandoning discs only to increase profits.
PlayStation will continue to support physical games beyond 2028
Sony's controversial decision to stop production of the physical PlayStation after January 2028 comes with a notable asterisk that allows for some space.
According to the analysis of Dr. Serkan Toto, CEO of KantanGames Inc., says about 35% of the earnings from each physical disc sale of a first-party game goes to production, shipping and retail costs. Third-party studios spend more, around 50%, on disc printing because they also pay royalties to platform holders such as Sony, Xbox and Nintendo. For digital games, the only added payment from third-party publishers is a 30% trade cut, which is about $21. That leaves them with about $49 in revenue from the $70 game. First-party studios don't pay these fees and keep the full $70 for each digital sale.
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Dr. Serkan Toto says, “This means that, from a purely financial perspective, Sony, Microsoft and Nintendo have more incentive to avoid physical media on both an absolute and a relative basis.” Industry analyst Piers Harding-Rolls also notes that digital-only game sales represent an opportunity that could benefit developers and publishers in the long term. The numbers suggest that scrapping discs could increase the amount of money publishers keep. But the key question is whether focusing only on profit will help the industry grow or risk hurting it in the near future.
Digital vs. Physical profit from first party game sales
|
Price/price |
First party digital game |
First party physics game |
|---|---|---|
|
Price |
70 dollars |
70 dollars |
|
Retail/digital reduction ~30% |
-$0 |
-21 dollars |
|
License fee ~15% |
$0 |
$0 |
|
Production ~5% |
$0 |
-$3.50 |
|
Publisher's Share (Profit) |
70 dollars |
$45.50 |
WITH GTA 6 has already raised prices to $80, the industry could see more AAA titles priced at that level rather than sticking to the traditional $70 standard. So, the total profit that companies can get from digital sales could exceed the mentioned figures. This means that there are several key points to consider. According to Dr. This can be an almost endless discussion, so factors like sales taxes, a deeper economic comparison of physical vs. digital and the ocean of other details such as retail boxes containing downloadable vouchers are left out for brevity. For example, profit figures comparing physical and digital sales are calculated before tax. Second, depending on each country's market, there may be additional production costs that are not fully accounted for, as publishers and sellers typically do not disclose them. In addition, each platform may have its own private policies and fees that may affect the final numbers. So, as Dr. This, his analysis, “is not an exact science.”
To be completely fair, platforms like PlayStation, Xbox, and Nintendo have gotten really expensive to run, maintain, and expand in today's economy. RAM and storage shortages also persist, raising concerns about the future of gaming hardware. However, some argue that large corporations such as Sony and Microsoft are more focused on increasing profits from existing customers than on reducing costs or increasing production efficiency. As a result, many people feel that gaming is becoming less accessible to the average gamer every year. And it's still unclear whether this trend will improve over time.
