Digital movies and games cost as much as their physical copies, and the convenience they provide isn't always worth it.
This article originally appeared in Dollars and Sense.
In the digital world we live in today, purchasing digital movies and games are starting to become the norm.
Media players such as iTunes allow consumers to enjoy the convenience of digital downloads that people can pay for. Compared to piracy, legal download feels like a win-win situation. Creators are paid for their products while consumers enjoy the convenience.
But are consumers always better off buying digital downloads today?
Digital Media Has No Resale Value
When you buy a digital movie through a media player like iTunes, you pay the price set by Apple and agreed upon by the copyright owners. Similar to the physical purchase of DVDs, the revenue generated through the sale of digital movies is shared between Apple and the copyright owners. Everyone involved in the buying process is happy, including you, the buyer.
However, think about what happens if you want to sell your purchase.
Unlike the purchase of a physical DVD, the purchase of digital movies provides no resale opportunity. You cannot go to a second-hand DVD shop or to Carousell to sell the movie that you no longer want, even if you paid as much for the digital download as the physical copy of the movie.
You Can't Lend Digital Media to Friends Either
Not only are you not able to sell the digital movie to recoup back some of your money, neither are you able to lend the movie to someone else, not without giving them the access to your own iTunes, or activating the Family Sharing function.
This is an extremely uneconomical characteristic of digital buy today, since it means that movies can no longer be shared among friends, like what we used to do with DVDs. In fact, if everyone only buys digital movies, it’s the copyright owners and content distributors that stand to gain the most.
Harry Potter Complete 8-Film Series, Cheaper On Blu-Ray
Just last week, we observed that the complete Harry Potter 8-Film Series was selling on iTunes for S$100. On first glance, it seems like a reasonable deal at S$12.50 per film. However, once you take a closer look at the value of the purchase, it’s easy to see why buying the movies digitally don’t make any financial sense.
For starters, a brand new Blu-Ray set cost USD$40.99 (S$57.40) on eBay, with an additional $25.33 for shipping. In total, buyers will pay about S$83 for the complete set. Pre-owned sets would costs even less.
Not only do consumers pay less buying the physical copy, there are also able to sell it in the future if they choose to do so, or to lend it to a friend.
Buying A PlayStation 4 (PS4) Game – Final Fantasy XV
Last week, the long-awaited Final Fantasy XV game was released. PS4 gamers have a choice of whether to buying the physical copy or digital copy of the game. Both copies cost the same.
Unlike music, there is an active market when it comes to the buying, selling and trading of console games. For example, video-game shops in Singapore will buy back your used game for half of the current sales price.
That means opting for the physical copy of the game over the digital version can be 50% cheaper, since you can sell the game after you are done with it at half the price you bought it for. Aside from that, you can also lend or trade the game with a friend once you are done with it.
Given all these possibilities, it’s hard to imagine why anyone would prefer buying the digital copy of a PS4 game (which they cannot resell, lend or trade) over the physical copy.
Digital Movies and Games Need To Be Cheaper
The whole idea of going digital is that end-products to consumers have to be cheaper. Simply going digital for the sake of doing so is not enough, especially if consumers are savvy enough to recognise the lower intrinsic value of a digital copy.
By going digital, the aim would be to reduce the cost of the final product for creators by taking out the middleman and to save on packaging and transportation. This saving needs to be passed down to consumers, or at least, shared between consumers and creators.
The music industry is an example of how traditional music CDs were able to successfully evolved towards digital downloads. This was done not only by providing convenience (which the iPod and iTunes did wonderfully), but also in offering value by enabling consumers to pay and download specific songs that they want, instead of having to buy the entire album.
For digital purchase of movies and games to be successful online, a similar approach needs to be taken. More value has to be created and offered to consumers to entice them to go digital. Simply offering convenience for digital downloads is no longer enough, not when there is a proliferation of e-commerce sites that allow people to sell their physical copy.
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By Timothy Ho of Dollars and Sense
DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.