A gaming consultant and analyst sheds light on what the numbers look like for companies PlayStation And Xbox in an all-digital future, suggesting that a shift to a disc-less industry could boost profits by up to 54%. It's no secret that producing video games and gaming consoles is becoming more and more expensive and large companies are looking for ways to improve their profit margins. A recent example was PlayStation's sudden decision to stop printing new video game discs starting in January 2028.
PlayStation's announcement sent shock waves through the gaming community, with many expecting Xbox to follow suit and ditch physical discs in the near future. One of the early arguments in favor of PlayStation was that with over 80% of gamers already buying digital games, the move seemed inevitable. However, analysts later challenged that claim, arguing that digital purchases account for the largest share of sales because they include a much wider range of content, such as DLC. They believe that PlayStation is releasing discs to increase profits.
PlayStation will continue to support physical games after 2028
Sony's controversial decision to end physical PlayStation game production after January 2028 comes with a notable asterisk of allowing some leeway.
KantanGames Inc. CEO of Dr. According to Serkan Toto's analysis, about 35% of the revenue from each physical disc sale of a first-party game goes to production, shipping, and retail costs. Third-party studios spend more when printing discs, about 50%, because they also pay licensing fees to platform holders like Sony, Xbox, and Nintendo. For digital games, the only added payment to third-party publishers is a 30% store cut, which is about $21. That leaves them with about $49 in revenue from a $70 game. First-party studios don't pay these fees and keep the full $70 for each digital sale.
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Dr. “This means that, from a purely financial perspective, Sony, Microsoft and Nintendo have more incentive to abandon physical media, both in absolute and relative terms,” says Serkan Toto. Industry analyst Piers Harding-Rolls notes that digital-only game sales present an opportunity that could benefit developers and publishers in the long run. The numbers suggest that dropping the disc could increase the amount of money publishers keep. However, the key question is whether focusing solely on profits will help the industry grow or risk damaging it in the near future.
Digital vs. physical first-party game sales advantage
|
Cost/Price |
First-party digital game |
First-party physical game |
|---|---|---|
|
price |
$70 |
$70 |
|
Retail/Digital Store Cut ~30% |
-$0 |
– $21 |
|
License fee ~15% |
$0 |
$0 |
|
yield ~5% |
$0 |
– $3.50 |
|
Publisher Share (Profit) |
$70 |
$45.50 |
with GTA 6 By already raising prices to $80, the industry could see more AAA titles priced at that level instead of sticking to the traditional $70 standard. So, the overall profit may be higher than the potential figures that companies can earn from digital sales. That said, there are a few key points to consider. Dr. According to Toto, the discussion can be almost endless, so factors like sales tax, in-depth economic comparisons of physical vs. digital, and oceans of other details like retail boxes with downloadable vouchers are left out for brevity. For example, profit figures comparing physical and digital sales are calculated before taxes. Second, there may be additional production costs depending on each country's market that are not fully accounted for because publishers and sellers generally do not disclose them. On top of that, each platform may have its own private policies and fees, which may affect the final numbers. Therefore, Dr. As Toto says, his analysis is “not an exact science.”
To be completely fair, running, maintaining, and expanding platforms like PlayStation, Xbox, and Nintendo have gotten really expensive in today's economy. There is also a shortage of running RAM and storage, raising concerns about the future of gaming hardware. However, some argue that large corporations such as Sony and Microsoft are focusing more on increasing profits from existing customers rather than reducing costs or improving production efficiency. As a result, many people feel that gaming is becoming less affordable for the average gamer every year. And it is still unclear whether this trend will improve over time.
