Lawsuit Accuses Sony of Monopolizing Digital PlayStation Game Sales

A proposed class action lawsuit has accused Sony of operating an unlawful monopoly by only allowing the sale of digital PlayStation games in its PlayStation Store, preventing third-party retailers from selling download codes as of two years ago.

“Sony’s monopoly allows it to charge supracompetitive prices for digital PlayStation games, which are significantly higher than their physical counterparts sold in a competitive retail market, and significantly higher than they would be in a competitive retail market for digital games,” reads the complaint in Caccuri v. Sony Interactive Entertainment LLC, 3:21-cv-03361, per Bloomberg.

The suit goes on to claim downloadable games end up costing consumers as much as 175% more for downloadable games than physical ones.

Read the suit itself here (H/T Polygon).

Analysis: Does the Suit Hold Water?

Mike Futter, games industry analyst, author of "The Gamedev Business Handbook," and co-host of the Virtual Economy Podcast, says the suit appears to be built on a fundamental misunderstanding of how game pricing works. It seems to believe that digital and physical prices are determined purely by manufacturing costs, ignoring how inventory factors into the equation.

"I think that's a comparison of apples and oranges," Futter told DBLTAP on a phone call Thursday.

Generally speaking, when a game is released for a game console, retailers have to buy a specific number of game keys from the console manufacturer the same way they would buy a certain number of physical units. Because the retailer is taking on some level of risk that these games won't sell, they'll make agreements with the publisher that allow them to lower the price at one point or another to encourage sales.

So if a retailer has stock of both digital and physical games, and the digital games are selling normally while physical sales dip, that retailer could drop the price of the physical version even as it leaves the digital one at full price.

Where the two products differ is in how much space they take up — or, in digital's case, how little.

Whenever a physical product is sitting on a shelf, it's not only taking up space that could go to another product that might sell more quickly, it's also incurring whatever costs are associated with storage.

"Literally every product you put on the shelf, every unit you put on the shelf, has a cost associated with warehousing," Futter said. "You're paying for that space, you're paying for that climate control, you're paying for everything."

Digital games don't have that problem, as they take up next-to-no physical space. As a result, retailers are often more comfortable sitting on unsold digital copies than they are physical ones.

All this adds up to create price disparities between physical and digital copies of the same game before competition even enters the equation.

Futter uses Resident Evil 3 for the Xbox One to illustrate the point. The physical version shipped and sold by Amazon costs $39.99, but the digital version costs the full $59.99. That's without the price gouging the suit accuses Sony of engaging in.

"So clearly, having the ability to sell digital codes through third party retailers does not automatically mean that there is going to be price parity between physical and digital, that there is true competition here," Futter said.

It remains possible the suit could go to trial, as there's no guarantee a judge would have the necessary industry knowledge to see the gaps in the case's logic, but Futter is skeptical it will get very far.

"It feels to me like they're trying to obfuscate the way real retail works," Futter said of the suit. "A lot of this does not seem rooted in reality."