Your money-making expert. Financial journalist, TV and radio personality.
The digital world is taking over our lives.
We download music rather than buy CDs, we choose Netflix over DVDs and we can even give up our yoga classes at the gym for free videos on YouTube.
Over half of Brits were given ‘virtual gifts’ at Christmas!
But have you stopped to question whether this digital development is a good thing?
In fact, the move towards the digital and virtual might just be robbing you of potential money-making opportunities…
For example, if you rarely watch a film more than once it makes sense to pay £5.99 a month to watch several films rather than buy a physical copy that you’ll have no use for afterwards.
People download music for convenience, after all it’s easier to type an artist’s name into iTunes than to trawl through HMV only to find out they don’t have it in stock.
…the most insidious ‘download opportunity’ is the ever growing trend of ‘digital download’ video games.
For a long time the idea of downloading a video game to a console was something of an impossibility – the hard drives were too small and the download would simply take too long for it to be a workable business model.
However, particularly with the next-generation video game consoles, digital downloads are very much a reality and instead of going into a video game store and buying a disc, you can instead download it from an online store straight to your console.
The only real reason to do this is convenience – you can now buy a game without having to leave your home and you can start playing before it’s fully downloaded. It may also result in quicker loading times.
We’ve got a whole article on how to make money selling old DVDs, CDs and games but this only works for physical items, not digital ones.
With CDs and DVDs, this doesn’t necessarily mean you’ll be losing money. You may well be able to buy or listen to music cheaper than from a store, and you might be getting more value for money by paying a subscription to Netflix rather than buying DVDs.
However if you never purchase physical copies it does mean you’ll never know the joy of buying something without much thought only to find out a few years later that it’s rare and could make you a few bob.
Plus there are some films you really should be buying if you’re a fan (and a smart one at that) – for example Disney classics are only released every seven to ten years, so you can make money buying and selling at the right time. Find out more in our article on making money from the Disney Vault.
Downloading video games on the other hand… well that’s much more problematic for consumers.
Without a physical copy, however, there’s no way you can sell your game on. With a disc you can buy a game and if you complete it or don’t like it you can sell it on. You might not get a fortune for it, but you’ll get something.
With a digital download you can’t do that – once you’ve downloaded it you can’t sell it on again.
Given the huge market for pre-owned video games, which not only allows people to get some money for their used discs but also makes games affordable to people who couldn’t buy them new, it seems that the push towards the digital download is very deliberate. Indeed Sony has been very open about its intention to move more and more towards downloads.
There have already been moves to make pre-owned games less appealing. For example EA often sell their new games with ‘online passes’ which can only be used once. If you buy the game second hand you’ll have to pay to get a new online pass.
But digital downloads appear to be the biggest push towards eliminating the second hand game market.
What really rubs salt into the wound, however, is that digital downloads are more expensive than physical copies!
You pay, on average, an extra £10-15 when you buy a digital download rather than a disc.
Directly buying from an online store means there is much less competition, so you can be charged extortionate amounts.
But why should we pay more? After all, downloads are cutting out the middlemen so really they should be cheaper. But it’s not.
At the moment you can buy a copy of the recently released Grand Theft Auto 5 for the PS4 from Amazon for £42.99. If you buy a digital copy from the Playstation Store, however, it will set you back £54.99. Straight away you’re paying an extra £12 just for convenience (with no option to sell it on after you’re done with it.)
But it doesn’t end there. CEX will currently pay £40 in cash (or £44 in voucher) for a secondhand copy.
And what’s worse, let’s say you bought the game and found you didn’t like it – well you could get most of your money back.
If you’d downloaded it, it would be a complete loss.
Using an example of a game that came out a few months ago, you could get Watchdogs for the Xbox One from Amazon for £26.86. If you download it from the Xbox Store, however, you’d pay a staggering £59.99. That’s a saving of over £30 straight away!
If you want to trade it in, CEX will give you £8 cash (or £12 voucher), or you could sell it for more on Amazon or eBay. But with a download you wouldn’t even have the option of selling it.
As you can see, you could be losing a fortune by buying a digital download instead of a disc.
This isn’t even taking into account the fact that certain games may become rare and be worth a fair bit.
For example, if you managed to get your hands on a PS3 copy of Afrika when it came out you could easily be selling it for more than double the price you paid… if not more!
At this point in time we should be making a stand against digital downloads because
What do you think about digital downloads? Do you agree or do you think the convenience is worth the cost? Let us know your thoughts below and please share with your friends!