Business Law

Sony Facing Class Action Over Playstation’s Digital Store

Two months after facing a class-action lawsuit over malfunctioning controller drifts, Sony is yet again in legal trouble.

Two months after facing a class-action lawsuit over malfunctioning controller drifts, Sony is yet again in legal trouble. This time, a class-action lawsuit was filed against PlayStation over the alleged monopolistic pricing of digital games.

In other words, Sony is in trouble for limiting online purchases of PlayStation exclusives to PlayStation’s digital store. A move that, according to consumers, unfairly monopolizes the price of digital games.

With modern games like Returnal costing $70, it’s only logical that consumers are striving to find the best deals on the market.  But what about the company’s digital exclusivity?

The Battle for Digital Exclusivity 

The battle for digital exclusivity has been the center of home console gaming over the past two decades. This is understandable seeing that console-exclusive games are considered system-sellers. While PlayStation has dominated the console-exclusive games’ race for the last console generation, Xbox recently acquired Bethesda Softworks to add some points in that department.

This year, Sony has reportedly doubled its console-exclusive games investment, even as the 9th console generation war wage on. However, this exclusives-first mindset has landed PlayStation –and by extension Sony – in trouble, with claims that the company has a monopoly around its digital games. 

The Claim

Joseph Saveri Law firm representing a proposed class of over 1million US-based PlayStation owners filed a class-action lawsuit against Sony in the United States District for the Northern District of California. 

The law firm brings claims against Sony Interactive Entertainment LLC under Section 2 of the Sherman Act that prohibits illegal monopolization

The law firm states:

“By limiting the options users have, Sony effectively foreclosed all retail price competition on PlayStation games, creating its own monopoly on digital PlayStation content and thereby allowing Sony to charge inflated prices for these games. Consumers, limited to a single source for purchasing any digital PlayStation content, are forced to pay a higher price for digital PlayStation games than they would in an unrestrained competitive retail market.”

Unlike Microsoft and Nintendo, PlayStation stopped selling their digital game codes via outside retailers (like Walmart Inc., Best Buy Co., and Amazon.com Inc.), in 2019.  As a result, any PlayStation owner needing a digital game must purchase one via PlayStation’s storefront. That allegedly creates a monopoly on PlayStation digital content – allowing Sony to inflate prices for the affected games.

The Issue 

Cendejas v. Sony notes that consumers: 

“Are forced to pay a higher price for digital PlayStation games than they would in a free and unrestrained competitive retail market.”

On its end, Caccuri v. Sony claims that PlayStation Digital Store consumers:

“…end up paying up to “175%” more for the same games on the PlayStation Store than they would for physical releases.”

The Options 

Until 2019, PlayStation users could buy video games from retailers, like Target, Walmart, and GameStop on either a digital download code or a Blu-ray disc. So when Sony stopped allowing retailers to sell their digital download codes, PlayStation Users have but two options. Purchase games from retailers on a Blu-ray disc or buy digital download codes exclusively on Sony PlayStation Digital Store. 

In essence, the cited digital exclusivity can be frustrating for gamers playing on a Standard Edition PS5 or PS4. But it’s more problematic for individuals who bought a PlayStation 5 Digital Edition. To them, digital exclusivity means a lack of other alternatives for buying games. 

That form the basis for the claim:

“Consumers, limited to a single source for purchasing any digital PlayStation content, are forced to pay a higher price for digital PlayStation games than they would in a free and unrestrained competitive retail market.”

When retailers like Target or GameStop offer sales on Xbox or Switch video games, the respective digital versions are often sold at the same price tag. But while the PlayStation Digital Store offers frequent sales, its prices are less competitive than prices from other retailers. The lawsuit includes a claim that 3 popular (unnamed) video games were more expensive on the PlayStation Digital Store than their physical counterparts.

The Numbers 

The PlayStation 5 (PS5) Digital Edition was released in late 2020 at $100 less than the standard version. It’s no wonder Sony sold more than 5milion units within 3 months of launching PS5. That sale generated $2.6 billion in revenue, despite the limited stock.

By the end of March this year, Sony had sold 7.8 million PS5 digital consoles. So you can get a rough idea of the number of people affected here. 

Sony’s Antitrust Litigation as a Class-Action Lawsuit 

As a class-action lawsuit, it’s likely for the case not to progress past the current state. Many class-action lawsuits never see the light of day. Sony is yet to respond to the allegation but its response will sure dictate what happens next.

Bear in mind, charging more for video games is not a crime. But eliminating competition leaving consumers without a choice but to buy video games at inflated prices could be a crime. It’s not that simple though – especially if Sony built the digital exclusivity clauses into contracts signed by developers and publishers willfully. 

Forcing gamers to pay the alleged “175%” more for digital copies than physical copy may not then be a crime, but only a taint on the brand’s reputation – from a consumer perspective. 

More Trouble for Sony?

This antitrust litigation occurs concurrently with the ongoing Epic Games vs. Apple lawsuit, where Epic accuses Apple of working under monopoly. And seeing that Sony recently invested $450 million into the Unreal Engine and Fortnite maker, Epic Games – there could be “interesting” times ahead for Sony and all of us game lovers. 

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