A proposed class action alleges Sony Interactive Entertainment’s move to block retailers from selling download codes for digital PlayStation games and requirement that publishers who sell games for the console relinquish all control over retail prices amounts to competition-suppressing conduct that’s foreclosed “any and all price competition.”
The 25-page antitrust case alleges Sony’s sale and price restrictions for PlayStation games have established for the company a monopoly propped up by roadblocks that the suit claims have allowed the defendant to charge for PlayStation games “supracompetitive prices” that are significantly higher than they would be in a competitive retail environment.
Central to the claim is the switch from disk-based to digital games. According to the complaint, Sony’s ability to maintain supracompetitive prices on the PlayStation Store as consumers continue to shift from disks to digital games, coupled with the company’s skyrocketing revenue from digital games, shows that the prices for such are “not responsive to changes in price for PlayStation games on disk.”
As a “direct and proximate result” of Sony’s alleged competition-precluding conduct in the sale of digital PlayStation games, consumers have paid and will continue to pay “significantly more” for digital offerings than they would have in the absence of the defendant’s roadblocks, the lawsuit claims.
Since its 1994 launch, the PlayStation has become one of the most popular video game systems in the world, the suit begins. The most recent iteration of the product, the PlayStation 5, is expected to become the best-selling console of all time, with sales predicted to surpass 200 million units within the next five years, the complaint says. Since the console’s November 2020 launch and despite its astronomical sales numbers, however, Sony has struggled to maintain enough supply of the product to meet demand, the case notes.
Per the lawsuit, the bulk of the profits Sony pulls in from the PlayStation console come not from sales of the machine but from the digital video games and other digital content sold through the PlayStation Store and PlayStation Network, which, according to the suit, have yielded more than $17 billion in revenues for the defendant.
As the lawsuit tells it, the shift from disk-based to digital games began with the launch of the PlayStation store with the PlayStation 3 console in 2006. From then until recently, consumers could, in addition to purchasing content directly from Sony, buy download codes for digital PlayStation games from retailers such as Amazon, GameStop, BestBuy and Walmart, the case says.
On April 1, 2019, however, Sony eliminated retailers’ ability to sell download codes, the suit relays. Because delivering digital content to PlayStation consoles requires access to the PlayStation Network, the new policy from Sony set up the PlayStation Store as the only source from which consumers could purchase digital PlayStation games and through which publishers could sell PlayStation games, the lawsuit says. Moreover, the case alleges, publishers are also required by Sony to relinquish all control over the price at which digital PlayStation games are sold.
The product of these policies, the complaint alleges, is the foreclosure by Sony of “any and all price competition” in the sale of digital PlayStation games, which, as a result of the defendant’s alleged conduct, are sold to consumers at “significantly higher prices” than their disk-based counterparts would be in a competitive market, the case says.
“A comparison of prices for the most popular digital games on the PlayStation Store with prices for the same games available on disk from an array of retailers suggests prices on the PlayStation store are, on average, about 75% percent higher than those for games on disk, and in some cases closer to 175% higher,” the suit reads, asserting that there exists no legitimate reason for digital games to be more expensive than their physical counterparts.
“In fact, given the costs saved on packaging and distribution, prices for digital games in a truly competitive market would likely be lower than they are for games on disk,” the suit contends.
The lawsuit looks to represent all persons in the United States, excluding Sony and its employees, agents and affiliates and the Court and its employees, who’ve purchased any digital video game content directly from the PlayStation Store at any time from April 1, 2019 through the present.
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