Ubisoft has recently stated that aggressive price cutting has led to an overall decline in profits for them.  Contrast this with Steam’s recent announcement that aggressive price cuts for their digitally delivered games actually grow profits in the long run.  Steam has stated that moving prices back up after temporary (i.e. weekend) discounts do not affect sales negatively nor buyer perception.

More from GamaSutra

DGSpy’s Take

So what is the difference between price cutting offline at retail vs online?  Retail cuts tend to be more permanent and longer lasting due to the hassle of changing price, advertising costs, etc.  Online has much lower overhead in advertising and distribution costs leaving much greater margins of profitability for publishers to enjoy despite aggressive cutting.

Just one more financial reason publishers will embrace digital distribution wholeheartedly from here on out.

The news was revealed in Stardock’s Customer Report 2009 dated November 18, 2009.  No information was given how Stardock came up with these estimates who which companies occupy the other major positions in the market.

It wasn’t clear either if Casual Games, which have enjoyed a long history of Internet Digital Distribution, were taken into account or if console digital distribution, (i.e. Xbox Live and Play Station Network) were factored into the findings.

For now, until some hard facts are revealed by independent research groups, Digital Game Spy recommends interpreting these numbers cautiously.

Stardock Customer Report 2009 – http://www.stardock.com/press/Reports/Stardock2009.pdf