EXCLUSIVE INTERVIEW: Former Sony Veteran On Digital vs. Disc Gaming and PlayStation Stars Failure

The notion of digital gaming is one that has been blowing up in recent weeks, but not entirely for good reasons. It has become a massive point of contention across the wider industry thanks to Sony’s revelation that it will cease to produce discs for new PlayStation games released after January 2028.

Taking advantage of the discussion, I grabbed some time from Gordon Thornton, a former Sony Interactive Entertainment veteran with almost 18 years at the company, before departing in 2022. He was the SVP in control of PlayStation’s global direct-to-consumer business, scaling the PlayStation Store from nothing to a multi-billion-dollar beast of digital games.

I asked him for his take on the digital gaming space.

‘… The Real Value for Both Players and Developers…’

From 2005 to 2022, Gordon Thornton was climbing the presidency ladder at Sony Interactive Entertainment. He was pivotal in launching PlayStation’s first digital platforms, cranking the value out of digital sales, leaning heavily into the concept of data-driven transformation, and ultimately, scaling the PlayStation Store to where it is today.

Put simply, Thornton was directly responsible for the PlayStation Store and PlayStation Digital verticals racking up $14 billion a year in global revenue.

I felt that he was one of the safest and most knowledgeable souls in the world to ask about digital gaming, but I had a specific line I wanted to probe first. In recent news, someone managed to pre-order GTA 6’s Ultimate Edition using only Microsoft Rewards points, after having grinded the system for months to rack up the credits.

I asked how valuable an ecosystem like this is, given that Sony is preparing to entirely sunset the PlayStation Stars loyalty system later this year.

The Microsoft Rewards story demonstrates the power of a well-executed loyalty program built on a two-way value exchange system where both Microsoft and the player are winners. In my opinion, PlayStation Stars failed because it did not properly align player behaviors with the right incentives, leading to its closure.

Thornton is now the Chief Commercial Officer at ZBD, a payment pipeline provider for the gaming space. He used a success story from the company to paint a picture of how things should be in the loyalty space.

I think the real value for both players and developers comes from aligning player rewards directly with in-game mechanics and objectives. When developers successfully connect these elements, it significantly boosts a title’s lifetime value and average revenue per user.

For example, when ZBD helped TapNation implement this strategy, the game experience a 142% increase in retention over two weeks and a 44.4% bump in average revenue per daily active user.

The inherent issue comes from a replication trend, Thornton says. The problem is that most loyalty systems simply copy a formula employed by others across the industry, and there’s no evolution at play. Microsoft does it will, as Thornton quipped, but it’s still not transformative.

The next step in player incentives requires elevating the relationship between user and game to a financial level, embedding real-money rewards directly into the core gameplay loop.

Introducing instant rewards like real-money payouts for content creators transforms the audience into vested participants with shared objectives, deepening their connection to the game.

It’s no big secret that digital-first storefronts benefit from loyalty schemes, but they have to be handled correctly. It’s about rewarding users for their time spent playing the games they buy, and instead of relying on a simple flat-rate discount system, something more personal is the best step forward.

Next up, I wanted to pick Thornton’s brain about the cost of digital gaming and the news that Sony is pushing more players into the digital space by scrapping discs for new games post-January 2028.

‘… The Relevance of Physical Resellers Has Naturally Diminished…’

Thornton assured me that the PlayStation Store is in a great place and ready to evolve as digital-first becomes the de facto standard in the gaming space. He came armed with numbers for our discussion:

The PS Store already commands a significant 80 – 85% market share. Physical retail now primarily competes during the initial launch window, especially as dedicated gaming storefronts are replaced by supermarkets and general electronics retailers.

Consequently, the PS Store entirely dominates the catalog market (games older than 90 days), minimizing distribution risks.

Many have voiced their concerns about PlayStation’s push for digital-exclusive gaming, and within 18 months, no new PlayStation game will be available to buy on disc. That is, unless the global petitions with hundreds of thousands of signatures change anything.

One of the leading issues stoking the fire in this debate is around Sony’s ‘monopoly’ on gaming that will arguably grow with the digital ramp-up, and the notion that the PlayStation Store overcharges gamers. That latter point has caused lawsuits to surface, some of which have been successful.

Thornton had an answer:

Regarding allegations of monopolization and price manipulation, PlayStation operates on a buy/sell model where the publisher acts as the supplier. Because the recommended retail price is set directly by the publisher, Sony does not control these pricing structures, which counters claims of unilateral price fixing.

I asked Thornton what he thought about the resilience of the anti-digital crowd, staring Sony in the face and threatening to boycott the entire ecosystem in defence of their discs. I’m of the standpoint that an all-digital future is inevitable, and it sounds like Thornton agreed with me:

The reluctance to adopt digital gaming and the relevance of physical resellers have naturally diminished. In major markets like Western Europe and the US, traditional sofa gaming has moved online, with players connecting from their homes.

Furthermore, frequent digital sales and promotions have resulted in consumers waiting for the right digital price drop and purchasing a game for themselves. All of this makes digital appealing to players, more so than the general appeal physical provides, like disc-sharing.

We wrapped up with a brief chat about the cost of digital vs. physical gaming, because, again, that has spread like wildfire in the last few weeks. Many feel that digital gaming must be cheaper as there are no distribution or manufacturing costs to consider, but that rarely seems to be the case.

Thornton explained:

Publishers have never desired to run channel-centric pricing.

In the US, pricing is harmonized and this helps set the global pricing via foreign exchange and market pricing.

The gaming industry is not incentivized to work on a cost-plus model where the game’s price is based on its production costs. It would prefer to maximize revenue however possible, such as embedding sustainable value loops directly within a game to strengthen its user lifetime value and average revenue per paying user.

This extra revenue can then be used to help cover the increasing costs of game development instead, allowing the price of a game to remain fixed, regardless of whether it’s physical or digital.

Do you agree with Thornton’s lines of thinking, or would you dispute his takes? Let us know on the Insider Gaming Discord server.

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