Could a $2.6 billion UK lawsuit force PlayStation to lower its 30% commission fee?
The class action lawsuit ends this Friday
A major $2.6 billion class action lawsuit over PlayStation game pricing ends this week, which could force Sony to alter its business model.
The lawsuit was brought about by Alex Neill, who is representing consumers that purchased PlayStation digital content between August 2016 and February 2026. The action accuses PlayStation of having a ‘near monopoly’ on digital games and add-on content on PlayStation platforms. The case asserts that Sony sets strict terms and conditions on developers, and charges a 30% commission on every purchase, which results in “excessive and unfair prices”. It claims the prices are out of proportion to the costs.
Sony’s counter-argument is that there is sufficient competition against its store and platform, and that the fees it charges developers allows it to sell hardware at a lower price to consumers.
Here’s what you need to know:
What is Alex Neill arguing?
Put simply, that Sony has been “ripping off” customers by charging a 30% commission on every digital purchase through its store. The case argues that Sony has a dominant position and is in breach of consumer law. Neill says that PlayStation has a near monopoly on digital game sales on its own platform.
Is it a monopoly?
The lawsuit argues that for owners of PS5, the only place they can buy digital video games is via the PlayStation Store. The counter to this argument is that most of the bigger PS5 games are still available via physical retailers, and PlayStation does have competitors in the digital space via other platforms. For instance, EA Sports FC 26 (last year’s best-selling UK video game) is available to buy via physical retailers, and via digital Xbox, Nintendo, PlayStation and PC stores (plus streaming services). PlayStation would argue that this competition keeps the company honest, because if it charged more than its rivals, it would potentially lose customers to these other platforms and stores.
Didn’t Apple lose a similar case?
You are referring to Kent v Apple. In this case, Dr Rachel Kent successfully won a lawsuit that stated Apple’s 30% cut on App Store purchases was unfair. The Competition Appeal Tribunal concluded that Apple should lower its commission rates for developers and was found liable to pay £1.5 billion in damages to UK users of iPhone and iPad. The case that Alex Neill has put forward is basically the same.
Why is this any different?
It is similar, but there are a few key differences. Apple is one of just two main competitors in the mobile space (alongside Google). It’s often referred to as a duopoly. That’s not the case in the video game console market.
The bigger argument is around the costs associated with the PlayStation business. Unlike mobile, PlayStation is primarily a video games machine. It isn’t an essential item like a mobile phone. Therefore, Sony invests in marketing and promotional activity to bring in customers and support publishers. This comes at a price. PS5 consoles are sold at very low margins (and even at a slight loss). The idea is that the hardware is kept as low as possible to make games accessible to the widest audience, and then the profit is made up via the 30% fee imposed on the software sales.
PlayStation’s overall profit margin is typically between 9 and 10%.
Why can’t we have multiple digital stores on PlayStation?
PlayStation argues this would negatively impact the consumer experience, and pose security and privacy risks for consumers. Apple and Google have made similar arguments in its cases.
If PlayStation lose, will this result in cheaper games?
Alongside a financial payment for PlayStation users, the company may (if regulatory scrutiny follows) be forced to change the fees it charges developers. This theoretically could result in developers and publishers reducing the price of their games.
If PlayStation sees its margins erode on the software side, it could choose to increase the price of the consoles instead. After recent price increases caused by a worldwide shortage in RAM, this would be a tough pill to swallow for PlayStation.
What about the rest of the world?
This trial is only in the UK for now, but there are similar class actions in Australia, Netherlands and Portugal at an earlier stage. There is also another class action lawsuit in the US. This lawsuit focuses more on the fact that Sony no-longer allows for the sale of game-specific vouchers that allow other stores to sell digital PlayStation products. In this case, the court has preliminarily approved a $7.85 million settlement. However, the court has not decided if the company has actually violated any laws.
When will we know the outcome?
The closing arguments are being made this week (Friday, May 8). The Competition Appeal Tribunal typically hands down its decisions between three to 18 months after the conclusion of the trial.
My Take:
The retail landscape for video games has shifted drastically in 15 years. And in the UK, the competition on the High Street used to be intense. Back in the 2000s and early 2010s, price wars would frequently flare up around the biggest games. At one point, with every major supermarket desperate to win market share, a price battle took place over Call of Duty: Modern Warfare 2 (the 2009 version). On the day of its release, the shooter was available for £26 from Sainsbury’s, that was about half price. The retailer lost significant money on that game.
That is an extreme example. But it was common that most games would have a few pounds shaved off its retail price at most stores. And then there was pre-owned. Most major retailers would accept trade-ins (even some supermarkets), which was hated by publishers but appreciated by consumers. Players had a system where they could offset the cost of a new game by bringing in the previous one.
Now, that does still happen. Physical online retailers like ShopTo will try to stand out by shaving a few quid off the recommended pricing, and second-hand games store CEX is now the UK’s biggest games retail chain. But the rise of digital has certainly impacted the physical space. There are simply fewer retailers that sell games. Even the supermarkets have stopped. Nobody is getting Call of Duty for half the price on launch day this year.
Except… consumers can now get Call of Duty Warzone for free. And there are now various subscription services available. The rise of digital has brought with it new, value-oriented business models to replace the old.
In truth, the video game market is more competitive today than it’s ever been, and pricing is part of that competition.
But what about that 30% store fee? Is it fair? I think back to our interview with Zynga boss Frank Gibeau last year. His issue with Apple and Google’s 30% fee is that he wasn’t getting good value for the money. The various app stores simply weren’t delivering the results to justify that kind-of commission. On consoles, that value exchange is better. Unlike Apple, Sony makes no money on its hardware. It wants to bring in as large an audience as possible, and is willing to take a financial hit on the console in order to achieve that. That’s what the 30% commission is supposed to get developers, a large and valuable audience to sell games to.
Of course, they would love lower fees. And with the market in the situation it’s in, game companies, more than ever, are looking to the platform holders for help. But that conversation isn’t really what this story is about. The lawsuit says that PlayStation is abusing its position and ripping off consumers. Is it?
The price of PS5 games is not really any different to the price on any other format. Factoring in inflation, you could argue that AAA game prices have gone down over the last 15 years. And if PlayStation is required to reduce its fees, what will be the outcome? Do we really think that’ll lead to cheaper game prices? Or will developers simply take the savings for themselves to help offset the current industry headwinds? And there’s a genuine risk that such a change could lead to more expensive consoles, and therefore a potentially smaller player base. So even if some games do end up slightly cheaper, I’m not convinced players, or developers, will actually be any better off overall.
There are, of course, conversations to be had around store fees, platform support and the increasing power that console makers have across the whole value chain. But outside of a few quid for some PlayStation players, the only people I can see who really benefits from this lawsuit are the lawyers that proposed it in the first place.