Licences
"There is a cost to a physical disk, not to mention the cost associated with handling and postage/packaging."
Which should be minimal. Even if you allowed for say two replacement disks per sale, and you spend the minimum effort checking the client claims, it's maybe a buck or two on top of a games price.
It's pretty basic customer service. I'd assume it was essential for any industry that runs a lot on loyalty. If a customer has gone to the effort of getting hold of you, the story of how you treat them is going to be told to quite a few people.
My friend is an avid bibliophile, and buys a couple of hundred hardbacks a year. Half of these are from a single publisher (Baen). Not only does he regularly get "free" books (typically first in a series) from them, but he's had about a dozen books replaced (flood damage) for free. Including shipping. And it works, that's where he spends the bulk of his book money.
Biting the hand that feeds IT
