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Why Next-Gen Titles Cost $60
Posted by
Zonk
on Tue Mar 20, 2007 10:20 AM
from the some-worth-more-than-others dept.
from the some-worth-more-than-others dept.
Heartless Gamer writes "Forbes.com has up an article detailing what goes into the $60 price tag for next generation games. Publishers get about a buck per copy sold. 'The remaining $59 per game goes into many hands. The biggest portion — nearly 45% — goes toward simply programming and designing the game itself. Then the console maker, retailer and marketers each get a cut. Add in manufacturing and management costs, and depending on the type of game, a license fee. Some gamemakers also have to pay a distributor to help get their titles in stores.'"
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What about Wii? (Score:5, Insightful)
Re:What about Wii? (Score:4, Insightful)
They are the only ones who are not subsidizing the price of their consoled with the games that they are selling!
Sony takes about $150 hit they need to recap!
Pay for it now, pay for it later in the end you are still paying for it! I for one do not mind paying a bit more now to save later!
Parent
Re: (Score:3, Funny)
On!
The!
Exclamation!
Points!
There!
Dude!!!
Re: Cost =! price. (Score:3, Insightful)
No. There is no direct correlation between development costs and consumer price.
If it did you would have non-standard prices that would vary wildly. Do you pay more to see a 'summer blockbuster' that cost 200 million dollars [to make] than an independent film that cost $5 million?
The developers have standard price points and they set their price and development budget to a level they feel they will make the most profit.
Welcome t
Re: Cost =! price. (Score:5, Insightful)
If their is any coorelation between the cost to produce a good and the price of a good, it starts with what the customer is willing to pay. The cost of the final product to the consumer dictates the development costs and not the other way around (otherwise the market would not support it).
The Fact that Gears of War cost more to make than Dead Rising didn't mean it debuted at a different price. They were priced equally to maximize profit on each. Gears sold amazingly well, but would not have sold at a $99.95 price point simply because it cost more to produce. We as the consumer don't care how much it cost, we care about the value added to us, and what we are willing to pay for that.
Likewise, games that were easier to develop, like Katamari Damacy, often went for $40, $30, or even $20.
Lower development costs help a publisher's ability to do that, but it was priced lower to make it more attractive to the average buyer. If a Mario game, or Harry potter game cost the same to develop as Katamari it wouild still be priced higher than $40 since that is what the market will pay.
Furthermore, games were almost never sold at $50 for their lifetime. Once publishers have exhausted the amount of people who are willing to pay $50 they generally drop the price to attract customers who are more price conscious.
Exactly, and this works reguardless of initial development costs. Once the publisher has exausted the maximum profitability of the higher price point, they lower it to bring in more people. That's why you typically have a step down in pricing (from $50 to $40 to $30 to $20) rather than simply cut the price from $50 to $20, because you are optimizing profit and brining in new people at each level.
Parent
Re: (Score:3, Informative)
With programmers, though, unless you have fairly extensive technical skills, or someone else with said skills doing the hiring, you can't be sure what you're getting. If the person you interview knows just enough more about programming than you do, it's hard to say that he's incapable. People pad their resumes and embellish thei
Re:What about Wii? (Score:5, Insightful)
But there's also this: in the end, they don't charge you what the game costs, they charge what you're willing to pay and then distribute the monetary yield. The Wii is an economy system, whereas the PS3 and XBox 360 are more high-end gear, (and with more "loss-leader" money to recover) so the game titles are priced to match.
Parent
Re:What about Wii? (Score:5, Insightful)
You're absolutely right, and that's a big part of why I didn't buy a console for 2 decades until the Wii arrived. I want enjoyable games, not tedious movie-wannabes or, even worse, pretentious dross by programmers who want to be "artists". That approach just means sinking the budget into visuals instead of game design.
Cheap and fun beats high-definition dullness every time.
TWW
Parent
Re: (Score:3, Interesting)
The console makers generally charge a fee to publish the game on their console, but then they spend this fee in additional testing and QA for the gam
Re:What about Wii? (Score:4, Informative)
I don't think that the designers of the console should be entitle to anything.
They're not "entitled" ... the companies have simply established a mutually beneficial business arrangement that you're willing to pay for when you buy a game. Nintendo sinks money into developing a console, in the interests of making money. The software company sinks money into developing a game title, in the interests of making money. The software company pays Nintendo to license the Wii name and logos for marketing and sales purposes (you know, so they can say the game is for the Wii), and to get Nintendo's technical assistance and expertise. That serves the software house's interest, as it allows them to sell more games, and hence make more money. It also serves Nintendo's interests, as they also make more money. You're free to go ahead on your own and develop and market a console game without the help of the console manufacturer ... but you aren't going to make a whole lot of money without their assistance and logos. Really, how many people are going to spend money to buy a game for a console when the box doesn't say it's for that console? Bloody few....
I don't see Dell getting a cut when PC games are sold.
In this instance, there's no mutually beneficial business arrangement that would dictate that. The correct comparison would to Microsoft getting a cut for each PC game sold. And they DO get a cut (of a kind ... I don't know if they get an actual slice of money per box), in that they license their Windows logos and tools to developers in another kind of mutually beneficial business arrangement.
Parent
Inflation (Score:5, Insightful)
-Why did next-gen titles five years ago cost $50?
-Now, take that answer and apply inflation for five years.
1.1^(1/5) = 1.9% per year inflation is all it takes, and it's been worse.
Re: (Score:2)
You've got a good point. It's amazing that the $50 price tag held on as long as it did. However, even a bad next-gen game still fills the DVD with textures etc. because Sony and Microsoft insist on it.
Cute (Score:2)
Beats the music industry (Score:2)
Order of magnitude (Score:3, Funny)
Because it's what the market will bare. (Score:5, Insightful)
Re:Because it's what the market will bare. (Score:4, Insightful)
I'm confused by a strange attitude I see in people today I'd label "entitlement". Somehow, we are entitled to anything we want, whether or not we can afford it. Instead of dealing with it and living without luxuries, we take what we want.
I don't know where this attitude comes from, I'm just noting what I've been seeing here in America.
Parent
Market forces (Score:3, Insightful)
Way past my impulse buy point (Score:3, Interesting)
$60 seems to be pushing the extreme limits of how much I'd even pay for a video game under ANY circumstances. I wonder if this line will ever be crossed?
It's mostly licensing... (Score:5, Insightful)
The obvious reason why console games are expensive is because of console licensing costs. It's why the same game for PCs costs $10 to $15 less. PC games have been $45, at most $50, for years but console games seem to have been creeping up in price in that same time period. So the price difference clearly isn't due to increased development costs.
This is one of the reasons I never really got into console gaming. I don't like having to pay for these nonsense licenses nor do I like having to spend that much on games. Certainly consoles have some desirable games, but not desirable enough that I'm willing to spend that much more money on them. And if you think what we pay in the US is bad, you should see prices in Japan where your average game is at least $70, and I've seen some close to $80.
Why does anything cost what it does? (Score:3, Insightful)
Bad math corrected: $28 per copy, not $1. (Score:3, Insightful)
Aaah, no. This is terrible, terrible math. The article is claiming that for copies 0 through 1,000,000, the publisher makes nothing. Then for copies 1,000,001 and beyond, the publisher is only making a dollar per copy. Utter nonsense.
Why would be publisher not be profiting for the first million? Obviously because they're recovering their initial investment. The investment into programming, design, art, and the like. So once that millionth copy is shipped, you don't get to count it as an expense any more.
The attached graphic indicates that art/design is running about $15 per copy, and programming is running about $12. From this we can conclude: For copies 1 through 1,000,000, the publisher is making zero profit. For copy 1,000,001 and beyond, the publisher has recovered the art, design, and programming costs. Add in their $1 pre-planned profit (also in the graphic), and now they're making $28 per copy. A significant difference from the articles insanely wrong claim of $1 per copy.
Chrono Trigger was $100 in speciality stores (Score:3, Interesting)
Re:This is pure bullshit (Score:5, Insightful)
In short, greed has nothing to do with it. It's a simple matter of money value over time, and mildly increased production costs.
And honestly, using a vague work history for the record industry isn't likely to increase your credibility for most people here, most of all in a post that tries to imply that -game- publishers are greedy.
Parent
Re: (Score:3, Funny)