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Games Entertainment

Why Next-Gen Titles Cost $60 241

Posted by Zonk
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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Why Next-Gen Titles Cost $60

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  • What about Wii? (Score:5, Insightful)

    by jZnat (793348) * on Tuesday March 20, 2007 @09:25AM (#18413859) Homepage Journal
    Then how can you explain why Wii games only cost $50 still? I blame the increased graphical power of the 360 and PS3 which increases the development costs due to the developers' (or publishers?) need to utilise all graphical power available.
    • Re:What about Wii? (Score:4, Insightful)

      by Vandilizer (201798) on Tuesday March 20, 2007 @09:42AM (#18414095)
      Simple you want to know why Wii games cost less!

      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!
      • by Itchyeyes (908311)
        Nintendo takes just as much a cut of the game as Microsoft and Sony do. The reason Wii games cost less is development costs, plain and simple. A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.
        • by Chmcginn (201645)

          A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.

          True... but how does the cost of porting Oblivion compare to the cost of creating Gears of War? Or even Twilight Princess, for that matter.

          • by Itchyeyes (908311)
            First of all, Oblivion wasn't a port, it was developed for the PC and the Xbox 360 at the same time. However, developing a game for multiple systems is even higher then simply developing for one system, since in addition to the usual costs there's the cost of coding the game for the second system. Obviously, the benefit is that you get a larger install base to sell your game to, but the total cost of development is still higher.
        • by bendodge (998616)
          That makes sense. I am a hobbyist game developer and have always found that programmers are a dime-a-dozen. Game art (esp pixel animation) is hideously expensive.
          • Re: (Score:3, Informative)

            by deuterium (96874)
            The tricky difference between securing a good programmer and a good graphic artist is that you can judge the skills of the artist fairly directly. Does their stuff look good? Great.

            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: Cost =! price. (Score:3, Insightful)

          by trdrstv (986999)
          The reason Wii games cost less is development costs, plain and simple.

          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

          • by Itchyeyes (908311)
            There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple. Even still there were plenty of games sold at "non-standard" prices. Limited editions went for $55 and $60. Do you think they put those o
            • Re: Cost =! price. (Score:5, Insightful)

              by trdrstv (986999) on Tuesday March 20, 2007 @11:42AM (#18416535)
              There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple.

              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.

            • by 7Prime (871679)
              Yet your (b) reason just goes to prove his point. Similarly, the reason why games like Katamari are around the same price as FF12 is because people who buy them view them as not having THAT much different entertainment value. We're used to media having relatively flat rates, because there's no accounting for taste. If people don't like Katamari, lowering the price to $20 isn't likely going to make them pick it up, but pricing it at $39.99 will likely get MOST of the people who would have bought it for $20.
      • Re: (Score:3, Funny)

        by Kevin DeGraaf (220791)
        Easy!

        On!

        The!

        Exclamation!

        Points!

        There!

        Dude!!!
    • Re:What about Wii? (Score:5, Insightful)

      by MS-06FZ (832329) on Tuesday March 20, 2007 @09:42AM (#18414107) Homepage Journal

      Then how can you explain why Wii games only cost $50 still? I blame the increased graphical power of the 360 and PS3 which increases the development costs due to the developers' (or publishers?) need to utilise all graphical power available.
      I disagree. More likely it's due to the Wii hardware's close kinship to the Gamecube. Developers familiar with the 'cube can take advantage of their existing skills - much like GBA developers could with the DS. The same applies to some extent to the PS3 and XBox 360, too, but those machines are much more distant from their predecessors in terms of capabilities.

      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.
      • by Itchyeyes (908311)
        You can disagree all you like, but you'll still be wrong. Take a character model from Wii Sports and a character model from Gears of War, which one cost more to make? You can give Epic the best tools in the world and all the experience they could want with the XBox 360; it's still going to cost more to make Gears of War. You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.
        • Re:What about Wii? (Score:5, Insightful)

          by nagora (177841) on Tuesday March 20, 2007 @10:07AM (#18414575)
          You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.

          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

          • by nuzak (959558)
            It's great that you enjoy that style of game, it really is. I liked Katamari too. But none of us are really interested in your two-minute hate against fancy graphics. I bet God of War cost a lot to do the graphics on (and yeah, it's a last-gen title, but there'll be a GoW3). And guess what, Kratos wouldn't work as a Mii.
            • Re: (Score:2, Funny)

              by LordRobin (983231)

              And guess what, Kratos wouldn't work as a Mii.

              Sez you! I'd love to see a super-deformed Kratos rampaging through the Mii Plaza, decapitating Miis left and right!

              ------RM

        • by miyako (632510)
          Not to completely disreard your point, but sometimes it is substantially more difficult to create lower polygon models of things. Yes, games for more powerful systems often have more art assets- and that can correlate to more cost to pay artists- but at the same time there are certainly cases where a more powerful system means that artists and programmers don't have to spend as much time optimizing.
        • by MS-06FZ (832329)

          You can disagree all you like, but you'll still be wrong.

          Blow me. Like you're Mr. Industry Analyst and I'm just the know-nothing feeb? Don't be a prick, we're both just armchair quarterbacks here.

          If you want to talk about effort required to make models - Miis are a special case as they're rather simple. But people don't want that in all their games. They don't want cartoon characters in Red Steel. If you're going for a complex look, it's harder to make a good-looking low-poly model than it is to make a good-looking high-poly model. Game designers have, of

    • by RyoShin (610051)
      That's the main reason as far as I know. If companies kept their graphics at the height of the PS2/XBox generation, they would quickly be slammed by all video game media as having "lack-luster graphics", despite the fact that they might be able to then offer those games at $45 instead of $60.

      A big reason a lot of previously-exclusive PS3 titles are going multi-platform or jumping ship altogether is because of the substantial increase in development cost for the PS3, combined with the very slow sales of the
    • by MBraynard (653724)
      MS's own 360 games cost $50 still.
  • Inflation (Score:5, Insightful)

    by UbuntuDupe (970646) * on Tuesday March 20, 2007 @09:26AM (#18413885) Journal
    Easier explanation:

    -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.

    • "1.1^(1/5) = 1.9% per year inflation is all it takes, and it's been worse."

      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.
    • -Why did next-gen titles five years ago cost $50?
      -Now, take that answer and apply inflation for five years.


      It's not that simple, or else Atari 2600 games would have retailed for under $10.

      Come to think of it, they DID, after the industry collapsed. I know MY cartridge collection, for one, grew substantially circa 1984 as retailers attempted to liquidate their remaining stock.
      • by Phisbut (761268)

        Come to think of it, they DID, after the industry collapsed. I know MY cartridge collection, for one, grew substantially circa 1984 as retailers attempted to liquidate their remaining stock.

        Yeah... games were so cheap then... I bought a shovel and dug out lots of cartridges [wikipedia.org], they were coming out of the ground, for free. I later attempted to sell on a gray market to make a hefty profit (no eBay back then)... I still haven't recovered the cost of the shovel...

  • I click on a link to an article of why game prices have gone up and I get a full-page ad asking me to compare various sports cars.
  • If the programmers and actual developers get 45% of the remaining $59, it beats the music industry content creators by a magnitude or more.
    • by kinglink (195330)
      The reason this is better is because the publish pays the developer for the game. The developer pays the employees for the game. So the only way the game is made is if the programmers get a fair share of the money.

      Basically that 45 percent they are talking about is already spent by the time any of this profit comes in. And suprisingly it works. Most programmers are salaried and they get paid whether the game does excellent or awful, but they are held accountable because they really do want to make the b
  • by hal2814 (725639) on Tuesday March 20, 2007 @09:33AM (#18413983)
    As long as people are willing to pay $60 per title, that's what they will cost. You can break down the numbers all you want but if the market won't tolerate $60 games, there sure as heck won't be any. The least important links in the chain will either be paid less or eliminated entirely.
    • by xdroop (4039)
      My god, man, this is Slashdot -- it is no place for rational discourse. And on economic theory no less!

      Unless you are going to rail about the "unfairness" and "greed" inherent to the current system, I recommend you find another place to discuss the matter.

      (Now in your defense, you did disguise your rationality by using "bare" instead of "bear".)

      • by hal2814 (725639)
        "(Now in your defense, you did disguise your rationality by using "bare" instead of "bear".)" Yeah I noticed that after I hit submit. I guess I've seen the "We bare all." billboard a few too many times on I-85.
    • You're neglecting the supply side of the price/quantity equilibrium. If some suppliers were willing to supply their (equivalent) games for $50, then even consumers who would tolerate a $60 pricepoint will instead by the $50 games. Your formulation assumes that the developers would all collude to fix their price at the maximum the consumer would bear -- which may be true, but I haven't seen any evidence to support it.
      • by hal2814 (725639)
        "You're neglecting the supply side of the price/quantity equilibrium."

        Most games on a given platform despite their differences are priced within about $5 of each other at launch. Pricing them any lower tends to give consumers the impression that the game is a "value" (read "inferior") game. That impression is worth more than any possible collusion. Pricing them much higher simply keeps consumers from buying in the first place. At launch, games are priced as high as consumers will tolerate. After that
    • by The-Bus (138060)
      The thing is that we passed the $60 limit, in real dollars, a long time ago.

      NES cartridges could be $45 back in the late 80's (possibly higher, I don't recall, just remember that as an average price point for new releases). Some games on the SNES were even more expensive: I distinctly remember seeing Mortal Kombat being advertised at $79.

      Adjusting for inflation we're looking at $75-$105 prices nowadays. And outside of specialized collector's editions or games requiring additional hardware, we're not at that
  • Market forces (Score:3, Insightful)

    by tygerstripes (832644) on Tuesday March 20, 2007 @09:50AM (#18414225)
    It's interesting to see where that money goes & how it's divided, but to suggest that the ultimate destination of that revenue is the reason for the price of games is ignorant and foolish. Supply and demand, people. Any company who doesn't get all the revenue they can for a release won't last long.
    • So why are (almost) all the games set at the same price?
      Are you suggesting that by some incredibly unlikely coincidence all of the games have the exact same demand curve?

      The pricing of video games has more in common with the pricing of songs on iTunes or the pricing of movies in a theatre - consumers are charged the same price for all products irrespective of demand.

      Market forces don't kick in until you get to the used market - there you will see popular games priced much higher.

  • by sixteenvolt (202302) on Tuesday March 20, 2007 @09:57AM (#18414339) Homepage
    When I am browsing through something like Steam, I don't think twice about buying a game for $20 or $30. For $60, it definitely becomes a calculated purchase, and I really start questioning how badly I want the game.

    $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?
    • I agree with the parent that $60 is past the "impulse buy" range. I suspect why the DS does so well month after month isn't the hardware (which is so-so) but the fact it is a cheap gaming device with cheap games. Especially with kids, are you willing to spend $60 on a game you've never heard of for your kid or a $30 kiddy looking one?

      This is why I'm disappointed in this era for consoles. Both the XBox 360 and PS3 are overpriced, their software is overpriced, and the games are getting shorter and maybe of
    • by RexRhino (769423)
      I will pay $60 for a console game, easy. A) I know it works on my system. B) It is legal to resell it when I am done, and recoup some of the costs. C) I am getting subsidized hardware.

      However, for a PC game from Steam, where you can't resell the game, where your PC might not be enough to get optimum performance from the game, where you have paid the full unsubsidized cost for the hardware, and especially on the PC where they release beta products that need to be patched before they work properly... then def
    • by Kelbear (870538)
      I think I share your price elasticity. I buy games on Steam on an impulse, it hardly takes more than 2-5 minutes before I decide to pay up.

      At $60, so long as it looks like it'll be "decent" I'll pay up.

      But more than $60 bucks and I would take a long hard look at what else I could be buying for that price. Opportunity costs.

      Thing is, while inflation keeps moving, the practical buying power of the average consumer isn't necessarily moving at the same pace. And that buying power is much more relevant than how
  • This article is a work of fiction on a hilarious level. "Next-Gen" titles cost $60 because the greed of publishers demands it. Publishers get the majority of the profits, developers only get the amount it actually takes to develop the game and pay their employees. I can't believe the writers of this have the gall to say otherwise.
    For the record I've worked in the industry for 15 years. There doesn't seem to be a hair of truth in this article.
    • by LordPhantom (763327) on Tuesday March 20, 2007 @10:14AM (#18414733)
      ....and your post was grade "A" fertilizer. Look, real prices of games have actually gone down over time due to inflation. 60$ today is -not- the same as 60$ in 1995 or 1990, etc. When you were buying the high end games for your SNES, you were paying the equivalent of roughly 20$ more in terms of today's money. The reason for games being cheaper also probably has something to do with the fact that more of them are selling (volume).

      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.
      • 20$ now being equivalent to 50$ of money from 10 years ago? That's 10% yearly inflation - not remotely close to reality. In accusing others of downplaying the impact of inflation, you grossly exagerated it.
        • The SNES was released in 1991, the new top titles were $50. Take $50 in 1991, run it through the Bureau of Labor Statistics inflation calculator, you get $75 in 2007. So if the cost of new top titles currently is $60 in 2007 dollars then SNES games were $15 more each in real dollar terms. Given that the grand parent seems to have done an estimation, $20 is close enough. He's not saying that $20 in 1991 = $50 now, he's saying that the $50 you spent on SNES games would be about $20 more than the current price
      • by scot4875 (542869)
        And *your* post was grade AA fertilizer.

        When we were buying those NES and SNES games, we were also buying a cart that generally made up a large portion of the manufacturing cost. ($20ish) A lot of PS1 titles were $40 because they were cheap to manufacture.

        How much do you think it costs to press those optical discs? Are Blu-ray discs an extra $10 per disc to justify that cost?

        --Jeremy
        • by p0tat03 (985078)

          Spoken like someone who doesn't develop games, which isn't your fault, but here's some clarification:

          Depending on the types of games you play, production costs have risen dramatically since the last generation. Heck, they've been rising since long before then, but only have we seen a price hike now. The workload to produce your average FPS is now *many times* more than during the times of Halo 1 or Half-Life 1, and the size of teams have ballooned dramatically just to give you all the marvelous eye candy

  • by MaWeiTao (908546) on Tuesday March 20, 2007 @10:01AM (#18414413)
    I don't think the $60 price tag is anything new. I recall seeing PS2 and Xbox games in that price range.

    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.
    • by duerra (684053) *
      You're not wrong, exactly, but I think that there is another factor in there - PC games have to compete with free (piracy). That also helps keep the cost of games down.

      What gets me is that I know I'm not the only one who would be more likely to drop $25 or so on a game without thinking twice if they were priced as such, but when they're priced at $60... I feel more compelled to wait. Then, by the time the prices for the game actually come down, there's usually a newer version of the game out and I don't w
      • by ivan256 (17499)

        What gets me is that I know I'm not the only one who would be more likely to drop $25 or so on a game without thinking twice if they were priced as such, but when they're priced at $60... I feel more compelled to wait.

        You've struck on the exact reason that I own neither an Xbox 360 or a PS3 yet. When the $25 "Greatest Hits" libraries for those systems grows to something sizable, perhaps I'll reconsider my ownership position. $60 for a game is on the borderline of what I'm willing to pay, but they push me

  • by ThousandStars (556222) on Tuesday March 20, 2007 @10:04AM (#18414469) Homepage
    Because people will pay the price. If they won't, the product sooner or later disappears.
  • If you'll notice, a lot of next gen titles are existing previous generation titles in higher resolution with a few more effects enabled. Obviously the development costs there weren't anywhere near what the inintial development was, especially with cross platform titles that have to have a portable enough code base to be deployed on disparate architectures.

    The $59.99 is completely artificial, because that's what people will pay. There's no other reason for it. Of course, some games do cost quite a bit mor
    • I'd like to point out that it make take several titles to recoup the cost of a single game engine.

      That said, I think they're focusing too much on detail [the wrong details], which is why the games cost so much. If you had to hire 200 artists, musicians, modellers, etc. for a year to make a game, you'd sell it for $60 too. Back when games were the product of 10-20 folk, it was totally possible to sell them for $20 and profit.

      Tom
  • Why do they cost $60, People will pay it. Period.

  • Next-gen? (Score:2, Funny)

    by ebingo (533762)
    I'm sorry, but I always buy games for current-gen systems. What would be the point of buying a game for a system not out yet?
  • Just wait a year and buy the game in the bargain bin for $15. If you've got to have the title NOW, you obviously don't mind paying the premium that much.
  • Now explain why other games that were twice as expensive to be made also have the $60 pricetag.
  • Frankly, Final Fantasy XII was worth the $60. (Yeah, I know the non-collectors one was $50, but it was out of stock at the time.)

    Many of the franchise games, with recurring themes, are no longer worth the $60. Many of these simply look better, or have some nifty feature and that's it. Hmmm... reminds me of Microsoft software actually. --no thanks! This title was big (really fricking big), expanded on the story line and overall theme nicely and had fantastic art direction. Beautiful and engaging game,
  • is why does the same game on Xbox360 cost AU120 while the Xbox game cost AU90 at release?

    The games in question have already been out for a fair while on XBox, yet the 360 version costs even more and the game is old. (OK, maybe not a better question, but I find it damn irritating /rant)
  • by ChaosDiscord (4913) * on Tuesday March 20, 2007 @12:11PM (#18417047) Homepage Journal

    Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold.

    The remaining $59 per game goes into many hands. The biggest portion--nearly 45%--goes toward simply programming and designing the game itself.

    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.

  • $60 is nothing new for games, I remember NES and SNES games costing this much, and after inflation, that price was probably closer to 80 or 90 of today's dollars. I've probably only bought about five total $60 dollar games, and most of those were for the N64. I buy most of my games used or at the $40 price range, just requires a little patience...
  • I really think I remember seeing Mario Kart for the SNES being something like $55-60 (and offtopic, but it was some weird random number like $57.42)...back in the early 90s. Yes, I know that cartridges cost more than CDs/DVDs to manufacture, but Sega CD games were in the same price range at about the same time.

    The laws of inflation don't seem to apply in the video game realm. We get off kind of easy now as compared to before. I don't remember relatively new "greatest hits" being sold for $20 a pop back then

  • by Astarica (986098) on Tuesday March 20, 2007 @01:22PM (#18418337)
    Was it because it cost roughly twice of any game that's ever been developed? Or maybe cartridges cost $40 more than CDs? No, it's because whoever sold it thought this is the right place to maximize profit. They may be right or wrong, and history seems to indicate $100 is probably the wrong price to sell a popular game. But really it's not our problem whether games are priced right or wrong. If they're priced wrong the publisher eventually pays for that mistake. If $30 gets you more profit than $60, eventually someone will notice this and start selling them at $30. The fact it's not happening suggests selling at $60 might be a good idea after all.

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