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The Almighty Buck Games

Why Games Cost $60 536

Posted by Soulskill
from the get-your-fingers-out-of-my-wallet dept.
eldavojohn writes "Crispy Gamer is running a very interesting article on why games cost $60. Many games start out at this retail price — but why? Did the makers of The Beatles Rock Band game just happen upon $59.99, as did the makers of Batman Arkham Asylum? After all, those two titles surely took different amounts of man hours to develop, and result in different averages of entertainment time enjoyed by the consumer. They interview a director at Electronic Entertainment Design and Research, who breaks down the pie as $12 to retailer, $5 to discounts/returns/retail marketing, $10 toward manufacturing costs and shipping. That leaves $30 to $35 in the hands of the publishers. Though lengthy, the article looks at three forces of economics on why game publishers continuously end up in lockstep for pricing: sensible greed, consumer stupidity or evil conspiracy. When asked about the next step up to $70 or $80, Hal Halpin (president and founder of the Entertainment Consumers Association) says, 'I'm not sure that we'll see a standard $70 price point at all. To my mind, emerging technologies, subscriptions and episodic and downloadable content should all enable price drops — increasing accessibility to a much wider audience.'"
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Why Games Cost $60

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  • by sopssa (1498795) * <sopssa@email.com> on Friday September 25, 2009 @03:13PM (#29542659) Journal

    Many games start out at this retail price â" but why? Did the makers of The Beatles Rock Band game just happen upon $59.99, as did the makers of Batman Arkham Asylum? After all, those two titles surely took different amounts of man hours to develop, and result in different averages of entertainment time enjoyed by the consumer.

    It's the same thing with movies and music. There's a certain "standard" price everyone goes with, because if they didn't, it'll affect their sales. Going a bit over the standard decreases sales, going a bit less than the standard can increase them. You have to find the fine line.

    And to be honest, they $60 price isn't that much if it's a great game. You pay atleast $15+ to go the movies, probably even more if you make a night out of it. You might spend the same amount in bars too. Both of those give only a few hours of entertainment value, and to be honest aren't all that fun all the time. Good games give a lot more entertainment and fun hours. My stats for Left4Dead show 947 hours and I've probably spend *a lot* in WoW too. And dont even get me started on the civilization and settlers series.

    That being said, I would probably try more games if they were cheaper. But I still will get the games I want.

    $10 go toward cost of goods sold, which includes manufacturing the game disc, shipping the games to the store, and anything else directly related to production and delivery of the game package.

    I think digital delivery is something that can bring this price down a lot. Yes, bandwidth does cost, but its nothing like producing tons of dvd's, packaging them, sending them all over the world and delivering to stores. And the user experience is usually a lot nicer, you can easily buy it without walking to store.

    And to be honest, game development is no cheap business and it's getting even more costly all the time. Yeah you could argue that theres great indie games that have been developed at cheaper budgets, and you're right; there are. But their budgets also are $10 000 - $100 000. It means you have to get lots of sales. And indie developers really cant produce the games like Call of Duty series (specially the modern warfare ones!) and Left4Dead and Half-Life 2. There is place for indie developers, but you need professional commercial game developers too.

  • by omgarthas (1372603) on Friday September 25, 2009 @03:19PM (#29542725)
    Yeah, Batman is a very nice game, I enjoyed it, but after 10 hours, I'm done with it and it offers no replayability (sorry spelling), on the other hand, other games (specially RTS or Tycoon series), cost 45$ and I would spend my entire life playing those if I could
  • Which is why (Score:3, Insightful)

    by Monkeedude1212 (1560403) on Friday September 25, 2009 @03:20PM (#29542739) Journal

    I stopped going to Retailers for PC games, and started using a downloadable system (Steam).

    And when I want a 360 game - I'll either Rent it, or one of us in our group of 5 friends will buy it and we'll rotate our games around, or on the odd Chance that it has great addictive multiplayer (Halo 3, Call of Duty, etc) We'll all buy it ourselves. But with episodic content (Like ODST) its cheap enough that we all can grab it, IF we really want it.

  • Re:Price Drops (Score:1, Insightful)

    by Anonymous Coward on Friday September 25, 2009 @03:21PM (#29542749)

    dropping the price could bring in more buyers.

  • by FlyingSquidStudios (1031284) on Friday September 25, 2009 @03:22PM (#29542759) Homepage
    Games are $60 because enough people are willing to buy games at that price to justify it. Like many other products, if games don't sell at $60, the price drops. If they thought people would be willing to buy games for $50 but not $60, games would be $50.
  • Huh? (Score:3, Insightful)

    by Etrias (1121031) on Friday September 25, 2009 @03:23PM (#29542771)

    To my mind, emerging technologies, subscriptions and episodic and downloadable content should all enable price drops--increasing accessibility to a much wider audience.

    Oh yeah. Just ask EA how well that's going. How much has their episodic content come down?

  • by tacokill (531275) on Friday September 25, 2009 @03:24PM (#29542779)
    Why do games cost $60? Because that is what the market will pay.

    Does this even need to be discussed? Are we really that retarded with our understanding of economics? Do we not understand the very simple concept of supply and demand?

    ...sometimes I wonder
  • by Lord Ender (156273) on Friday September 25, 2009 @03:26PM (#29542811) Homepage

    Online multiplayer games are probably the best value in entertainment. Example: The Orange Box was $50, and contained four games. Just one of those games, TF2, has given me over 500 hours of entertainment in the past two years. Compare that $50/500hr expense to a $10 2hr movie, and you can see that almost any price could be "justified" for certain games. $60 is likely selected because it's about as much as many people can drop on an impulse purchase for a purely luxury item.

  • by LordPhantom (763327) on Friday September 25, 2009 @03:28PM (#29542821)
    Frankly, to some degree I think the current cost of games is a bargain, especially if you compare the price point versus development costs of games of even 5-10 years ago. Paying $60 for a 40-100 hour RPG experience complete with full score, FMV and incredible rendering that took thousands of man-hours to produce is actually pretty cheap.
  • by qoncept (599709) on Friday September 25, 2009 @03:28PM (#29542831) Homepage
    Because no one is going to sell a game to you for $35 when people are obviously buying it for $60.

    Oh, and what a waste of breath that article was. Summed up, "$60 because that's what they charge."
  • Re:Price Drops (Score:5, Insightful)

    by chill (34294) on Friday September 25, 2009 @03:29PM (#29542835) Journal

    Drop in at your local community college and take a course on statistics. Pay close attention to the "profit maximization" section. It'll explain the math behind the relationship between unit cost, units sold and total profit.

    Fascinating stuff. If nothing else, it'll teach you to never spend more than $2 on lottery tickets, if you spend anything at all.

  • by jollyreaper (513215) on Friday September 25, 2009 @03:31PM (#29542859)

    Why does the CD soundtrack to a $150 million movie cost $17.50 and the DVD goes for $14? It's because those are the price points they got the public to swallow. VHS movies back in the day used to go for $75 or some ridiculous number and only the video stores bought them -- who would have thought private individuals would want to own movies? But eventually the price points dropped and there you are.

    Back in the day, Sierra games came with order forms for other Sierra games. Those crappy little DOS games were selling for $79.99. The stores typically had the prices lower but not by much. The entire time I was growing up, the price points for AAA titles for the top systems would be anywhere from $40 to $60. Usually $50 was the sweet spot. I recall Street Fighter having some of the most insane markups. I think SFII topped out at $80 for the SNES. Then you could also pay another $100 a piece for the special controllers.

    The two things that strike me now are 1) games were really goddamn expensive back in the day and 2) I'm surprised that they haven't been able to jack that price harder considering inflation and all.

    I agree with the article about how crazy it seems for simpler games selling for the same price as ones you know have to be ridiculously expensive to produce.

  • by cowscows (103644) on Friday September 25, 2009 @03:31PM (#29542861) Journal

    Because people will still pay $60 for them? But mostly because if the retail copies of your game are $60 but you're selling them on your website for $30, your retail partners are going to get pissed off because you're undercutting them so much. Digital distribution is definitely becoming a big thing, but there's still enough money to be made in retail that you don't want best buy refusing to stock your game.

    As retail becomes increasingly less important, I think we'll see an increase in the amount of games that you can download for cheaper than the usual retail price. It'll never drop down to $30-35 for a brand new AAA game, but maybe closer to $45 or so.

  • by Kagato (116051) on Friday September 25, 2009 @03:42PM (#29543029)

    Back in 1979 Atari was selling games at the $45+ price point. Same thing with Sega and Nintendo in the 80's, $49-59. In the 90's, $49-59. Today? $49-59.

  • DVDs (Score:3, Insightful)

    by mcgrew (92797) * on Friday September 25, 2009 @03:44PM (#29543047) Homepage Journal

    $12 to retailer, $5 to discounts/returns/retail marketing, $10 toward manufacturing costs and shipping. That leaves $30 to $35 in the hands of the publishers

    So why can I buy DVDs from $5 to $20? manufacturing and shipping costs for these two items should be the same. And I've never seen a game at discount, have you? Nor have I ever seen a game as heavily marketed as a DVD.

  • by thule (9041) on Friday September 25, 2009 @03:54PM (#29543197) Homepage
    Trent Reznor feels the same way about many games these days: Joystiq interviews Trent Reznor [joystiq.com]

    A timeless game is well worth $45 or more. I have been finding old GBA carts that are selling for more than $45 if they are in good condition. Many of the "hardcore" games on modern systems are not nearly worth that price point. Wait a year and you will see how much the game is *really* worth.
    It is amusing that game companies want to shut down used game sales. Maybe they should work on making timeless games with good content.
  • by gurps_npc (621217) on Friday September 25, 2009 @03:58PM (#29543239) Homepage
    1. Prices are controlled by supply AND demand, not just supply. This young ignoramus exaimed supply only and forgot to consider demand.

    2. The truth is that supply side pricing is pretty consistent. He listed out the costs to deliver to a store. That is a solid $27. You need to throw in at least $5 for development and another $5 profit. OK, so the minimum price is $37 for a new game. But $5 profit out of $37 is a low margin on. Clothing is about as high as it gets at x20 cost for high end. Food goes for about profit margin about 5% at a grocery store (less than x2). But the truth is people LIKE making games. We do it for free. So they can't really raise the profit up to that high x20. They can't even get it above x2 for $74.

    3. If you can wait a year, you can get the game for $20. Pretty much all games.

    4. Games are priced at $60 not because of an evil conspiracy but because that is how much we budget for NEW games. It is the demand that is setting the price, not the supply. When supply sets prices, it varies more.

    5. The real problem is that of difficulty in accurately measuring the pleasure provided by the new game. There is no simple way we can get an accurate worth on the product to us, in the short time that the game comes out. The best we can do is read articles, which by the time they come out, the item is already priced.

  • Re:Price Drops (Score:3, Insightful)

    by phantomlord (38815) <slashdot@krwt[ ].com ['ech' in gap]> on Friday September 25, 2009 @04:02PM (#29543307) Journal
    I seem to remember paying about $30 for most of my NES games. I never would have been able to afford games on my allowance otherwise. SNES I seem to remember being in the $50-60 range (at least for ActRaiser and Pilot Wings), which is why I bought fewer games for it. Most of my PC games in that era were in the $30-40 range too (in fact, I abandoned the SNES and switched over to PC gaming exclusively sometime around 1995, largely due to price and depth/replayability)

    The Wii suckered me back into console gaming when it came out and that seems to have a mix of $30 and $50 games, depending on the title.
  • by sexconker (1179573) on Friday September 25, 2009 @04:04PM (#29543341)

    Tetris was free with my Game Boy.

    Best game ever.

    Not best video game.
    Best game.
    Ever.

  • by Darkness404 (1287218) on Friday September 25, 2009 @04:04PM (#29543349)
    The only thing though, its a $60 risk. Even great studios have turned out crap games. I remember really liking Yoshi's Island and when a "sequel" came out (Yoshi's Story) I ran out to buy it for around $60, it was a terrible game, I finished it in about 2 hours and ended up trading it for like $15 to a used game retailer. There have been games that have been critically acclaimed but I simply can't get into them. Sure, $60 is a bargain if you get a truly epic game, but at least for me, I only get one "epic" game per console and the other games on the system simply aren't worth $60. If every game was a great value as, say, The Orange Box, I would have no problem shelling out $60, but you have crap games mixed in. Other times, yeah, you pay $60 but the game is so crippled that you end up paying $40 in DLC to get the "full" game.
  • by CyberLord Seven (525173) on Friday September 25, 2009 @04:11PM (#29543437)

    And to be honest, they $60 price isn't that much if it's a great game. You pay atleast $15+ to go the movies, probably even more if you make a night out of it. You might spend the same amount in bars too. Both of those give only a few hours of entertainment value, and to be honest aren't all that fun all the time. Good games give a lot more entertainment and fun hours.

    When was the last time you got laid taking a chick to a video-game?

    Value is where you find it, my friend. :)

  • by ReverendLoki (663861) on Friday September 25, 2009 @04:14PM (#29543477)
    Some of us have wives. They still make you buy a ticket for her to get in.
  • Re:Price Drops (Score:3, Insightful)

    by quantumplacet (1195335) on Friday September 25, 2009 @04:15PM (#29543485)

    anyone remember the Virtua Racer for the Genesis? First time we ever got real polygon's on a home console, cost $100 when it was released.

  • by BJ_Covert_Action (1499847) on Friday September 25, 2009 @04:20PM (#29543549) Homepage Journal
    ...for myself as to why $15 per month was not an unreasonable WoW fee. Then I stopped paying for monthly subscriptions and reunited my life with the real world. I learned something when I did that. WoW and video games in general, as much fun as they are, shield you from the joys of reality. Granted, the fees being paid are less than those you would pay for going to the movies or going to the bars, but you don't actually get to meet people face to face in WoW or Halo 3 online. Frankly, if I don't play WoW all day, I probably will get bored, get outside, and might just meet someone. Suppose I ask that someone to come hang out and watch a movie with me. Well now I just made a friend and watched a possibly decent movie for $15. I would say that having a pal to go run amock with rather than spending my afternoons and evenings in front of my computer was well worth that $15.

    In fact, you can also find fun things to do in the real world that are cheaper than WoW AND movies. Imagine that. For instance, suppose again that I don't play video games all the time and instead walk down to the beach every so often instead. After awhile, walking alone might get boring so I start swimming, skimboarding, surfing, or playing volleyball there. Now not only have I saved myself the cost of the video game, but I have started learning a new skill, which in and of itself is a much more rewarding experience than epic loots. On top of it, I'm at the beach, even if I don't meet anyone I can gawk at all the cute girlies in bikinis. Priceless.

    Don't live by the beach? Make for a mountain hike, or go explore a forest, or go buy a $15 bike off craigslist and start mountain biking...the possibilities are endless really.

    I suppose what I am getting at is that this mindset of "Either video games or drinking or movies..." is really stifling. For some reason we think it makes sense to pay a crapton of money for eye-candy which really just paints a picture of what's already alive and well in our own imaginations when, in fact, we could be going out and living our own adventures.

    Do yourself a favor...just say no to video games (mostly, I do admit that I still play Halo regularly and own both Mass Effect and Fallout 3).
  • by coldmist (154493) on Friday September 25, 2009 @04:26PM (#29543647) Homepage

    And, how much does it take to make a movie? $50 million? $100 million? And, how much does that DVD cost? $20, or even $10 at Walmart?

  • by Lord Bitman (95493) on Friday September 25, 2009 @04:28PM (#29543665) Homepage

    here's a special trick you can do: don't give people money until they are only asking for an amount you're willing to spend. I just picked up Mirror's Edge AND DC vs Mortal Kombat for a total of £10. From a major retailer.
    If you don't want to spend $60 on a game, don't do it. Don't even complain about it. Just don't do it.

  • by Darkness404 (1287218) on Friday September 25, 2009 @04:38PM (#29543793)
    I can rent just about any new DVD for $1 a night and get the full enjoyment of the movie. On the other hand about the cheapest place that I know to rent games costs $7 for about 3 nights and you can't experience the entire game. When I walk into Barnes and Nobel if I feel like it, I can sit down in a chair and read the -entire- book, not just chapters one and two. You can type in almost any song into YouTube and with enough searching you can find it, listen to it and listen to it over and over again. With games you are limited to a demo where the creators have picked a few parts of the game that may or may not really represent the game.
  • by sopssa (1498795) * <sopssa@email.com> on Friday September 25, 2009 @04:38PM (#29543797) Journal

    It doesn't need to be either that or this. You can enjoy both worlds, just as long as you don't take gaming too long. I enjoy traveling, going out and hanging out with my girlfriend. On the other hand I enjoy sitting on computer, coding, gaming, writing on slashdot. As long as you balance them both good, it's great. Or even mix them; I like watching while my gf plays gta or some other games and drink a beer while she does so. And I like it when I play Left4Dead till 4am at night and she wakes up and comes sitting behind me to watch me finish it and convinces me to get to sleep then.

    You dont need to choose either one, you can do both as long as you balance it.

  • by PitaBred (632671) <slashdotNO@SPAMpitabred.dyndns.org> on Friday September 25, 2009 @04:47PM (#29543893) Homepage
    I blame frat boys. $60 copies of Madden and Tiger Woods every year is a hell of an income stream, and they're too stupid to realize they're simple rehashes of the old games with slight graphical tweaks.
  • by SuiteSisterMary (123932) <slebrun AT gmail DOT com> on Friday September 25, 2009 @04:49PM (#29543913) Journal

    49.95 in 1990 dollars is $72.95 in 2009 dollars.

  • by PitaBred (632671) <slashdotNO@SPAMpitabred.dyndns.org> on Friday September 25, 2009 @05:04PM (#29544059) Homepage
    Completely off-topic, but I paid nothing for my nonexistent jersey, because I'm not gonna pay into a company (yes, the NFL is a corporation, not a national institution) that actively hates it's fans, charging through the ass for seats and making it hard for people to even be fans of the game by trying to claim copyright of anything that once looked in their direction. Fuck them.
  • by triceice (1046486) on Friday September 25, 2009 @05:06PM (#29544075)
    The reason it cost $60 is because that is what we are willing to pay. To the person that posted the question spend the money to get a college economics class. You really are clueless.
  • by Carewolf (581105) on Friday September 25, 2009 @05:13PM (#29544127) Homepage

    For instance, at launch, Lego Star Wars for consoles was $59. For PC, $29. Every other cost is the same in making the different versions. Marketing, packaging, distribution, advertising, etc. So what is different? The console maker's tax.

    What is different? The competition. PC has more piracy, contrary to the whining of CEO's; piracy forces down prices by providing competion.

  • Most people could afford $30 or less for a game, but not $60. Which is why people pirate the games on P2P networks. They cannot afford it and the pirated version has the DRM removed. But the P2P version may cause lockups and might be malware infected, so people are taking a chance when they pirate a game from P2P networks.

    But common sense says the #1 reason why people pirate the games is the cost of them. When the Atari 2600 came out games cost $15 to $30 each, but as the Atari 2600 got old they got sold at bargain bins for $5 to $1 each. Sometime in the 1980's the video game console market collapsed and then games got cheaper. Then in the 1990's they went to $30 again, then $40 or $45 by 2000. Then by 2005 they were almost $55, and now in 2009 they are $59.99. Yeah games did get bigger and more of a challenge to develop, but most of the work is offshored to the cheapest labor in third world nations and then the debuggers are in the USA. It is the same way with sneakers, they make them in third world nations but sell for $100 or more in the USA.

    It is corporate greed and the companies conspire to all sell at the same retail price. Which is why sales are down, and companies cannot earn money. They keep raising the profit margin and that raises the retail price. If video games were reasonably priced, most people wouldn't pirate them, and video game companies will earn more money via the volume of sales. Back in the 1980's before they had DRM in games, after the crash, video game companies made millions and there wasn't as much piracy as there was now as games cost $20 or $30 each back then. Games like Bard's Tale made record sales and profits, but the Bard''s Tale remake for $60 wasn't anything like the original and was bloated and buggy and thus made record losses and couldn't sell very well.

  • by nobodyman (90587) on Friday September 25, 2009 @05:49PM (#29544475) Homepage

    The real answer to games cost $60 is "because people will pay that much". That said, I think there are signs that the price point is more than the market will bear. Look at the meteoric rise of the trade-in market and digital distribution. I'd argue that the lower pricepoint are a big factor.

    Furthermore, look at Left 4 Dead. When they lowered the price to $30 Valve sold more copies that weekend than they did at launch!

  • by Animats (122034) on Friday September 25, 2009 @06:11PM (#29544677) Homepage

    We know why most audio CDs cost $17.99. Illegal price fixing. [usatoday.com]

    We know why video games cost $60. Illegal price fixing. [nytimes.com]

    The FTC and the Justice Department's antitrust unit were out to lunch during the Bush administration, but that seems to be changing. Stay tuned for enforcement.

  • by Ifandbut (1328775) on Friday September 25, 2009 @06:14PM (#29544703)

    Minor correction, The Witcher had to be retextured to remove all of the nudity before it was released in the USA. Thankfully the developers finally released their official uncensor patch.

    USA has proublems with nudity and sex. EU has proublems with violence. Germany has proublems with Nazis.

    It is a shame that in this day and age a creator must be forced to change his work in order for it to be publicly viewed. Hell, even da Vinci's Vitruvian Man had to be censored in the Assassin's Creed 2 trailer.

  • by DaveGod (703167) on Friday September 25, 2009 @06:44PM (#29544947)

    Sure, $60 isn't so bad compared to $15 for a movie when comparing the time spent. But that isn't the half of it. Two hours entertainment from a good movie isn't the same as two hours of a good DVD movie, cinema, music CD, gig, the game, golf, hookers or whatever you do for fun. Two hours from different games isn't even the same, nor often is any two hours from the same game. If you're going to use hours as your criteria then how does gaming value stack up against a good novel, a good website, or a walk in the park?

    Sure, I think gaming is good value when you pick with care, but breaking it down into $ per-hour is folly.

  • by commodore64_love (1445365) on Friday September 25, 2009 @07:00PM (#29545083) Journal

    >>>I remember $80+ SNES games

    Nintendo was just greedy. (Sorry if that offends you, but it's just opinion.) Back when Atari ruled as the #1 console (1977-84) the games cost just $30 brand-new; $20 if they were older catalog titles. The most expensive Atari cartridge I ever bought was Star Raiders for $40 but it came with a free controller, so it was worth it.

    Then along came Nintendo with their NES in 1985, and they charged twice as much as Atari had charged. I never could figure that out. It's one of the main reasons I stuck with 8/16-bit computer gaming where prices were reasonable (or even free).

  • by commodore64_love (1445365) on Friday September 25, 2009 @07:10PM (#29545135) Journal

    >>>bought all of my games used (see, game publishers?

    The game publishers are working to close that door. That's why they are pushing downloadable games so hard - you can buy or sell them on the used market.

  • by Starayo (989319) on Friday September 25, 2009 @09:35PM (#29545829) Homepage
    USD$60 is a reasonably fair price for games. I would pay it happily and indeed I do on steam for PC Games.

    Now somebody explain to me why games in Australia cost up to USD$95.
  • by StreetStealth (980200) on Saturday September 26, 2009 @02:41AM (#29546905) Journal

    Whenever a post like this shows up, I always have to check to see if someone actually modded it insightful as well.

    You guys never disappoint.

  • Re:Serious answer (Score:2, Insightful)

    by fishbowl (7759) on Saturday September 26, 2009 @02:53AM (#29546945)

    >We provided a lot of custom tools to help small business owners set up an online storefront, and found that more people wanted our services at $79/month than $19, $29, $39, etc.

    Yes. I'm sorry if you had to learn this by trial and error, but you might not have believed it if a business consultant had told you directly.

    The price point must be the highest price while remaining a better value than your target competition.

    There are a whole lot of tenets in marketing that turn out to be important but so counter-intuitive, especially to us computer geeks, that I no longer have any doubt that marketing salaries are justified. This is just one in a LONG list of jaw-dropping realizations that I have learned over the past few decades that I would NEVER have accepted without seeing the results for myself.

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