Why Games Cost $60 536
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.'"
Re:Its justified price (Score:3, Interesting)
Thread with free & open games (Score:2, Interesting)
Some place to start: Python games community [pygame.org]
Cut Out the Middle Men (Score:5, Interesting)
"That leaves $30 to $35 in the hands of the publishers."
So why can't we just download games for about half the street price?
Re:Which is why (Score:3, Interesting)
I like Steam because I feel too ridiculous buying a game in a Best Buy in my late 30s :-) Really, Steam is like a brown paper wrapper for Half-Life and Crysis :-)
In Game Ads. (Score:2, Interesting)
If every instance of an ad in a game would cut 25 cents from the consumer cost of the game, I would say got for it!
It would be nice to see if Sargent Johnson drinks Coke or Pepsi and if Gordon Freeman likes McDonalds or Wendy's.
Re:Its justified price (Score:5, Interesting)
"You pay atleast $15+ to go the movies, "
I don't. Matinee prices for me or I wait for the DVD.
I won't pay $70 for a game either. I got burned by immediately paying $50 for the unplayable Splinter Cell Double Agent PC game and I swore off paying those prices. Saved me another $50 when Wolfenstein turned out to be sucky as well but for different reasons.
On the other hand, I paid $20 for Killing Floor and I've put hundreds of hours into that game unfortunately. I'll get Left4Dead when it hits $20 as well.
You suckers keep paying $50 and $60 for games and the prices will only go higher.
The Left-Digit Effect (Score:1, Interesting)
I think $59.99 may be a cap price for a while.
The left-digit effect: http://www.sciencedaily.com/releases/2009/02/090223221526.htm [sciencedaily.com]
Although arbitrary, I'd say it's common for consumers to think of "round" price points like $50 and $100 when it comes to entertainment (games, a night at the movies, dinner out, etc). The left-digit effect would make $59.99 the highest price to still "feel" like it belongs to $50, whereas the left-digit change of $60.00 would remind consumers they're "approaching" what they might consider an off-putting number.
Always been this way (Score:4, Interesting)
Price Inflexibility (Score:5, Interesting)
What is killing console games is the inflexibility in pricing structures. Although AAA release game is okay at $60, a game like "Darkest of Days" is not. But since they are stuck in the same distribution channels they are forced into this pricing structure that doesn't make sense for the game.
This is why online stores like Steam have taken off. "Plants vs Zombies" is a hell of a lot of fun and would have died at the fixed $60 price. A developer may notice their game sales are slowing down so they do a price cut weekend which is impossible to do with the classic distribution chain. Even in the citation, half of the cost instead of being consumed in the distribution chain just putting disks on shelves can be put elsewhere. I don't have much illusions the big boys with the big games will pass the savings on to us but having the flexibility is at least a start.
Re:Extra! Extra! Read here for the scoop! (Score:5, Interesting)
Why do games cost $60? Because that is what the market will pay. Does this even need to be discussed?
I would think yes; yeah, we all know basic economics, but from someone not working in the industry how much do we know about how this price point was reached? Was this found by trial and error? Market research? Both/other? To what extent have there been deviations and what were the results? To what extent do Nintendo/Sony/MS play a role with "suggestions" about pricing? How does price set expectations about quality? What about the impact of historical prices on the perception of current prices? And whatever else I forgot...There's probably a lot of detail that can be explored about the topic that goes beyond just saying "that's what the market will pay". The article isn't great though it mentions a few points but could have been more detailed and researched.
Re:Its justified price (Score:3, Interesting)
"You pay atleast $15+ to go the movies"
I pay 8-9 dollars and that is in a new cinema.
Yes, I will spend more it it's a night out, but not more on cinema ticket.
I don't go to bars. Boring places full of boring people most of whom are vapid.
At least that was my expedience when I was a bartender, many decades ago.
Of course you are basing the starting point for your argument on a false dichotomy. That video games are camparable to a night out.
You should be comparing video game price against developments and other prices in the same field.
Re:Let's be honest here. (Score:5, Interesting)
Actually, what the publishers typically do in order to maximize revenue:
Release day price: $60
6 months after release: $55
1 year after release: $45
2 years after release: $30
3 years after release: $15
4 years after release: $5
That way, they get the early adopters paying $60, and also get the people they just priced out of the market with their 3-4 year old titles. That's because the timing allows market segmentation, which allows them to capture a greater portion of the consumer surplus.
Anchoring (Score:3, Interesting)
We all know the supply and demand thing, but the question the author asks is, games don't inherently have a value, so how does the market determine its price to be $60 ? That is, why isn't the market clearing price not $30 or $90 ?
In addition to the points the author mentions, another explanation is in the phenomenon of anchoring. [futurelab.net] Humans inherently do not know the value of any good, so the first price they see for a product stays in their mind and they compare all prices for that product off that anchor. We have grown used to seeing $60 as price for games - it has become an anchor - so all new games are priced at that.
A brilliant example of anchoring is given in the book "Predictably Irrational" by Dan Ariely. He gives an example of Tahitian black pearls. When they were discovered all pearls used to be white, so black pearls had no market and no value. But a very clever marketing campaign was launched to *anchor* the black pearls with very expensive jewellery, and hence there value became very high.
Economics assumes that people are rational. However, people are often irrational. There is a subject called behavioural economics which studies irrational behaviour of people and the limits of normal economics.
Re:Its justified price (Score:3, Interesting)
Re:Its justified price (Score:4, Interesting)
However, there are certain games where I have more than gotten my money out of them, namely, Zelda Ocrina of time(still have no clue why I am compelled to play this game start to finish every year or 2), 007 Goldeneye, Mariokart 64 and wii, Starcraft, Warcraft III and baulders gate II (even though only played through once, the hours discussing, playing and thinking alone have put pennies on the dollar for enjoyment.)
Re:Its justified price (Score:3, Interesting)
I agree - I refuse to pay $60 for a game, so I don't. For my PS3 I've bought all of my games used (see, game publishers? Instead of getting a reasonable amount from me, say $40 - $45, you get nothing!), or waited for the price to come down.
That said, when Gran Turismo finally comes out I'll pay full price (although I have the nasty feeling they are going to jack up the price on it - hell, I stopped by a GameStop the other day and they were charging $35 or $40 for GT5: Prologue). There is an occassional game I'm willing to pay that price for, but I would consider it a very special, once-per-system kind of price for a game.
Fortunately PC games haven't quite gotten to the same price point (yet).
Re:Its justified price (Score:3, Interesting)
Most games will drop to $20 in 6 months time (usually after Christmas). Even the greatest hits eventually drop to that pricepoint, so I wait until that happens. One of the best games I ever got was Space Channel 5, parts 1 and 2 which for some reason Sega released at only $10 per game. Nice bargain.
Don't pay $60 for your games. Don't even pay $40. That's too much.
Re:Its justified price (Score:3, Interesting)
For multiplayer games, time can be a dealbreaker. When it came out, Little Big Planet was quite successful. Lots of people bought and played it. All of my friends did, that's for sure.
Now that it's cheaper, I was considering getting it. However, since my friends have all finished with it, a large part of the enjoyment will be gone. Even if I get someone to help me through the puzzles that require a second player, they'll probably just be directing me through them.
Re:Price Drops (Score:2, Interesting)
That story took some real digging btw. For a minute I thought I had dreamed it up.