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.'"
Its justified price (Score:5, Insightful)
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.
Re:Its justified price (Score:5, Insightful)
most games == Pussycat Dolls (Score:5, Insightful)
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.
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: (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: (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: (Score:3, Interesting)
Re:Its justified price (Score:5, Insightful)
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.
Re: (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
Re: (Score:3, Insightful)
>>>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.
Re:Its justified price (Score:5, Insightful)
Now somebody explain to me why games in Australia cost up to USD$95.
Couldn't agree more (Score:5, Insightful)
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!
Re: (Score:3, Informative)
From what I heard, it promised A LOT more than it delivered. I remember friends raiving about it for months like it was going to be the second coming of Jesus. The trailers even had me peaked. But I hear that the control system was messy, the game was repeatitive, and short. Marketting hype can often backfire on you if you're not careful. That's a big problem. It seems that it sorta deserved its tank.
Re: (Score:3, Insightful)
Re:Its justified price (Score:4, Informative)
Re: (Score:3, Interesting)
Re: (Score:3, Insightful)
>>>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
Re:Its justified price (Score:4, Insightful)
Re: (Score:3, Insightful)
Re:Its justified price - OT (Score:3, Insightful)
Re:Its justified price (Score:5, Insightful)
Re:Its justified price (Score:4, Insightful)
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?
Re: (Score:2)
Wow! Except for your personal experience on L4D (which I hear is a pretty good game), you kind of summarized exactly all the topics the article covers. Someone only read the summary ;)
Because they can (Score:5, Funny)
It's the same underlying reason why male dogs lick their balls.
Re: (Score:2)
No thumbs?
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.
Re: (Score:3, Informative)
I don't. Matinee prices for me or I wait for the DVD.
Indeed. It seems like every time anyone quotes the price for a trip to the movies on the internet they just have to go to the most expensive theater in town, at peak times, and just have to order the obligatory 64oz overpriced fountain drink and 1 gallon bucket of popcorn, leading to the exaggerated prices on the web.
When I go to the movies it's often earlier in the day at the cheaper theater in town. No food - I'll go out to eat afterward (there's a nice sushi place 2 spots down from the theater that some
Re:Its justified price (Score:5, Funny)
and I've spent pointless hours on it.
Learning how to survive with 3 other people against a horde of zombies is NOT pointless.
Re: (Score:3, Insightful)
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: (Score:2)
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.
That's close, but I think the second part of that sentence is "...and there's no reason to go less, since consumers are willing to pay $60."
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: (Score:2)
Going under the 'standard' price can also decrease the sales since gamers will think the game isn't worth the higher price simply because you didn't try to get it at launch. There's so much momentum for that price point that it's hard to break it unless you're a blockbuster hit, which is how we got from $50 to $60 not long ago.
Re: (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 othe
Re: (Score:3, Insightful)
When was the last time you got laid taking a chick to a video-game?
Value is where you find it, my friend. :)
I used to make this same exuse... (Score:3, Insightful)
Re:I used to make this same exuse... (Score:5, Insightful)
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.
Re:I used to make this same exuse... (Score:4, Funny)
It's where you have to go to collect 36 Murloc Eyeballs. Duh.
Re: (Score:3, Insightful)
Which is why (Score:3, Insightful)
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: (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 :-)
Re: (Score:2)
Re: (Score:2)
Re:Which is why (Score:5, Funny)
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 :-)
Damn, dude, I'm 57 but I'll get off your lawn anyway.
Re: (Score:3, Funny)
Don't have gamer shame!
Re: (Score:2)
Eh, you gotta be careful with Steam. Sometimes, the prices are equivalent or actually higher than what you'd find in Gamestop/etc.
For example, two of my friends have gotten Team Fortress 2 for $10 at Electronic Boutique (a Gamestop owned store in Canada), but the Steam price was $20 at the time. And that game is made by Valve!
That said, Steam still has lot's of sales and deals they do, but it's still not always the best choice for the frugal customer.
...only in America (Score:2, Informative)
Try shopping for games in Europe. I can't speak for the other european countries, but at least here in Germany prices get converted from $US to â 1:1. We pay around 59â for most game titles, which is over $US80. It's the same for music, movies, and consumer electronics, by the way. Sucks to pay off your ass. :P
Re:...only in America (Score:5, Funny)
That's to cover the costs of editing out textures and censoring.
Re: (Score:2)
I wish I had funny mod points for you.
Sad thing is that even after the self-censoring, developers still sometimes get hit [slashdot.org], and have to choose between stopping sales or spending more to fix the fix.
Re: (Score:2)
Thanks. I forgot the article link.
Re:...only in America (Score:4, Insightful)
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.
Thread with free & open games (Score:2, Interesting)
Some place to start: Python games community [pygame.org]
Re: (Score:2)
While I agree myself that it's fun to create games and play around with them (man did I have some great ideas and projects at teenage years!), but it's not at all for everyone. I like sandbox type games and I like messing around in games to see how the environment and AI responds to it. But my programming oriented mind probably affects a lot into that too.
However, most people just want to play a game.
Let's be honest here. (Score:5, Insightful)
Re: (Score:2)
And guess what it is not evil or excessive greed. Especially for VIDEO GAMES if you can't afford it then don't buy it, you won't be harmed from not buying such a product. Now if it is a product that people need to function in modern society and the price is too high then there is a problem. But if it isn't let it be priced as high they think the market can bare.
Re:Let's be honest here. (Score:5, Informative)
Actually, the article has it completely wrong. Beginning with the NES, companies pay very high licensing fees for games ($20 per game). I have friends that used to work at Interplay and they told me that the cost is up to $25-$30 per game sold.
This is actually surprisingly easy to confirm. To find the console license fee, subtract the PC version price from the console version price.
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.
That means that console makers are taking 50% of the cost into their pocket, even though they didn't do anything in the development of the game at all.
This is why they can eat $150 on the price of a console system with a mere 4.5 game average attach rate.
Personally, I buy PC versions whenever possible. The experience is usually equal to or better than consoles and I save 50%.
Re:Let's be honest here. (Score:4, Insightful)
What is different? The competition. PC has more piracy, contrary to the whining of CEO's; piracy forces down prices by providing competion.
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
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: (Score:2, Insightful)
Oh, and what a waste of breath that article was. Summed up, "$60 because that's what they charge."
Re: (Score:3, Insightful)
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 t
Re: (Score:3, Informative)
Because the retailers say "Please don't do that or we won't sell your game." And you won't sell as many if it's only available online. So we're stuck with matched pricing.
Re: (Score:2)
So why can't we just download games for about half the street price?
Without those middlemen, many of the projects you'd want to buy won't be funded, and wouldn't exist.
We game developers need money too, you know. Somebody has to take the risk and pay us, and with AAA titles, you're not going to see many self-funded indies.
Re: (Score:2)
"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?
Supply and Demand.
Huh? (Score:3, Insightful)
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?
Extra! Extra! Read here for the scoop! (Score:3, Insightful)
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?
Re: (Score:2)
Do you understand the concept of supply? We're talking about data here. You can't apply supply and demand concepts when the supply is practically infinite.
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.
We're already there ... (Score:5, Informative)
I think they have to keep the initial price at $60 for now because that's the point above which more consumers would say "screw it, I'll get something else". I'm pretty sure downloadable content will soon be (if it isn't already) about the only way game makers profit.
This is news? Sounds more like normal inflation (Score:2, Informative)
Surprisingly enough, game software really isn't that much more expensive today than it was 20 years ago. Seems like I plunked down $40 or so for Zork I way back in the day. So $20 increase in 25 years... 50%--hell, I'd challenge you to find many industries that are even close to that number.
entertainment hours per dollar (Score:3, Insightful)
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.
artificial price point (Score:5, Insightful)
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.
Serious answer (Score:2, Informative)
Like any other retail product, the price is a function of what the market will bear.
There are some interesting social phenomena that affect the demand curve, that allow (or even *require*) a product to be priced arbitrarily higher than the marginal cost of production and distribution, because in some marketplaces, lower priced goods are regarded, probably unconsciously, by consumers as inferior.
It is also the case that when pricing a product with respect to a competitor's product, it is advantageous to pric
A better way to manage downloaded games? (Score:3, Informative)
Until the DRM is removed from downloaded games its not practical. Any of the kids can pick a game up off the shelf and play it, but if I'm not logged in my kids can't play the games I've bought for them. I don't want them to mess with my account and I don't want to pay to download the games again. I really don't want to spend hours on the phone with tech support to "reunlock" a game I already bought and paid for.
Re: (Score:2)
This was the state of affairs last year, unless you called customer service and waited about 3 weeks for someone with the power to make those changes to come back to you. Since, they've released an a license migration process that will make that work:
http://www.xbox.com/en-US/support/systemuse/xbox360/licensemigration/ [xbox.com]
You can only do it once a year, and it's a bit of a hassle, but it should help you out with Castle Crashers.
No $70 standard pricepoint? (Score:2)
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.
Always been this way (Score:4, Interesting)
They cost the same back in the 70's and 80's (Score:3, Insightful)
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)
$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.
Same reason (Score:2)
Huh? (Score:2)
Games are $20. You just have to wait a few years. I'm just now enjoying Final Fantasy X, but still. The only way I'd pay $60 for a game is if the title starts with Starcraft.
This sounds familiar (Score:2)
Haven't read TFA but this stood out at me from the summary:
"'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.'"
Well if it worked for AT&T and Apple, I'm sure it'll work for the games industry. Decrease the initial investment cost, charge a regular subscription fee (DLC can serve this purpose too) and profit. No ???? nee
Article seems like BS justification to me. (Score:5, Informative)
$10 to manufacture and ship? WTF?
It costs approximately $0.75* to manufacture the DVD, print it's label, print the wrap that goes in the amaray case and package it. The packaging is approximately $0.55-$1.50* more (depending on how much junk / crap they stuff inside plus the manual).
Then once packaged the product gets bulk shipped. Claiming $7.75 for shipping per product would mean that a case of 20 unites would cost $155 to ground ship. That's a pretty absurd number. $7.75 is the cost to me if I were to ground ship each package individually to a different location.
No, this article is nothing but BS justification for game prices. The real reason why games cost exactly $59.99 has nothing to do with costs or logistics and revolves entirely around price point.
$59.99 is exactly the price point that industry wants per game, regardless of actual cost/development.
*Note: I work for a company that replicates DVD's and print the packaging and assemble. Thus I know the real costs for the packaging.
Re: (Score:3, Informative)
We are not unique. We have a lot of competitors. So yes, there are in fact companies that do everything in one place. The customers like this because they do not have to buy out each part of the p
Guy needs to take an economics class (Score:4, Insightful)
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.
The $60 price is the #1 reason for P2P piracy (Score:3, Insightful)
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.
Collusion, probably (Score:5, Insightful)
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.
Retailers (Score:3, Informative)
One point that it seems a lot of people are missing is the retailer's end in this.
Let's say a publisher creates 5a game with an MSRP of $25. The retailer isn't ever going to get more than 30%. So that means they can make $7.50 on the game - so little that they probably aren't going to bother with taking the shelf space for it when they can get $12-$18 for some other game that occupies the same place on the shelf.
Therefore, no game for $25 is ever going to appear on retail store shelves. Or Amazon. Or anywhere else, except direct from the publisher. Which means it isn't going to sell well and won't make much money for the publisher. Therefore no $25 games ever get made.
Remember, the publishers are competing against one another for shelf space and this market is controlled by the retailer. And if you aren't in retail in one form or another, you aren't in the marketplace at all.
Apparently the only measure of entertainment value (Score:3, Insightful)
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.
Re:Price Drops (Score:5, Informative)
I specifically remember My family shelling out (thanks!) the sixty apiece for SMB 2 and later SMB 3 and Megaman 2 when they were new. I think that the less popular or complex games costed less, but there were some real turds like Legacy of the Wizard which also went for the full sixty.
Re: (Score:2)
Exactly, and it's quite interesting thing. You can count the lesser userbase as one of the affecting factors why the games did cost so "much" then, but the entertainment value and playing hours weren't even close to what they are now with the same prices, while development costs have skyrocketed from those days. Considering some games take years to develop with multimillion dollar budgets, $60 isn't really that much now a days, considering how much entertainment some games now a days give and how much hours
Re: (Score:3, Insightful)
The Wii suckered me back into console g
Re: (Score:3, Insightful)
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.
Re:Price Drops (Score:5, Insightful)
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 $2 on lottery tickets, if you spend anything at all.
Re: (Score:2)
Option 1. Drop the price and sell more games (more people buying less expensive games). ...
Option 2. Keep the price the same and make less or equal profits (the same or less people buying 60$ games, budgets are getting smaller, videogames are the first luxury items to go IMHO, it's not like your old games stopped working anyway).
Option 3. Increase the price and make less profits (less people buying more expensive games).
Option 4. Sue Activision Blizzard into oblivion so that people stop playing WoW and payi
Re: (Score:2)
I remember Super Mario Bros. 3 was only $49.99 MSRP.
Re: (Score:3, Insightful)
49.95 in 1990 dollars is $72.95 in 2009 dollars.
Re: (Score:2)
What is this, the Hygrade Wieners defense?
Re: (Score:2)