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The Almighty Buck Games

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.'"
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Why Games Cost $60

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  • ...only in America (Score:2, Informative)

    by Anonymous Coward on Friday September 25, 2009 @03:21PM (#29542755)

    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

  • by NotBornYesterday ( 1093817 ) * on Friday September 25, 2009 @03:25PM (#29542791) Journal
    "subscriptions and episodic and downloadable content" already drive the cost (to the consumer) of games to $70-$80. My kid gets an XBOX game for $60. Plays it. Finishes it. Pays $5 -$10 for points to download an add-on pack, or 2 or 3 or more, and next thing you know, he has invested $70 - $80 in the game. I already assume when he buys ODST, it will cost $80 before it's all said and done, and to me, that's the real cost of the game.

    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.
  • by SierraPete94 ( 1641111 ) on Friday September 25, 2009 @03:25PM (#29542803) Homepage

    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.

  • Re:Price Drops (Score:5, Informative)

    by Ethanol-fueled ( 1125189 ) on Friday September 25, 2009 @03:28PM (#29542825) Homepage Journal
    What TFA didn't mention is that the $60 price point goes all the way back to the NES days.

    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.
  • by omnichad ( 1198475 ) on Friday September 25, 2009 @03:32PM (#29542863) Homepage

    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.

  • Serious answer (Score:2, Informative)

    by fishbowl ( 7759 ) on Friday September 25, 2009 @03:32PM (#29542865)

    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 price the product at the highest price possible while still being perceived as a better value than the target competition. I've seen reproducible studies that show the same product from the same supplier, if priced significantly lower, can be less popular.

    Retail pricing is a bizarre non-linear non-deterministic function. It boils down to: If you aren't willing to pay the retail price of a product, and aren't able or willing to negotiate a lower price from a given supplier, then don't buy it.

  • by 2obvious4u ( 871996 ) on Friday September 25, 2009 @03:33PM (#29542891)
    I got turned off to downloading games after I downloaded Castle Crashers for the XBOX 360 and then got the red ring. Now the only person who can play the full version of the game is me. I bought the full game for my kids to play not for me to play, but they are locked out. I've tried unlocking it but nothing works.

    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.
  • by Marful ( 861873 ) on Friday September 25, 2009 @03:51PM (#29543151)
    The article's pricing justification seems like complete BS to me. Just looking at the claimed "retail + shipping" costs tell me that the values are completely inflated.

    $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.
  • by PRMan ( 959735 ) on Friday September 25, 2009 @04:02PM (#29543291)

    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%.

  • by sexconker ( 1179573 ) on Friday September 25, 2009 @04:02PM (#29543293)

    A movie ticket costs me $6.75 at the matinee.
    That's not $15.

  • Re:Price Drops (Score:2, Informative)

    by NoYob ( 1630681 ) on Friday September 25, 2009 @04:03PM (#29543313)
    That was taught in Micro Economics, actually.
  • by Flentil ( 765056 ) on Friday September 25, 2009 @04:03PM (#29543319)
    Yes, we've all heard that argument before. Minute for minute versus a movie ticket. It doesn't matter. $60 is still too much for them to continue charging as they lower costs through direct downloads and other means. Yes, it costs a lot to produce the original, but then you see, they make virtually limitless copies of that original for pennies each. They could sell these games for $20 and still reap huge profits.
  • by Anonymous Coward on Friday September 25, 2009 @04:13PM (#29543463)

    I believe that $75 for video stores was actually including some kind of rental licensing fee, not something consumers would be paying if they bought their own copy.

  • by MBGMorden ( 803437 ) on Friday September 25, 2009 @04:46PM (#29543873)

    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 friends and I like to go to). Tickets are $2.50 each and I can watch anything I want as soon as it's released.

  • by 7Prime ( 871679 ) on Friday September 25, 2009 @05:51PM (#29544501) Homepage Journal

    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.

  • Retailers (Score:3, Informative)

    by cdrguru ( 88047 ) on Friday September 25, 2009 @06:18PM (#29544733) Homepage

    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.

  • by Anonymous Coward on Friday September 25, 2009 @07:15PM (#29545165)

    Check the inflation rates []. $30 in 1984 money is roughly $62 in today's money.

  • by Marful ( 861873 ) on Friday September 25, 2009 @09:21PM (#29545765)
    Actually, my work has 2 CD lines and 2 DVD lines (machines that make the discs from raw plastic pellets). We also have x3 40" offset sheet fed presses, x3 40" die-cutting presses, x3 40" UV coating screen presses and x2 Straightline folding carton gluers as well as a stitcher trimer for saddle stitching booklets.

    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 process at a different location and coordinate things. The $2.25 per unit does in fact include local shipping via our trucks to any local destination (within 50 miles).

    So considering the $2.25 cost for each unit, there is a heck of a lot of profit to be had by reselling it @ $59.99.

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