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WHY PAY MORE?

19 Nov 2006

So... I'm an advocate of lowering the core price-point of video games from the current $60 to something more DVD-like: $20-$25. If games were closer to $20-$25 apiece, more people would be willing to buy games. The way things are going now, games are becoming an investment. At a $20 price point, they could become impulse buys, just like movies. Then, not only would people buy [and play] more games, they would also be willing to take the [lower] financial risk on more obscure games. That would make the marketplace more friendly to those niche titles, those true works of art that stay with you forever, and would (should?) be the first step to combating the rampant sequelitis tearing through this industry.

I have noticed, on some forums, people saying they would gladly pay more than $60 for next-generation titles (specifically PS3 and Xbox 360 titles). The major, common justification for raising the price point was the argument that games cost more than ever to make, and developers and publishers have to push up prices just to make ends meet.

That argument is baseless. References:

GameDaily: http://biz.gamedaily.com/industry/advertorial/?id=12089

"Current rumblings are that the next generation of games will push development costs even higher- possibly to the $15 million range." (The "next generation" refers to Xbox 360, PS3, and Wii titles. With ancillary costs such as marketing included, the estimate is $25 million.)

The Numbers: http://www.the-numbers.com/glossary.php

"The average cost of a wide [film] release is about $65 million, with the most expensive films topping $200 million." That's only two sources - hardly a scientific study - but it highlights a significant disparity in the development costs of games versus that of films. Films cost significantly more to make, yet they debut in theaters for only about $10, with a subsequent DVD release at only about $20. How can something which costs more to produce be sold for less and still turn a profit? Because the audience is so large!

I'm not here just to complain, I'm here to try to understand why, in the face of the proven successful business model of Hollywood, there are still gamers who are totally okay with raising game prices instead of lowering them, with narrowing the market instead of broadening it.

It seems to me that we have an interesting situation on our hands. I'm not quite sure how to deal with it yet.

Posted In:

business video-games