Jimquisition: Videogames Are A Luxury

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Actually as a counterpoint to people who say that video games are a luxury, in some cases they're not. When I was 14 years old an asshole decided to shoulder check me into some folded up bleachers at school and it gave me brain damage (I've recovered most of the way, but I'll always have some problems). When I was at the first stage of recovery my neuropsychologist had me play video games as a form of therapy, and don't forget video games are also used in treating PTSD, and some phobias, so if it wasn't for the used game industry (I be poor as fuck) I wouldn't have been able to recover as well as I have. Mind you I still have problems, but I was able to regain a lot of my facilities, and my I.Q. with interest.

I wonder if someone has explained this to the game developers/publishers.

Sell games at 60 dollars, which 50 people can afford, and you make 3000 dollars.

Sell games at 40 dollars, which 100 people can afford, and you make 4000 dollars.

Sell games at 30 dollars, which 200 people can afford, and you make 6000 dollars.

Now, admittedly, this hinges on your game being able to sell enough copies to make up for the costs, but to me, at least, this seems like a better model than pricing yourself out of the market could ever be.

daxterx2005:
If things don't change, videogame market Crash #2 is inevitable.

This is the crash of 83.

From Wikipedia

So we had 11+ consoles to choose between that were priced between $200-$500 ($460.63-$1,151.57 when adjusted for inflation) (That was the price then), advertising stating that people need computers instead of video-games, loss of publishing control (yeah, didn't saw that coming either). Also, the crash only affected North America, no where else.

Video does make a lot of sense.
Having said that, there is one occasion where "Videogames are a luxury" is a valid point, and that's to shoot down "I am justified in pirating games because I can't afford them".

Mikeyfell:
Now I'm not usually this guy, but...

People didn't already know this?

I honestly wish they did already know this.

I hear this all the time, and my thought is "so fucking what?" Not to Jim's argument, but the idea that it's a good idea to cut off revenue streams.

Games are a luxury, and as Jim magnificently puts it, they are something we can do without. So it's stupid that game companies are declaring war on used games and whatnot, then asking "well why are our sales down?"

Well, duh. Games are a luxury. You've implied it, your sycophants and apologists have stated it. Now revel in the world you've created. Maybe kicking those people who actually work for a living in the balls isn't the best way to get them to buy your games.

I'm buying less games than ever, too. Not because I can't afford them, but because few of them seem worth the price. Since games are a luxury, asking me to spend the money I do have (which is far more limited than I'd like) on your product should mandate making it look attractive. I have other luxuries I can spend money on that are more appealing than the current game crop. And when you say something dickish like "well, our games are a luxury," I'm going to say, "You're right. And I won't buy them."

And if I was completely poor, I'd be even less inclined to buy from them.

Crono1973:

There was a study that pirates spend more on music than non pirates. http://www.independent.co.uk/news/uk/crime/illegal-downloaders-spend-the-most-on-music-says-poll-1812776.html

I wonder if it's true for games too.

If that's the study I think it is, then it's kind of an unimportant study as it was done by a torrent site. The article doesn't state directly. Since they only mention the analysis guy AS he's offering analysis and don't say he conducted or aided the study, I think it's safe to guess it is.

That's like trusting the RIAA's figures that every year, people pirated 270 gajillion dollars in music. Biased sources, as they say, are biased.

trollpwner:

I'm sorry, were we even watching the same video? Jim said specifically, in that video that those he was concerned with were those poor who wanted to game, but couldn't because the prices are too damn high. Yeah, other people are buying games, but these people are highly important, as they still are involved in the gaming community, but are prevented from doing so by high prices.

Oh and prices don't magically go down by themselves. Industries can, and do, fail when they get their pricing wrong. Remember the global recession: the industry there didn't magically fix its mortgage system when it went wrong: the whole thing came crashing down around their ears. It's how many big companies go out of business. It's perfectly possible for the games industry and the figures Jim quoted about decreasing games sales are just one of the many examples of how the AAA industry is in a bad state. Besides, the very principle of the current games industry is risky and unsustainable: if it costs millions to make a game, anything short of spectacular success in sales will destroy a company. And there will be failures, because no-one is perfect and this is a competitive industry.

Besides, even if the issues I mentioned didn't exist, it's never a bad idea to question the state of the games industry and attempt to improve it instead of just chugging along and hoping nothing goes wrong.

I agree with you, it's never a bad idea to question the state of the games industry and attempt to improve it. Thanks for the discussion!

I think the lack of sales has more to do with the game itself, more than it's initial price.

Being concerned with the poor who wanted to game, but couldn't because the prices are too damn high, only holds up when talking about the AAA games initial price tag. Companies will die out, sure. There are plenty of ones who won't. Besides, don't people like to hate on the bigger companies? If EA dies, do you think Bethesda will too? I think it's a little bit of 'the sky is falling' going on here. The video sounded like taking Prototype 2's first month sales records are a map to the fall of the entire gaming industry.

Maybe the majority of mediocre high budget AAA games will die off, and we will only have smaller Indie type games being released regularly, with the occasional big name Elder Scrolls, CoD ect ect. Is that so bad?

Why are budgets for AAA games so bloated, is it because they have way too many people working on the project, is it because they don't plan production of the game well and a large part of the budget is spent on content that is cut?

Also I believe sales are down because people are less willing to spend 60$ on a game that might be crappy like Prototype 2, that's why Assassin's Creed, CoD, Valve games and Rockstar games do well, they are associated with certain types of experiences or the development company is associated with quality products.

SkarKrow:
and Jim Sterling is an incredibly sexy man...

Oh shit I actually wrote that O_o

and your avatar makes it even better

trollpwner:

Owyn_Merrilin:

trollpwner:

I'm not doubting you, I'm asking because I don't know. If I was arguing with you, I'd be presenting an actual alternative to what you're saying. Unless I had a sudden desire to look incredibly stupid.

Ah. In that case, see my post above. The market crashed because it got oversaturated with really terrible shovelware, the absolute worst example of which was E.T..

Well, sorry for presenting a tone that could be seen as aggressive then. So, just to double-double confirm: lack of retail support and terrible shovelware destroyed the industry until the NES arrived, offering distribution again and bringing in decent games.

Thanks for that.

EDIT: is that a double post? I'm-I'm sorry.

It's cool, I read it wrong. I am sorry.

Yeah, consumers were getting crappy games because there was very little oversight. Nintendo's seal of quality meant alot to consumers back then but retailers still had to be lied to for the NES and the "tapes" to even be on the shelves.

Nintendo revived a dead market that was killed with greed. It can happen again. Did you know that Activision was one of publishers doing business leading up to the crash? They were formed from disgruntled Atari employees.

Apparently ET was an extremely rushed title due to the timing of the movie release. I think they had like 6 weeks from conception to retail. The programmers were not happy with the end result and neither were consumers.

Sober Thal:
Plenty of great games exist cheaper than the newest AAA titles.

About one days worth of work, for minimal wage, can get you the money for a new AAA game. (Even in Australia)

Sales are low when 'so so' games are being released.

*yawn

Cry me a river.

I still think game prices are reasonable, and I expect them to rise in the next 5 years. I hope they will be worth it. Or perhaps... dare I say it... we have to wait until the game goes down in price before we buy them?!? OMG!!

I think you missed the point a bit. Jim was saying that game prices are stopping people from purchasing more games, therefore making it so that pubs make less money. If I only have 100 dollars, for instance, I can only purchase 1 new game. If they were 50, I could purchase 2. If they were 40, I could purchase 2 plus some DLC. 30, 3+DLC, and so on. Making games less expensive means that you will sell more copies, which means that you make more money. That was the point Jim was getting at, I think, that high prices are bad for bottom line of devs and pubs.

While I agree with the overall message of the video, I have to correct Jim on one little thing: there is indeed one publisher and game developer out there currently changing the way they do business.

Yes, THAT one. I know you are sick of hearing the name. Yes, its Valve. Valve seem to be intent on either reducing the price of games (Orange box, steam sales, etc) rather quickly after release or making them free altogether (TF2, DOTA 2 which will be free straight out the virtual box, and maybe even CS:GO, if they can somehow work around Microsoft).

Admittedly its not really what Jim is calling for and one can make valid points against the F2P model, but hey, its a start and something different. You don't typically see large developers (that start out large) making games cheap or making them free altogether and still hold up a decent amount of quality in the actual game. (EA for example tried their hand at making Battlefield f2p, but both Heroes and P4F are terrible.)

There are so many things wrong with this video I don't even know where to start...

I agree, video games are expensive. You know what else is expensive that'd I'd really love to have? Gold. A shit load of gold. I think the price of gold should be brought down simply because a large amount of people like having things made of gold. It would make the overall sales of gold so much more! Don't even get me started on how many cool things you could do with gold if you had a large supply of it. Jewelry for days, my friends.

Do you start to see where it sounds a little ridiculous? games are expensive, yes, but that doesn't automatically mean the prices should drop. Can you give solid evidence that a less expensive product will provide more profit on a consistent basis within the industry, or is the reality more so that it'll sell more copies but have no real effect on the dividends? This is where your logic falls short, Mr. Sterling, in that you voice an opinion but have no real proof of the model.

Then the example. Oh boy, the example! Games sales are down from last year? No shit Jim! MvC3, Portal 2, Mortal Kombat, Dragon Age 2, Crysis 2, Bulletstorm, Rift, DC Universe Online, Dead Space 2, Magicka & a Call of duty Map Pack. What have we had this year? Soul Caliber V, FFXIII-2, The Darkness 2, Kingdoms of Amalur: Reckoning, Mass Effect 3, Street Fighter x Tekken, Ninja Gaiden 3, Armored Core 5, Xenoblade Chronicles & Prototype 2. To me, this year's line-up isn't as bombastic. Yeah, they're solid games, but only three of those had a huge hype train. Even having less overall blockbuster titles, the games in 2011 were far more significant than the games in 2012 as an industry. Last year was just better, period. I would dare say it'll have better profit margins for quite a few years just because of the titles that came out throughout the entire year. Using 2011 as your benchmark is just idiotic. It was a perfect storm of AAA titles and nothing more.

The last thing I found very ignorant was the complete overlook of the trends in other media. You know what else used to be expensive? Books, movies and music! A lot of things have gone down in cost because A) We've perfected the production of them over many, MANY decades -and- B) They've gone wholly digital as their main source of acquisition. I could be wrong in the latter point but I'm pretty sure the majority of consumers still get boxed copies of games, where as most consumers in other areas almost always get their products digitally. Movies are possibly the exception (though in five years that statement will probably be 100% true), then again, movie theaters provide the possible niche service to cover those costs. The problem with video games is that even though there are some digital services, the majority of copies are still in hard copy form. Look at a lot of wholly digital games, however. They almost always hit the black because they have little to no production costs. Lots of MMOs that run free-to-play that are mediocre at best run smoothly because of low production costs. I don't think going 100% digital will solve the problem we face with pricing, I'm just saying it'd help quite a bit and is probably the quickest solution to the growing costs of games.

Then again, we have the huge outcry of not owning our video games when they're digital, so apparently developers just can't win either way sometimes...

All in all, your episode -- and, in fact, the past few episodes -- had a questionable message and your sloppy presentation and lack of data just leaves me aghast and questioning whether your opinions are even grounded or if it's all just more sycophantic pandering to the public by another "internet celebrity".

Dexter111:
Here are things I could likely "do" without: games, movies, music, TV, internet, telecommunication in general, cars/public transportation and roads in general, any type of art, probably even books, hell I'd likely even survive without a home or electricity, but why the fuck should I have to?

If you cut everything down to the bare essentials e.g. caveman style all one needs to survive is basically food and warmth in the form of things like caves or clothes/blankets.
Everything else can be defined as "luxury" if you go by this narrow-minded approach. Yet I don't know when I last heard anyone argue that any other form of cultural medium like music or TV is a "luxury".

Other than that, games have a very large breadth of usage by now and can basically also do what books, paintings and movies are doing. There's educational games, there's games or simulators training pilots or troops, there's also Free2Play games that basically cost nothing (how does a "luxury" cost nothing?). Hell, there's even games created for the sake of art alone and given out for free, there's actually a lot of them.
They're also in our every day lives from the mobile phone, to a cars computer and can even be found on things like toothbrushes nowadays.

I'd very much like it if people would just use the economic definition of the word instead, e.g. from Wikipedia:

In economics, a luxury good is a good for which demand increases more than proportionally as income rises, and is a contrast to a "necessity good", for which demand is not related to income.

Luxury goods are said to have high income elasticity of demand: as people become wealthier, they will buy more and more of the luxury good. This also means, however, that should there be a decline in income its demand will drop. Income elasticity of demand is not constant with respect to income, and may change sign at different levels of income. That is to say, a luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying increasing numbers of luxury cars for his automobile collection to start collecting airplanes (at such an income level, the luxury car would become an inferior good).

Many of the things you use as examples are actually a necessity in today's modern society. You're basically handicapped without internet for example, at least in my country where most things are handled on the internet these days. You need a computer of some sort to do homework and manage your job. Just an example. Internet and computers and mobile phones are a NECESSITY, without them, you're dooming yourself to a life of poverty. Some things are just fundamental if you want to get anywhere.

Games are entertainment. They compete with other forms of entertainment when there is a limited demand, ie people can't afford all the shit. It's not the same. People always need some form of entertainment, but there are many different kinds to choose from with different price tags.

IMO, your entire argument is invalid because it's not realistic. And in the case where you mention F2P games, well...that's a case of companies trying DIFFERENT pricing models, isn't it? So it's not even relevant in this discussion, not to mention that they are still a minority of games.

Mangod:
I wonder if someone has explained this to the game developers/publishers.

Sell games at 60 dollars, which 50 people can afford, and you make 3000 dollars.

Sell games at 40 dollars, which 100 people can afford, and you make 4000 dollars.

Sell games at 30 dollars, which 200 people can afford, and you make 6000 dollars.

Now, admittedly, this hinges on your game being able to sell enough copies to make up for the costs, but to me, at least, this seems like a better model than pricing yourself out of the market could ever be.

It also takes an incredibly simplistic view of the way games are sold. Since companies do not see all of that money due to markup, it's not that easy.

The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad or samey games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works, still alot of samey game though.

Zom-B:

Sober Thal:

About one days worth of work, for minimal wage, can get you the money for a new AAA game. (Even in Australia)

Sales are low when 'so so' games are being released.

*yawn

Cry me a river.

What an ignorant comment. You clearly don't understand that for many, many people who would like to play video games that that "one days worth of work, for minimal wage" can mean the difference between paying a bill or eating for a week or making rent. It wouldn't surprise me to learn that you still live at home and have no idea what real day to day living expenses are like.

You omitted the first line of my post, is it because you think being the first kid on the block to play a new AAA game is somehow important?

Sober Thal:

Zom-B:

Sober Thal:

About one days worth of work, for minimal wage, can get you the money for a new AAA game. (Even in Australia)

Sales are low when 'so so' games are being released.

*yawn

Cry me a river.

What an ignorant comment. You clearly don't understand that for many, many people who would like to play video games that that "one days worth of work, for minimal wage" can mean the difference between paying a bill or eating for a week or making rent. It wouldn't surprise me to learn that you still live at home and have no idea what real day to day living expenses are like.

You omitted the first line of my post, is it because you think being the first kid on the block to play a new AAA game is somehow important?

Hm, here prices don't deteriorate that fast. A game can often be sold for 40 Euros a year after release and since the minimal wage is about 150 Euros per month.....

HellsingerAngel:

I agree, video games are expensive. You know what else is expensive that'd I'd really love to have? Gold. A shit load of gold. I think the price of gold should be brought down simply because a large amount of people like having things made of gold. It would make the overall sales of gold so much more! Don't even get me started on how many cool things you could do with gold if you had a large supply of it. Jewelry for days, my friends.

Bad analogy.

First off, gold is a finite resource.
Second, gold is actually useful in uses outside of possession.
Third, there is no real first-hand interest in getting you to buy gold.

Do you start to see where it sounds a little ridiculous? games are expensive, yes, but that doesn't automatically mean the prices should drop. Can you give solid evidence that a less expensive product will provide more profit on a consistent basis within the industry, or is the reality more so that it'll sell more copies but have no real effect on the dividends? This is where your logic falls short, Mr. Sterling, in that you voice an opinion but have no real proof of the model.

Games being expensive doesn't justify a drop, but it does mean that if they want to sell more, they might want to consider actually dropping the prices or consider other revenue streams (used games boost new sales). There's no real benefit in keeping game prices high, as scarcity is not an issue with games as it is with gold.

Game publishers want their games to be plentiful, to sell a lot of copies. Gold creators...Wait, there are none. Gold traders want gold to be scarce so they can continue to make money off it. If games were a precious or even semi-precious commodity, you might have a point. Scarcity is not beneficial to the games industry, thought.

Then the example. Oh boy, the example! Games sales are down from last year? No shit Jim! MvC3, Portal 2, Mortal Kombat, Dragon Age 2, Crysis 2, Bulletstorm, Rift, DC Universe Online, Dead Space 2, Magicka & a Call of duty Map Pack. What have we had this year? Soul Caliber V, FFXIII-2, The Darkness 2, Kingdoms of Amalur: Reckoning, Mass Effect 3, Street Fighter x Tekken, Ninja Gaiden 3, Armored Core 5, Xenoblade Chronicles & Prototype 2. To me, this year's line-up isn't as bombastic. Yeah, they're solid games, but only three of those had a huge hype train. Even having less overall blockbuster titles, the games in 2011 were far more significant than the games in 2012 as an industry. Last year was just better, period. I would dare say it'll have better profit margins for quite a few years just because of the titles that came out throughout the entire year. Using 2011 as your benchmark is just idiotic. It was a perfect storm of AAA titles and nothing more.

Mmm...That's either confirmation bias or teen spirit. I forget which one is the fallacy and which one is the Nirvana song.

The last thing I found very ignorant was the complete overlook of the trends in other media. You know what else used to be expensive? Books, movies and music! A lot of things have gone down in cost because A) We've perfected the production of them over many, MANY decades

Let me stop you there:

-Books have seen an increase in cost over the last decade or possibly two.
-CDs, DVDs, etc all have standardised process which should have reduced prices but have not.
-Games should have seen a simil;ar drop because we've switched from proprietary media.

They've gone wholly digital as their main source of acquisition. I could be wrong in the latter point

Yes, considering that is completely false. So two reasons. One is untrue and the other is...Untrue.

Also, since we're talking digital, ebook prices are RISING.

Then again, we have the huge outcry of not owning our video games when they're digital, so apparently developers just can't win either way sometimes...

It's almost like...Gamers are not some hivemind and actually have different desires.

Nah. That'd be crazy. Must be some catch 22.

Zachary Amaranth:

Crono1973:

There was a study that pirates spend more on music than non pirates. http://www.independent.co.uk/news/uk/crime/illegal-downloaders-spend-the-most-on-music-says-poll-1812776.html

I wonder if it's true for games too.

If that's the study I think it is, then it's kind of an unimportant study as it was done by a torrent site. The article doesn't state directly. Since they only mention the analysis guy AS he's offering analysis and don't say he conducted or aided the study, I think it's safe to guess it is.

That's like trusting the RIAA's figures that every year, people pirated 270 gajillion dollars in music. Biased sources, as they say, are biased.

The country of Switzerland did a similar study and seemed to have gotten the same results.

Links: http://boingboing.net/2011/12/03/swiss-govt-study-downloadin.html

http://www.ejpd.admin.ch/content/ejpd/de/home/dokumentation/mi/2011/2011-11-30.html

So, seems there's a bit of truth to it.

Crono1973:
The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works.

LOL.

Do you have any idea how many shitty, broken games were released with the Nintendo seal on them?

Irridium:

The country of Switzerland did a similar study and seemed to have gotten the same results.

Links: http://www.forbes.com/sites/erikkain/2011/12/05/swiss-government-study-finds-internet-downloads-increase-sales/

http://www.ejpd.admin.ch/content/ejpd/de/home/dokumentation/mi/2011/2011-11-30.html

So, seems there's a bit of truth to it.

Oh, good to know. I guess you learn something new every day.

Yesterday, I learned I could fly...>.>

DonTsetsi:

Sober Thal:

Zom-B:

What an ignorant comment. You clearly don't understand that for many, many people who would like to play video games that that "one days worth of work, for minimal wage" can mean the difference between paying a bill or eating for a week or making rent. It wouldn't surprise me to learn that you still live at home and have no idea what real day to day living expenses are like.

You omitted the first line of my post, is it because you think being the first kid on the block to play a new AAA game is somehow important?

Hm, here prices don't deteriorate that fast. A game can often be sold for 40 Euros a year after release and since the minimal wage is about 150 Euros per month.....

Don't they release Indie games in Europe? (joke)

As I said in another post, maybe it's best (not sure if possible) if the mediocre over budget games die off. There are plenty of cheap games to buy as of today, and some AAA games still sell really, really well.

Zachary Amaranth:

Crono1973:
The more I think about the crash in 1983, the more I see Indies as the train driving us there. Bad games with little oversight (ie, lack of quality control) ultimately led to the loss of consumer confidence. Nintendo's Seal of Quality was there to tell consumers that this game has been checked and it works.

LOL.

Do you have any idea how many shitty, broken games were released with the Nintendo seal on them?

I am sure there were alot but obviously not so many as to destroy consumer confidence. You know what, when I was playing NES, I never remembered games crashing or glitching. You can find all kinds of glitches for NES games on the internet today but the vast majority of players never personally experienced these glitches.

Jim. Welcome to Games Workshop's typical business practices X3

I dont think games will ever come down in price until as a minimum there is a "global industry standard" of hardware that is accesible to everyone across the world(for example if everyone in the world at a minimum had a smart phone or laptop) until this is achieved on a global scale, (i.e accessible to people even in whats considered today to be a third world country)

Also as a counter argument... games do get cheaper... constantly they lower in price but only over time for example you could today purchase a sega megadrive with 30 games for under a tenner thats what 30p a game not including the console & controllers itself, or as another example... go down to your local gameshop today and purchase yourself halo for xbox 360 for 2.

The only differance is time and the demand for a game on its release (key selling time) in which people want to play that game NOW and not wait till all the hype has died down which in itself is essentially greed ... but we are all of course guilty of doing this.

I'm not saying that I wouldnt like to see cheaper games... but merely that they all will be cheap games at some point.. so why shouldnt game development companies charge a large price for their games on release? especially when the sales of the first month of a games release will account for 90% of their earnings over the entire period of that games "life" and go on to fund further releases to that games series or a entirely different type of game.

Just a point to consider.

Very funny! Interesting too, when you think about it. Shrimp. It's such an interesting talking point. I want to eat shrimp. I like shrimp. Shrimp is tasty. Shrimp is a luxury. Shrimpie! Shrimp.

Shrimp.

SHRIMP...

captcha: good morning! What the.. captcha, it's 19:42 here in London. Your going to make me say good morning! back to you at 19:43, at night, and your going to have your good morning! bounce around like a gerbil.

I hate you.

Shrimp.

Since 2010 Video Games have been becoming more & more unimportant to me. I never thought they were a luxury. Although I had seen people who act like they are & I guess I could finally agree with them.

In fact I made a major budget cut on May 1st when I sold around 20 games leaving me with only 7 games left.

Because some game franchises like God Of War wanted to milk the hell out of me through prequels. (Spoiler: Kratos died in GoWIII) Or Assassin's Creed case coming out on a yearly basis. (And Desmond is still boring.)

-

Although I end up disagreeing with them when it comes to micro transactions on PS Home.

For anyone who's been following x7 rioting apparently $15 for a Gold Suit is "Class Warfare".

And it becomes more bizarre when these rioters can spend $60 or more in video game pre orders.

It almost reminds me how stupid this argument was back in 2009 where you have to buy a $5 pilot's jacket to get into Scorpio's VIP.

Frazzles! Frazzy-fraz!

Also, shrimp.

You know, I would really like it if the RE4 Merchant worked at Gamestop and asked everyone "WHAT AR' YA' BUYIN'?!?!?"

Blade_125:
This is how the market works. Mass produced items don't make their money back on an individual sale. Production costs on anything (phones, TV's, computers for example) are a small portion on the overall costs. This varys depending on the product, but engineering, development, and testing are very expensive.

Please don't insult my intelligence by presuming that my use of the term "production costs" means only the cost of imaging a disk and putting it into a box. Of course it doesn't. The cost of production I'm talking about is the price to bring a completed game to the market, and that includes all the programming, voice acting, testing. The actual cost of putting game-on-disk and disk-in-packaging is not only negligible, but it's probably the element that has increased the least in the last twenty years- the move from floppy/cartridge to CD to DVD to Blu-Ray (and in some cases, digital distribution) is a pittance compared to the cost of increasing the programming pool for a single game twenty-, fifty-, or a hundred-fold, or hiring an entire cast of A/B-list actors to voice it.

Games are not artifically low. That isn't even a correct concept to use in this type of industry (that would be better said of most food commodeties). A company must make a profit. To do that they need to sell enough items to make more money than they invested in the product. As a small example, if something cost a milion to make then the company must make a million back to break even, then everything else is profit (I am ignoring overhead in this example). So it could be one sale at a million, 2 at $500,000, 10 at $100,000, or 16,667 at $60. Or 25000 at $40.

The key is for a company to figure out what price point will generate the most overall profit. The numbers above are just break even, but the real goal is to make as much profit as possible. So if $60 generates 100,000 saless and $40 generates 200,000 sales then it makes more sense to price at $40, as the company makes more money overall.

Game prices can't be "artificially low" in the sense of a food commodity being subsidized by the government or a company trying to flood a market with cheap product to kill competition. Yet there are a variety of reasons to suggest that game prices are indeed artificially low, and your "reason" for calling the term "incorrect" doesn't broach a single one of them.

The cost of creating a video game has increased dramatically, but the price a consumer is willing to pay for a video game has not, especially in the United States. The increase in price here has barely kept up with the cost of inflation, let alone the increased cost of development.

A company should make a profit, but that's not a given. Part of the thrust of Jim's argument is that game companies might be able to sell more units at a lower price. But even that's not a certainty. Games like World of Goo have done a good job of making the case that predicting around traditional market models with regard to video games isn't necessarily a good bet: even offering the a popular and well-received game for pennies wasn't proof against it being pirated.

The price of video games is artificially low from one standpoint in that a great many games are selling at a price point that won't allow them to recoup their costs and doesn't reflect the price in other markets. It's artificially high from another standpoint in that those same games are selling at a price point that may keep potential customers from buying, cause them to buy used, or wait for the price to come down. Also from the point of view that the cost difference between offering 1,000 copies of the game and 100,000 copies of the game may be negligible, so why not sell [or try to sell] 100,000 at the lower price rather than 1,000 at the higher one?

Just to add further perversity to the mix, there's also the issue of the perceived value of a game being partially based on its price. A $60 game may come with the perception that it's a blockbuster in part because it's priced like one. The same game priced at $40 may suggest to its market that it lacks the confidence that it can sell at the same price as its competition, therefore it must be an inferior offering.

Game prices are just artificial in that they are set on the basis of clearly flawed market examinations, a pricing based on how competing companies price their own goods, and an established "maximum" price based on consumers' expectations that haven't changed in step with the rising costs of creating their product.

The issue you point to is more to do with over saturation. Too many developers all wanting our limited disposable income. With so much choice we can pick and choose, so some companies will fail because the made something that didn't have a broad enough appeal and cost them too much to make.

The market always balances out in these situations, either by adjusting their price or the company going under.

And yet there used to be more companies making more games. When single programmers and three-person teams could make a state-of-the-art game, it could be commercially viable even if it only sold on one system, and a breakaway hit if it sold 100,000 copies. Now the risk is so high that major releases can fail selling a million copies. It's only over-saturation because rather than being able to succeed off of capturing a portion of the market, game creators nearly have to capture the majority of the market. And then go back and do it again, and again, and again.

Sometimes it isn't individual companies going under; sometimes the market doesn't balance out. Sometimes it just collapses. Sometimes entire industries are annihilated. I have yet to see a good counter argument that, at least as far as the AAA-game market goes, we aren't nearly at that breaking point.

Angry Birds.

At any price it would never have amounted to anything but give it away for little or nothing and everyone involved becomes hugely, stinkingly, sneering-at-lottery-winnersly rich.

There's a lot of disruption creeping up on the games industry right now, from iOS to Kickstarter, and I sincerely hope it brings down a few of the monolithic publishers that bleed the market when they should be innovating.

This didn't really click for me. The bottom line is that games do not cost $50-60 but are actually dirt cheap. There are many options for people who cannot afford new AAA releases. Besides, as I understand it the argument is most often used against people trying to justify piracy with their lack of money. The point about the current model not being sustainable has been made many times before.

Sober Thal:
Plenty of great games exist cheaper than the newest AAA titles.

About one days worth of work, for minimal wage, can get you the money for a new AAA game. (Even in Australia)

Sales are low when 'so so' games are being released.

*yawn

Cry me a river.

I still think game prices are reasonable, and I expect them to rise in the next 5 years. I hope they will be worth it. Or perhaps... dare I say it... we have to wait until the game goes down in price before we buy them?!? OMG!!

That it takes a full day of work to pay for something, is not a statement of how cheap it is when given the length of many triple A games will hold you over for a week maybe. Especially when the volume of people buying them at a regular basis needs to be enough to make up for their 7-8 digit budgets. If being able to buy games on release is always such a hassle that people need to spend a whole day's wage on it that means few games can recoup their production costs

I could name 1 , maybe 2 games a year that deserve a full $60, especially when I consider I could get a game like sequence for $5. And it's not as if a game dropping price to $40 is the exact same as it releasing at $40 minus the people who bought it for $60 and gave $20 extra. The longer from release you have to wait to buy a game after it releases is on your mind the more likely you are to just forget it, and lets not forget that the less people buy on release the more likely a game is to be considered a failure financially and make them less likely to fund more games like that.

Damn right games are a luxury. Games are fucking expensive. Which means when it comes to buying games, I have a choice to make. Because I can't afford everything I'm interested in. If studios keep putting out the same old eight hour long shit that doesn't stand out from the crowd, then they're gonna lose the sale to something longer that does. If a game was cheaper, I might be more willing to take the plunge, because I have less to lose if it turns out to be not worth my time or money.

Mangod:
I wonder if someone has explained this to the game developers/publishers.

Sell games at 60 dollars, which 50 people can afford, and you make 3000 dollars.

Sell games at 40 dollars, which 100 people can afford, and you make 4000 dollars.

Sell games at 30 dollars, which 200 people can afford, and you make 6000 dollars.

Now, admittedly, this hinges on your game being able to sell enough copies to make up for the costs, but to me, at least, this seems like a better model than pricing yourself out of the market could ever be.

Sell at 60, 50 purchase, 3000.
Reduce price 3 months later 100 purchase, 4000 dollars.
Reduce price 6 months later 200 purchase, 6000 dollars.

13,000 dollars.

The trick is to know the target pool of potential purchasers on the front end, then treat that data with a first order ordinary differential to calculate the optimization. It's sorta' sad when I end up working these problems on my lunch break for the "marketing people", who couldn't find their asses with both hands and a map.

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