Jimquisition: Videogames Are A Luxury

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No *you're* a luxury!!11!

:P

So true. Wouldnt it be better to sell 300,000 games at $40 than 100,000 at $60? Also, looking to the future, you need these people buying games now as they may well be buying the sequels in the future. It maybe a luxury but then so are tvs, dvds and every other form of entertainment. So luxury, in that sense, is different to say a $200 bottle of champagne or a Bugatti.

I've often wondered what the margins are like to have everything set to $60. If they allowed a triple-A title to be sold at $40, wouldn't it sell more copies than the sixty dollar games and thus make up for the lower price point? Maybe that's just wishful thinking.

SonOfVoorhees:
snip

You ninja'd the shit out of me.

Modern Warfare 1, 2 and 3 sells world record amounts on release and games aren't selling? Angry Birds makes millions of dollars every week and games aren't selling? Skyrim becomes one of the biggest single player games in years and games aren't selling? Minecraft makes one man a multi-millionaire in the space of a few months and video games aren't selling? More people than ever in history play video games and fewer people are buying them?

Anyone who thinks games are too expensive has never heard of anything other than AAA and wants every big title the day of release.

Anyone who refuses to play anything but the next big budget game is an entitled prat. News flash: you don't get to demand sports cars be cheaper because you don't want to drive a Ford Falcon.

Sober Thal:

trollpwner:

Sober Thal:
Plenty of great games exist, for sale, 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.

Oh wow.....way to show that you don't understand, or even care about, those less rich and parent-leaching than yourself. Way to go. I don't think I can even start describing why what you've said is wrong without shooting my mouth off and getting my dumb ass banned. Suffice to say, people who have moved out of their parents' house need to spend that day's wage on stuff like food, rent, etc. They don't have much to spare on other items. Which is kinda what makes them poor, y'know?

I think I understand. I know I don't care.

As the first line of my post said: Plenty of great games exist, for sale, cheaper than the newest AAA titles.

Also, I added a bit a moment after posting: 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!!

EDIT: Sorry if I sound too harsh, I don't want to upset you. It's better to just ignore me if I make you feel on the verge of getting banhammered.

Peace be with you.

The only problem I see with the argument of "wait for the price to go down" is that if everyone does that, or even the majority of people, it's a sign that the prices are, in fact, too high. If there are a lot of people willing to wait until the price drops instead of rushing out to get the game, it's a sign that the game wasn't exciting enough or was overpriced. In the end, it's the consumers who set the prices on non-necessities, by buying or not buying at various price points. The mere fact that the used game industry exists and thrives the way it does is proof enough that the current price point is just too damned high for a lot of consumers.

I don't even buy most AAA games on day one any longer, and I have the impulse control of a squirrel on crack. Too expensive for the potential of them sucking eggs. On the other hand, I'll be willing to entertain buying a $20 or $30 game on day one with minimal reviews, because it's just a lot less money to risk. That's something the publishers need to look at carefully, unless a AAA game is part of a very anticipated franchise, it's a hell of a risk to ask people to take.

Zom-B:

Even with the first line of your original post, your comments are still colossally ignorant and insensitive. I'm surprised you even cared to respond, after your trollish comments that had more than a few people call you out.

Really? I think Sober Thal has a point when he said:

Ive been gaming for nearly 30 years and games are far more affordable now. In the early 90s new games were 60 when it was 10p to play the arcade and I thought I would buy my first home for 20,000. Now they are 45 (and come down quickly if you are not 12 years old and can be patient enough to wait past release date), its 1 to play the arcade and most first houses are bought for around 120,000. 60 in 1990 would be around 120 today so games are far more affordable now. You got 1-2 games a year and played the shit out of them as no new games were coming for a while.

Before I started a family and had lots of disposable income I bought plenty of games release day. Now I have a wife, child, mortgage etc. As well as having less time to game I have more bills and other "luxuries" I choose over games. I now buy 1-2 launch titles but for single player games Im happy to wait a few months for the price to drop. 25-15 is fine for that sort of romp. I picked up Lost Odyssey last month for 2. Its not on release date but Im still enjoying it. I frequent GOG, older titles and only buy the triple A launch titles I really want. I dont feel discriminated against or hard done too.

So are games too expensive? I'd argue no as they are still selling well (1 set of sales figures doesn't change that, I'll be gob smacked if the new COD fails to sell) and there is a variety of prices out there. F2P, GOG, bargain bin, 6 month old titles, indie games, steam, second hand, and of course the AAA launch titles everyone moans about. Something for everyone so people should stop complaining like their food rations are being cut.

If they were too expensive they would stop selling, publishers would drop the price or go broke. COD is worth the money as it more than makes its money back. I could have chosen any number of titles but COD seems to be the big one. $60 pricing will stay as long as its profitable.

People will take your points more seriously if you make solid arguments rather than attacking fellow posters. How were you furthering discussion on this thread?

Dryk:
If budgets keep rising the way the gaming industry is just to look like a pack of wolves fighting over a carcass. People aren't magically generating more and more money out of nowhere over time and they're going to have to face up to that eventually.

mfeff:
-snip

Publishers don't care about selling more copies later though, they want to make all their sales in the first week, make a shit-ton of money and then have it forgotten about. A high price stops that plan dead in it's tracks.

Not to mention that each person who can't afford a $60 game is another person who isn't telling his friends about this awesome game he found.

There is certainly a push for the first 48-72 hour sell through. As it was my experience when I worked in distribution in the "games industry" years ago. To anecdote when I was offered a store that was "floundering" I modified some of the price structures as well as the policy of the store. The store was earning around 330,000-350,000 U.S. a year when I took it over.

In a year I had it up to 1.6 million. The issue became one of replication in the retail chain. What your saying rings true as to the resistance to change and short shortsightedness that I encountered throughout the U.S. game industry. This store was in a very "urban" environment. My success here earned me the nickname "prince of the ghetto". Let that sink in for a minute as to how much these "people" opinion the lower class.

The push is more on the retail side rather than the publisher side anyways. Retailers purchase in bulk and often do not want to be "storing for fun", hundreds of thousands, or even millions of copies of a product. It cost "something" just to have them on pallets.

Mass Effect 3 sold three million copies! Break out the champaign!

Well not exactly, 3 million units are being stored at the retailer. That number is coupled with the direct download sales, again without the numbers it's difficult to tell what has actually sold until the earnings reports come out. That said, ME3 was expected to hit the 5 million mark... good luck with that.

I mention this to further illustrate and clarify "marketing people couldn't find their ass with both hands and a map".

So let's look at what you just said.

Budgets. Not really sure if you mean game development budgets or personal budgets that show a reduction to the amount of fluid spendable money towards the purchase of entertainment.

Games, in an arms race to achieve a certain look and animation quality have certainly increased the cost to make. Most of that cost is from attempting to compress the creation time to bring the product to market faster. Not really so much that "it cost more to make games". That is a pretty meaningless statement without a reason as to why it went up. I have shown time... and time... and time again... that content creation cost have gone DOWN, not up per unit of creation widget.

Game "budgets" are semantically tied into marketing budgets. That being said, since 2004 to 2008 the game industry doubled it's advertising budget. From 2008 to 2012 it tripled it AGAIN on the previous double. This is exponential spending on advertising and accounts for most of what a game "cost" to make. A huge portion of the price of a AAA game is the purchaser subsidizing the advertising cost of the thing he just bought. Reflect on this in a moment of contemplation.

Diablo III adds on every web site? SWToR adds on T.V.?

Now if cost of creation becomes more or less a fixed, and it is headed that way, the target pool is approximately known, then it is simply a derivative of the unit per unit sale per unit profit margin. That is to say, earn 20 percent above cost, 30 percent? It helps to know where one wants to be. Clearly one wants to be on the highest possible point of the curve.

Audience budget. Maybe it has gone down, maybe it has gone up. That there has been a downturn in sales is not an indication that there is less disposable income towards the units purchase. It is a possible factor, but not necessarily THE factor.

Owners, statistically per console, typically buy 6-8 NEW titles during the entire cycle life of a system, and there are new games being released all the time, then it is plausible that it is competition, it is also plausible that cheaper games through digital download are offsetting the end user's time in such a case that he or she simply has no desire to purchase the new widget. To answer the question outside of "speculation land" one needs the data. That data is guarded, so anyone's guess is as good as any other.

This is one of the primary reasons of the "used games" debate.

Other factors: DLC - extending product life (offering a by-pass to used), sticking to a product - CoD, Battlefield are great examples of this (hence the pay to play garbage being tossed around), handhelds and micro transaction games - market saturation. Could go on... and on... and on....... it's pedantic.

So is it less money to blow? Are games to expensive? Maybe. Are there areas where cost could be streamlined in product creation? Most certainly... again, as it was and has been my experience the "games industry" is LOADED with slop and money waste. Those cost are reflected in the title.

So... let's see... don't care about selling copies later... ummm, yes they do. I have already detailed that above. It's retail chains that don't want to float boxes of shite with no home to go to. Clearly the publisher would love nothing more than to move another 1.5 million units to that retail chain.

That it is not built into the price structuring on the front it is probably right on. Though this simply reiterates my point... which I will mention again.

"marketing people couldn't find their ass with both hands and a map".

To reflect this again, is to say that as the price of content creation per widget in a compressed period of time becomes fixed, it is advantageous to continue to market the product one already has for whatever one may get for it unit such time that one has something else to sell.

When we see this not being done... you guessed it...

"marketing people couldn't find their ass with both hands and a map".

mention that each person... yadda yadda... right.

The key here is that (especially younger people) who "DO" have a copy of "the next best thing", DO have a copy and are telling everyone about it... thus this creates (ideally) a sense of urgency and "keeping up with the crowed" mentality. Leveraged greed is a beautiful thing. Slashing a price can negatively impact the impression of a titles "worth", thus pricing something high... cars are a great example, instill in the idiots mind that it is "actually" worth what the price tag says it's worth.

Constantly slashing prices to hit a market penetration rate to maximize the initial impact of sales "could" lead to a market crash.

Prices... as an honest opinion... they are going to go up, not down. Especially if these "so called" cost keep trending up. The cost increases will be bundled with plastic crap and the DLC kicked in... how generous. Then a middling product, (same thing just without the plastic crap toy and DLC), and then perhaps a stripped down version a little cheaper.

We can say this because it is already here. This is lunch break stuff... as I said... haven't even tickled the surface of "how and why" these things are done.

A wise man once told me... if you want to be rich, stop thinking like a poor person.

I already do without most games.

Games, in general, have had issues with abysmal quality and inflated prices for production starting back from the beginning of time. The problem has always been present, in some shape or form, since the Industry first became that... an industry.

As publishers began throwing more and more money at games, it became more and more necessary to offset their costs through pricing. Where before, they were simply making a killing, slowly their industry has become DEPENDENT upon these inflated prices simply to survive.

The reason for this is the same as the reason for the diminishing returns on investment for television shows, music, and movies: failure to adapt.

Media is failing to adapt to a world in which technology has vastly outstripped them in methods of distribution, methods of availability, and the ease of access.

And so they go through expensive, time-consuming measures to ensure their games don't get pirated. They spend tens of millions on advertising, on ENORMOUS teams of programmers and level designers, and flooding the airwaves with their product's name. They waste vast quantities of time and money fighting with bleeding-edge technology in order to compete with all the OTHER samey-lamey AAA-Titles on the market.

They push deadlines that are impossibly to meet, force developers to strip content and dumb-down systems for 'mass-market audiences', and then shovel their crap out the door to whoever's unfortunate enough to pay $60 for a steaming pile of shit.

But like Jim says... the days when people have that kind of money are coming to an end. Games aren't all that important to a person who has to choose between food and the next Call of Jurassic Chrono Halo Conquest. And if the Video Games industry wants to survive, it's going to have to adopt a pricing structure which DOES NOT write off huge portions of their customers.

This means either cutting down on the size of design teams assigned to a given project, reducing the amount of time and money invested into a single production, or some combination of both.

The current model cannot stand. It's failing, and it's only a matter of time before these major publishers begin to disappear... or change their business model.

The thing is that their ARE ways of getting games inexpensively. Their is Amazon (Alan Wake collectors edition, Just Cause 2, Red Dead Redemption GOTY, Skyrim (all games on the 360) for less then $120 for example), GOG, Steam sales (assuming your PC is capable of playing the game in the first place).

Besides here is a cliping from a magazine (Sears catalog)from the early ninety (note, these are US prices).

So, the pricing isn't really all that much more expensive then the mid 90's.

To avoid confusion, this is the defintion of Luxury goods that I am going with.

From Investopedia

Luxury Item

"An item that is not necessary for living, but is deemed as highly-desired within a culture or society. The ability to purchase or finance a luxury item is directly proportionate to ones' income or assets. In other words, as people move into higher income brackets they are more able and more likely to purchase more expensive luxury goods.

Luxury items are also known as "positional goods" because they signal that the owner has achieved a certain position or status within society to be able to afford them."

Read more: http://www.investopedia.com/terms/l/luxury-item.asp#ixzz1uAf1Yd3q

Video games seem to fit with that definition.

Lunar Templar:

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

Oh shit I actually wrote that O_o

and your avatar makes it even better

Pervy sage! xD

Jiraiya makes everything better.

maninahat:

rembrandtqeinstein:

How could anyone not like a game just because the price is low? That makes no sense.

The same reason that some people want to watch something other than cut price indie flicks and b-movies. Sometimes people want to watch big expensive films with high profile stars and glossy set pieces or special effects. Cut price games are limited a lot by their smaller budgets - which is why there are so many damn 2D, indie platformers these days. Sure, you may get some very good $5 games, but a cheap title will struggle to create something as pretty, atmospheric, and technically proficient as, say, LA Noire. Cheap titles can't deliver everything.

Then you wait 6 months and the game goes on sale, or wait for steam xmas sale. Don't be a sucker and think about the most efficient use of your money.

lord.jeff:

maninahat:

lord.jeff:

Cheap games do deliver example LA Noire is 19.96 on amazon.

Oh, that game that came out a year ago? Games devalue pretty quickly, as soon as the buzz dies down. I didn't realise you were counting them too.

Why shouldn't I count them? It's not fruit that goes bad after a month, they stay good, I have played Persona 4, Perfect Dark, Medievil, and Super Mario Brothers 3 with the last month, and guess what non of them yet managed to rot.

I didn't count them because the original post I was responding to specifically talked about eshewing AAA games, in favour of cheap, small studio titles. There is no need to patronise me.

HellsingerAngel:
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.

Gold is a resource and a commodity, not a product. There is also a finite amount of gold in the world, while for all intents and purposes there are an infinite number of games to be made. Your analogy doesn't work because you're comparing two things that are in no way similar. Gold has value while it is still in the earth, and becomes even more expensive once the costs to mine, transport and refine it are factored in and then again once value is added by using it to make products like jewelry and electronics.

Video games, by comparison, have little value while still "in the ground". A concept and a story are a start, but a video game doesn't have value until you can get it to consumers. Though I will grant that an intellectual property, such as an idea for a game, can have value to the right person.

HellsingerAngel:
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.

While taste is subjective (Portal 2, DA2, Crysis 2, Bulletstorm are all less interesting to me than Amalur, SFxTekken, The Darkness 2 and Soul Caliber 5. Go figure.), most industry watchers and analysts realize that a big reason that game sales are down is because consumers are ready for a new console. It's not just your list of games.

HellsingerAngel:
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".

You know what I find interesting? In your example here, you can lump all media together, but as soon as we talk about used sales, videogames become something special that don't work the same as used books or used cars (maybe not you specifically saying that, but you get my point). Videogames, in fact, are a different beast than books or movies. They are consumed differently and purchased differently. Very few books or movies ask us to invest 100 hours, for example. Books and movies aren't interactive, either. You can't affect a movie or book like you can a game. If we agree on this point, we can't compare books, movies and games using the same criteria. Personally I would say that games and movies are luxuries, reading is and should be a right and a necessity for all people. Few things impact our lives so forcefully and positively as being able to read and then using that skill to learn about our world, communicate and enjoy our own and others imaginations.

I would have a very hard time believing that the reason books have gone down in price- which they haven't really, in fact. see this link: http://www.theawl.com/2011/12/how-much-more-do-books-cost-today - because their production has been perfected. It is one factor, I'll grant you, for lowering prices for products, but it's not the only one. The economy plays a part, as do availability of materials, shipping costs influence final cost as well as employee wages and author salaries. To pin it on any one thing is naive. That being said, aside from a few ups and downs, book prices for new hardcovers have hovered right around $30 on average since the 50s.

Feels more to me like you just have an axe to grind with Jim Sterling, didn't like this video and trotted out a bunch of half-baked comparisons and unresearched theories. Try again.

bjj hero:

*anecdotal evidence snipped*

So are games too expensive? I'd argue no as they are still selling well (1 set of sales figures doesn't change that, I'll be gob smacked if the new COD fails to sell) and there is a variety of prices out there. F2P, GOG, bargain bin, 6 month old titles, indie games, steam, second hand, and of course the AAA launch titles everyone moans about. Something for everyone so people should stop complaining like their food rations are being cut.

If they were too expensive they would stop selling, publishers would drop the price or go broke. COD is worth the money as it more than makes its money back. I could have chosen any number of titles but COD seems to be the big one. $60 pricing will stay as long as its profitable.

People will take your points more seriously if you make solid arguments rather than attacking fellow posters. How were you furthering discussion on this thread?

Do you know what other things people keep buying that are too expensive for them? Cars and houses. There was a huge subprime mortgage crisis in the USA during the 00s (http://en.wikipedia.org/wiki/Subprime_mortgage_crisis) where lots of homeowners purchased outrageously expensive homes and then couldn't keep up the payments as the economy collapsed. But homes still sell. There are entire TV shows devoted to repo men where you can watch them repossess "luxury" cars from people who can't afford them. By now you'd think that every single American would have a vehicle and yet new cars continue to sell year after year, despite costing tens of thousands of dollars.

I don't think that anyone is arguing that current game prices are going to collapse the industry, but we'll definitely see it shrink if publishers continue to adhere to a $60 price point + DLC run wild. Gamers will focus on sure fire games that they really want and it's DLC in favour of indies, new IPs and less popular genres.

And regardless of whether or not prices have come down in relative terms, $80 for an NES game in the 80s and $60 for a PS3 game now is moot. The fact is that both prices are too high and a lot of customers have trouble or are uncomfortable paying either price. The industry was wrong then and it's wrong now. If it wants to stay healthy it's in it's own best interest to keep it's products affordable and in consumer's hands, not up on a shelf, unsold, waiting for "rich" people to buy them.

That being said, Sober Thal's comments were trollish and ignorant and I've got no problem calling out someone when they engage in such flamebaiting.

maninahat:

lord.jeff:

maninahat:

Oh, that game that came out a year ago? Games devalue pretty quickly, as soon as the buzz dies down. I didn't realise you were counting them too.

Why shouldn't I count them? It's not fruit that goes bad after a month, they stay good, I have played Persona 4, Perfect Dark, Medievil, and Super Mario Brothers 3 with the last month, and guess what non of them yet managed to rot.

I didn't count them because the original post I was responding to specifically talked about eshewing AAA games, in favour of cheap, small studio titles. There is no need to patronise me.

Sorry for that coming off like an insult, but older used games still factor in with this because they are still an option. I believe being poor you shouldn't be buying new AAA games, same as it would be a foolish act to be eating caviar or buying designer clothes while poor. Let the rich foolish consumer support the industry will we sit back and enjoy the exact same thing for a third the price.

Now that I think about it, I can't remember the last time I bought a full priced game that wasn't Mass Effect 3, ok I'll buy Halo 4, Assassin's Creed 3 and Dishonored but I think I understand what Jim means. I just don't feel like the games on the market are worth $60.

mfeff:
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.

Better go back and check those figures you gave to the marketing people then, because your math is off here. :P

You incorrectly assumed that the person who bought the game as $60 will then buy the game again at $40 and $30. Which won't happen because no one buys themselves three copies of the same game.

The correct math would be 60 * 50 = $3000, then 40 * 50 = $2000, then 30 * 100 = $3000, for a total of $8000.

This math also relies on a lot of assumptions that are somewhat shaky, such as:

1) Will the player who refused to buy at $60 still want the game three months down the line when it drops in price, or will another game have come along that replaced his desire to buy that full-price title? For example, Torchlight 2 will end up replacing several people's desire for Diablo 3 by sheer virtue of the price barrier, and the former isn't even released yet. But since they offered pre-purchase before the release of D3 (deliberately, as a marketing move), suddenly the notion of getting a similar game in the future for only $20 is going to appeal to more people than getting a $60 game right now.

2) Will the game actually drop to $40 in three months, or will it take longer? Most publishers try to juice their title for quite a long time before dropping from the $60 mark. Skyrim was released in November of last year, and to this date (a full six months later), it's still being sold for $60 unless you've snapped it up during a Steam sale....which sort of helps emphasize the point Jim is making, that the price barrier is too high.

The simple fact of the matter is that even if the publishers were making good games all the time (and generally they aren't), they're pricing themselves too high. And thanks to new distribution methods like Steam, the indie game market has been making a killing off of the increasing greed of mainstream publishers and will continue to do so.

Also as a pro-tip from a math person, you don't need a first order differential equation to perform typical optimization (that is, optimization involving min/max). That would be over-thinking it. Most optimization can be performed with simple algebra and a basic algorithm that can be calculated entirely by hand. Not that it matters for this situation, because you don't need to do much of any math to realize that the publishers have set themselves up for failure by overpricing the product. Sales are down, it's a bad economy, they should be able to put the figurative two and two together. Right now, they're basically saying 2 + 2 = fish.

This entire post made me smile. No snarky comments, no sarcasm, some actual analysis done. It made me smile really big and I just wanted to say thank you before I start to dig into the meat of the post.

Zom-B:
Gold is a resource and a commodity, not a product. There is also a finite amount of gold in the world, while for all intents and purposes there are an infinite number of games to be made. Your analogy doesn't work because you're comparing two things that are in no way similar. Gold has value while it is still in the earth, and becomes even more expensive once the costs to mine, transport and refine it are factored in and then again once value is added by using it to make products like jewelry and electronics.

Video games, by comparison, have little value while still "in the ground". A concept and a story are a start, but a video game doesn't have value until you can get it to consumers. Though I will grant that an intellectual property, such as an idea for a game, can have value to the right person.

I used the first thing that came to mind that would be extravagant. You're correct, it wasn't the best example I could have used because gold is a much more finite finished product than video games. However, you can take your pick on the various luxuries we as humans have created and find a similar example for commercial goods. I used luxury cars in a reply to someone else and with some quick googling was easily able to find various figures for prices on luxury cars year by year which has shown a fairly stable market, despite the total automotive market crash for the past little bit. My point was luxury items are expensive and don't fluctuate often because they're luxuries.

Zom-B:
While taste is subjective (Portal 2, DA2, Crysis 2, Bulletstorm are all less interesting to me than Amalur, SFxTekken, The Darkness 2 and Soul Caliber 5. Go figure.), most industry watchers and analysts realize that a big reason that game sales are down is because consumers are ready for a new console. It's not just your list of games.

That could be true. It might not be. The new console generations for both Microsoft and Sony are looking to be right around 2014-2015, so I don't believe game sales would slump this quickly. I could see why Xenoblade might not sell because of the early attack Nintendo is putting on but that shouldn't create a numbers decrease that's so drastic. Then again, your proposition also debunks Jim's proclamation that games sales are down because they're too expensive but rather that people don't want to invest in products that will potentially become obsolete in two to three years. I dunno, take your pick, but I do agree that maybe next year we'll start to see a slump when something more substantial about the new console generation gets shown.

Zom-B:
You know what I find interesting? In your example here, you can lump all media together, but as soon as we talk about used sales, videogames become something special that don't work the same as used books or used cars (maybe not you specifically saying that, but you get my point).

Actually, they're the exact same problem. Authors don't see the revenue from books being re-sold. Neither do car manufacturers (except maybe spare parts to fix them). It's the pawn shop policy and I think publishers need to back off in that respect. At the same time, GameStop are being total douche bags by basing their entire business model around cutting out the hand that feeds them their products. I feel bad for publishers in that respect where they do need to try and push those new games sales to get the return they'll need in order to keep publishing. the two quickest solutions to this problem are quite literally A) Go all digital -or- B) Stop giving your product to GameStop, take a massive hit to sales for a couple years while they etch out deals with places like Wal-Mart, Furutre Shop, Best Buy and small games stores and dig themselves out of a hole they never really dug (for some of the part). While option B would solve the problem much faster, it's not the more attractive option, for sure. I think pushing a digital media model would really help pricing in the industry and thus am excited to see services like Steam and Origin.

Zom-B:
Videogames, in fact, are a different beast than books or movies. They are consumed differently and purchased differently. Very few books or movies ask us to invest 100 hours, for example. Books and movies aren't interactive, either. You can't affect a movie or book like you can a game. If we agree on this point, we can't compare books, movies and games using the same criteria. Personally I would say that games and movies are luxuries, reading is and should be a right and a necessity for all people. Few things impact our lives so forcefully and positively as being able to read and then using that skill to learn about our world, communicate and enjoy our own and others imaginations.

To be honest, I think entertainment as a whole is a necessity. If we didn't have any, we'd all go crazy or do very crude things like start wars for that purpose. However, AAA games are a luxury and there are plenty of games out there running free business models as well as games that are running $10 business models. The later might not be the newest and hottest games around but they're affordable and still great games. Much like a good book or a good movie, a good game never becomes bad. If you want to game, there are opportunities to do so, so complaining that the luxury part of the system is too expensive for you is just petty greed.

Zom-B:
I would have a very hard time believing that the reason books have gone down in price- which they haven't really, in fact. see this link: http://www.theawl.com/2011/12/how-much-more-do-books-cost-today - because their production has been perfected. It is one factor, I'll grant you, for lowering prices for products, but it's not the only one. The economy plays a part, as do availability of materials, shipping costs influence final cost as well as employee wages and author salaries. To pin it on any one thing is naive. That being said, aside from a few ups and downs, book prices for new hardcovers have hovered right around $30 on average since the 50s.

So what happened to the other 1550 years books have been in circulation? When you look at media, you need to look at it from the beginning. As it stands, video games are very young right now, more than three times as young as the last big step which would be movies. In 1920, movies weren't in common circulation like video games are today and historically we're booming and on the right track compared to all other forms of media forty years from their conception. Book prices have been relatively stable in the past fifty years, yes, and I would also expect that from video games when we get there in the timeline. Unfortunately, that isn't now. We are far from perfecting the distribution methods of our medium with standard models and the digital age that looms over us isn't helping very much. We're trying to perfect something while also making a culture shift and that can be difficult. however, we're also the pioneers of this medium. We are literally making history and that is a privileged, not a right. Yes, it sucks that some games cost sixty dollars but that's sometimes the price you pay in order to enjoy the premium experience. For all others there's your Super Monday Night Combats, your TF2s, your Dofus', your League of Legends' and so on. Gaming isn't as limited as Jim makes it out to be and it's extremely frustrating when he goes off like the industry owes him something when they don't. If he doesn't like it, he should get a new hobby or luxury to indulge himself in.

CriticKitten:

mfeff:
-snippers

Better go back and check those figures you gave to the marketing people then, because your math is off here.

Man o man... third response to this post... will the madness ever stop! Nah, just teasing... having of addressed all sorts of various aspects of this, I will try to hit just the hot topics you bring up.

-The first one... these are not my numbers.

The target pool for the example is specified by the OP as being fixed, and I took a pretty big liberty at that, making a further assumption that as the price decreases one's product dips into a different pool of purchasers. Many an economics or stats class will run these types of simulations and cover this topic. For brevity sake I will say, upper, middle, lower class pools, each with there own independent pools of purchasers.

I should of been more clear on that. Although I skirt around it in other post. Get the cost low enough, people that where NEVER interested may purchase the widget. It's cost, just cost... cost into different pools of different interest with tons of overlap. Like working a topology problem.

You incorrectly assumed that the person who bought the game as $60 will then buy the game again at $40 and $30. Which won't happen because no one buys themselves three copies of the same game.

It's not the same person, see above as to why.

The correct math would be 60 * 50 = $3000, then 40 * 50 = $2000, then 30 * 100 = $3000, for a total of $8000.

Correct and I didn't really feel bothered to point that out, as the OP assumed a fixed population with the only mitigating factor as to "sell through" being a cost barrier. Still in yet... 8k is more than 3k, is more than 4k, is more than 6k. Even considering that the premise shows some promise which is why it is done in the work-a-day-world, but the application is suspect. Thing is do we want to go into a cost optimization lesson on the escapist forums? Eh? Shrug... I stand by the notion that the premise of a cost gate is faulty and simply does not go deep enough.

Though you point out the flaws nicely.

1) Will the player who refused to buy at $60 still want the game three months down the line when it drops in price, or will another game have come along that replaced his desire to buy that full-price title? For example, Torchlight 2 will end up replacing several people's desire for Diablo 3 by sheer virtue of the price barrier, and the former isn't even released yet. But since they offered pre-purchase before the release of D3 (deliberately, as a marketing move), suddenly the notion of getting a similar game in the future for only $20 is going to appeal to more people than getting a $60 game right now.

Great use of an example!

Maybe... but in the case of Acti-Blizzard stuff they are very slow to reduce the price schedule as there products seem to be utilizing synergism around creation the Blizzard network and gating there customers to their service plan. Torchlight cannot offer that. Starcraft II is sitting around 44-60 bucks a copy today. It dropped around 6, 2010... so at a year after launch, it's still "high". Also the D3 buy got someone a year of WoW. Which simply reinforces what I just said. Torchlight is certainly a similar product but it is not the "authentic" Diablo clone, nor could it ever really be. I cannot say that people won't purchase both, especially if TL2 goes on the cheap. Can't expect D3 to drop in price anytime soon.

2) Will the game actually drop to $40 in three months, or will it take longer? Most publishers try to juice their title for quite a long time before dropping from the $60 mark. Skyrim was released in November of last year, and to this date (a full six months later), it's still being sold for $60 unless you've snapped it up during a Steam sale....which sort of helps emphasize the point Jim is making, that the price barrier is too high.

Skyrim does something interesting, in that it allows for the leveraging of the player base to create new material for the title. Again, looking at Day Z for Arma II has generated more sales and that was done, for free, and Bohemia Interactive enjoys the proceeds. Skyrim simply built it into it's design. Again if the product has no direct apparent competition in the marketplace, and nothing foreseeable on the horizon, why drop the price? In Skyrim's case I would suspect that it will be offered from time to time as a sale item, and those numbers calculated to see what the new pool of interest at the price gate actually is.

The simple fact of the matter is that even if the publishers were making good games all the time (and generally they aren't), they're pricing themselves too high. And thanks to new distribution methods like Steam, the indie game market has been making a killing off of the increasing greed of mainstream publishers and will continue to do so.

The indie game market exist pretty much because of Steam. Rock paper shotgun ran an article discussing indie games and how even mentioning one on their site could change the fortunes of a developer. So there is truth in advertising after all.

As far as pricing them high, it is based on an extrapolation not an interpolation. I discussed this further up. Prices have also gone up, not down. They will continue to go up, especially considering Day 1 DLC, other odds and ends... a game could be nearly a hundred dollars. As far as the "cost gate", that is the gate. A decision to buy all the extra crap or not. To think about dropping a price one needs data that suggest that, not speculation. Maybe the speculation is right? Let's support it with data. That's all I am saying.

Also as a pro-tip from a math person, you don't need a first order differential equation to perform typical optimization (that is, optimization involving min/max). That would be over-thinking it. Most optimization can be performed with simple algebra and a basic algorithm that can be calculated entirely by hand. Not that it matters for this situation, because you don't need to do much of any math to realize that the publishers have set themselves up for failure by overpricing the product. Sales are down, it's a bad economy, they should be able to put the figurative two and two together. Right now, they're basically saying 2 + 2 = fish.

Great, thanks for clearing that up. What is a math person by the way? Minor in math? Major in math? Help me out here. I personally prefer ODE to this "simple algorithm", I guess your talking about some form of a series, summation... Taylor?

I think the jury is still out as to what publishers have and have not set themselves up for. As I stated, the price has gone up, and will continue to go up. They will be cost gated because it is cost gated NOW, right now, TODAY. Additional content will be sold continually to support the initial purchase.

This solves market over-saturation, maintains a used game scheme, and supports the digital distribution models. What is there to change?

The big factor today appears to be "retention" and getting away from churn.

The used game demonstrates the cost optimization as it is not subject to the publishers contractual arrangement as to the fixed nature of the initial price. The vendor has no contract with such terms with the consumer. The cost changes and product dissemination's work very much like how a brokerage house values a stock.

So it is already here. It has been here for some time.

As far as what the "problems" are... they are a plenty. Cost gating may be one of them... but as to what extent the real impact is... shrug... not my problem. I simply doubt that it is much of one, and to that end seriously question any argument based on fixed populations and assumptions as to what the audience really is. That goes on all sides of it though, publisher, vendor, developer, and audience.

Need more facts to make informed decisions. If it was as simple as reducing the price to cash in on more $$$ it would of already been done. So that is clearly not the plan. The plan is the one in plain sight.

OK. I think we've had enough of discussing how things should be. Let's talk business and about the bottom line because that's what publishers are going to look at.

If the publishers are going to lower the price point for new games, it will be because they feel it will net them more on their profits. So the question, the one that is the most relevant, and what we should be asking ourselves is, can publishers pull in more money if they lower the price?

EDIT: I missed the discussion above me when I posted this.

Video games actually offer pretty good bang-for-the-buck. A decent game actually costs very little per hour of entertainment delivered. Compared to going out to the movies, buying DVDs, eating at restaurants, going to nightclubs, they are actually inexpensive.

That's not even considering other hobbies one could get involved with, which get expensive very quickly.

Great show. I would say 60$ is the price for the luxury to play a game early, right from the start. I try my best not to give in and keep waiting but sometimes i`m just a whore (MAX PAYNE3 weeeEEEEEEEEEeeeeee)and part of the problem.

Good discussions here but i have nothing new to add. It`s a bit saddening that the game-industrie wastes so many resources on advertising. The average regular gamer is thirty and good informed with the www and sometimes even printmagazines. Who would buy cod or mp because of adverts on tv or in cinemas, if this person isn`t into gaming at all? Gaming people are informed anyway (at least about the games) and i doubt that they get many people to buy a console/pc and this one special title over a tv advert to justify the costs of advertising. With people wanting this game and being informed about it advertising seems senseless, since they would`ve bought it anyway.

The man makes a very simple but important point in this weeks video. Without knowing it I realized that I have classed games as a luxury and being as poor as I am I've not bought a single game this year. In fact both myself and my house mate are huge gamers but also both have other, more important things, to be spending our money on (rent, food, heating, etc). So I do not think that either of us have bought a video game at all this year.

-M

Kind of off-topic, but does anyone know what game that is at 3:03 in the video? Is that that Dragon's Dogma thing I've been hearing about?

I do love how Jim falls into a pretty big logical fallacy here. Just because sales for 1 game is down, doesn't mean that sales for games as a whole is down.

Also: there are plenty of alternatives if you can't afford to buy a AAA game, for both console and PC. Like Diablo but can't afford it? How about Path of Exile (free to play) or Torchlight 2 (20$)? There's a swath of cheap games on the PSN and XboxLive Arcade that are well worth the modest investment.

Indeed I would make the arguement that gaming is at the cheapest it has ever been. There are so many options now if you're a gamer, that simply did not exist 10 years ago.

BreakdownBoy:
You will most likely be able to play Diablo3 offline, just with out muliplayer functions.

Unless you can point to a source saying they plan to alter D3 in the future to make this possible, I'm going to assume you're saying this out of optimism rather than likelihood.

Game developers: "Games are too expensive, except for my game..."

Gaben: "Team Fortress 2 is Free, as will DOTA2, oh and here's a Steam Sale with 50% games that came out only 6 months ago."

Game Developers: "heeb heeeeb haaaay ah what now??!?"

HiRez Studios: "Hey! Check out our free to play Tribes Ascend"

Game Developers: "Well, Those are just a few rare exampl..."

League of Legends
Planetside 2
Hawken
ShootMania: Storm
Mechwarrior: Online
Dust 514
Reign of Thunder
Blacklight Retribution

image

mfeff:
It's not the same person, see above as to why.

Then you're assuming more people than the person you were quoting, which changes your sample size and thus your results considerably. :P

Great use of an example!

Maybe... but in the case of Acti-Blizzard stuff they are very slow to reduce the price schedule as there products seem to be utilizing synergism around creation the Blizzard network and gating there customers to their service plan. Torchlight cannot offer that. Starcraft II is sitting around 44-60 bucks a copy today. It dropped around 6, 2010... so at a year after launch, it's still "high". Also the D3 buy got someone a year of WoW. Which simply reinforces what I just said. Torchlight is certainly a similar product but it is not the "authentic" Diablo clone, nor could it ever really be. I cannot say that people won't purchase both, especially if TL2 goes on the cheap. Can't expect D3 to drop in price anytime soon.

Except that the Blizzard "network" only means something to people who are buying it because it's a Blizzard product. It's really nothing fancy, and to make matters worse for Diablo 3, they're releasing the game with a major multiplayer component (PvP) completely absent from the game.

Also, the Torchlight series was created by former Blizzard developers. It's rather hard to argue that Torchlight 2 isn't an "authentic" clone of Diablo given that it's made by the people who made Diablo 2. To the contrary, it is THE Diablo clone.

Will some people buy both? Sure, that always happens. But the tendency for gamers is to buy one over another, and if Torchlight 2 is offering people a smaller price window, players newer to the genre will reach for it rather than the high price of entry for Diablo 3.

Skyrim does something interesting, in that it allows for the leveraging of the player base to create new material for the title. Again, looking at Day Z for Arma II has generated more sales and that was done, for free, and Bohemia Interactive enjoys the proceeds. Skyrim simply built it into it's design. Again if the product has no direct apparent competition in the marketplace, and nothing foreseeable on the horizon, why drop the price? In Skyrim's case I would suspect that it will be offered from time to time as a sale item, and those numbers calculated to see what the new pool of interest at the price gate actually is.

But players create new material for their favorite PC titles all the time. Mods are not something unique to Skyrim and I'm not entirely sure what gave you that impression.

Also, the problem with this logic is that there are plenty of competitors that released months, even years prior to Skyrim that now sell for less than it does. Sooner or later, it has to bring the price down to stay competitive. What's uncertain is how soon.

The indie game market exist pretty much because of Steam. Rock paper shotgun ran an article discussing indie games and how even mentioning one on their site could change the fortunes of a developer. So there is truth in advertising after all.

As far as pricing them high, it is based on an extrapolation not an interpolation. I discussed this further up. Prices have also gone up, not down. They will continue to go up, especially considering Day 1 DLC, other odds and ends... a game could be nearly a hundred dollars. As far as the "cost gate", that is the gate. A decision to buy all the extra crap or not. To think about dropping a price one needs data that suggest that, not speculation. Maybe the speculation is right? Let's support it with data. That's all I am saying.

....I'm not sure what other data you require. Video game sales are down. Significantly, in fact. And it's not just last month, it's starting to become a trend. Jim highlights this simple fact in his video. It's very clear that if sales are down that much, then SOMETHING needs to be changed to reverse the trend. You can argue all you like about the causes or the ways to reverse this trend, we may or may not agree. But you most certainly cannot possibly hope to argue that the trend doesn't exist at all when the evidence clearly indicates that sales have dropped.

Heck, I'll go ahead and call it now: we'll see slightly higher sales in May, but almost entirely due to Diablo 3's release.

Great, thanks for clearing that up. What is a math person by the way? Minor in math? Major in math? Help me out here. I personally prefer ODE to this "simple algorithm", I guess your talking about some form of a series, summation... Taylor?

Math teacher, actually.

And there are quite a number of algorithms used for a variety of optimization functions, all of which involve simple algebra. Differential equations are hardly required to perform simple optimization. I suggest you take a class in something called "Operations Research" or a similar such topic. "Discrete Mathematics" also covers several optimization and organization methods, again all of which require only simple algebra. Or you could simply research the topic yourself through the internet. If you're that keen on over-thinking it, more power to you, but the easy methods exist for a reason. Namely, to make optimization accessible to folks who don't want to go through four levels of Calculus. :P

I think the jury is still out as to what publishers have and have not set themselves up for. As I stated, the price has gone up, and will continue to go up. They will be cost gated because it is cost gated NOW, right now, TODAY. Additional content will be sold continually to support the initial purchase.

This solves market over-saturation, maintains a used game scheme, and supports the digital distribution models. What is there to change?

This is the sort of thinking that has led the developers to record losses in the past month, and a significant drop in overall sales. "Our model seems to work so let's keep using it". But it's *not* working if your sales are dropping, is it? Something clearly needs to be changed.

Need more facts to make informed decisions. If it was as simple as reducing the price to cash in on more $$$ it would of already been done.

Nope. You seem to forget that common sense isn't that common. We're in a weaker economy than we were last decade with more families in financial strains than ever before, yet the prices are higher than ever. This is obviously not a model that should work, and it won't continue to work. Or, if it does, we might get to bear witness to the next big crash.

Here's hoping the government won't bail out the video game industry too.

Kuth:

JohnnyDelRay:
As much as anyone here might like to think there will be a "crash", or that the greedy game publishers will suddenly come to their senses and see the err of their ways, the truth is, Diablo III just broke the record of pre-ordered sales, so NO, game sales are not in the slightest bit hurt by high prices. Maybe there haven't been as many "must-have" releases as of late compared to the Skyrim and ME3 launches, but the ones that are supposedly hype-worthy will still sell at prices deemed appropriate.

What other market environment, other than rabid fandom, would a company be daring enough to try the crazy DRM implementation, DLC bullsh!t and everything else they are doing if they had the slightest doubt in success. So, nice call guys, but I have the feeling gaming will go further into the "luxury" category rather than come out of it.

I don't think so. What we are seeing now is a larger range of price tags appearing in the market. AAA titles are down, but a large amount of smaller companies seem to be grabbing dough and making a decent profit in this new era. This is just me observing the PC market, but there has been an increase in cheaper, high quality titles on Steam and other distributors as of late. It seems that 20 dollars is the new 60, by making a decent budget game with most people are perfectly fine about, much like how movies are produced now.

AAA titles may indeed go into more of a luxary model, but I am theorizing that the rest of the market will go and appeal to a broader customer range with leaner price tags.

That's an interesting point actually, I get kind of caught up in the shitty things happening in the industry I tend to overlook some of the good, or at least hopeful. It would be good to see if they don't get steamrolled and actually make a living, starting up new genres and creative, daring ideas, instead of going into the saturated genres that already exist. And not being subjected to the crazy policies of EA, Ubisoft and the like.

Hopefully the climate doesn't force this kind of outcome, I'd like to see more evolution into great IP's such as CD Projekt, and I'd like to see more console support. That would definitely level the field a bit, but no doubt the giants will continue doing what they're doing as long as it keeps making tons of cash.

OK... as a guy studying economics (fun, fun) I'll just leave this here.

image

Now, the video games industry is hedging its bets that the video games market has Inelastic Demand. This meaning that they hope they will gain more money:
Selling fewer products at higher prices - Graph on the Left
Instead of
Selling more products at lower prices - Graph on the Right

As video games have pretty much infinite supply in the long term (which is something economics breaks upon hearing as it is just an insane concept not meant to exist) they may as well fetch for as much money as they can get.

The method to do this? Sell a game at $60, and then allow that price to fall and fall and fall over the next months so that a year or two later the game is $10. Basically you are paying the higher prices in order to play the game a year in advance. However if you pick the game up a year later, then you pay a low price while the developer and publisher are still getting some money, rather than the Used games market (I'm a PC gamer and have little taste for it, possibly out of jealously).

Now in this scenario EVERYONE (but retailers) WIN! The consumer gets lower prices for older games, and the publishers make lots of money and can dent the used games market by LOWERING THEIR SELF ENTITLED PROFITS.

Sadly this won't happen as the publishers are mostly assholes :D

While the argument sounds convincing, I'm not sure i agree with it. Video Games Sales took little more than a miniscule dent in 2008 during the Global Financial Crisis, the one time you'd expect luxury goods to be eliminated from household budgets. I mean, sales actually increased during 2008:

http://au.gamespot.com/news/npd-2008-game-sales-reach-21-billion-wii-play-sells-528m-6203257

And as for the Decrease in Sales in the U.S during April, i doubt its due to people suddenly being unable to afford luxury goods such as games, seeing as prices haven't gone up from last year and the American Economy is relatively stable for now.

Lower price is what encouraged me to purchase The Walking Dead, a game far better than most AAA titles these days. Many indie developers are finally realizing that lower price = more sales and less piracy. Usually enough that it balances out, and gamers are more happy, plus you have more people playing your game.

animehermit:
I do love how Jim falls into a pretty big logical fallacy here. Just because sales for 1 game is down, doesn't mean that sales for games as a whole is down.

Also: there are plenty of alternatives if you can't afford to buy a AAA game, for both console and PC. Like Diablo but can't afford it? How about Path of Exile (free to play) or Torchlight 2 (20$)? There's a swath of cheap games on the PSN and XboxLive Arcade that are well worth the modest investment.

Indeed I would make the arguement that gaming is at the cheapest it has ever been. There are so many options now if you're a gamer, that simply did not exist 10 years ago.

Uh, no. He gave a graphic example of the best selling hardcare game selling way less than one of the less successful games of last year, so it's not just the sudden dropoff of casual gamers from Nintendo basically giving up for the past 18 months.

Yes, it's great on PC, but Consoles are getting utterly shafted without lube. Almost every game has huge parts of its ready-to-go content that was supposed to be in the game gutted and sold back to you, it doesn't matter if it is on the disc or not, it was supposed to be there. Xbox Live Gold membership has gone up to $60 per year.

Here is the problem. Games didn't used to Cost $60. A relatively short time ago in the days of Playstation 2 and Original Xbox they were $50 at most and $40, there has not been significant inflation since then. The $60 price point for the "next generation" was accepted as the early adopters were generally more affluent to blow $400-600 on a new console and then even have a HDTV to use it, $60 seemed "worth it".

But that was when it was small install base. Now it has gone from about 10 Million to over 100 million current-gen console owners, only now they are asked to pay $60 at an absolute minimum for every game, new. Used games, that were supposed to be a pressure release valve has totally blown off the bolts, it was supposed to be a side business so the less affluent can get a hand in, instead it has become so well established the markdowns aren't that great but VITAL not just for those in dire straits but just those on average income. Average income has actually fallen since 2005 yet games cost 20-30% more than before.

Steam sales show how sales seem to be on an asymptomatic exponent with price. A small price cut hugely increases sales above the money lost from lower price point, while a price hike crushes sales sales nullifying the extra revenue per game.

PC has some good games for a low price but consoles do not. Sony and Microsoft won't let a game like Syndicate be released on XBLA or PSN for only $20, they say they must release it on disc where when everyone else had had their say with publishers too you know it is $60 minimum plus several dollars of DLC that should be on disc (or is and is arbitrarily locked).

It's interesting the Video Games crash in 1983 didn't really affect computer gaming, it continued along on its path of steady growth. I'm worried there may be a console gaming crash caused by all the bullshit on consoles and it being sparked by a totally botched next-generation transfer. It could get out of control very quickly and like musical chairs when the music stops a lot of people are going to find themselves without chairs.

Zom-B:

Do you know what other things people keep buying that are too expensive for them? Cars and houses. There was a huge subprime mortgage crisis in the USA during the 00s (http://en.wikipedia.org/wiki/Subprime_mortgage_crisis) where lots of homeowners purchased outrageously expensive homes and then couldn't keep up the payments as the economy collapsed. But homes still sell. There are entire TV shows devoted to repo men where you can watch them repossess "luxury" cars from people who can't afford them. By now you'd think that every single American would have a vehicle and yet new cars continue to sell year after year, despite costing tens of thousands of dollars.

I don't think that anyone is arguing that current game prices are going to collapse the industry, but we'll definitely see it shrink if publishers continue to adhere to a $60 price point + DLC run wild. Gamers will focus on sure fire games that they really want and it's DLC in favour of indies, new IPs and less popular genres.

And regardless of whether or not prices have come down in relative terms, $80 for an NES game in the 80s and $60 for a PS3 game now is moot. The fact is that both prices are too high and a lot of customers have trouble or are uncomfortable paying either price. The industry was wrong then and it's wrong now. If it wants to stay healthy it's in it's own best interest to keep it's products affordable and in consumer's hands, not up on a shelf, unsold, waiting for "rich" people to buy them.

That being said, Sober Thal's comments were trollish and ignorant and I've got no problem calling out someone when they engage in such flamebaiting.

There is a difference between houses, cars and videogames. No matter how much homes and cars cost people will buy them as they are necessities. People will go into debt to own a house as they need somewhere to live, the same way you will go into debt for medical bills, food etc. Somethings you need. Games are not on that list. Houses get more and more expensive to the point where people cannot afford them and they are over priced, then prices come down.

Games are affordable, demonstrated by the millions and millions of people who buy games. As I said, the price of new titles has come down in real terms. If games were now 120 I think sales would nosedive so its hardly "moot". Games are more affordable now and interestingly more games are sold now. There is also a mix of price points for games so no one is excluded. Games are worth whatever people are willing to pay for them and they are selling pretty well at $60. You say the industry will shrink if the 60 price point doesnt change but its been there for a while and seems to be doing fine.

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.

Halving the price doubles the amount of sales you need. Wealth is spread hierarchically, though, so, the amount of people with a low disposable income is much larger than the amount of people with high disposable income. Thus, in theory, the lower price doesn't only yield twice the possible sales, but far more.
The thing in question here, to get this ironed out, is the demography, though. We really need to pull studies on that for once, not on the basis of people who already bought the games, but based on the people interested in the game to begin with.

That said, I'm gonna stay out of that whole "games are a luxury" thing ... Mainly because I didn't watch the video (as I really can't stand Jim sometimes, regardless of how reasonable he is).

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