Analyst: Activision Price Hike is a "Test" of Consumers
Industry analyst Michael Pachter says Modern Warfare 2 [http://www.activision.com] in the U.K. is a test to see how far it can push consumers.
Activision revealed last week [http://www.escapistmagazine.com/news/view/93238-Higher-Game-Prices-Coming-to-the-U-K] that it will be charging £54.99 (roughly $90) for the standard edition of Modern Warfare 2 in the U.K., a substantial increase over the usual price point for major game releases. High development costs and a weak British currency were blamed for the hike but Pachter says the reality is something entirely different.
"The price increase is a business decision," he said, noting that the British pound is worth more now than it was when Call of Duty: World at War [http://www.callofduty.com/CoDWW] was released in November of last year. "Activision knows it has a 'hot' game, knows that the market will pay an additional 10 per cent, and has decided to increase price accordingly."
"My guess is that this is a one-time test for Activision, and that they will re-think the strategy after seeing if it angers consumers," he continued. "If there is no consumer backlash, I think we may see higher pricing on other games, regardless of the GBP/USD translation rate."
Despite how nefarious it all sounds, Pachter said the higher price isn't necessarily unjustified. Games today are cheaper to buy, he said, but contain increasingly advanced technology, better gameplay and improved online functionality which Activision has to pay to provide. He also pointed out that other upcoming Activision games like Band Hero, Tony Hawk Ride [http://www.djhero.com/] will be more expensive than their predecessors across all platforms.
"The repercussions [of the Modern Warfare 2 price increase] could be significant and lasting," Pachter said. "If Activision is successful, we may see increases for other 'hot' games in the future. We see tiered pricing to the downside for more casual games, so why not tiered pricing to the upside for hot games?"
Source: Eurogamer [http://www.eurogamer.net/articles/pachter-activision-mw2-price-is-a-test]
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Industry analyst Michael Pachter says Modern Warfare 2 [http://www.activision.com] in the U.K. is a test to see how far it can push consumers.
Activision revealed last week [http://www.escapistmagazine.com/news/view/93238-Higher-Game-Prices-Coming-to-the-U-K] that it will be charging £54.99 (roughly $90) for the standard edition of Modern Warfare 2 in the U.K., a substantial increase over the usual price point for major game releases. High development costs and a weak British currency were blamed for the hike but Pachter says the reality is something entirely different.
"The price increase is a business decision," he said, noting that the British pound is worth more now than it was when Call of Duty: World at War [http://www.callofduty.com/CoDWW] was released in November of last year. "Activision knows it has a 'hot' game, knows that the market will pay an additional 10 per cent, and has decided to increase price accordingly."
"My guess is that this is a one-time test for Activision, and that they will re-think the strategy after seeing if it angers consumers," he continued. "If there is no consumer backlash, I think we may see higher pricing on other games, regardless of the GBP/USD translation rate."
Despite how nefarious it all sounds, Pachter said the higher price isn't necessarily unjustified. Games today are cheaper to buy, he said, but contain increasingly advanced technology, better gameplay and improved online functionality which Activision has to pay to provide. He also pointed out that other upcoming Activision games like Band Hero, Tony Hawk Ride [http://www.djhero.com/] will be more expensive than their predecessors across all platforms.
"The repercussions [of the Modern Warfare 2 price increase] could be significant and lasting," Pachter said. "If Activision is successful, we may see increases for other 'hot' games in the future. We see tiered pricing to the downside for more casual games, so why not tiered pricing to the upside for hot games?"
Source: Eurogamer [http://www.eurogamer.net/articles/pachter-activision-mw2-price-is-a-test]
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