rockingnic said:
RvLeshrac said:
rockingnic said:
You do realize that games don't cost, to make, the same in the future than they do in the past. So before, games on consoles were $50, let's say it was $45 to make it and $5 profit margin. But with the technology today to keep up with the times (it's like updating a PC to the maximum each time something better comes out), the cost becomes (just for example, not saying it is) $55 and they make it $60 for a $5 profit margin. By that, they lose money and instead of having the rights to the game as an asset, it becomes a liability and they would close it immediately. I wouldn't be surprise if the cost for a single game and standard retail price, in the future, becomes $100, but in the future the value of a single dollar will drop, that's to be expected.
This makes... almost no sense. I don't mean that your premise is flawed, just that I can't work out what you're trying to say.
If I'm hearing you right, you're saying that each copy of a game costs $55 to produce. That makes sense if you're looking at physical goods, but when you're talking about software, there's no need for a physical item. Additionally, it only makes sense if you can't produce an infinite number of an item - it doesn't cost me appreciably more to sell 10,000 copies of a word document - perhaps a few cents for the bandwidth, and another few cents for payment processing. It DOES cost me substantially more if I need to sell 10,000 copies of a check-valve, because I need to spend money on materials, energy, and time (employees).
The cost includes, new software and hardware, salaries of EVERY person working on it. Any costs of testing (yes it does cost to test), advertising, bills. Bungie has a whole room with hundreds of 360s (both new and old) to test run the games 24/7, seeing any overheating or other performance problems so there's hardware (the hundreds of 360 including newly bought ones), bills (electricity), and more. Basically everything that is required to create and sell a game, even each time someone opens up a soda can so they have the caffeine and energy to keep working in the night so they can meet deadlines. Don't also forget the benefits each person has (like paid vacations) so someone can enjoy coming to work on the game each day. Sure if you love games enough, you wouldn't need any other incentive to work on it but people do need vacations every once in a while so they can be at their best.
Cost accounting failure spotted.
When you say that each games now costs $55 to make, you are ignoring several significant factors in how prices are determined.
There are two types of costs - fixed and variable. Variable costs relate specifically to each unit sold. Fixed costs do not relate on a one to one basis. Variable costs in the case of video games would be the licensing fees paid and manufacturing costs associated with each disc (case, manual, cover, disc). Fixed costs would be everything else you mentioned and anything else you did not mention that was involved in the development of the game
As long as the price of a video game is higher than it`s variable cost, the more copies you sell, the more of your fixed costs are recovered, and the less each copy costs to make. The tricky part with video games is that Nintendo, Microsoft and Sony take an additional fee in the way of a license for each disc. I believe that this license though, is charged only for games sold. Otherwise, you`d only ever see small runs of games made, with more runs done only after there is demand. In addition to that, you have the mark-up that stores charge. Now, I have never audited a game retailer, so I don`t know what that mark-up is, but it does play a factor, and it most likely is less than %100.
So yes, video games could be reduced in prices to something that people view as more affordable, and as long as the number of games sold increases in a way closely matching the price drop (so for a %10 drop in price, %10 increase) it would be fine.
Personally, I buy new games, but I also trade in games to get new games. I don`t like getting other people`s used games, because I don`t know what they did with their hands before handling the manual or case and I hate things that carry that stale smoke smell that you`ll find on the belongings of heavy smokers. I bought a used copy of Legend of Mana once and I could never ever ever play it, because every time I opened the case that odor just erupted and assaulted me.
