Why Games Will Only Get Cheaper

[Callate]

Ben Kuchera made almost exactly the same argument when he claimed that the XBox One killing off the used games market was a good thing on Penny Arcade.

Can we spare some time and presume that all the much-deserved scorn that article received also falls on this one?

The ill-conceived idea that game companies give a tinker's damn about a nebulous kind of "value to customers" that never makes a blip on their profit sheets and will pass that on as savings to customers was a far-fetched fantasy then, and it still is.

Likewise the idea that a future with a game industry nearly identical to our present one, only with a magical digital distribution system in place of physical disks, is "inevitable". Stop using that word. It does not mean what you think it means. And if you believe the creation of an expensive system to sell Blu-Ray sized downloads to the limited market that has access to that kind of bandwidth is "inevitable", you're not using the same definition as anyone else.

Here's the metaphor I tend to haul out: movies. They hiked up the price of popcorn, and your ticket got more expensive. They started showing slide shows of ads before movies, and your ticket got more expensive. Then they started showing ads for cars and phone service during the time that used to be trailers, and your ticket got more expensive. Then they gave up on the slide shows and just started blasting your pre-movie conversations with looping video advertisements, and your tickets got more expensive.

Oh, and somewhere along the way, your theater probably replaced reel-to-reel film projector with a digital system!

No points for guessing what your ticket price did in response.

Yes, games are probably under-priced for their skyrocketing development and advertising budgets. Yes, that's a problem. No, digital is not the panacea to that problem. No, I'm not going to "Oh, it's just the way of the world, tra la la" my way along in response to whatever bullshit the companies come up with to prop up their failing market model.

Games will get cheaper when there are fewer people who require a paycheck involved in their creation. That's as close to an inevitability as anyone is going to get. Anything else is speculation, and probably speculation ignoring at least two major hurdles between reality and their vision. And should be treated as such.

 

[Chris Rio]

Hey guys, thanks for reading my words. I've read through every post here and I'll try to respond to what I can.

Firstly, I don't know where in the text I said "I CAN"T WAIT UNTIL THIS HAPPENS!" but that's not what I'm saying at all. It appears some people took my speculation as me cheerleading for publishers, which is not at all what I meant it as. This is just me saying, look, we are probably going to lose some control over our content in the future, so here's the silver lining.

A few people argued that it's the developers fault that this is happening, which is actually one of my points and I said it right in the article. In fact, most of my blame is placed on devs and pubs pushing costs so high that they are FORCED to look for other means of revenue. But I think most people admit that they would also like the best bang for their buck. Would you rather get Skyrim or Assassin's Creed for the same price? Even with the multiplayer, I'd argue you get way more hours-per-dollar with Elder Scrolls.

I think the car comparison is correct (hopefully, since I wrote it). Obviously it's not an exact metaphor, but I was trying to make a point that when the seller knows that you can resell something, they are able to get more for it. Don't you agree that if secondary car markets were illegal that the market wouldn't allow you to charge someone $20,000 for a new car? Games have a resell price built it. No one would pay $60 if they knew they couldn't get cash for a game at any time either at GameStop or online.

I will concede the part about wages stagnating. I'm not an economist and I don't really have a good counter-argument other than the fact that even if game prices as a percentage of wages have been the same (or even going up), I can't believe that someone would pay the same price now for that style game. Most of our Indie/arcade style games now are what the main games were back then, and they are usually a fourth of the price as a "full" release. I still think IN GENERAL you are getting more for your money NOW more than ever, it doesn't really have anything to do with the quality of the game or the features that publishers think you want and such.

Anyway, I appreciate your opinions, and really that's all this article is supposed to be. I'm a gamer too, so why would I want all this crap to happen? It came within a hair of happening, do not think for a second that they've given up.

Thanks!

 

[Ipsen]

I also can't buy that games would get cheaper. Like, at all. Big game companies get big from mainly being corporate, including all of the shit practices that corporations attempt and succeed at pulling. They now compete against each other more than they compete against the times; video gaming is a technology field; there will always be the reach for optimization, and we'll be among the quickest to adapt. Get rid of the bullshit big-business practices, then we'll be fine (hell, then we MIGHT get some cheaper games).

Consumers demand more substance from the newest games, but aren't willing to pay more for the base product.

Really? I don't know what I've demanded more of , or even how I've demanded some of the games we continue to get. Then again, I was always under the impression big companies only hear in the language of my wallet opening or shutting. But if there's another way, you got me!

 

[Darkness665]

An interesting perspective that is almost exactly backwards from the realities that gamers are being bludgeoned with daily, this includes their wallets. First the development costs are not directly related to the quality, value, fun or resale. They reflect the disproportionate costs of the hyper increase of graphic quality. Second, the corporate suit mentality that produce the vile creatures that attach themselves to this business of which Bobby The Kotick from Activision Blizzard is the prime example. A horrible individual that is the nearly the ultimate depiction of greed and zero redeemable features. The problem with an industry lead by such is the values you assume are inverted. The value to the gamer is the Least Important while the return to the Suits is the only value the corporation is concerned with.

The concept that the resale value is built into the price of a car is not valid, nor has it ever been. The process of pricing any product does not include the resale value. The enabling the purchase of a vehicle, house, stock or game that is beyond their current cash is between them and their credit solution. Including the resale value is done by the customer, not the manufacturer, and it is one that can lead to financial disaster.

The world is still in an economic malaise. Disposable income is not higher and it has less value. Fuel is higher, food is higher as is almost everything associated with the cost of living. The truth of inflation is lost on the consumer when their isn't more money left over at the end of month and they are more concerned if they will be working the next.

A truly bizarre article that applies assumptions with no basis in fact to float the concept that games that have shorter play times, larger storage requirements, dramatically higher costs are actually better for the customer while, in actual fact, are a sign that the customer, the one paying for this effort, are getting less.

The only valid conclusion is that PR from some of these firms have convinced one person, the author, that they are providing more to the customer when all they have provided is PR.

 

[Chris Rio]

Really? I don't know what I've demanded more of , or even how I've demanded some of the games we continue to get. Then again, I was always under the impression big companies only hear in the language of my wallet opening or shutting. But if there's another way, you got me!

Right. Not you personally, but when publishers feel the need to throw DLC at you, it's because SOMEONE is buying it. I feel like Activision wouldn't bother releasing 4 map packs for Call of Duty unless they made money. I'm obviously talking about the whole market, not just you.

 

[Ipsen]

Hey guys, thanks for reading my words. I've read through every post here and I'll try to respond to what I can.

Firstly, I don't know where in the text I said "I CAN"T WAIT UNTIL THIS HAPPENS!" but that's not what I'm saying at all. It appears some people took my speculation as me cheerleading for publishers, which is not at all what I meant it as. This is just me saying, look, we are probably going to lose some control over our content in the future, so here's the silver lining.

A few people argued that it's the developers fault that this is happening, which is actually one of my points and I said it right in the article. In fact, most of my blame is placed on devs and pubs pushing costs so high that they are FORCED to look for other means of revenue. But I think most people admit that they would also like the best bang for their buck. Would you rather get Skyrim or Assassin's Creed for the same price? Even with the multiplayer, I'd argue you get way more hours-per-dollar with Elder Scrolls.

I think the car comparison is correct (hopefully, since I wrote it). Obviously it's not an exact metaphor, but I was trying to make a point that when the seller knows that you can resell something, they are able to get more for it. Don't you agree that if secondary car markets were illegal that the market wouldn't allow you to charge someone $20,000 for a new car? Games have a resell price built it. No one would pay $60 if they knew they couldn't get cash for a game at any time either at GameStop or online.

I will concede the part about wages stagnating. I'm not an economist and I don't really have a good counter-argument other than the fact that even if game prices as a percentage of wages have been the same (or even going up), I can't believe that someone would pay the same price now for that style game. Most of our Indie/arcade style games now are what the main games were back then, and they are usually a fourth of the price as a "full" release. I still think IN GENERAL you are getting more for your money NOW more than ever, it doesn't really have anything to do with the quality of the game or the features that publishers think you want and such.

Anyway, I appreciate your opinions, and really that's all this article is supposed to be. I'm a gamer too, so why would I want all this crap to happen? It came within a hair of happening, do not think for a second that they've given up.

Thanks!

Responded like a gentleman. +10, sir.

I dunno, I'm of the opinion we have to draw the line for control somewhere, and somewhere pretty close to how things are now. Adam Sessler stated this in one of his Sessler's Somethings a couple months back, but as far as 'gamers' go in terms of influence in this hobby, we don't amount to much more than consumers.... Feel free to differ, Escapists, but I'm not comfy with that.

Having this hobby for +decade, I've come to learn we've been losing more and more control on the games we 'own' (or naggingly think we own). As IP's become more and more important in this digital age, I can understand. But the one thing that comes with the feeling you 'own' a game (such as by disk) is that you 'control' the game too (at least for me). One can feel a part of the medium, or even create in the medium by simply play (at least for me). It's one of the prime aspects I've found, as an entertainment medium, that set it apart from TV/anime or music (though music is close).

 

[Unreasonable Man]

I'm going to have to disagree on the retail store part, I think they are completely unnecessary and a detriment to the feasibility of making games at a not only affordable but pallet able price. These days people know exactly which game they want to buy and no one browses or has any need of elaborate and costly displays let alone store fronts.

In order for games to become affordable for a greater portion of the market they need to trip the fat, stores need to go and publishers need to go. Publishers are an antiquated relic of a by-gone area, there is no reason why developers cannot publish their own games directly to their intended distribution networks.

Get rid of retail and get rid of publishers and the game will go on.

 

[Norithics]

I really don't like it when people insist that game creators have to do X or Y because "consumers demand it." As somebody who creates things, I can tell you from experience that to remain successful, you've got to give people what they want. Not what they think they want.

This isn't some corporate doublespeak way of saying that you'll all be happy when you're plugged into the Money Matrix; what I'm saying is that "consumers demand" multiplayer and sequel after sequel. If you just listen to people and give them what they say they want, they'll completely drop off and leave you forever. There's a reason you're the creative person and they are not. Don't condescend the consumer, and don't coddle them, either; read them.

 

[Karadalis]

This little comparison between GTA and Street fighter just doesnt work on a very basic level.

One was mass produced ond a dvd... and one was a module wich was akin to an arcade platine. That is as if you have to build a motherboard for every game copy you produce.

Chips and all included.. in a time when mass producing capabilities werent nearly as refined as today and "globalisation" hadnt set in yet.

So the price you paid was less the programming cost and more the physical medium.

The only way to justify todays triple A budgets is the ease of creating copies via DVD medium and digital sales.. and even then the budgets are overblown to kingdom come.

So no.. games themselves are not really cheaper now... the medium they are printed on is and that is what loweres the price.

I will go out on a limb and say that you pay the same amount of money for the programming of the actual game as you used to.. you simply dont pay for the complex module structure anymore since everything is on easaly mass producable mediums now.

I mean some of those modules back then came with really expensive chips back then... star fox anyone?

 

[Vivi22]

Thank you. I couldn't even get past the first page of this article, because the old "games are cheap because inflation hurr durr" BS really pisses me off. Not only are individual copies cheaper to make than they were back then by an order of magnitude, not only are more people buying than ever before -- also by an order of magnitude -- but wages are down compared to inflation. $60 today may buy a smaller amount of goods than it did 20 years ago, but it also accounts for /more/ of an average person's money. We're in the middle of a recession (really it's a depression but nobody is willing to admit it), these aren't the boom years of the 90's anymore.

Thank you and every other person who pointed out that comparing prices based on inflation alone is only telling the smallest fraction of a story in which the customer isn't really better off at all. Hell, considering the fact that wages alone have stagnated in the last 10+ years, games costing $15 less when adjusted for inflation is not some massive, miraculous dip in prices. Most of us aren't making the same amount that people were 20 years ago.

 

[Gennadios]

Well, we can look at the PC market to see that this has already resulted in huge price cuts. Without boxes and shipping, publishers have the freedom to cut out a lot of the middleman costs and provide the savings to you.

There's one small issue, publishers have limited control over what Steam decides to charge during a sale, indie devs already complained the loss of price control.

A more relevant fact is that the lack of boxes or competition for shelf space has to this day had no impact on the price of digital games.

Also, Kesmai came at a time when when very few people owned a PC, much less had the luxury of the internet, games in those days could expect to reach the hands of an elite/hardcore few and priced accordingly, selling 5 million copies of a game was unheard of, and there is no way it would have been looked at as a failure.

Now that gaming is trying to go "mainstream," charging $60 to $75 is no way to reach a large audience, the vast majority of the american public just doesn't have the money to buy more than a few games a quarter at that price, meaning publishers are just cannibalizing each other's audience. There is a market for season passes and all that jazz, but there won't be 5 million people buying them.

Games will get cheaper, but it'll happen after the next video game crash, where the talented few survivors gather in small groups and start making appropriately budgeted indie games.

I'm sorry to say that'll still leave 80% of the remaining industry vets trying to survive on proceeds of fan-fiction commission and selling 3-D animated porn. I just don't think they'll be good for anything else, really.

 

[Karadalis]

Games will get cheaper, but it'll happen after the next video game crash, where the talented few survivors gather in small groups and start making appropriately budgeted indie games.

else, really.

That sounds like a weird plot for a zombie apocalypse movie in the game industry....

 

[Gennadios]

Games will get cheaper, but it'll happen after the next video game crash, where the talented few survivors gather in small groups and start making appropriately budgeted indie games.

That sounds like a weird plot for a zombie apocalypse movie in the game industry....

I think there's one going on already. The first sign was when I unlocked Mass Effect's N7 armor for Dead Space 3. I just couldn't tell the difference between those two games/franchises after I equipped it.

 

[stabnex]

I'm pretty sure the article meant to read "cheaper in quality" because while games are significantly rising (as a prerequisite) in visual quality, they are losing meaning, boiling down to the safest possible mediocrity allowed in this multimillion dollar industry where any risks are viewed as "loss of profit" from every corporate angle.

I'm sorry, but my used game purchases have only gone up. Adjusting for inflation may make a compelling argument for those who care about such things, but I've only bought VERY FEW games new this console generation because of rising prices. 99.99% of my game collection was bought used. I think the only two games I bought new were Bioshock Infinite, and Skylanders Giants, if that tells you anything about game quality/expectations. I didn't even bother to buy the last 2 Assassin's Creeds because of the stagnation the series HAD to have been suffering by then.

My WiiU is still a purchase I'm proud of. Every good feature of the upcoming generation is already built in, they're just waiting for the other two children to come out of their proverbial closets to release the good games.

CAPTCHA: get your goat
?!

 

[Lightknight]

People always cherry-pick their numbers from the early 90s and then adjust them for inflation as "proof" that the market has always been dropping in price, but the reality of the situation is that they've been steadily increasing on most games. Games in "the olden days" varied much more greatly in price because of the medium they were using, as bigger games required more chips in their cartridges which required a higher cost. But the "standard" game was relatively inexpensive. As the "Big Three" all swapped over to CD-style storage and everyone started shuffling towards the "same" relative design, the prices began to level off and steady themselves because developers no longer had to build their games three different ways to make them work for each system. Compare the range of prices on, say, the NES to those of the Wii and you'd find that it's a much smaller range of values. It's a relatively weak argument to compare to prices in the 90s because everyone was using such vastly different media for their games.

Not to mention that adjusting for inflation is a fallacy in and of itself, as it implies that games have been dropping in price when in reality, they've just been increasing at a rate that's much slower than the rate of inflation on money. That doesn't mean "they got cheaper", it means they didn't grow in price as fast as inflation did. In fact, electronics generally tend towards the opposite of standard inflation trends (they appear to "drop" in price over time using inflation, when in actuality they're still roughly the same price they were before, or at times priced even higher), so using inflation as a basis for your argument is a fallacy by the grounds that standard inflation doesn't apply to a non-standard product like electronics. I'm betting if you plug food costs into an inflation calculator, they're higher now than ever before.

This "games are getting cheaper" argument keeps getting trotted out on a regular basis without any actual thought put into it from a practical standpoint. Yes, after inflation, a game that costs $50 from the N64 days can be made to look like it "cost more" than today's $60 games, but that's being somewhat dishonest with the numbers. A larger percentage of our money goes towards essentials (which have grown much faster than the rate of inflation), leaving less discretionary income. Thus, retailers have had to increase their prices at a slower rate to make their products more marketable and available to a wider audience. On top of this, pricing has tended only to change after the introduction of a new generation, which means every couple of years....whereas pricing on other products generally change whenever they want or need to.

Pricing isn't dropping, from a practical standpoint. It's just increasing at a much slower rate than most other products, so as a result, the hobby has become more affordable than it used to be.

I think the biggest point is that the gamer market has blown up. It's many times the 80's and 90's so even a 50% reduction in actual game prices doesn't account for just how many more copies are being sold to a market that simply wasn't this large ten years ago.

 

[Shuu]

This is all good market science, but it does still come across a bit... not naive, but very... "optimistic".
As Mr. Sterling pointed out several weeks/months ago, should the industry eliminate the used market, competition is removed, and the publishers now have a monopoly, and monopolies can be very dangerous for the consumer.
Considering the majority of the games market refuses to restructure its pricing now, when it desperately needs to, is it sensible to expect it to lower its prices when it no longer has to?
Should the used market be eliminated, the amount of people who cave in and buy their games at their current full price, even if they buy fewer of them, may make up for the people who will simply stop buying games outright. That might be how the larger console market might think of it.
It's very interesting, what you're saying about the price of the resale being built into the initial purchase, but the man on the street hasn't considered that, and the industry knows he's not considered that, and may feel comfortable assuming he won't see why he should be outraged if the used market goes, and game prices stay where they are.

It's a sticky situation, at the moment the people who don't resell their games get ripped off, because they're still buying at prices that assume they will (the current system almost encourages people to sell their games... jesus christ) But the future you're proposing, conversely, would suck for those who do want to resell, as they may be getting better prices (if there's any decency left in the market) but it's not their choice to make that trade off.

 

[Brotha Desmond]

Games won't get cheaper with digital only. Since when did lack of competition lead to lower prices?

 

[Lightknight]

This is all good market science, but it does still come across a bit... not naive, but very... "optimistic".
As Mr. Sterling pointed out several weeks/months ago, should the industry eliminate the used market, competition is removed, and the publishers now have a monopoly, and monopolies can be very dangerous for the consumer.

That isn't true. The game publishers will compete with each other for our money still. Competition doesn't require a used market to exist. The hotdog industry isn't about to fall over because you can't eat my hamburger after I've consumed it. Well, not in any civilized manner that is...

I don't think Jim said it would eliminate competition either. Just that it would ultimately harm them as the used or discounted market is where people find a new series they care about after playing but otherwise wouldn't have tried for the first time at retail price.

Games won't get cheaper with digital only. Since when did lack of competition lead to lower prices?

How is the second hand market more competition? You're talking about the same number of game publishers in both scenarios. There is no less competition. Why would you think that game stop is competing with a publisher like EA? All it's doing is taking EA's work and reselling it multiple times. Whether or not you agree with that practice it's still not competition. They aren't in the same market. Publishers are in the game software business, retailers are just that, retailers.

If you only had $60 bucks in your game buying account and had to choose between two games, let's say Bioshock Infinite and Dragon Age II. Let's also assume you actually like one of those more and they are the same price. You'll likely buy the one you want more. That's where competition in the gaming market is.

 

[Seracen]

Respectfully, I must disagree with some points this article. I won't reiterate what has already been eloquently refuted, so here's a quick blurb.

So often, the arguments presented place the entire onus on the consumer. Bloated business practices are as much to blame as consumer demands.

I still don't believe games will get all that cheaper. They've been promising this forever, with little result. As Jim Sterling is wont to point out, EA stated years back how they said the market couldn't sustain a $60 model anymore, they had to go lower.

Well, they can't, to be sure, but neither have they lowered the prices. Instead, they often monetize an already premium priced product. I'll refrain from rambling further, because if I don't stop now, I'll end up writing a thesis on the subject.

I'll close by asking: why shouldn't consumers demand more for their money? Often, in these cases, competition breeds quality & value.

 

[grumpymooselion]

I find it funny you chose to note 75 versus 59.99usd, and then forgot to mention the in between period, for a decent time, in which new top price games cost 49.99. So 75, then 50 and then 60. Then again I also remember gobbling up adventure games in the late 80s and early 90s for the PC that cost anywhere from 10-30usd new, so, it's all relative. Prices tend to be specific to a particular format, those 75 dollar games were typically cartridge games which were just more expensive, overall, than a game off a floppy disc or CD ever was.

Maybe I am spoiled these days, but it doesn't change the fact that when a game gets knocked down to 5usd from a much higher price, off one of Valve insane sales, I'm a lot more likely to buy that than a 60usd game. It's just . . . common sense. If I can get just as much fun and content out of a 5usd game, why would I turn around and buy the 60usd game with no more content, and just as much fun? In all honesty, some of those 60usd games are so short, and railroad track linear compared to some of the cheaper games now that . . . it goes from common sense to being the outright choice, with exception in only the rarest of new games these days. Do I buy a supremely price reduced Fallout New Vegas (the edition that has all its DLC included, no less) at 5usd total, on Steam today, or do I buy the new 60usd linear shooter #3534634 that's 6 hours long?

Gee. I wonder.