Why Games Will Only Get Cheaper

[La Barata]

Well written.
Well written, but completely wrong.
There's really not that much to say that other people haven't already, but I'll just add this.

Video games aren't expensive because of the used market, the cost of making games, the alignment of the planets or any other buzzwords the publishers might throw out to smokescreen themselves. Video games are expensive because they know we'll pay it.

Prices won't magically drop because we give corporations a 100% monopoly. In fact, they'll most likely increase them, because they'll then have no competition whatsoever and may charge whatever they please. This is what a monopoly DOES, and why it's illegal.

If you really think that microsoft and their new VCR has our best interests in mind, heck, if you think they care about anything aside from their profit margin, then I'm not really sure whether to call you idealistic or naive.

 

[Colt47]

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.

This article is kind of a rehash of older arguments that have been thrashed to death multiple times. Really, the future is going to be determined by how successful kick starter and independent "big budget" games compete with the major publishers.

 

[TrevHead]

Sure the cost of living has gone up for the bare essentials but that doesn't totally excuse the fact that CONSOLE games are cheaper than 15-20 years ago.

In an ideal world games would be priced accordingly so that quality games can be charged more than normal mediocre games. However the world isn't perfect, most customers couldn't tell real quality even if it smacked them in the mouth and even then there are different things that ppl see as quality. Most ppl judge a game by how sparkly the eye candy is and how many hours it takes for a single playthrough. A much small number of gamer like me judge quality in a different way, the core gameplay, controls, level design and balancing of any score systems.

Imo I don't think we will ever get away from current pricing trends, ie the most popular games can get away with charging the most even if it's just a slight tweak on a yearly release or a MP game that's just a few arenas. On the otherhand we have retro styled games where most gamers feel ripped of with a AAA $60 2D platformer like Rayman Origins and instead are fine with a $10 indie game that does much the same things but not as well. Or there's savy gamers who know that any niche boxed game will be in the bargain bucket a month later so why pay $60 at launch.

Faced with such a market it is little wonder why so many AAA and mid tier game studios have closed shop this past few years. In that light I don't blame devs and publishers for putting in hidden charges into the games like DLC, passes, skinner boxes etc to con gamers into paying extra.

Maybe the answer for some niche games is to copy what Altus does, small print runs of premium priced games that are unlikely to become bargain bin fodder but rather collectors items. Maybe then devs can start to put abit of quality back into their games.

 

[Haakmed]

I don't agree that digital games will make games cheaper. Yes it works on the PC because you have options where you can go to buy games. If a console becomes digital only you now have a monopoly and you start alienating some of your customers. But hey the publisher, developers, and the console makers get more of the pie and everyone else gets shafted. But then again a soul may be found within these people. Sooo....give it a shot, I may be a customer after you prove to me that your looking out for your customers.

 

[Bruce]

There is a basic fundamental error in your logic. What governs selling price is supply and demand.

Take out the used market and suddenly you've got less supply, and more demand. Any first year economics student can tell you straight away what will happen - the price will go up.

This did not occur in the PC market because Steam is not the only online shop where you can buy games. At the same time Steam was setting up, there was still a vibrant disk-based market, and other people were setting up digital store-fronts with the same idea, effectively increasing supply.

With consoles, each one will be tied to one store-front, which means that each one will effectively have a captive audience. The cut costs involved in digital distribution won't translate into lower prices, because cost of sales does not in fact govern the final price of a product except so far as setting a basic minimum.

 

[RandV80]

Personally I don't see how some of the used markets listed as examples are comparable. In the game industry a used game can show up on the shelves within days of a new release, and then competes directly against the new release copy where there is no discernible difference between the quality of the two, for only a few dollars less. This is the business model Gamestop has shifted to over the last 5-10 years.

With vehicles, the new car dealership isn't really competing with the old car dealership. Automobile manufactures really have a sweet setup going on for them in society, as a car is typically seen as a 'status symbol' in our society. If people can afford it they'll buy a new car, used cars are for those that can't, and I really doubt a persons thought process is "I'm paying $20,000 now, but in 5 years I'll be able to recoup $2,000 when I sell my car." With gamers its a matter of weeks/months when you recoup your loss, car ownership it's years. Also when someone buys a used car it's going to come with a greater risk of breaking down and requiring some work, which means the mechanic will probably be ordering parts from the manufacturer so they're still making money off of it. So do they really take resale value into account when selling you a car? With so much real competition it seems like something that would get weeded out.

Also music, I don't think anyone's going to care about being able to resell a single song. It works on iTunes because you're starting with something that's such low value.

Anyways, it's pretty obvious why video game prices have come down. If I make a game that costs $1,000,000 and will sell 100,000 copies, then make a game that costs $100,000,000 but will sell 10,000,000 copies, sell them at $50 each and you've made the same amount of money. Video games are software, and with software the vast majority of the costs goes into R&D and marketing, the actual physical copy you produce probably costs pennies. It's all about how much you're going to sell, and the video game industry has grown a lot over the years. Also factoring into the costs they probably saved a ton switching from cartridges to discs, those old cartridges probably did cost a few bucks to make back in the day.

So the real question for today is, has video game sales/growth stagnated? Development costs have gone up, but if people aren't buying more you have to either raise prices, cut your budget, or take a loss. And no one wants to be the first to raise prices. But then again, if it all goes digital I doubt anyone will want to be the first to lower prices as well. Much easier to say "game development cost has skyrocketed, we need the extra savings from cutting out the middle man to stay in business and continue making AAA games". Now I'm totally onboard with Steam, but don't forget that Steam is a privately held company. Gabe Newell can do whatever the **** he wants and doesn't have to answer to anybody, so if he believes in passing the cost savings onto the consumer then we when. All the other big publishers and console makers we're looking at are usually publicly held corporations, meaning they need to answer to their shareholders and shareholders always want the immediate profits. They're only going to do what Steam does if it makes them more money, and someones going to have one hell of a time trying to convince them that it does... and maybe they'd be right it doesn't.

 

[008Zulu_v1legacy]

I am curious as to what country the author lives in where a purely digital distribution is a viable option, because it's certainly not Australia, New Zealand, England, Mexico or most of South America.

 

[Sarge034]

Why Games Will Only Get Cheaper

Do you remember how much games used to cost? No? Well, they're only getting cheaper.

Read Full Article

I had to stop reading right here, "Imagine if the first-sale doctrine didn't exist, like if reselling any of your possessions was illegal. Wouldn't things be cheaper? We pay up front for the right to resell our stuff, in a way. It's like a refundable tax. When you count something as an asset, it's because you know that at any time you can exchange that thing for money."

To quote you in reply to you, "my naïve little flower" the object of business is to maximize profit by minimizing cost. If you remove the resaleability of any product you create a monopoly. They can then charge anything they want for it. Let's assume for this thought scenario however that the publishers are benevolent. They will keep the same price because there is no reason to drop it and pocket the extra money. It is the same principle as manufacturing companies firing human workers to mechanize the production process. They save money by not having to worry about insurance, retirement, HRO complaints, strikes, human error, ect. The only two costs picked up are initial purchasing cost and maintenance (you could argue a nominal increase in utilities as well if you really wanted to). Yet I don't see those saving trickling down to the consumer. This is the side of "trickle-down" economies that simply does not work.

 

[jklinders]

there are actually a few problems here.

The first and most glaring is that I see no real reason why any publisher or dev would lower the cost to remove the "built in trade in value" if used games were eliminated from the equation. After all we are basically being under charged for the games ( no argument there at all, we are paying half cost from the 1980s factoring in inflation easily) so really once we get used to paying a certain price, it...will...not...drop...period. Best case scenario here is to get a temporary stay on the prices in exchange for losing a fundamental consumer right.

Secondly,it's really easy to extol the virtues of a fully digital version of this media working to cloud based systems but right now and maybe forever it's stupid. Two reasons for this. One, not every market has access to broadband and the argument could be made that T-1 or better would be needed to make this truly fly. I can't get t-1 here and will be shocked if it become available in my lifetime and I see server stutters as it is on my current speed. So keep cloud gaming out of this until a proper broadband becomes fully widespread.

The second issue with cloud gaming is that it is a hacker's wet dream. The less physical control you have over your property and information the easier it is to exploit. I'm not ready for that yet as there are too many security outfits who brag about their "impenetrable security" only to get a lot of egg on their face when a proper hacker shows them how stupid they are.

Bottom line prices don't go down in this brave new world, we will pay one way or another more and more. The changes will come but don't try to bullshit me about the outcomes. It makes you look stupid to lie out your ass in trying to do so.

 

[Something Amyss]

After all we are basically being under charged for the games ( no argument there at all, we are paying half cost from the 1980s factoring in inflation easily)

And what has happened to our buying power in the same time?

Spoiler: it hasn't risen with inflation.

In a vacuum, there's no economic contest. In reality, inflation isn't much of an excuse.

 

[Something Amyss]

This is the side of "trickle-down" economies that simply does not work.

Unless you count the rich pissing on us. >.>

"Trickle-down" economics works as intended, though: it's a philosophy designed to market rich people to poor people.

 

[jklinders]

After all we are basically being under charged for the games ( no argument there at all, we are paying half cost from the 1980s factoring in inflation easily)

And what has happened to our buying power in the same time?

Spoiler: it hasn't risen with inflation.

In a vacuum, there's no economic contest. In reality, inflation isn't much of an excuse.

Irrelevant. the hobby is cheaper now than it ever was. I can get a gaming machine for less money than was possible in the 80s. That is not adjusted for inflation that is dollar for fucking dollar. Buying power is lower but that is due to everything else going up at the rate of inflation.


And about talking about facts in a vacuum, it is more expensive by leaps and bounds to make a game than ever and cheaper in real money to buy them than ever. You are not making any sense.

Gaming has gotten cheaper over time. You fail at math, history and economics combined. Good show.

 

[RoBi3.0]

I really dislike this article because it makes assumptions that simply are not true the first being that there is a built in your going to resell this "tax" in products. Sorry but that simple is not true. Products are sold for absolutely as much money as the seller thinks they can get for it. Executives do not sit around in meets going "Man I really just want to sell this game for 30 dollars but we have account for the probability that it will be resold. Unfortunately we HAVE to add another 30 on to it to recoup sales." As long as people are buying games for 60 dollars publishers will sell them for 60. It is extremely foolish to assume that any company is willing going pass up profit because it suddenly costs less to make something. Companies are out to make money not be altruistic, if they don't have to drop prices they won't.

Also, music didn't become cheaper because digital suddenly made it less expensive to produce. Music became cheaper because digital made it easier to file share and customers who were feed up with extremely overpriced Albums, stopped buying music all together. Have people already forgotten about Napster? The music industry panicked crapped themselves started suing tons of people, then realized that it needed to changed.

Second Steam games are not cheaper overall. Day one and for quite some time afterwards they sell for the same price as other PC games. Yes, Steam has great sales but that does not equate to a across the broad drop in game prices.

Edit: subscription services for games are probably not the way of the future. You only need to look to MMO to realized that trend is dead in the water.

 

[Elate]

This article seems highly naive to me. We only have to look at things like Origin to see that even when a publisher has less costs involved, they don't reduce the price, even when they have competition like Steam, they don't reduce the price. They're greedy, and I don't think that will change until we see some major shifts in attitude.

People have already pointed out that Steam takes it out of the publishers hands so that isn't a valid argument, but Origin? EA owns and runs that, so it's a prime example of how lower production cost doesn't equate to lower prices.

EDIT: Also saying that's it's cheaper now than the 1980s, isn't saying much. It was a brand new medium then with a small market, they needed to charge more to recoup their loses. Now? Not so much, the prices have stabilized because the market has increased dramatically, gaming is now almost on par with television. Hell, they've been relatively stable since the PS1 era.

 

[gamegod25]

Games cannot get more expensive thats for sure. Aside from the very rich and privileged few people could afford to spend more than $60 for a single game, not including DLC and whatnot. Not to mention that digital distribution cuts out a lot of the costs with selling physical copies (materials, labor, shipping, etc.) so there is no excuse for them to be have the same price.

If "AAA" games decide they want to charge even more then I'll just look elsewhere for my entertainment. I enjoy videogames but I enjoy having food and a roof over my head more...

 

[Shamanic Rhythm]

Wow. Apparently this blew up a little bit. So much that I'm compelled to respond one more time. Yay!

I really, really think a lot of people saw the title and just decided to comment without reading. Because some of you are arguing the same things as me and then saying that I missed something. For example:

Sorry to quote a long post, but all of this is important, and shows a much more accurate understanding of prices than the article. 'resale value' isn't something with production costs that firms need to recoup. New prices are pushed up by resale because consumers value it. Prices of items without resale possibility aren't lower because they somehow cost less to make. Even if they did cost less to make, that wouldn't lower the price naturally unless we were talking about a perfectly competitive market with many firms and undifferentiated products, which video games very much aren't. No, if items without resale value are priced lower, it's only because consumers aren't willing to pay as much for them.

And when you get down to it, that's what sets the prices of games. What consumers are willing to pay. With real income significantly down over the last few decades, and with a new generation entering adulthood pre-saddled with crippling debt and paying dozens of 'reasonable' monthly service bills that their parents never saw further weighing on their already depressed salaries, the amount of games they're going to be willing to buy, and the amount they're going to be willing to pay for them, will only go down.

That's the driving force that will keep the cost of games in check, and the bloated, stagnant, inefficient, and unwieldy triple A publishing and development industry is going to need to adapt to it or they're going to fail.

Um. This is LITERALLY MY POINT. Of course Microsoft isn't sitting around a table saying "Gee, we should really pass some savings onto the consumer. We're so nice. Big Hugs all around!" It all has to do with what people are willing to pay. The "resale value" of an object is not a literal amount tacked on, it simply means that if we couldn't sell things to other people we wouldn't be willing to pay as much for them. As someone above said, would you care that you couldn't share a Steam copy of Just Cause 2 if it only cost $2.99? My entire conclusion is that devs and pubs need to adapt to this and take advantage of the changing market.

Again, I'm the consumer here, saying, "well game companies are probably going to try to screw us out of controlling our content even more than they already are, but at least it looks like cheaper technology and competition are gonna keep prices down. Hold on one second, let me just rent a song on iTunes's almost-monopolistic service that I love so much for it's convenience. OPPAN GANGNAM STYLE!"

Is that really your point? I felt like I was reading three separate articles with no logic connecting them. The first one claiming that publishers are undercharging us because of inflation, with no mention of the lack of comparative growth in wages for most Western nations. The second one claiming that games are artificially priced high because of the included resale value provisioned in the first sale doctrine, and arguing that getting rid of resale value through digital distribution would automatically make the base price cheaper (which is just plain ridiculous, if you look at the launch prices of games on Steam and Origin). The third claiming that the consumer will ultimately accept any move to digital or subscription based rentals because the low cost and convenience makes them ignore any restrictions and loss of ownership - a point that sits in blissful defiance of reality when considering the massive backlash against the Xbone's DRM.

This overall discussion of how gaming will get cheaper ignores the white elephant in the room, which is the ridiculous cost of AAA gaming. Gaming is already cheaper if you know where to look. While most mobile games are absolute crap, those few gems that are well made are usually only a few dollars. Indie games retail for around ten bucks. Yet no one ever looks at this and realises that consumers are willing to forgo graphical quality for a more focused experience. The AAA development studios have been caught in this bubble whereby they have picked a style of development that lends itself well to marketing but leaves little more than a shell of a game to play, with expensive development costs that need to be recouped at launch. It's a bubble that needs to be burst soon, but most of these massive organisations are controlled by marketing executives rather than gamers, so they can't see the problem.

Overall I'm not sure what to take away from your article. I don't think anyone here is disputing that digital is inevitable. You say that the first sale is representative of a price point that consumers are willing to pay for being able to trade away their game, but that ignores what the costs of development are. You can't compare iTunes to Steam because a Florence and the Machine album doesn't debut at $60 and then eventually move back down to $30 - not to mention that Apple has some bogus regional pricing despite having eliminated first sale doctrine. Really, the only way games will get cheaper than they already are will be if publishers lower the bar for development. This is exactly the point the chap you quoted made, so I think you should consult the dictionary for the meaning of 'literally'.

 

[Strazdas]

My only dissent here is that current network infrastructure does not allow rapid installs of games and the actual size of video games are skyrocketing to multiple tens of GBs per game (Uncharted 3 was 40GB and that's on a current gen console). Steam is seriously helping this with a persistent library that allows uninstalling and reinstalling but the fact remains that US internet speeds are too slow and foreign data caps are too low to make this kind of thing viable or convenient. It will be and on that day I'll be cool with it. Until then, this is significantly less convenient for me than driving to a store, buying a disk, driving back, and slapping it into the system to play.

a thing of note here, as you siad, is that US internet speeds are to slow. the rest of the world can already handle these internet installs. and as soon as US decide to catch up. we wont have to worry about internet indrastructure failing.

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.

Hence why you sohuld never lsiten to forum whiners when designing something. I think the "i'd rather ahve my players annoyed than bored" applies here very well. most people dont really know what they will like from a next game, because they haven though about it. though there is one thing i think i want, and i really do, but our technology is like 100 years till that becomes even a possibility.


P.S. can we cut the crap about our wages being lower than 20 years ago and still being in crysis? because neither of those are true.

 

[Sarge034]

Unless you count the rich pissing on us. >.>

"Trickle-down" economics works as intended, though: it's a philosophy designed to market rich people to poor people.

I would disagree. The business cost cutting side of "trickle-down" economics fails miserably because there is no reason for the company to lower costs when they can simply pocket the extra earnings. I believe the individual side of "trickle-down" economics can be quite effective if implemented smartly. Think of a "stimulus package" type idea that was implemented at the correct time. You can't wait too late into the game to use this or people will simply save that money incase things get even worse. The idea is to provide capital to the market that will actually be circulated. However, this is one of those things that works well in theory, but in practice will probably always come a little too late. There are some other things you can do as well, but the same time sensitivity applies.

 

[Malisteen]

That's less 'trickle down', and more 'rising tide' - an economic philosophy that recognizes that the poor & middle class by necessity spend more and save less than the rich, so giving money to the poor & middle class will spur more activity and fluidity in the markets than giving money to the rich. Corporations and their wealthy owners, shareholders, and executives will still end up with the money in the end, but they'll have to actually make something or provide a service in order to get it, instead of it going straight into their pockets.

It's a philosophy I share. Tax incentives, grants, and the like can make hiring cheap as they want, but if the consumer base doesn't have any disposable income, then a firm still isn't going to hire anybody, because they wouldn't be able to make any more money with the extra productivity those new hires might provide.

 

[the_green_dragon]

You know what grinds my gears? Microsoft (and other people) trying to sell me a digital game at double the boxed price. If they did the right thing and made the digital games cheaper then the boxed product then maybe it wouldn't be a *****.

Simcity 5 with their always online DRM and one use code (no reselling) was selling for full price. HOW DOES THAT WORK?!