Jan 19 2009

A Philosophical Question About Video Game Prices

Published by at 1:00 pm under News,Video Games

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Pictured: Peter Molyneaux

I’ve heard this question touched on briefly in the past, but someone on a Steam forum logic-ed it all out for me in a very coherent fashion. Read through and tell me if you have an adequate explanation as to why this continues to happen:

“Can somebody please explain to me how charging $50 for a videogame is still feasible?

Before I start this rant let’s all rewind about 2 decades: The standard MSRP price of an NES game at release is roughly $60 to $80. This makes sense because the market is still somewhat niche, and all those talented software engineers have to pay off their student loans somehow. Also, this has to make up for the overhead of producing the actual cartridges which then was exponentially more expensive to produce plastic encased circuit boards than it is today to produce disks, or in the case of Steam digital distribution, bandwidth/server costs.

Now let’s return to the present. Grand Theft Auto IV tops every single box office smash of 2008. $400 million its first week, and currently surpassing billions in sales. 2008’s box office smash “Iron Man” grosses $318 million in total, roughly 75% of GTA IV’s first week sales. The budget for the GTA IV was $100 million, while Iron Man cost an extra 50% to make at ~$150 mil. What we can tell from these figures is that though comparing the top grossing products for 2008 don’t make an entirely comprehensive and conclusive statement about the respective markets’ relation to one-another, it does suggest that they’re becoming equivocal. At least I know far more people who own videogaming paraphernalia than a blu-ray player

Iron Man cost $7.50 to see in theaters, $10 to own on DVD, and $17 for the special collectors edition on blu ray.

GTA IV, 9 months after release, still costs $50 over steam, a medium in which there are absolutely no shipping or factory costs to distribute.

The enormous markup on videogames is no longer relevant, especially with the quality of them turning the way of hollywood with an emphasis on aesthetics over depth (but that’s round-robin argument for another time).”

It is kind of a puzzling mystery no? I think it’s most due to the fact that they charge $60 because they can. They’ve been doing it for so long, why would they knock down prices if they’re still pulling in $400M weekly hauls for new releases? It’s partly some form of collusion as well, because if PS3 knocked their prices of titles in half, I bet it would lure some people away from Nintendo and Microsoft, but not enough to make the price cut economically feasible.

The high prices of games is a deterrent to a young gamer like myself. I’d love to play (and review) every title that comes out, but my only options to do so are:

A)  Go broke.

B) Sign up for Gamefly and hope they can succesfully deliver the game to me by the time it’s still relevant.

C) Buy, beat, then return to Gamestop for half price, cross fingers no good DLC comes out (the current philosophy). **** I need Fallout 3 back.

I feel that a price cut would drastically reduce the resale of games to places like Gamestop, something that video game companies keep bitching about because they get no money for it. If I buy a game for $60 and sell it back, then another kid buys that copy and does the same thing, then another kid buys the same resold game again, I gave the company $60, initially, but the company is out $120 extra. If prices were cut in half, the company would have made at least $90 selling three new games. See?

That’s the most math I’ve done since college. Let me hear your own thoughts on the matter.





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11 responses so far

  • Chris

    $10 for 2 hours of entertainment ($5/hour)
    $50 for 40+ hours of entertainment ($1.25/hour)

    Seems like you’re getting a heck of a better bang for your buck with videogames.

  • Sean

    Also, many movies are started and completed within one to two years. Most games are in development for a minimum of two years, and on average? four years.

    Plus, think about how much more innovative and technologically complicated video games are.

    Either way, the 360 is modded and all of my PC games are cracked! :) Love the website by the way.

  • http://neonblue2.blogspot.com/ James Madley

    In Australia, US$60 for GTA4 would be a bargain. Prices here vary from US$53 for a new release Wii game (from JB HiFi) to US$80 for a new release 360 or PS3 game.

    Even when the Australian dollar was almost equal with the US dollar our prices remained the same. That would have been about US$79 to US$119 back then.

    It’s really annoying.

  • Xin

    I think saying video games are more innovative and technologically complicated than movies is a bit drastic. A lot of the same concepts and processes are being used in both medias. Lots of work by lots of people go into each one. People tend to think that some guy writes a movie, a director just shoots some stuff on a camera and it gets slapped together by an editor and then Average Joe pays out his ass to see or buy said movie.

    I don’t think the lengthy time it takes to make the game should cause it to cost more. If it costs $100 million to make Game X over the course of, say, 4 years and it costs $150 million to make Movie Y in 2 years, that’s a lot more money going into a project that took less time to potentially more people involved.

    I hear people crying all the time about how a movie costs $10 dollars to go see, but everyone’s willing to shell out $60 for a game.

    Movies also have more potential to stand the test of time. I know plenty of people like to go back and play their old games, myself included. Saying that a movie is only good for 2 hours of entertainment, however, is unrealistic, especially if you’re going to see that movie several times in your life. Many many hours are logged into the various games, but just how much can you really play any game for years and years.

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  • wrathoftodd

    Gamefly is awesome. Totally best option for gamers, most games and best price. I’ve used them for going on 2 years and have fast shipping and has probably saved me $100’s because I don’t buy as many games but end up playing more games than I would have been able to afford. They also sell games for around $40 which is a big plus too.

    Movies are just totally different than video game. Movies make a lot of money in the Theaters, then make more money in rentals, then makes more money on tv. Video games are release and sold, and have no other venue to make money.

  • William

    Only 6 post, really? So does no one read these articles or are we all just given in to the idea that these are acceptable prices. I agree lower the price. I will sooner buy 2 games for 40 or 60 dollars than one for the same. I can go out and rent the new games, and then actually buy once the price has dropped and the new has worn off. Feels kind of nostalgic. The game industry both console manufacturers and game makers rely on games sales for income, but like most in todays failing economy they would sooner go broke than lower the price and maybe break even. Everyone complained about the price of gas so we as a country cut back on our consumption and what happened the prices fail. Same goes for video games or does it? They complain of the used game market well their high prices are the reason for the used market. One other thing not mentioned is so called reply value with updates and such, well they started charging for clothes, weapons, cars you name it. I pay full price for the game I should get a full game, not upgrades I have to pay extra for. There is a happy medium here just no one willing to sit down at the table and hammer it out. GAMERS UNITE, rich and poor, young and old and say enough is enough, we need reasonable priced games. This might also explain the growing indie market right now. These are people who are almost content with just getting their game out there and not so concerned with how much profit they will make.

  • Ace

    When dealing with console games you have to look at one other issue. The PS3 and 360 are sold at a loss. The profit is then made up by the games. Each game is marked up X% to make up the difference and eventually turn a profit on a per gamer basis. People that buy few games or only buy used deny the console makers the break even/profit built into the distribution of games.

  • William

    Ace I respectfully disagree. The so-called loss the manufacturer produces at is very small. Right now Sony’s difference in cost is only about 40 or 50 dollars per unit. That will be made up in no time considering the income from downloads, extras, and so on. Better yet charge me to play online like Microsoft does. There are plenty of channels for them to make residual income for years to come. How about the advertising dollars that will more than likely be generated by vendors showing up in Home. not to mention the future commerce that will surely take place as more vendors join in. We as consumers do just that we consume any and everything, but greed has a way of getting in the way and killing alot of really good things sooner or later. These companies are not in this to break even they are in it to make a profit. Lower the prices and you will increase ownership and decrease the turnaround time to secondhand sales(used games). So what if we have to see more advertisments in game We’ve dealt with that for years now, but if it means a lower price for the gamer then it’s fair. Think about why you pay for cable TV. It used to be because most cable channels didn’t have advertising so somebody had to pay for it. Yet now you pay for cable and have to deal with all the commercials yet the networks with their commercials still broadcast over the air(now in HD) for free because of advertising dollars so why does cable cost so much? Because we have always paid for it. Same goes for gaming. In game ads will increase advertisers will become plentiful in Home and the xbox experience(can you say netflix) and the consoles, and the games will see no real price reductions because you don’t want the companies to not “break even”. Retail is not a pretty business and it does not have the consumers best interest. It is only concerned with getting you to buy at the best price for them.

  • MergedLoki

    “Chris on 19 Jan 2009 at 1:33 pm

    $10 for 2 hours of entertainment ($5/hour)
    $50 for 40+ hours of entertainment ($1.25/hour)

    Seems like you’re getting a heck of a better bang for your buck with videogames.”

    Thats only true if A. I never ever the movie again (a rare thing unless the movie sucks).
    and B. The game is a huge in depth rpg, or something that nets LOTS of replay value.

    Fallout 3. Definently worth the cost as im 30+ hrs in and nowhere near close to beating the game.

    Other games such as Fable II (good game), but short gameplay time.. beat it in 10 or so hours. and haven’t touched it since. No point. I dont feel like starting over JUST to be an evil character, and my ‘completed hero’ is so powerful NOTHING can touch him so no point playin that except to run around and kill things.

    But at least that was a good game. there’s far too many rushed games/crappily produced games (such as almost ANY game made about a movie EVER). that are nowhere near worth their pricetag of $60.

  • http://www.sergiohalaby.com Sergio

    Someone posted this

    $50 for 40+ hours of entertainment ($1.25/hour)

    Makes a good point. Some games are of course less than 40 hrs, and most of them are between 10 – 15 hrs of play.

    So, 50$ for a 40+hrs = 1.25$/hr
    50$ for a 10+hrs = 5$/hr

    Basically, the same concept.

    And at least, you get to keep the game.

    But yea, it is very expensive.

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