Features// Are Games too Expensive

Posted 2 Oct 2009 16:09 by
Activision CEO Bobby Kotick made few friends earlier this year when he announced that the eagerly anticipated Call of Duty: Modern Warfare 2 would carry an RRP of £54.99. He continued to remove his name from gamersí Christmas card lists by adding that if it was left to him, he would raise prices even further Ė hardly a statement befitting a world in recession, but not surprising from an industry feeling the crunch and escalating production costs.

Due to various factors (downloading, competition and other nasties) the prices for music and movies have come down considerably over the past decade, while video game prices have remained relatively constant. Since the early 90s games have stayed at a steady price of between £30 and £40 in stores, with their RRP usually about £10 higher.

In the mid 1990s I paid around £60 for Super Street Fighter 2 and had friends paying over £100 for the title on import from Japan. There were eight selectable characters, no online options and, well if you donít know about SF2 Iím not about to give you a lesson now. Suffice to say, at the time, the price was high but seen as worth it to get the biggest game from the arcades in to your bedroom. SF2 proved to be an exception, but todayís gamers would expect a set of plastic instruments or some kind of Ďspecial editioní tag for that kind of money - a sentiment echoed by ĎMr. Playstationí Chris Deering.

At this yearís Edinburgh Interactive Festival, Deering claimed that to maintain the tradeís current cycle of Ďblockbuster gamesí the industry would need to price them at £70, a price-point that even he saw as impossible due to a Ďpsychological glass ceilingí.

Deering went on to state: ďThe cost of development is ten times what it was for PS2, and more like 20 to 50 times more than on PSOne.Ē

Halo 3 is reported to have cost $30m to make, while Grand Theft Auto 4 set Rockstar back £100m. This is before other costs are taken in to account, such as marketing. Fortunately these titles they sold by the bucket load and more than paid for their inflated budgets. But few titles do so well. A study by Electronic Entertainment Design and Research in 2008 found that roughly 20 percent of video games that make it to market are actually profitable. Forbes took this statistic a step further by claiming that only four percent of games that start production make a profit.

Itís worth remembering that both Deering and Kotick are looking at the pricing and development of triple-A titles and not Wii shovel-ware, movie tie-ins and other off-the-peg games. However, with the aforementioned glass ceiling preventing such a price hike, the industry needs another way to recoup the apparent lost millions. One solution, which has been eating in to gamersí budgets for a couple of years, is downloadable content.

The industry would like gamers to believe that DLC enables them to offer more game for a little extra cost - the truth is that while DLC does achieve this, it also helps boost the bottom line in a variety of fashions.

The obvious tactic is for producers to sell a game at full retail price then later in the productís life-cycle charge extra for content that some believe should have been included from the beginning.

Call of Duty: World at War came packed with 13 maps, with an additional 12 through DLC at a combined cost of £20.40. While it is unlikely that COD: MW2 will come with 25 maps before DLC, it proves that many gamers have little problem paying over £60 on one title, so long as itís done right.

Problems occur when publishers do DLC badly. An example of this is Resident Evil 5ís multiplayer mode that was available for download on the day of release. Christian Svensson, Vice President of Strategic Planning & Business Development for Capcom responded to frustrated gamers by telling them on the companyís forums that DLC has its own budget and profit and loss sheet. He went on to claim that RE5 was great value and gamers didnít feel ripped off before the announcement so they shouldnít be too pissed off afterwards.

The problem with Capcomís method was that the extra modes downloaded at a tiny 180kbs, suggesting that they already existed on the disc and the paid DLC was actually an unlock code. The extra modes only cost £3.40, but the way Capcom marketed them generated a lot of negative feeling towards the Japanese giants who have come under fire for similar tactics regarding downloadable costumes for Street Fighter 4.

Another unfortunate bi-product of DLC is that while it can be argued that if you donít want the extra content, you donít have to pay for it, some titles, like Halo 3, make having the basic package a hindrance when playing online where extra map packs are a necessity.

With publishers playing their DLC cards close to their chests it is hard to know exactly how they budgeted but it is clear that DLC is a healthy and previously un-tapped stream of revenue.

There is another motive behind the industry's adoption of DLC Ė it fends off the secondhand market by keeping the title in the gamersí collection as they wait for extra maps, missions or other digital goodies.

Believe it or not, retailers donít make a great profit from their mark-up of new titles (around 15-20 percent), however, they do profit relatively handsomely from games they buy themselves from bored punters.

Ever had an employee of Game tell you they have a second-hand copy of Street Fighter 4 cheaper than the shiny new one in your hand? This is why they do it and why the publishers hate it. There have been countless tales of industry big-wigs arguing that they should either get a percentage of used game sales or even that punters should be banned from trading in altogether.

While these tactics offer substantial rewards for publishers there is the added bonus for the gamers. Blockbusters like Fallout 3 and Grand Theft Auto 4 have received substantial DLC that have been well received by fans who acknowledge the work that has been put in to extending the life of their games and bought the bonus content in their millions.

There is a camp that argues games are too expensive and lowering prices is the answer. This camp isnít solely occupied by tight fisted gamers; it also includes Valve Corporation, the publisher behind co-op shooter par excellence Left4Dead and content delivery system Steam. In February Valve Software President Gabe Newell said that data from Steam suggested games are too expensive, with a half price offer on Left 4 Dead seeing sales explode by 3,000%. "We sold more in revenue this last weekend than we did when we launched the product," said a rather proud Newell.

The advantage that Valve has over other publishers is its ability to control pricing through Steam. Activision, for its part, is going to have to try the Ďsuck it and seeí method when Modern Warfare 2 hits stores in November.

If Modern Warfare 2 tanks (relatively), it will be unlikely that other publishers will follow Activisionís lead. However, if it succeeds it could open the floodgate to an army of cocky publishers thinking (mistakenly) that if Modern Warfare 2 can sell for an extra tenner, then why canít their latest bog-standard shooter do likewise?

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Comments

Sab 6 Oct 2009 17:52
1/3
Higher price? More piracy! Nice tactic.
Joji 14 Oct 2009 21:22
2/3
Nice feature, Paul.

Indeed, talk about being stuck between a rock and a hard place. Obviously, many of us gamers forget that in this industry, the gears of business turn and churn out our games behind the scenes. As a young gamer (30 is young to me, so sod you), I like to know as many facets of the industry as possible. I remember those days of 16 bit SSF2 very well. Back then there was next to no second hand market, so many of us were stuck with games priced high, for as long as a console was on sale officially.

The result of this, for many gamers, is that we purchased less games back then, because of such awful prices (by the time the SNES officially died, I had about 12-14 games, most of which I got in sales. With the rise of the internet, many of us got sick of that crap, and turned to Ebay and such. Used games are like mana from heaven, especially to kid gamers, so I'm sure that even at present, where the big publishers want shot of this model, at the expense of retailers, I think that the pre owned business will just migrate online. Just think about it for a second. Even if stores were closed and jobs lost, from Game to Gamestop, it would only take the likes of those parties, to group together and buy an online outfit like Goozex, which is primarily aimed at pre owned games. There's nothing to stop this happening, and if this 'messiah' like push for a DLC future comes to pass, it more than likely will.

If you want a good example of this kind of thinking, look no further than Woolworths. The greedy bastard bankers and their recession killed off an established 100 year old brand store. Many jobs lost, shops close and a river of tears flow. Where are Woolworths now? Strangely, while cutting back they have adjusted, and are now selling the unique thing they were known most for.....their awesome pick and mix candy selection, which they sell online. This might yet keep them alive to fight another day. Strange, but true. Poor comparison, you decide.

I think that Bobby Kotick is a cock to be honest. He's probably a nice chap in real life, be he should put that cocky persona he's waving at customers away. As much as we hate corporate bullshitters, bullshitting us, he should know where to draw the line at times. Sure dev costs are high, but not for all games. The advent of Live Arcade and XNA, PSN and Wii Ware, offer cheap dev alternatives, to try out new ideas etc. If more used these means first, costs could be cut.

As for the prices in relation to piracy, that's a hard ship to sink, but other measures can be taken, without stiching the customer up. I think a good one that no one has tried, is to encourage gamers to buy, even if they import a copy of a game, its still a legal sale of goods and they are still getting paid, rather that than nothing at all for a game. They don't have to shout about it officially, but don't come down hard on those that do import a game, as Sony did with PSP owners for buying from importers Lik Sang. And hey, look at that, PS3 and 360 have low piracy rates, due to both systems being region free, but leaving it up to the developer, to choose whether to keep that loop open or not. On PS3 its pretty standardly open, and 360 not so much.

Oh yeah, I heard an interesting piece on some who pirated Batman AA. Apparently when a pirate version was played, part of the code in the game makes it unplayable, creating a glich where Batman's cape won't let him glide, something vital to playing the game. A nice move by Rock Steady, and we may yet see more tactics like this in other games. If done right, it could cut piracy a lot.

But I digress, would I pay £60 for a game? No, I wouldn't. I'd always hunt for a reasonable price, the same way I will with MW2, and other games before it.
headcasephil 15 Oct 2009 15:39
3/3
Joji wrote:


But I digress, would I pay £60 for a game? No, I wouldn't. I'd always hunt for a reasonable price, the same way I will with MW2, and other games before it.


i think £60 for a game is crap but then they no that we will and willing to spend it the only way that games don't stay at the high price is if people don't buy but is that going to happen NO i all so remember the prices that of the 16 bit era i ended up renting from a little game shop wich all so was cool for imports then buying the game meny mounths down the road when the games were put in to ex rentel but still payed a lot for em (mum and dad lol )

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