Question of the Week Bonus Responses: Next-Gen Games Price Increase?

No, they need to decrease in order to limit piracy. A premium high price at launch, very rapidly followed by a drastic cut could work. The hard core crowd will pay for the privilege of having the game's “special edition” first, whatever the price and the casual majority will be able to buy their games at a reasonable price. When I speak of a drastic price cut I really mean under-30 USD pricing. With the advent of long play life MMORPGS, games must be put in a compulsive buy category, it will not be reasonable for gamers to invest 60 USD in a new game, when their 12 USD subscription fee allows them to get all the pleasure they need. As a consequence, small specialized game shops will disappear. This has already begun happening anyway, in Brussels for instance, where the distribution giants are selling games at cost price to try to cut piracy, leaving the small shops with no margin to do business with. Games will become a normal no margin product for the supermarkets, as the majority of the products they propose (As you probably know, the business of supermarkets being in the interest generated by the money they move and the way they generate cash by paying their providers with a big delay but being paid immediately by their customers at the time of purchase, not in the margin of sales). It is going to be tough times for the games industry, it needs to setup an economic model adapted to the reality of the situation. The prices have to go down or piracy will do the same thing to us it has done to the record industry. To be honest, I might be the only person I know that does not copy games or CDs or DVDs, but I fall short of arguments when normal middle class friends (barmen, cooks, salesmen) sadly confess not being able to afford 60 USD for a game. And to put the finishing touch in my argument, they are the people that play the most. Fewer companies are going to break even. The publisher's attitude towards this trend will be key to the survival of lots of companies. If they don't use part of the money generated by the big sales to support more non-break-even projects, many developers will die off. After all it is their role in the industry and the justification (the only one) for the profits they make when a game is a hit. Consolidating and taking control of the production facilities, as they have done and continue doing, is not in par with their primordial reason for being. This makes the industry's implicit balancing mechanism malfunction, strongly weakening the vital money redistribution process, converging on a higher risk industry and a further concentration of an increasing majority of the money on a decreasing number of actors. These are the real problems of our industry and in addressing them is the only way to significantly and positively take us the next qualitative step of our industry's evolution. Increasing prices is a short term measure that will fail in having any real lasting influence on the broken mechanisms.
-Javier Benito, Oniros Simulations

While it may be true that production costs will probably increase, particularly for the next generation; the price of games is already quite high. In Australia (my point-of-reference) you pay $90-$100 for a new game. That is a fairly significant amount of money to invest in an unknown quantity. Leaving aside dollars-per-minute-of-entertainment arguments (I can get a good 40-50 hours of entertainment out of a good $20 book), here are some consequences I have observed:

1) Higher Cost = Less Games Purchased. A gamer's budget is finite, so the more you have to pay, the less you can buy in a given time-frame.
2) Less Games Purchased = Less Risks Taken. If you're only going to buy three or four games in a year, you want to make sure they will be worth the dough. As a result, players are likely to stick with known quantities - sequels to existing games, similar genres to other games they like, or games they have played elsewhere.
3) Less Risks Taken = More of the Same. If a game is an unknown quantity, it is less attractive. Newcomers and innovators beware! While there is some attraction to new ideas, and they do sometimes catch on, they are more likely to disappear into the ether than break into mainstream consciousness. Look at the best seller list this year - Gran Turismo 4, GTA: San Andreas, Halo 2, Half-Life 2, to name a few. Notice any trends?

So, what can we do? Maybe I'm alone here, but I think that the more games that get sold, the better the industry will be. And that means reducing the cost, not increasing it. I don't know what 'the solution' is, but here are a few ideas:

1) Stop Reinventing the Wheel. As a programmer, I know how much fun it is to solve interesting problems. But do we have to all keep solving the same problems over and over, in a multitude of different development houses, on hundreds of different games? How much more interesting would games be if that time and energy was being spent on gameplay rather than graphics? How do we prevent this? I wish I knew...
2) Related to the above, games would be cheaper and faster to build if we had a common, powerful set of tools. Again, reduce the time spent on implementation, increase time spent on creation. It's not sexy, or even that interesting, but if you have flexible tools and a good engine, you can reduce the cost of building individual games. I'm not advocating Java as a game-building platform, but the process there is one which could benefit the games industry. In its best examples, a need is identified (XML support, graphics, whatever), a proposal is made, industry contributes a specification, a reference implementation is built and a standard is released. Individual companies are free to create better implementations of the standard, but everyone meets the standard. Now, that is, admittedly, best case. Design by committee? Yes. The best possible solution? Not always. But it does mean you can Get Things Done. In the tools area, Java also sets a great example. Look at the NetBeans or Eclipse projects as examples. Good, extensible, productive tools, free for all to use. Only possible because of the standards built for it to stand on.
3) Build Smaller Games. Why do we (gamers and developers) have such a fixation with having huge games? If it doesn't cost so much to get a good engine and tools, you don't have to build such a big game to justify high prices. And they will take much less time to develop. If it's a good game at a reasonable price, I'll buy it. Personally, I'd rather buy 5 games with 5-10 hours of gameplay for $15-$20 each than one game with 40-50 hours of gameplay for $100. Out of the 5 short games, the odds are that at least 3 of them will be fun. With the $100 game, my odds are much lower (statistically speaking). If you are building a series of smaller games, gameplay and technology can be refined with each iteration, and you can get more of them out in a given timeframe. Anyway, enough from me. To sum up, let's build more games, cheaper! And to answer the question, I hope not.
-David Peterson, randombits.org

No, I don't think the game industry should boost prices based on new technology. I realize that games are no longer just for kids. Games grew up with my generation and now appeal to people of all ages and all income levels. However, just because games use newer technology doesn't mean that we should exclude their use to those that can afford only the best. As developers inevitably move to the next generation of hardware, retailers and thus consumers are forced to follow. When was the last time you saw an N64 for sale at Best Buy? Higher prices in both hardware and software set precedents and lead to the expectation of more high prices. The entire software industry follows Moore 's law when it comes to hardware (and to a lesser degree, software) pricing, keeping prices of new products compared to older products fairly constant over time. This affects the hardware costs, bringing them down for the console manufacturers. Of course, new technologies cost more. But manufacturing costs are simultaneously coming down. I remember when new systems sold for $100. Yet $100 seems ludicrous as a launch price for any new console system anymore. In fact, rumors have already surfaced of next-generation game systems launching at $400-500, the price PCs have actually come *down* to! You can't tell me that's all inflation. So what does that mean in terms of the consumers? To those of us with full-time, well-paying jobs: not much. To everyone else, high school students, college students, etc.: games are becoming more and more difficult to afford. If game developers really want to sell exclusively to adults and parents generous enough to buy their kids expensive toys, then by all means, raise the prices. But if you want to sell to kids at all, kids that are working part-time jobs to support their love of games, then we need to be fair. The entertainment industry doesn't raise prices every time a new movie or CD comes out. If prices do rise, it is based chiefly on the economy and inflation, not on the technology used to produce the content. We as a game industry shouldn't expect any better. We should keep the standard retail pricing system in check: no more than $200-250 for a new game console, perhaps $40-50 for a AAA title or half that for a budget title. Internet-based sales can have different standards, but considering the decreased manufacturing costs, Internet prices should be slightly lower. While games aren't for kids any more, if we're honest, most of us got first into games while we were kids and had to save up money at some point to get the games we drooled over. Let's not make it that much tougher on them just because they were born later.
-Anonymous

Not only should the price not increase but it should actually DECREASE. Why? Because the console game industry has been living according to an old and obsolete model inherited from the early cartridge games. The idea at the time was that because of the limited amount of graphics and simple mechanisms you had to deliver a LOT of gameplay (as in 40 hours or more) to satisfy your (mostly hardcore) customers. This is how we got the flawed model that today dominates the market: because studios have to produce huge games they can only release a new one every 2 or more (i.e. Valve). Long production times mean huge costs to the developers who are asking for more money upfront from the publisher, and of course the publisher has to put a huge price tag to try to make their investment back in 3 months or less (console games usually make all their sales in the first 3 months). And what do we get on the other end: customers who have to shell out huge amounts of money for derivative “sure hit” products and will rarely finish any game they buy. When you know that the average demographic on consoles is around 30 years old I think, you wonder why publishers are still trying to reach the deep hardcore “40 hours minimum” crowd. When you work, have a family, you have the money to buy the expensive games but no time to finish them and usually no patience to wait for the sequel that'll be out in maybe 2 years. The solution? Simple. Make small games - really small ones, 6-10 hours of gameplay. Release them for $20 or less, and best of all, release one every 3, 4, or 6 months. For example wouldn't it be better if San Andreas had been cut in 3 parts, each sold for $20 and released over a one year period? We all know that when games are sold at $20 or less they sell faster and better. How many average cheaper games have crept in the top 10 that way? Quite a few. With the new consoles coming out (and it works for PC too) it's time for the publishers to switch to a new sensible model that will allow for lower budgets overall, more titles, more risk taking and a constant feed to the market (instead of a ridiculous Christmas week spurt). We will have more creativity, more small developers surviving, publishers with more regular and safer revenues, and definitely more impulse buys from customers who have both a larger choice and a smaller investment to make. I could elaborate more on this but I lack time and space.
-Jean-Michel Ringuet, NPCube

Pricing needs to stay the same. I live in Canada and talk about getting screwed when buying a game. For example, the last game I bought was XENOSAGA 2 for the PS2 and it cost $49.99 US in Canada it cost $69.99 when it was released. Now the exchange rate of $49.99 USD works out to roughly $60.50. Therefore, somebody is making almost $10 extra selling in Canada , whether it be the wholesaler or Retailer. Not to mention the 15% we have to pay on taxes here. However, the problem is games are becoming more expensive, and if unionization occurs they will just become more expensive and will take more time to complete. Also my main reason I think that the PSP might fail is because the price of a game. The game price is so close to a PS2 game, who would want to buy a game on a little 4” screen when they can buy a PS2 game. Nonetheless, from a developer's point of view I can see why the games should go up in price. More cost for voice acting, more motion capture, more actors, better artwork. The game industry needs to find some way to take a cut of the pie from rentals. The main problem is when a game is out, it's mostly done, nothing really follows the point of sale. Except for maybe MMORPGs, which there will be a big push for now with the success of World of Warcraft. Instead of higher prices, why not target better and bigger markets? For example, maybe marketing should start looking more at selling games in China and India . They are the two highest populated countries. And in like 10 years China wants to be like the U.S. in terms of development. Just think... it's 3 times the size, population wise, so you could sell tons of games there. Also, if the average price is lowered by $10-20 you might be able to sell more copies, but you would have to go into detail about volumes vs. pricing. Overall I think they should stay the same, but I can see it going up maybe within the next 5 years
-Lee Ing, Howling Moon Designs

As a gamer, my immediate response to this question would be "NO!” I have trouble enough buying games as it is, and making them more expensive would be outright bad; there are so many games I would love to have picked up but just couldn't afford along with the great titles I had to have. Increasing the overall price of games would just make the situation worse. However, as a future game programmer/developer, and with the rising cost of game production (along with such things as inflation, etc.), I realize that this is simply not a realistic view. The retail price of next-generation games likely will, and probably should, increase. Hopefully though, there may be ways of working around the rising cost of game production. One of the easiest ways of doing this would be to produce simpler or shorter games that could be sold at a generally lower price point. Another way would be to utilize quality middleware and pre-developed engines to reduce production time and, thereby, production cost (though any such advantage could, unfortunately, be offset by excessive licensing fees). Additionally, selling games at a wider range of prices could be more effective than what seems to be the current pricing strategy; for example, pricing a game, according to cost and value, somewhere between $20 and $80 instead of pricing a game somewhere between $30 and $60 regardless of whether it's worth it. So, yes, prices for next-generation games probably need to increase, but a blanket increase on prices is only likely to further limit what the average consumer can afford (and thus is willing to buy), and it's not necessarily impossible to work around the cost of producing next generation titles with some adjustment to development and pricing strategies.
-Matthew Thomas, University of Montana

I am taking Economics 101 and we are discussing supply and demand. When the price goes up, the demand for a particular product goes down and vice-verse. With that said, I don't see how video game companies can make profits (especially smaller development companies). I read an article on the web where a developer stated that the game industry has not seen a price change in years compared to the film industry where the price of admission to see a movie has risen and is now time to raise the cost of video games. Although it makes sense, the only way I see myself paying sixty-four dollars for every video game I purchase is if it offers over fifty hours of gameplay with exceptional quality (no excuses, no bugs) and has cool extras such as; behind-the-scenes, artwork, directors-cut, posters, etc. I see that as a difficult promise to make because most developers cannot even promise that now. How can they promise that when the cost of developing a game will go up this coming generation? On the flip-side, I recall when the N64 first came and Mario 64 and Pilot Wing cost more than sixty-five dollars. I know because I purchased Mario 64 at that price. I can see people paying an extra ten dollars for certain AAA titles but not on every single game purchased. To me, it would be wise to keep the current price as is so that you do not alienate those whose income is limited. By not raising the cost, people will continue to purchase games and not reduce the amount of games they buy in a year because they cannot afford it. You may not see more cash come in but at least you don't have a decline in sales because you want to see profits quicker.
-Joseph L. Blackwell, Jr., B.R.A.T.S. (Blackwell's Radio Animation Talk Show)

Some would think that prices should rise according to EA leading claims. What we as developers see, is game production turns to cinematic standards. Hi-res models, shaders, different render methods. All these mean more resources allocated which will inevitably turn to the consumer. Epic claims it has come up with solutions. As programmers for many years now were preaching, that productivity rates will rise with the proper use of software and especially the development of proper tools. Less dependence on programmers during level and encounter building process Epic says by developing a visual scripting system "Kismet" which will effectively help builders build faster and be more autonomous. This if it works as advertised (and having worked with the previous Unreal editor, Epic delivers) can indeed raise productivity since a programmer is not needed to say "this model is a door, and you know what game? This door is closed and it can be opened" or build a simple shader. They can be more focused on developing the actual game and by building faster and more efficiently keep production cost at a reasonable level. Another important factor is of course piracy. I believe an increase in prices will lead to higher percentage of pirated games. Consumers can't be expected to blow $50-$60 for a game especially since production standards vary and not many games dare to provide them with demos. Consumers are lead to cheat to protect their pocket, downloading a pirated copy instead of the game demo. Developers/publishers need to be more honest with their clients. The last years we have seen over-hyping, and it has a very bad effect in the gaming community. Distrust, alienation, and piracy. I believe cheaper games, (and perhaps even free mini-games online; Bioware knows this well), will bring more people to retail stores.
-Yiannis Koumoutzelis

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