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Old 02-17-2017, 08:20 PM   #1
OrangeCrush
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Pricing of videogames

I made a comment in the Sideshow thread regarding video games being the one product that has literally been immune from inflation and the price increases you normally see with increased producion cost. One of the replies I got was this post:

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Originally Posted by NorthernLadMSP View Post
Video game prices might seem like they haven't changed, but that is only partially true. Base prices have remained, but with each year that passes, you get less of said video game for the price and more DLC that is extra charge.

Example: The upcoming Injustice 2 retails for $59.99, however if you want all the characters you have to buy the ultimate edition for $99.99 as the basic edition is missing 9 fighters.
I said I wouldn't debate it in the Sidshow thread, but I would be more than willing to debate it here so I figured I would start a thread giving those that wanted to do so the ability to do just that.

As I said very quickly in reponce to that post, DLC and special edition don't even begin to make up the kind of price difference we should have seen from just inflation alone. If gaming were 100% in line with inflation, like most products in the world today, retail games would literally be $140+. And that doesnt take into account the fact that the price of game production has increased like 20 fold since gamings inception. Games used to be made by small teams of people and development time was short, like 3-6 months, and now you have literally teams of hundreds buliding some of the AAA games today and they have development times of 4-5+ years. Not to mention the overhead has increased DRAMATICALLY. Back when gaming first started all the overhead you needed was a computer to program on. Today you need various high tech software and tools. Not to mention the leasing of game engines. There is a very good reason why so many game companies have closed thier doors in recent years. Its becasue modern games are very expensive to make and all it takes is a couple of poor releases and the company is bankrupt or seeing large lay off's, which is very common in the gaming industry.

NorthernLadMSP mentioned DLC and special editions. First off, 49% of gamers don't even buy DLC:

https://www.wired.com/2011/10/dlc-eedar-report/

Given that article is a bit old, but if you actually look at more recent articles, DLC sales have actually appeared to have gone down, not up. Likely pushback from gamers for feeling like thier being cheated out of content that should have been included in the game to begin with. Here is one:

http://segmentnext.com/2016/11/11/28...nsactions-dlc/

Thats an article from 2016 and it states that 28% of gamers had made DLC purchases in the last 3 months. There is no doubt that game companies are making a decent amount of money off of DLC, but again it doesnt even begin to explain away 35+ years of inflation and the 20+ fold price increase of game production. Hell, DLC didn't even exist until the XBox 360/PS3 generation and neither did special editions. So your argument is basically excluding 25 of the 35 years gaming has been around and your only concetrating on the last 2 generations. If DLC and special editions really were the answer, we would have seen price increses with gaming right up until DLC and special edition hit the market, but that isn't what happened at all. We didn't see any price increases with gaming for the 25 years before DLC and special editions even existed. So to suggest thier the reason why gaming has basically been immune from inflation and the increases of cost production just makes no sense at all.

And most special editions can be found 3-5 months later for 50-75% off. Very few special editions actually hold thier value. Yes game studios make money off of special editions and DLC, but again, nowhere near the level that would make up for 35+ years of inflation and the increase of cost associated with the production of video games today compared to 1980. Not even close. Again, just with inflation alone AAA games should be priced at $130-$140. Add to that the increase of cost production and god knows what games would be priced at if they followed the rules that govern 99.9% of the rest of the products made in the world.

and that doesnt even take in to account hardware. Here are the prices of some well known pieces of gaming hardware with thier price at the time of release and the price with inflation factored in:

Atari 2600 - $199.99 in 1977 ($796.50 w/inflation)
Intellivision - $299.99 in 1980 ($878.68 w/inflation)
Commodore 64 - $595 in 1982 ($1,488 w/inflation)
Colecovision - $175 in 1982 ($437.69 w/inflation)
Sega Master - $200 in 1986 ($440.43 w/inflation)
NES - $299 in 1985 ($672.89 w/inflation)
N64 - $199 in 1996 ($307.64 w/ inflation)
Xbox - $299 in 2001 ($408.83 w/inflation)
PS3 - $499 or $599 in 2006 ($598.58 to $718.30 w/i)

So were getting VASTLY superior hardware for much cheaper pricing as well. And on top of everything else, games go on sale MUCH MUCH faster than they ever have before and are discounted by MUCH larger margins then they ever have before. Plus the games that were buying today are significant larger and significantly more complex. I have already put over 200 hours into Fallout 4. Some of the games being made today are absolutely MASSIVE in size and scope. They literally dwarf anything that has come before them. Plus we have digital only games now that cost between $5-$20 bucks and many of those games are as large and complex as AAA games were just 1 or 2 generations ago.

Each year that passes, gaming literally gets 2-3% cheaper, on average, as our money is literally worth 2-3% less each year due to inflation. Every other marke in the world compensates for inflation by raising prices as time goes on. Just compare thre prices of houses, cars, groceries, clothing, furniture or any other product you can think of back in 1980 to the prices those items are selling for today. I guarantee each and every one of them will be significantly more expensive than they were back in 1980, except video games. And this has nothing to do with it being an entertainment medium thing as all of the other forms of entertainment have risen right along with inflation including movie tickets, books, etc. Gaming is the only entertainment medium that has not seen its prices rise due to both inflation and increase cost of production. Not to mention the PC side of gaming and game bundles. The advent of game bundles has allowed people to buy games for as little as .50 apiece. I own over 3000 games on Steam and the average price I have paid would be well under $5.00 a game.

The bottom line is gaming has never been cheaper and it literally gets cheaper with each year that passes. This in spite of the fact that our money is worth less with each passing year and the costs associated wih game production have risen from day one and continue to rise today. Again, were literally paying 2-3% less for games each year and have been since roughly 1980, when gaming first started. There is absolutely NO WAY the cost of games remaining at the same price they were at 35 years ago can be explained away because of DLC and special editions, especially when they didn't even exist until last generation. Honestly, they wouldn't even account for a tiny fraction of the price rises we should have seen from just inflation alone.

Again, I would LOVE to hear from a professional economist on this matter as the gaming market is the ONLY market I know of that defies everything we know about business and pricing. Its been 100% immune from inflation for the past 35 years. Its been 100% immune from the production cost increases we have seen with the gaming market over the last 35 years, which have been SIGNIFICANT to say the least. Those 2 things are the 2 mian factors for all price increases seen with any consumer product, yet gaming has been and remains 100% immune from their effects since its inception. I have averaged around $20-$25 on all console game purchases the last 2 generations and I have never had to wait more than 3-5 months after release before buying a game. I certainly can't explain it, but neither do DLC and special editons.
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Old 02-18-2017, 04:29 AM   #2
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I think that there are a couple of things that have contributed to this. The cost of manufacturing the technology itself - microchips, etc. has dropped significantly across the time period, and you've also seen the shift from games coming on cartridges which would have cost more to produce to discs which cost literally pennies each. You've also got to factor in the numbers of people downloading games now, which have 0 manufacturing costs as there is no physical product to produce or ship.
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Old 02-18-2017, 08:34 AM   #3
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Depends on the game/company for me. Injustice 2/NRS for example. Yes the game is an additional $40 for 9 extra characters, however the base roster is double the size of something like SF5 yet both cost $60 at launch.

You can take it further with a game like Killer Instinct. An entire season costs $20 which nets you not just 8-9 characters, but 8-9 stages with unique music as well. KOF 14 launched with nearly 40 characters IIRC for $60.

You just need to be smart when it comes to what you want, expect, etc. The Order delivers 5-6 hours of gameplay, Dark Souls 3 40+ hours, and The Witcher 3 can exceed 80 hours, and all costed $60 at launch.
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Old 02-18-2017, 11:28 AM   #4
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Quote:
Originally Posted by Dan_Lebou View Post
I think that there are a couple of things that have contributed to this. The cost of manufacturing the technology itself - microchips, etc. has dropped significantly across the time period, and you've also seen the shift from games coming on cartridges which would have cost more to produce to discs which cost literally pennies each. You've also got to factor in the numbers of people downloading games now, which have 0 manufacturing costs as there is no physical product to produce or ship.
First off, catridges were only around for roughly 15 of the 35 years gaming has been around and were never used on the PC side of gaming. PC's used floppy discs. And the difference in cost going from catridge to CD/DVD is really insignificant compared to the overall cost increases we have seen with game production from the early 80's to today, or the amount of inflation we have seen since the early 80's. Again, most large AAA studios today literally have hundreds of employee's and they have to lease very expensive software and game engines. And as gaming has gotten more high tech, things like motion capture technology and other forms of technology have come into play.

The cheaper cost of microchips and other computer components can help to explain why we are able to buy signifincatly more powerful hardware for much cheaper prices than the hardware we bought back in the day, but it does not explain the gaming side of the industry.

In my initial post I estimated game production costs to have increased 20+ fold since gamings inception, but that is actually a very unrealistic figure, although I did include the plus sign to signify "or higher". Once you factor in all of the increased costs assocatied with modern gaming, which include things like the large increases in development times, the size and scope of the games themselves, the size of the teams actually making AAA games today, the expensive technology game companies have to lease or use for modern gaming etc., a more realistic figure would likely be a 50-100+ fold increase in game production cost.

GTA V cost $265 million dollars to produce. Thats on par with some of the most expensive Hollywood films being made today. Kings Quest I cost $850,000 to produce and one of the main reasons that game was as expensive as it was is that Sierra developed a scripting engine (AGI) which worked as a high level language compiler and made it easily portable to different platforms. Its basically equivalent to a modern game studio creating its own game engine as opposed to leasing Unreal engine of Cryengine. Its a very expensive endeavor, but once its finsihed, it lowers the cost associated with future games made with that engine. With inflation factored in from 1983, when Kings Quest I was released, $850,000 would be equal to roughly 2.1 million dollars today. And well just ignore the fact that a large chunk of that money was spent creating the game engine itself. Compare 2.1 million dollars to 265 million dollars. Thats a roughly 126 fold increase in overall costs associated with production.

Again, that 20+ figure was an extremely LOW estimate. Its FAR more likely costs associated with game production have increased by at least 50-100+ times since the early 80's. Add inflation to that and....well, the difference in cost from going from catridge to CD/DVD really becomes irrelavant, especially since cartridges wen't even used on the PC side and were only around for roughly 15 of the 35 years gaming has been around. Your point is relavant in regards to hardware costs, but it simply doesnt help to explain how gaming has managed to remain immune from both inflation and the large increase in costs associated with game production.

Quote:
Originally Posted by damienjakk View Post
Depends on the game/company for me. Injustice 2/NRS for example. Yes the game is an additional $40 for 9 extra characters, however the base roster is double the size of something like SF5 yet both cost $60 at launch.

You can take it further with a game like Killer Instinct. An entire season costs $20 which nets you not just 8-9 characters, but 8-9 stages with unique music as well. KOF 14 launched with nearly 40 characters IIRC for $60.

You just need to be smart when it comes to what you want, expect, etc. The Order delivers 5-6 hours of gameplay, Dark Souls 3 40+ hours, and The Witcher 3 can exceed 80 hours, and all costed $60 at launch.
All valid points, but it is EXTREMELY rare for a AAA single player game to only have 5-6 hours of game time. The Order is really an exception. Most AAA single player games deliver at least 12-20 hours of game time. And of course, multi-player games can give you hundreds of hours of game time above and beyond its single player content depending on how serious you are about the game. I put at least 1000 hours into Halo 2's online component.
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Old 02-18-2017, 10:26 PM   #5
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Quote:
Originally Posted by OrangeCrush View Post
All valid points, but it is EXTREMELY rare for a AAA single player game to only have 5-6 hours of game time. The Order is really an exception. Most AAA single player games deliver at least 12-20 hours of game time. And of course, multi-player games can give you hundreds of hours of game time above and beyond its single player content depending on how serious you are about the game. I put at least 1000 hours into Halo 2's online component.
I know, I just used those examples to show how large the gaps can be.

As for MP, you have to consider that a paid subscription is required for that aspect. Not that I think it's a bad deal, paying an extra $25 for 3 months of play time isn't bad at all, but it does factor into the price in the long run when talking about price per content.
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Old 02-19-2017, 12:45 AM   #6
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If game cost was in line with inflation and the games priced, as you say $140 , no one would be buying games. Hell, in Canada, games are $79, which I find too much. I rarely buy new games when they come out and if I do, I am trading in old games for it to reduce my cost. Despite the leaps and bounds in games; graphics, game engine, story line, I would never pay more than it is now and I am sure a lot of people will not either.

I'm pretty sure the game developers know that too.

As for cost for consoles, cost to produce them has gone down as well.
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Old 02-24-2017, 01:36 PM   #7
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Quote:
Originally Posted by damienjakk View Post
I know, I just used those examples to show how large the gaps can be.

As for MP, you have to consider that a paid subscription is required for that aspect. Not that I think it's a bad deal, paying an extra $25 for 3 months of play time isn't bad at all, but it does factor into the price in the long run when talking about price per content.
Yeah, but you also get a significant number of free games with that subscription. Xbox LIve didn't always have Games with Gold so when MS did finally bring Games with Gold to the table, it significantly increased the value of Xbox Live. I have never spent more than $40 a year for Live and the number of free games I have gotten up to this point is significant to say the least. And even though I already owned most of the 360 games that have come to Games with Gold, I still really like having the digital edition as I have found I am far more likely to play/replay a game if its already installed on my hard drive and ready to go at a moments notice.

So while you do have to pay for Xbox Live Gold, it's a killer deal when you factor in everything you get. IMO, its well worth every last cent. And considering the amount of hours I spend playing online games....well, if I were to divide the hours spent playing by the overall cost, it would literally come out to be less than 5 cents an hour. Compare that to a $10 movie ticket for a 2 hour movie.

Quote:
Originally Posted by Y3E View Post
If game cost was in line with inflation and the games priced, as you say $140 , no one would be buying games. Hell, in Canada, games are $79, which I find too much. I rarely buy new games when they come out and if I do, I am trading in old games for it to reduce my cost. Despite the leaps and bounds in games; graphics, game engine, story line, I would never pay more than it is now and I am sure a lot of people will not either.

I'm pretty sure the game developers know that too.

As for cost for consoles, cost to produce them has gone down as well.
First, I was simply making a point that gaming has been completely immune from inflation and that game pricing would be $140+ a game if the game market were right in line with inflation. In other words, I was showing what a HUGE difference there has been in the value of our money since gaming first started back in the early 80's. I was not suggesting games should be $140 right now. And of course people wouldn't be buying games if the price suddenly jumped from $59.99 to $140, but had the cost of gaming slowly increased over the last 35 years, right along with inflation, like 99.9% of the rest of consumer products on the market, the sticker shock of higher priced game simply wouldn't exist as people would have slowely adjusted to the small changes in pricing as we went along, just like we have with all of the other consumer products on the market.

And even if you take all that away, it still doesnt explain how there hasn't been a single rise in price at all. Not even to $64.99 or $69.99 when the cost of game production has increased 50-100 fold and the rise in inflation has been significant since 1980. The pricing of retail games is right where it was 30-35 years ago so people have gotten used to the idea of game prices staying exactly the same. That is why the idea of higher prices is so hard to swallow for some gamers. Again, had the pricing of gaming risen slowely, right along with every other consumer product on the market, people would be ok with game prices whatever they would be at this point. Their certainly ok with all of the other products that have risen in price over the last 30-35 years including all of the other entertainment mediums. People are ok paying 4-5 times the price for movie tickets compared to their price in 1980. People are ok paying 2-3 times the price of books from their 1980 prices. Again, thats becasue those prices rose slowely right along with inflation. They didn't just jump up in price $10-$20 and again, had gaming done the same thing, people would be just fine paying whatever price gaming was at right now, but for some reason gaming has been completely immune from both inflation and the increased cost of game production and that has resulted in a mindset amongst gamers that game prices shouldn't increase and should stay right where they are.

As for the cost of hardware, that point has already been addressed.
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Old 02-24-2017, 02:24 PM   #8
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Cost of gaming actually has gone up. Yes, the price has pretty well remained the same but you get less for what you buy now. When you buy your game what do you get? The case and disk, that is all. In the past, you will get a manual and sometimes some inserts. Sometimes, there are posters and maps. The manual could be half as thick as the case. Sometimes you get slipcases, now pfft, you get nothing. And yes, I always enjoyed having those things. Now, you have to buy the limited collectors edition which would be $140 (in Canada). So, yeah, cost has gone up.
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Old 02-24-2017, 03:33 PM   #9
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Also keep in mind, while the prices of the actual games hasnt seemed to go up as much as everything else...the price to MAKE the games has exploded.

Games that sell well and lots are not made by 10 - 20 people anymore in a small studio. Games now have blockbuster budgets, with 100s of people working on them, sometimes for years at a time.
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Old 02-24-2017, 03:42 PM   #10
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That's the odd thing isn't it, PermaGrin. I read the same thing about cost to make these games and you have to think the studios are making a profit, why else would they keep on making them. So, cost somewhere has either gone down drastically, or their profit margin is low.
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