The Great Leap Forward - Next Gen investigates

[fitbabits]

Noticed this article (http://www.next-gen.biz/index.php?option=com_content&task=view&id=970&Itemid=2) over at Next Generation (http://www.next-gen.biz).

A couple of prime quotes:

From the author:

Recent years have seen publishers like Midway Games, Microsoft, Atari and Electronic Arts succeed with $55 and $60 special collector’s editions of console games like Mortal Kombat: Deception, Halo 2, Dragon Ball 3: Budokai and Madden NFL 2005; but those were limited runs. Consumers still had the option of purchasing $50 games.
Scott A. Steinberg
Vice President of Marketing
Sega of America

The $60 price point will highlight to every gamer that Xbox360 games are much more sophisticated and different when compared with titles from the existing generations. The consumer value found in Sega's titles, Condemned: Criminal Origins and Full Auto, will be there - visually and from the standpoint of building experiences that are beyond anything seen on today's systems.
Dave Perry
President
Shiny Entertainment

The thing we need to remember is that our market is growing rapidly. In the old days, if hardware sold a million units, we used to gasp. In 25 years, Sony alone hasa raised that number 100 fold. So the big question is... Is it over yet? Can the growth continue? Can the videogame industry endlessly keep expanding? Is the saying true that "No Tree Ever Reaches the Sky?" The answer is, "We're not even close yet!"... For many, many reasons.
Michael Pachter
Director of Equity Research
Wedbush Morgan

Consumers won't care. They understand that the games cost more to develop, and inflation is inevitable. It is actually surprising that game prices haven't risen in the last ten years.
If Michael Pachter thinks that consumers don't care then he really has no business being an analyst!

[Reanimated]

Rental services like Gamefly should be happy about the prices of games going up. They're about to see their customer base really grow.

[Metal Jesus]

An extra $10 for a game I really, really want won't stop me from buying it. In my mind, games like Final Fantasy, Burnout, GTA, SSX are all worth that much given how much enjoyment and time I get out of them. Plus the market place is already setup nicely for USED games at EB/Gamestop. Can't afford the $60? Wait a month or two and pay $40.

[Ajezz]

I've not paid full price for a game in a long time (WoW is the only recent exception), I tend to keep my gaming a little behind the times so that there is always something new (to me) to be found in the used bin/after a price drop/on ebay.

So raising game prices won't affect my buying habits... I've got an xbox 1 library to build

[Nesta]

$60 for AAA titles, I can see paying for that. Liking it? No, but for some titles it would just be too hard to refuse. $60 for the crap games that come out aside from the AAA titles? No fricking way. I'd definately turn to more of a rental consumer than a purchasing one at that point.

[Mr.Green]

The "analyst" is right. Gamers are junkies and $10 won't change a damn thing.

[bapenguin]

This will hurt the general gamer more than the hardcore. Parents REALLY aren't going to want to buy kids games now. It really hits home for say, X-mas time. Maybe you'd get 2 or 3 new games, that's 100-150 bucks. Now we are talking almost 200! Parents aren't going to drop that.

[Reanimated]

Lorne Lanning got it right here:

Lorne Lanning
President and Creative Director
Oddworld Inhabitants

The first million’ish early adaptors will begrudgingly pay the price, but it will be a challenge to convince the larger audience to start paying more for games. Which will be fine for the rental business, but bad for publishers and developers.

The hardware prices proposed for launch are already high and if compounded with higher priced games… they had better knock the socks off people, or else market penetration will be slow.

Gamers are accustomed to watching prices drop quickly, so unless the games are must-have-awesome, they’ll rent first then buy later when the prices drop.

[MajSheppard]

I will not buy games at 60, I no longer buy games at 50 dollars. 30 is my maximum, and thats rare for me to spend that. 2k games showed me the light!
BTW I am hardcore. I have hundreds of games. I realized that I have more games then I have time to play them. So I play the games I have and it works marvelously. Then I get new games when they are well worth it. I have bought two games in the last month. NHL 2k6 at 15 dollars, and Advance Wars at thirty. These two games can easily give me 100+ hours of fun. and cost less then one of these games that often last less then 10 hours.
Gamers are losing their minds. 60 dollars for a game, 40 for a controller, 60 a year for online subscription, 50 dollars for broadband, 600 dollars for a system. Where does it end people? Where does it end?

[Arphahat]

Currently, $50 is too much IMO. I'm happy waiting for a new game to age to a happy $20 or $30 price. An advantage to that (for PC titles, anyway) is that by that time most of the bugs have been fixed. Heck, I just got SimCity 4 a month ago and it is great!

[Reanimated]

Dave Perry had another good 'nail on the head' quote:

With larger audiences, the costs of games can come down. So if our industry balances this equation, hopefully we will grow our market faster than we need to grow our prices.
Otherwise, Blockbuster will be expanding their videogame shelves even more, as they enjoy our negligent miscalculation.

[GodFather]

Remember when the Nintendo 64 first came out and games were $70+ each?? I remember gamers not buying alot of N64 games before Nintendo made adjustments..

[The Radical Cleric]

:rolleyes: People need to stop quoting Pachter. He's also quoted in a GameDaily article where he basically says WoW is doomed (except in China perhaps) because we in the U.S. are so much more 'advanced' than everybody in China and that -they- need this outlet much more than we do:

"It may continue to grow in China, but not in Europe or the U.S. We don't need the imaginary outlet to feel a sense of accomplishment here. It just doesn't work in the U.S. It just doesn't make any sense."

And then:

[In China, however] people's ability to move up the social ladder is still limited... they're not yet an open enough society where everybody has the skill to be a journalist, or be a research analyst or be a doctor. The appeal of these games in other cultures is different than the appeal in our culture," he continued.

Wow. Just wow. Maybe someday people in China can aspire to be research analysts like Pachter. Imagine!

My point is, this guy is full of shit. Maybe WoW will lose subscribers at some point, but if it does, it won't be for the reasons this guy states.

The article can be found here:

http://biz.gamedaily.com/

[Malovech]

If Michael Pachter thinks that consumers don't care then he really has no business being an analyst!

Actually I think he is dead on. We still buy games from EA and they are both expensive, and poorly made, so why would a jump of $10-$15 make any difference? Gamers, for the most part, are like Pavlovian dogs our trained response just happens to set to the words "new! flashy! cool!"

And to be clear I fully place my self amongst this group.

[Reanimated]

Another good one:


Keith Boesky
President
Boesky & Company

I understand the price rise, but believe it is a mistake. Look how many $75 video tape films sold compared to $20 DVDs. Rather than looking at ways to extract additional revenue from our most important consumers, we should look at ways to expand the market.

[fitbabits]

Another good one:

Keith Boesky
President
Boesky & Company

I understand the price rise, but believe it is a mistake. Look how many $75 video tape films sold compared to $20 DVDs. Rather than looking at ways to extract additional revenue from our most important consumers, we should look at ways to expand the market.

I think that may be the best one yet!

[fitbabits]

Actually I think he is dead on. We still buy games from EA and they are both expensive, and poorly made, so why would a jump of $10-$15 make any difference? Gamers, for the most part, are like Pavlovian dogs our trained response just happens to set to the words "new! flashy! cool!"

And to be clear I fully place my self amongst this group.

Well I personally stopped buying EA-produced games after the NFL fiasco, but I know that I'm in the minority!!!

[earthworm48]

Perry strikes again. I definately (sp?) don't agree with his quote there are the difference between this gen and next probably won't be much apart from graphics and sound. (I'm not saying that will be it though). Also before he reckons consoles should aim for the PC model with upgradable memory and physics units e.t.c. and well thats basically a PC then isn't it? Also it'll mean more money.

I must say I don't know how this will affect me until I see game pricing for the UK. This is because we pay £40 for the newest games (drops to 30 near the end of the generation life cycles in onlince shops) already which must be like.... almost $80? (can't be bothered to pop to xe.com) and right now the online stores are guessing £45 for MS titles and £50 for the rest, which is damn high really (although it probably just means I can buy not quite so many games over a shorter period of time). Back years ago SNES games were like £50, same with N64 when PS games were £50 (people didn't like that). However recently with the console prices, rather than £=$ which we used to get (launch PS2 in UK was £300 like $600) we got $=Euro so then we got the $400 machine for £280 not £400. The peripherals (sp?) were similiar. If the games are the same 60 euros is just over £40 so the UK gamers may be quite pleased. Most likely the $60 games will be £45. Which isn't too bad.

Just have to wait a while and see.

[Librum]

That's what the 'Collector's Editions' are for, anyway. Put some out there at $75-$100 and the people who want them will buy them, and for everyone else the $39-49 no frills version. For most popular games, those CEs do seem to sell well(though there have been some that collect dust for months when there has been a miscalculation), so instead of trying to squeeze that extra bit of revenue out of people and risk either (at best) people spending the same amount of money on fewer games, or (at worst), just spending less money on even fewer games, I'd think they might try to make those CEs even more special and work that angle.

Of course, like previous posters have mentioned, quoting this guy after he's said such completely ridiculous things about WoW and, by inference, other MMORPGs, does give him far too much credit. Plenty of business analysts are wildly inaccurate when it comes to pure business forecasts, so when they get into areas they're obviously not familiar with, they can really sound silly sometimes.

[Kelegacy]

I wont pay 60 bucks for games. Hell, i dont even pay 40 or 50 these days. Back when I didnt have money, as a college or high school kid, I bought more games at full price than I do now. These days I wait out the games and buy them cheaper...or used, via game stores or ebay-like traders.

This raise in price wont affect me personally. I still hate it, but if I play the waiting game long enough for any game, I can get it cheaper. This is usually because I'm a slower adopter of consoles...by the time I buy one there are already dozens of hot titles. While i am playing catchup, new games come out. When I get to those "new" games, newer ones are coming out, thus making these previously must-have games lower in price. It's a cycle I play to my advantage.

[pacmanfever]

Plus the market place is already setup nicely for USED games at EB/Gamestop. Can't afford the $60? Wait a month or two and pay $40.

the EB/Gamestops in your area must be different than mine. around here, it would be more like wait a month or two and pay $55.

[RMan]

The "analyst" is right. Gamers are junkies and $10 won't change a damn thing.
Nonsense. Unless you feel every gamer out there would be willing to pay any price for a game he wants, but in the real world higher prices equate to less people buying the product.

Clearly the hardware and the software will sell, I think it’s wrong to think they’ll sell primarily because they’re that much better, it’ll just be because that’s where the games are (for instance, if my favorite TV shows suddenly required an HDTV then I’d be getting one, but not because I’m unhappy with my current big screen). I also think it’s doubtful that gamers will accept or care that development budgets are higher, I suspect they’ll care about as much about a publisher’s profit loss margin as much as the publisher cares about the consumer’s thinner wallet.

I’m still getting a little tired of hearing big publishers and developers whining about increased development costs as a reason for these price hikes, that’s just silly. Games are costing more because they have to compete against games that are costing more, IOW, they’re more costly because they made them that way. Although I’m sure the biggest companies would be more than happy to stick with the $60 pricetag since it ultimately results in less games, less competition, and a greater dependence on established franchises, my bet is that this price point will not last long. Either the games will only be at that price for a short period, or within a year they’re back to $50. This would likely coincide with Nintendo’s system, since they’ll likely be able to charge considerably less for the console and the games, and the average player will see virtually no difference between the technologies, they could really take back some of the market if Sony and MS stick with the $60 tag on games.

[Kelegacy]

Perry strikes again. I definately (sp?) don't agree with his quote there are the difference between this gen and next probably won't be much apart from graphics and sound. (I'm not saying that will be it though). Also before he reckons consoles should aim for the PC model with upgradable memory and physics units e.t.c. and well thats basically a PC then isn't it? Also it'll mean more money.


In the end, the most noticeable upgrades are always graphics. Gameplay can change as a result of new technology, but it's increasingly rare. Half Life was an excellent game. HL2 was good too, but how much of it was because of the pretty environments and physics?

[Orphiuchus]

I dont think I mind paying an extra 10 bucks for a game I relly really want, what I do mind is being told that xbox 360 games will be so far beyond anything I've ever seen that I'll feel like 60 bucks is a bargan. Bullshit. Its not a quantom leap forward, its just the evolution that happens every few years. This isn't moving from 2d to 3d, and its not moving from something that looks like a game to something that looks like a movie. Its a evolutionary step forward and I dont like being told its anything else, because that leads me to believe that they will lie about other stuff without batting an eye.

[normyk]

the EB/Gamestops in your area must be different than mine. around here, it would be more like wait a month or two and pay $55.
Well, if you trade in 10-20 games you can save another $5! :p

As far as I'm concerned it's like this: I'll take a chance on a $30 game that looks interesting. I'll pass on a $60 one. Unless I've played a demo and its like turbo-crack or something (World of Warcraft?) I just won't touch it.

Also, what are they going to change the 'Platinum Hits' and other similar lines to include? Games with more than 10K units sold? And are they going to have correspondingly higher prices since the new initial retail for a game is climbing?

My last word on the subject: NOBODY doesn't care when they have to pay more for things they want. Seriously. Gas prices creep up a nickel and you have millions screaming. Why would any dumbass think that gamers won't scream when they raise the prices on us?

[roboflavinoid]

I’m still getting a little tired of hearing big publishers and developers whining about increased development costs as a reason for these price hikes, that’s just silly. Games are costing more because they have to compete against games that are costing more, IOW, they’re more costly because they made them that way.
Clearly, you don't know anything about game development, or haven't given it much thought. It's really simple math.

A first Gen (PS1) character model may have been about 500-700 polygons. It could take a day to model this character and another day to texture it. There may be revisions later, but that's the basic timeframe. A 2nd Gen (PS2) character model is now 3000-5000 polygons, with a texture at twice the resolution. This extra detail isn't free. It takes more time. Now it's a week to model and texture.

A 3rd Gen (PS3/X360) character may now be 15,000 polygons, using normal maps that have been rendered off of an original 3,000,000 polygon model. 3 million polys! This may take a month to execute to a high standard.

We get paid for this, you know. What may have taken me 2 days now may take 1 month. And the same is true of every other discipline: animation, programming, design. Where do you think that money comes from? If we don't put in at least some extra effort into making our product look better, play better than the other guy's, we'll never make a dime.

The consumer is at the wheel here. Not the developer. Developers are giving consumers what they want, and this is what it costs.

[jacktion]

Pachter is an idiot. His recent WOW comments have shown he has no idea what he is talking about. Who here thinks MMORPGs will shrink %80 and go down to only 1 million people in the world? From 4 million on WOW alone? I don't think so. This stuff is just going to keep growing. Any company that employs this idiot should be stayed far away from.

"Pachter? Packer is more like it... Fudge Packer! Ha!"

[Reanimated]

Clearly, you don't know anything about game development, or haven't given it much thought. It's really simple math.

A first Gen (PS1) character model may have been about 500-700 polygons. It could take a day to model this character and another day to texture it. There may be revisions later, but that's the basic timeframe. A 2nd Gen (PS2) character model is now 3000-5000 polygons, with a texture at twice the resolution. This extra detail isn't free. It takes more time. Now it's a week to model and texture.

A 3rd Gen (PS3/X360) character may now be 15,000 polygons, using normal maps that have been rendered off of an original 3,000,000 polygon model. 3 million polys! This may take a month to execute to a high standard.

We get paid for this, you know. What may have taken me 2 days now may take 1 month. And the same is true of every other discipline: animation, programming, design. Where do you think that money comes from? If we don't put in at least some extra effort into making our product look better, play better than the other guy's, we'll never make a dime.

The consumer is at the wheel here. Not the developer. Developers are giving consumers what they want, and this is what it costs.




I'd say that publishers are at fault for not coming up with more tools to ease common development problems. MS had the right idea with procedural synthesis, but that has yet to materialize in any meaningful form.

But hey, publishers will figure it out when the rental market booms and their bottom line sinks. If you thought the last 5 years was full of closings, layoffs, and mergers... well, you ain't seen nothin' yet, chief.

Eventually the market will FORCE them to figure out how to cut development costs. This is the only business where operating costs more than double in 5 year cycles. It's time for publishers to start creating new revenue streams, figuring out new ways to expand their potential markets, and start coming up with more ways to cut costs. Adding 20 modelers and texture artists to your team isn't going to cut it anymore.

[Klade]

Anyone else bothered that the article is named after a communist chinease economic experiment that killed millions?

Prices were bound to rise eventually, and you know what? Most people will pay it, cause most people (ie not the gaming hardcore) buys fewer then 1 game a month and won't feel this that much. Its those of us that buy 2, 3, or 4 games a month that this really bothers.

[Crabby]

Clearly, you don't know anything about game development, or haven't given it much thought. It's really simple math.

A first Gen (PS1) character model may have been about 500-700 polygons. It could take a day to model this character and another day to texture it. There may be revisions later, but that's the basic timeframe. A 2nd Gen (PS2) character model is now 3000-5000 polygons, with a texture at twice the resolution. This extra detail isn't free. It takes more time. Now it's a week to model and texture.

A 3rd Gen (PS3/X360) character may now be 15,000 polygons, using normal maps that have been rendered off of an original 3,000,000 polygon model. 3 million polys! This may take a month to execute to a high standard.

We get paid for this, you know. What may have taken me 2 days now may take 1 month. And the same is true of every other discipline: animation, programming, design. Where do you think that money comes from? If we don't put in at least some extra effort into making our product look better, play better than the other guy's, we'll never make a dime.

The consumer is at the wheel here. Not the developer. Developers are giving consumers what they want, and this is what it costs.

I'm pretty sure I was Jim-Dandy happy playing with 8-bit pixels. Then something *new* was introduced to me. Are you claiming that, as a satisfied gamer at that time, I somehow mentally spurred on developers to go "bigger and better?"

New things are released to the consumer, not the other way around. Especially not two decades ago when no consumer had much imagination for how far this gaming thing could be taken.

"It is very simple." If I am happy with something, who is telling me that I want this other something? Since that is your assumption here.

[H.Bogard]

Yep, I`m sticking to my (offline) pc gaming from now on :(

[RMan]

Clearly, you don't know anything about game development, or haven't given it much thought.
Wow, you are, umm, very wrong, I've been a professional game developer for more than a decade and have done almost all aspects of game design in that time. You may not agree with me, but I most certainly know what I’m talking about.
It's really simple math.
Well, by the math you propose (which is quite dubious) between PS1 and PS2 we saw a 3X higher cost and no price hike. Also, the idea that 9 or 10 years ago you could model and texture a AAA quality model in two days is silly, you may be able to do it today, but that's because with the technology the tools have improved as well (not to mention access to reusable resources such as texture and model libraries that can significantly improve the process). This improvement in productivity has offset greatly the development time involved in making these models. Also, the model quality you describe for the next generation is tech demo artwork (like for Unreal 3), that is not representative of common game assets. I’d say, compared to PS1, common character assets will not even take 2X as long to develop (again, unless they’re being made for tech demos), and if you consider that for many games they can license a good portion of their assets the development could be lower this generation. It’s only “simple math” if you eliminate all the other relevant factors in the equation and just count polygons.

In the end just saying “it’s more polygons, that costs more” is pretty silly. What costs more is creating something at a higher quality, that takes talent and refinement.
This may take a month to execute to a high standard.
And the "to a high standard" is the key phrase here. Creating a model from a source model of 3M polygons is not a big deal (to people who understand the process), but doing it better than the other guy is a big deal if the other guys spending a month on it. It’s like the auto industry saying “we’re jacking the price of cars by 20% because our designers are making better cars”. Well, we’ll still buy the cars, because we don’t have a choice, but trying to pass it off as an unavoidable cost of making cars is ludicrous to a thinking person.
And the same is true of every other discipline: animation, programming, design.
Not true.
If we don't put in at least some extra effort into making our product look better, play better than the other guy's, we'll never make a dime.
Hey, I’m always for making a better experience, but I do not believe that these price hikes have anything to do with that. Heck, put 20% less content in the games and skip the price hike, in that case the experience would be better (I likely don’t finish half the games I play these days).
The consumer is at the wheel here. Not the developer. Developers are giving consumers what they want, and this is what it costs.
That’s a pretty naïve statement, I guess you think all the people who voted for the president felt 100% sure he was the perfect man for the job, but I’d say that most felt he was the better of the two they got to choose from. The consumer can only buy the games being developed and sold, and the graphic quality is hardly a deal-breaker for them (I mean, GTA and WOW hardly have technically impressive graphics, they seem to do fairly well).

Let’s test it though, everyone raise your hand if you’ve been looking at your AAA Xbox games and said “I just can’t stand it anymore, at the end of 2005 my games will suck unless the characters were normal mapped from 3M polygon models!”. The consumer’s at the wheel, bah, the consumer’s strapped to the wheel, now that I’ll believe.

[Mason]

Gas prices are triple what they were 20 years ago, movie tickets are quadruple what they were 20 years ago, but people freak out when games increase their prices by 15%?

If profit margins get too slim or nonexistent, the only guys who survive in the game industry will be the gigantic studios, who will only ever release sure-fire rehashes of their old successes. The most dangerous part is that this sort of stagnation would slow down the growth of the gaming population. Most people who are going to like Halo X or GTA Y are already playing them. Interesting new games that experiment with the medium can pick up new gamers, but tired old remakes or clones can only sustain people's attention for so long.

Right now the only expansion in gaming is a demographic one, i.e. the gaming population ages, the old non-gamers die out, and new gamers grow old enough to hold a controller. This isn't progress.

[roboflavinoid]

Wow, you are, umm, very wrong, I've been a professional game developer for more than a decade and have done almost all aspects of game design in that time <snip>

Well, I'm a developer too, so clearly the issue is muddier than you make it to be. Yes, I simplified the complex process of development to counting polygons because I wanted to find an example that makes the point clearly. Regardless of how talented your team is, more detail and more quality means more work. Better tools that simplify the work still take more work to make.

Perhaps to better make my point, look at 8-bit gaming. Richard Garriott wrote Ultima I single-handedly, did he not? And was it not one of the best games at the time? How much do you think that cost to make? Certainly less than $9 million, which is what our last game cost. Plus at least as much in marketing and distribution costs. And how many people played Ultima I? I gaurantee it was a lot fewer than GTA3. The difference between those two in cost, in size, in quality and sophistication, is entirely due to the force of the market driving developers to outdo one another in an effort to get the consumer's dollar. Because invariably, THE CONSUMER chooses game X-- which is bigger and better than game Y, and likely also cost more to make.

To subtract the consumer from the equation of demand and competition is a mistake. But that's effectively what you're arguing.

If customers aren't willing to pay an extra $10 per game, the forces of the market will sort it out. We *will* find ways to cut costs (we already are). But to argue that people only buy games that look better because we force them to is absurd.

Also-- I need to add because it's really relevant here-- When I say consumer, I'm not talking about us, we, the people who read EA. I'm talking about everyone else. The mainstream consumer, who buys all their games at Target or Wal-Mart. These are the ones who make and break games, and they have very different tastes than we do. We will be happy with interesting gameplay and servicible graphics. I love Katamari Damacy. Yeah, and how well did *that* sell? Maybe it was that gun that we're holding to their heads commanding them to buy Halo 2.

[Taco]

Dave Perry, reminding me why I've never been a Shiny fan, even when it was "cool" to be one.


Edit: Scratch the above. I got the names ordered wrong. I meant Steinberg's quote.

[Orphiuchus]

Yea, of the two people claiming to be developers here one of them is full of shit.

[Mason]

Well, by the math you propose (which is quite dubious) between PS1 and PS2 we saw a 3X higher cost and no price hike. Also, the idea that 9 or 10 years ago you could model and texture a AAA quality model in two days is silly, you may be able to do it today, but that's because with the technology the tools have improved as well (not to mention access to reusable resources such as texture and model libraries that can significantly improve the process). This improvement in productivity has offset greatly the development time involved in making these models. Also, the model quality you describe for the next generation is tech demo artwork (like for Unreal 3), that is not representative of common game assets. I’d say, compared to PS1, common character assets will not even take 2X as long to develop (again, unless they’re being made for tech demos), and if you consider that for many games they can license a good portion of their assets the development could be lower this generation. It’s only “simple math” if you eliminate all the other relevant factors in the equation and just count polygons.

In the end just saying “it’s more polygons, that costs more” is pretty silly. What costs more is creating something at a higher quality, that takes talent and refinement.

It's fair to point out that the increases in tool productivity have indeed kept costs down, but in the end if we were making Quake 1 quality models using modern tools it'd certainly be faster than Quake 4 models, or Quake 1 models using Quake 1 tools. Equating polygons to pennies is certainly false, but complexity isn't free, either.

You're right that the main factor is experience and talent. But the game industry has some substantial problems with retaining that experience and talent. Better compensation and schedules would keep people from burning out a while longer, you'd imagine.

And games are a business. If ($50 - [publishing overhead]) * [total number of sales] - [cost of game development] is consistently a negative number, fewer games get made. Keeping costs down through efficiency and better tools is a great thing, but unless you're licensing your modules and assets there's a certain irreducible amount of complexity.

Games are a luxury, cars are a durable necessity. For cars, most auto makers keep prices of their low-end vehicles within the range of much of the population, but then hype up their platinum-edition SUV to make huge profits. Until the game industry can figure out a way to make rich idiots pay 4x as much for basically the same game (excluding the MMO model), you can't really compare automobile and game pricing.

[roboflavinoid]

Games are a luxury, cars are a durable necessity. For cars, most auto makers keep prices of their low-end vehicles within the range of much of the population, but then hype up their platinum-edition SUV to make huge profits. Until the game industry can figure out a way to make rich idiots pay 4x as much for basically the same game (excluding the MMO model), you can't really compare automobile and game pricing.
That's an excellent point. The industry is kinda doing that... with special editions and the like. Also, there is cross-marketing and other product tie-ins. It's ugly, and none of us want it, but if it keeps costs down, and prices down, it's always an option.

[Mason]

That's an excellent point. The industry is kinda doing that... with special editions and the like. Also, there is cross-marketing and other product tie-ins. It's ugly, and none of us want it, but if it keeps costs down, and prices down, it's always an option.

True, but a special edition is $10 more, not an extra 300% of pure profit like the high-end models of cars. Not to mention the auto industry has a slightly lessened instance of consumers stealing their product.

[Zeal]

All I can say is that Microsoft and Sony better get ready to accept rampant piracy this generation, because that's what most people are gonna resort to.

[roboflavinoid]

All I can say is that Microsoft and Sony better get ready to accept rampant piracy this generation, because that's what most people are gonna resort to.

I'd argue that piracy would still be a big problem even if games cost less. I think the consumer's expectation that products-- particularly media like games, movies, and music-- grow increasingly cheaper has gotten to the point where many think they should be free. Stealing them has become more culturally acceptable, easier, less preventable.

If we could figure out a way to offer games for free, and I would still get paid-- that would be a great day. I think somewhere someone will find a model (it looks like music is already moving this way) that is different, not free, but closer to it. You pay for exactly what you want, and the charge for that little thing is small ($.99). I can't think of a perfect example for games, but that doesn't mean someone else won't.

[RMan]

To subtract the consumer from the equation of demand and competition is a mistake. But that's effectively what you're arguing.
No, that was not my point, my point was that the consumer is not in control of these types of market forces, I’m sure only about 10% of common gamers would rather pay more for their games if they had better graphics. Most gamers I know think the prices are too high right now, this has little to do with what the consumer wants.

I can lay this out for you fairly simply. The primary force here is MS wanting to grab a greater market share from Sony, and the only clear way to do it at this point is with a new console system (which is likely a year or two too early from a purely technical and financial viewpoint). So, the best way to sway consumers currently is through brute force marketing through TV/print/internet and since people can’t play it yet, screenshots and movies are the only thing that can really show the difference between the current generation and the next. IOW, the focus on graphics (thus the resulting increase in costs) is being fueled by the marketing, and absolutely not by the consumer.

The big publishers clearly benefit from the higher prices since it strengthens their IP and limits competition, but I think in the long run it will be detrimental due to the obvious decrease in diversity it’ll promote (of course, we’ll never know how much).
If customers aren't willing to pay an extra $10 per game, the forces of the market will sort it out.
By forces of the market, do you mean MS or Sony? :) Yea, and I think they will, really, that's why I said in a year or so they'll go down (basically, they'll be the only game in town for some time, so they can rail the freakos). Again, I'm just never swallowing the idea that they’re jacking the price because gamers demanded them to spend more money on the games, that’s absurd. Ideally it’d go in the opposite direction, I think games need to be shorter and cheaper, then we’d get games that I wouldn’t get bored with half way through and we wouldn’t expect them to be loaded with grand new features so we will accept that $60 price and 2 or more year wait between sequels.
We will be happy with interesting gameplay and servicible graphics.
I personally think you have that backwards, I think it's the hardcore crowd that's more interested in the graphics, the common gamer doesn't care as much.

[RMan]

Gas prices are triple what they were 20 years ago, movie tickets are quadruple what they were 20 years ago, but people freak out when games increase their prices by 15%?
Honestly, the argument that it's because of inflation would be OK for me, but I just don't agree with the development cost argument. I mean, I can buy a $20 DVD (at the most) for a new movie that cost 100M to make, nobody's gonna tell me that a video game that costs 3 times less to make should cost 3 times more and that’s the way the consumer wants it. Granted, movies have additional distribution channels (Theater and TV) and don’t have to pay licensing fees, but still, if games were shorter and cheaper I think they’d definitely flourish much more than they are now.

[roboflavinoid]

IOW, the focus on graphics (thus the resulting increase in costs) is being fueled by the marketing, and absolutely not by the consumer.

Ok, I see. We're really talking about the same thing, I guess. I agree that marketing is driving this, but my point is that marketing does what it does because it has an audience. If focus on graphics and size means more sales, thats what they do. If not, they don't.
The big publishers clearly benefit from the higher prices since it strengthens their IP and limits competition, but I think in the long run it will be detrimental due to the obvious decrease in diversity it’ll promote (of course, we’ll never know how much).
I think it's hard to say if it will be detrimental in an economic sense. Certainly it is already detrimental in a creative sense. Our team feels perpetually burdened by the need to hit a certain technical watermark: for our audience, for our publisher-- and this strain prevents us from taking the opportunity to really break out and get creative. Everything must be focus-tested and reviewed, because so much money is at stake. Ultimately, it is sound business, but terrible for true creativity. Again, though, I'll point to games like Katamari Damacy. Creativity alone does not necessarily = sales.

Also, I wholeheartedly agree about size and cost, personally. I have no need of a game that is 60 hours long, unless it is the best goddamn game ever. (but that would not have any bearing on its length)

[PixelSamurai]

The $60 price point will highlight to every gamer that Xbox360 games are much more sophisticated and different when compared with titles from the existing generations. The consumer value found in Sega's titles, Condemned: Criminal Origins and Full Auto, will be there - visually and from the standpoint of building experiences that are beyond anything seen on today's systems.

I've seen nothing of the next gen games that makes me think they'll be any different from this gen but with better graphics. It sounds like he's saying we'll be willing to pay more for games because they look prettier, which is a load of horseshit. In Gamefly I trust!

[Demize99]

Based simply on inflation, a game you would have bought for $50us in 1990 should now cost nearly $75. We're underpaying, there's no way around it.

Source (Consumer Price Index Inflation Calc):
http://data.bls.gov/cgi-bin/cpicalc.pl

[Fernie417]

I think somewhere someone will find a model (it looks like music is already moving this way) that is different, not free, but closer to it. You pay for exactly what you want, and the charge for that little thing is small ($.99). I can't think of a perfect example for games, but that doesn't mean someone else won't.

I suppose this would be a good argument for the benefits of episodic content. Instead of having someone pay sixty bucks for something they might tire of a few hours in, sell pieces of the game for say, ten or fifteen bucks, something easier to swallow than the full price. Add in online distribution and I wouldn’t be surprised if this sort of a business model becomes more common, maybe even successful in a few years. Probably not on the scale of iTunes but it’s something to aim for.

[pdeupree]

There are two quotes I've seen that aren't quite correct, or at least the analysis of them isn't quite complete.

"I understand the price rise, but believe it is a mistake. Look how many $75 video tape films sold compared to $20 DVDs."

If I remember correctly, video tapes that were sold for $75 or so were ones that were earmarked for sales to rental companies and that was how the film companies made their money back since the economics of selling a video tape for $20, and having a rental agency rent it out at $5 a shot didn't work out. For as long as I can remember (and my family had a video recorder before wires remotes existed for them) general market video tapes were about the same price that DVD's are today.

The other quote is:

"It is actually surprising that game prices haven't risen in the last ten years."

This should actually be updated to say that game prices have not risen in the last twenty years, not ten. I still have the receipt from the copy of Wizardry I bought for my Apple ][ and it retailed at $49.95. Heck, the copy of Ultima that a friend and I bought came in a ziploc bag, so packaging was no frills back then.

What this means for where games "should be at" price wise is another topic, but I still find it interesting that, with inflation hitting everything from gas, to clothes, to food, the one thing that has stayed almost exactly the same over the past 20+ years has been pricing on video games and entertainment media in general.

Of course, it was easier to handle many years ago since maybe 3 or 4 games a year came out that one was interested in buying, or possibly 6 record albums. Back then movies were still cheap enough, and VCR's expensive enough that it still made sense to go to a theatre rather than buy a video tape, so that wasn't a booming business.

Eh, but that's many years ago.

[Mason]

Honestly, the argument that it's because of inflation would be OK for me, but I just don't agree with the development cost argument. I mean, I can buy a $20 DVD (at the most) for a new movie that cost 100M to make, nobody's gonna tell me that a video game that costs 3 times less to make should cost 3 times more and that’s the way the consumer wants it. Granted, movies have additional distribution channels (Theater and TV) and don’t have to pay licensing fees, but still, if games were shorter and cheaper I think they’d definitely flourish much more than they are now.

Picking and choosing factors that are "justifiable" doesn't really make sense. Like I wrote earlier, if ($50 - [publishing overhead])*[total sales] - [development cost] isn't positive, the business of making games has problems. Each factor there can be jiggered independently, but the equation still needs to balance.

At present, the industry has survived because publishing overhead has gone down slightly, while total sales and development costs have risen, no matter how you want to count it. Smart guys like Valve are working on ways to drastically reduce publishing costs, as well as roll out low-priced, episodic content. Good ideas. But any rational future plan can't be based on the assumption that sales will continue to climb sharply, as all growth industries reach saturation at some point.

And in the end, the more profitable games are, the easier it is to bring new game concepts to market. When everything except the year's few blockbusters are perpetually teetering on the edge of being profitable, everyone suffers. Studios play it safe with their projects, developers get worked like dogs, and the lowering of quality and innovation slows the growth of the game market.

And of course, even if games are 3x the price of DVDs, a game is considered a ridiculous shaft if it doesn't deliver 6x the content, at least. With 20 hours of entertainment being the acceptable standard, gaming is still a pretty cheap hobby, for the average consumer.

We agree, though, that making game releases less monolithic would certainly be healthy for the industry. Online distribution makes that possible, although Valve's rumble with their publisher likely scared some away from the concept for a while.

[RMan]

I agree that marketing is driving this, but my point is that marketing does what it does because it has an audience. If focus on graphics and size means more sales, thats what they do. If not, they don't.
Clearly marketing is designed to appeal to it's audience, but if the development is being fueled and directed by marketing, then saying it's being directed by consumer demand is incorrect. Marketing’s purpose is to steer consumer demand, not to react to it. IOW, you can’t herd sheep in a direction then claim they must have wanted to go that way because that’s where they went.
I think it's hard to say if it will be detrimental in an economic sense. Certainly it is already detrimental in a creative sense.
I think a lack in diversity almost invariably results in reduced consumer interest and an overall smaller market (especially in entertainment where your goal is eliciting an emotional response, which is more impactful with change), but clearly it’s difficult/impossible to discover the exact effect. IMO, the impact will be somewhat serious, but I think between the internet and Nintendo (in the console market) will help keep things in check and minimize the damage.
Ultimately, it is sound business, but terrible for true creativity.
I would argue that this makes it not a sound business strategy, like "Nash Equilibrium" describes, the “war is good” theory of economics is not necessarily sound in the long run. Strengthening your bottom line while eroding your overall market is not strategically sound, unless your in it for the quick buck.
Again, though, I'll point to games like Katamari Damacy. Creativity alone does not necessarily = sales.
No, but it’s necessary for the market. It does seem you have some kind of information about how much this game sold, if it’s not based on assumption could you please print it here? I thought the game did real well, but I have no figures. Clearly this kind of game cannot compete with Halo 2, but nothing can without Halo 2’s marketing.
Also, I wholeheartedly agree about size and cost, personally. I have no need of a game that is 60 hours long, unless it is the best goddamn game ever. (but that would not have any bearing on its length)
Yea, this is an aspect of games that has been bothering me for years, and I think many players would be on board with me on this one. This is another good example of where the consumer’s wishes do not play into the products development, because where this would be good for games overall and result in possibly greater product returns and an assuredly stronger overall market, it does not strengthen the properties of “the powers that be”, so it’s being resisted. Eventually, I think it’ll change and go in that direction, but I wish it’d happen faster.

[RMan]

And of course, even if games are 3x the price of DVDs, a game is considered a ridiculous shaft if it doesn't deliver 6x the content, at least. With 20 hours of entertainment being the acceptable standard, gaming is still a pretty cheap hobby, for the average consumer.
True, but what I was referring to was the cost vs. price, the purely economical side of things. When I look at my movie vs game collection, I have likely 4x the number of movies than games, and I like games more. Movies sell for substantially less money, which has resulted in my buying more movies, and them ultimately making more money from me, even though ideally I’d rather buy games. The PS1 generation saw an average of 5 games sold per console system, which equates to about one game a year (which I thought was crazy until I started looking at my collection for all my systems). This means that if that trend continues with the current generation and the next (which at these prices it will) then only a few franchises will flourish for obvious reasons.

I think the solution is not just price point, though, it’s also the length of games. It’s pretty arguable how much money the consumer is willing to spend on games, but it’s far more obvious how much time they have to play them. If prices fell to $20, sales likely wouldn’t support development cost without games being cut at least in half in length. IOW, no matter what the cost, I wouldn’t have the time to play enough games. Basically, if the cost was $20 for 6 to 8 hours of gameplay (as opposed to an average of $50 for a comparable 25 hour experience), I bet the average player would buy 4X as many games, I’m quite sure I would.

[bapenguin]

You can't apply standard inflation to the games industry. Have computer prices inflated since 1990? I don't think so. Now you can get a PC that's 50x more powerful for 1/4 the price of what you paid in 1990.

Sure now it takes more man hours and more time to make a game, but you also have a greater market penetration.

The electronics market place simply does not have inflation, it does the opposite of standard consumer goods...

[earthworm48]

Does it cost more today to get the equivalent amount of power now though? (Like, what was a good gaming rig 10 years ago, look at its price then, and what a gaming rig today which is like the same level of power that the one 10 years ago was, and its price, if you get what I mean).

Sorry if this is a bit unclear.

[Crabby]

That's exactly what he said already.

[earthworm48]

I asked a question. He was saying that the power if the PC for the same money was a lot lower, but all components age, I was wondering about the equivalent power.

Arrg, still can't quite phase my question correctly though.

[PimpMasterToTheMax]

The main problem with comparing the price of video games (and other digitizable media) with other hard goods, is that the price of publishing the media is miniscule compared to the cost of development. Publishing 1,000,000 copies of a game does not cost 10x the amount it costs to publish 100,000 copies of a game. The main reason that we have not seen inflation affect games is because the overall size of the game market has been growing enough to cover the increase in development costs. When market growth slows down, we will start to see increased prices, smaller games, and/or alternative delivery methods start to take hold. We'll be seeing this with audio and video content as well, as bandwidth increases and people get more and more used to paying as they go. What we're experiencing right now is the stage when software is defining its own outlet that is different than the traditional hardware outlets (retail shops), since it is finally possible. Just like organized religion, the traditional retail model is trying very hard to hold on to its place in society, which just serves to make things a little messy and confusing in the interim. Evolve or die.