Are Games Too Expensive?

[Evil Avatar]

Speaking at the annual DICE Summet, Valve Software's Gabe Newell suggested that publishers and developers may be losing out on increased profits due to high prices. Edge Online has the news (http://www.edge-online.com/features/valve-are-games-too-expensive),

Although Valve was initially afraid that volatility or variability in pricing would confuse or anger its customers--or even cannibalize retail sales--Newell says that was not all the case.

In fact, it dramatically increased sales. Illustrating his point, Newell showed the results of a Left 4 Dead promotion Valve ran last weekend, which cut the price of the game in half to $25. The discount (and promise of new content for the game) rocketed sales of the game on Steam by 3,000 percent.

"We sold more in revenue this last weekend than we did when we launched the product," says Newell. "We were driving a huge uptick in revenue and attracting new customers."

[Evil Avatar]

Sorry we are off to a late start today. I guess all the sites that steal news from us all day must seem pretty empty. ;)

[[GH-SC]Ryctor]

Pankakes! also games are fucking expensive.. its why I only play them on my Commadore 64. That shit is cheap!

[LilAbner]

If you go by face value, I guess they could be considered expensive...but if you go by the number of hours of entertainment a $60 game gets you, it's usually an amazing value when you compare it to a night out at a movie.

[alienchild]

If you go by face value, I guess they could be considered expensive...but if you go by the number of hours of entertainment a $60 game gets you, it's usually an amazing value when you compare it to a night out at a movie.

Except for the fact that we pay 69.99 euros (90 dollars) for games in most part of Europe. When we had american prices on Steam I shopped like hell (150+ games in under a year). After the change I won't buy anything unless its on sale. For 90 dollars I'd rather get shitfaced, get two blowjobs and buy new strings for my guitar... all for the price of say... Haze? :P

Once again, The Blob (that is, Newell) is right on the money. Literally. Valve not only have great deals on their games, but they also have great games.

[Deunnero]

Yes, yes they are. If all games were $39.99 I would would probably get most of them, most of the time.

[Virtuoso]

Gabe Newell as always speaks out in favor of the customer.

I love this guy.

[MasterKwan]

Except for the fact that we pay 69.99 euros (90 dollars) for games in most part of Europe.

And how much of that is the VAT tax? Since we don't have a VAT our stuff will will always be cheaper.

[JasonSuave]

Once games took the jump from $49 to $59, I seriously started to curb my buying habits. At $49, I would buy games just because they got good reviews, and if I liked the genre, I'd buy a game regardless of how low the reviews were (sigh...Sonic).

Now, regardless of whether or not I like the genre, I will only buy a game if the meta score is above an 85-90%. I don't care if it's a game that I'd been eyeballing for months (too human). If they don't even meet the minimum score, I won't even consider them.

I think the analysts need to get out and realize why software sales are so high on the wii, despite the fact that most of their 3rd party games suck. True, there are twice as many wiis in circulation, but I bet part of the reason is also because the max game price for the wii is $49.

Also, we've seen this problem with the movie industry, which hasn't exactly been growing in the past few years. People just can't stomach paying over $10 for a movie, and I think that we've seen that same effect about 10 years back when game prices started breaching the $40 mark. But then again, it's all about profit margins so regardless of how many extra sales may be generated by a $39 price point, it's just not possible for the developers to make money off that price.

[IveGotThatWiperFluid]

I wish I could say I'd definitely buy more games if they were less expensive, but I have far less time than money and buying more games won't help that.

I'd probably make more impulse buys on "iffy" games like I've done on some Steam sales. You know, games that you want to play but are too expensive to risk $60.

[Hydroeric]

Too expensive for whom? Price is and always will be a moving target. Mainly because games are a leisure good for most and a necessity for some. Just like drugs baby!

"The games industry is not pricing its products correctly. It's only through the experimentation that such services as Steam allows will the industry be able to find the golden ratio of price and sales..."

While generally true this not some awesome revelation. Ask Nintendo why they haven't dropped the price of the Wii or the DS. I bet it is because they have no issues with people buying it at that price.

Supply and Demand. As price decreases QUANTITY demanded increases. Trick is determine by how much it will increase when a change in price occurs.

Disclaimer: Hope all that is right. Studying for my econ test and this seemed like a real world example to apply some of what I have learned. If any econ people want to correct me I would appreciate it. :)

[JasonSuave]

Supply and Demand. As price decreases QUANTITY demanded increases. Trick is determine by how much it will increase when a change in price occurs.


Well said. There's a very good reason that games are priced at $59, and I can guarantee that the developers have done their due diligence in their financial modeling.

And just for reference. Say the final cost of a game is $30; selling at $40 will yield $10 in profit, while selling at $60 will yield $30.

That means that they would either have to sell 1 million copies at $60, or 3 million at $40 just to get the same profits.

At the end of the day, businesses car far far less about the actual number of copies sold than they do about their bottom line...

[PsychoticVile]

I have to say I bought it at $25 even though I already own it on 360. I probably won't play it much but I wanted access to the community created content that you can't get on the 360 and for $25 it was worth buying it for the PC.

[IveGotThatWiperFluid]

That means that they would either have to sell 1 million copies at $60, or 3 million at $40 just to get the same profits.

This is true, except that the percentage of the revenue that is considered profit changes over time. By profit I mean the actual money that is made above and beyond the cost of creating the game. The physical cost of the game is almost nothing in the long run.

So as an extreme example, the first million copies at $60 might yield $0 in actual profit (just recovering expenses) while the next 2 million at $40 are generating pure profit (and could arguably sell faster than another million still at $60).

[Apushmataha]

I don't know about games being to expensive, but the current cost of games makes do me a lot more careful about what I buy. A good review isn't enough on its own to persuade me to buy a $60 game, though I thought $50 was worth it. Go figure.

[Virtuoso]

I don't know about games being to expensive, but the current cost of games makes do me a lot more careful about what I buy. A good review isn't enough on its own to persuade me to buy a $60 game, though I thought $50 was worth it. Go figure.

Damn, another Oklahoman. There are more of us than I thought....

Anyway, because I didn't really buy my own games until they were 60 bucks, it feels perfectly normal to me. I will still buy a newer game as long as it gets decent (70+) meta reviews and it is in a genre I like.

[lockwoodx]

Games are way too expensive. I buy a game when it releases about once a year, and the rest of the time wait for a crazy gogamer sale.

Developers and publishers aren't always the ones to blame tho. Microsoft is the scum of the galaxy when it comes to nickle/diming customers and the infamous "Microsoft tax" on games developed for the xbox products.

[balamoor]

Yes games along with everything else are way too expensive, these days unless a game is passed my way by someone I know in the Biz or is just too damn good to pass up I'll pass. Dawn Of War II is a perfect example....it did not pass my: oh shit I will die if I don't own this game test so it's a no buy until it goes on 48 hour madness sale at least. if we had more 30.oo games out there I would take more chances and actually grab a mediocre title more often...and so would a hell of a lot more other players.

[Jadbalja]

I also wait until something is on a 48 hour madness sale, or until a price drop happens. Case in point: Mass Effect, which I just bought a few weeks ago when it dropped to 19.99. There are a few franchises I would make an exception for, like Thief, but otherwise I'd rather buy more games at a lower price.

[TheBot]

Yes, yes they are. If all games were $39.99 I would would probably get most of them, most of the time.

I would as well.

One of the reasons my fiance says no to buying an xbox or ps3 is because the games are $60. That and she says I have too many I haven't played already. But mostly because the games are too much money. Keep them at $50, or lower at $40 and I'll buy them all day long(at $40).

[murpes]

I also wait until something is on a 48 hour madness sale, or until a price drop happens.

Same here. There's the rare title every now and then that I have to have on day one, but mostly I just wait a few months and then snag it substantially cheaper. That's also one of the big reasons as to why I'm mostly a PC gamer - console titles don't seem to drop in price as quickly or as steeply.

[shpankey]

They may be new, but pfft... who buys new anymore. I just bought a combo disk of Forza 2 and Marvel Ultimate Alliance for $7 on eBay. $10 shipped. I also trade with friends, once they finish a game and I finish mine, we swap. Then I buy stuff cheap on XBLA. I'm also in a PSN group of 5 where we setup a separate account for us all to share... we all put in $20 every month (for a total of $120) and buy games for the PS3. Basically it splits the cost 5 ways and we all get it.

Just have to be a smart shopper nowadays. Games become so cheap so fast that you usually don't have to wait all that long anyhow.

[shpankey]

p.s. another Oklahoman here (Glenpool). :P

[drakkarim]

how long have i been saying this? : "profit through volume" the walmart model of selling tons at cheap prices.

now he opens his yapper long enough to blurt out some common sense and he's going to win some nobel peace prize probably.

[spdiscus]

I have no way of knowing if games are too expensive for the market, but they are a bit too expensive for me. I think my sweet spot* is about $34.99.

And I'd never compare it to 'enjoyment time versus a night at the movies.' I stopped going to movies long ago - somewhere around $7.50.

*sweet spot = Point at which I'd buy a game based only on word-of-mouth, without trying a demo or renting. This point is unrelated to platform or play time greater than about six hours.

[Zurik]

For me games are either a day one purchase or not worth my time. There's very few games that look just okay but I purchase anyway without alot of positive reviews. I also really prefer new games as I don't abuse my discs and keep them in mint condition. Not sure how people mess up the discs so badly if all they do is either play them in a machine, or keep them in the case.

[Pluvious]

I stick to buying games that I know will be large and have a lot of replayability. ie. GTAIV, Fallout3, Mass Effect, FableII etc.. I expect a lot for my $60. Well.. let's call it $70-80 because of all the DLC $10 packs. Let's not forget about that..

[AversionFX]

Yes, games are too expensive. There's not enough value in today's gaming market for the price of entry. The price of a game should reflect its value across the entire spectrum, rather than between such obvious extremes as Braid vs Gears of War. I would pay 60$ for Call of Duty. I sure as fuck wouldn't pay 60$ for Heavenly Sword, because it doesn't offer nearly the same amount of value as Call of Duty.

[pwnophobia]

There are very few games that I need to buy on day 1. All the rest, like GTA IV, I wait until I can get it used for $34.

Left 4 Dead is a great game and I love to play it but I wish I would of bought it for $25 because I don't have enough people online anymore to justify having spent $50 on it. It has been collecting dust for awhile now :(

[alienchild]

And how much of that is the VAT tax? Since we don't have a VAT our stuff will will always be cheaper.

In my country they put a 25% tax on everything (except food, which is 14% I believe).

[alienchild]

I forgot to add (and I can't edit in a newspost); on Steam, I don't pay any VAT at all, but the games are still prized the same as in retail. Makes me want to puke in my soup :(

[EL CABONG]

Yes games cost to much. Plus Left4Dead is a hella short game and not worth 60 bones.

[Johan]

Games are too expensive if you buy them at full price. In other words, if you have the impulse control of a dog in heat, you'll plunk down $50+ for the "latest/greatest" rather than WAITING a while for the absolutely inevitable price drop.

I rarely pay over $20 for a game, and I buy them all new. I wait. I get lower prices, more content (game of the year editions, like Oblivion...Ninja Gaiden Black...Fable Lost Chapters...all three for $20 each), and more bang for my buck.

[RMan]

L4D was not worth $50, I wouldn't have bought it without the price drop. After playing it, I'd still say, definitely worth $25, not worth $50 for me (1 of the episodes I still haven't played, but as similar as the other three were, I'm not that jazzed to get to it). I think it's a good strat though, charge the $50 for people willing to pay it, then those that aren't, charge them less later. Still, I've seen very, very few games I think are worth $50, I think they're wildly overpriced in general, but as long as a significant number of people will pay these high prices, publishers will charge them one way or another. As Johan said, you can get them cheaper, almost invariably, mostly just by waiting, so high game prices are arguably not a serious complaint.

[eilaw]

I tend to buy older games and get them off Ebay or Craigslist, where great deals can be found for both used and new titles for my consoles. If games were cheaper, say $30 to $40, then they'd get me with the impulse buy - which is how Steam gets my money with their weekend sales.

Other than that, even for the big blockbusters, I usually mull over the price then end up playing something that's already in my library until it can be found cheaper.

[netcraazzy]

The $20-$30 price range has been the sweet spot for me lately, picked up CoD World at War when it was $29.99 a while back. I also have a very large PC games collection so I like to go back and play old stuff a lot too. This week I've been playing Starcraft with a few friends.

[Major Dan]

I want to say yes, but realistically they are not. Considering I have been paying $50 for games since 1984. They probably should have gone up more then to just $60. Having said that, it seems that 8-10 hours of gameplay for $60 isn't the greatest deal out there. I still buy new, but I try not to pay the full $60. Buying 20-30 games a year can get expensive, my only true hobby. i really like to game.

[Wyrm]

There are lots of different ways to look at this, but here's my take:

With a game like Call of Duty 4, it sells so many millions at that 60 dollar price point, that they can leave it up there and not worry about it still flying off the shelves. They waited a long time to drop the price down with the new edition, because they didn't have to. They can wait until sales lag, and then adjust the price accordingly way down the road.

But most games aren't like this. There are lots of games out there, and there are always more coming out. Those companies that are not big hitters have to realize that in order to reach a wider audience, a lower price point is the way to go. Sell it at 60 for a few months, and if sales aren't great, lower the price, and advertise some more.

Valve recognizes that by giving someone a weekend deal, they're very likely to cave and buy it, especially when the deal is phenomenal. I'm actually of the opinion that they should have released Left 4 Dead as a 30$ game in the first place, but that's a different discussion. Valve is smart, because they knew people would pay 50$ for it right out the gate. I did, as did many others.

[Phread]

With few exceptions, $30-$40 is my "buy" price for a new game. Most $60 titles I either rent or don't care enough to play.

Most of the time, I'd rather pick up a couple of games on XBLA and save a few bucks...

[Syl]

I generally buy one or two $50 games a month, then 3 or 4 $20~ games a month.

Yes, I buy 5 or so games a month. I can manage this on less than $1000 a month and i get by perfectly fine. I just manage my money well in other situations.

[drakkarim]

Valve is smart, because they knew people would pay 50$ for it right out the gate. I did, as did many others.

but you're missing the point, what they're saying is they're losing out on volume of sales.

at $50 a hit, they're going to sell a lot less of ANY game, than if they released it at say $25.

but the important thing is in the details.... would they have sold MORE than twice as many boxes at $25 than at $50? if they would have, then they would have made more money for charging less.

you also have to figure in the gray/black markets:

those that saw the $50 and said 'screw that i'll buy a used copy' from which valve didn't make ANY money...

AND the ones that said "50 is too much, i'll wait a few weeks/months" ...and then forget about the game all together and never pick it up,

AND the ones that said "50 my ass, i'll get the warez and play it with my LAN buddies"...

money lost on 3 opportunities, a very good amount of which they would have MADE if they simply charged less from the start. a lot of those lost opportunities don't come back, even at these retarded 'sales' of theirs.

people move on.

[Suicidal ShiZuru]

Only if it sucks, whenever I have to pay full retail for a game its usually worth it and I feel fine about the price. When the game is horrible I would love to burn down a publishers building since I feel ripped off, I would feel the same even if it wasnt full price... Im in the group of "give me a demo or go to hell" unless I decide to go to torrents... Which if it turns out good Ill pay.

I finally got L4D thanks to the sale, It was still barely worth it for that price...

[TheBot]

L4D is definitely worth the $50 to me. But let me explain why. First, it's a stand alone game and offers single player, multiplayer co-op and versus. Additionally they will be adding content like maps and I'm sure they'll be adding weapons and new bosses and things of that nature. It will be worth the $50 with the extra content they'll be producing.

And one last point, think of all the hours you are getting out of the content they already put out. Have you hit the 50 hour mark yet? $1 an hour, think about it. It's pretty cheap entertainment when you think about it. You pay what, $10 for a movie now that's 2 hours. Renting movies is like $4 each.