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The Game Pricing Debacle

Author’s Note: This article was written three months ago when the PS4 was first announced. However, with the current situation with the Xbox One, the points in this article are even more relevant.

The next generation of gaming consoles is nearly here, and people are preparing to pay big bucks on new hardware. However, what is more concerning than the price of the hardware itself is the new standard price of retail games. Nintendo has finally raised their game prices to $60 (along with $300+ for the console itself), but how much will Sony and Microsoft raise their game prices (if there’s going to be a price hike at all). A few weeks ago, Sony gave us some comforting news that PlayStation 4 games will have a wide variety of game prices, from $0.99 to $60. It seems like Sony doesn’t plan to raise game prices for PS4 games, however, EA has other plans. During their next-generation press conference this week, EA announced they expect game prices rising to $70 on the PS4 and the next Xbox. If that’s not bad enough, EA also announced that they’ll be implementing their controversial micro-transaction system in every game they release in the future

Mark Cerny shrug

This image will never get old

Gaming has always been criticized for being an expensive hobby and practices like those above aren’t helping matters much. Many find it ludicrous to pay hundreds of dollars for a game console and then have to pay $50 or more for each new game. Some were able to get around this via game rentals and borrowing games from friends but the expensive stigma remains. Despite this, things are looking bright for gaming in the digital space, with smartphone and social gaming bringing new people to experience and appreciate gaming as well as digital stores such as Steam and premium services such as PlayStation Plus providing “hardcore” games at cheap and reasonable prices.

But for the traditional gaming industry, things don’t look so bright. Game sales at retailers have been decreasing year after year, with some game developers failing because their games haven’t sold as much as they needed to break even, much less make a profit. Due to the poor economy, people are spending less on games, and if game publishers are expecting customers to pay $60 for a game and even more on downloadable content on top of that, it’s no surprise that people are switching to cheaper alternatives with mobile gaming, or at the very least, sticking to game franchises that they are familiar with. In order for such a market to keep its relevancy, the industry needs to change in the following ways:

Gaming is Expensive…

Since the days of the Atari 2600, people were used to paying $200 for a gaming console and then paying $40 to play home ports of their favorite arcade games. However, when third party developers started making games for the system, since Atari had no centralized standards for their console, they were sold cheaper than what Atari was charging for their games and started selling more as well. Unfortunately, because the quality of the cheaper games were poor, they caused people to lose interest in gaming altogether, causing the gaming crash of 1983. When Nintendo and Sega entered the gaming market in the mid-80’s, they set their own standards for game prices and game releases, expecting a profit for every game sold on their system, which has been a standard practice for every console (except the 3DO) to date.

 

Pictured: Prices of game consoles over the years

Today, however, there are many different platforms for people to play games on. No longer do we need the support of game publishers or console manufacturers to release games. With the help of digital distribution, game developers can make a mutual agreement with a distributor to sell their games for a small cut of the profits. With this arrangement, game developers could make more money from their games than they could on consoles (where, when you cut console maker royalties, the publisher’s share of the profits, and marketing, totals around 10-20% of the game price going towards the developer).

Now that the games industry is switching its focus on the digital game market, game publishers and developers need to get used to the new pricing scale on these new platforms. No longer is $60 a feasible price to pay for a game when you can get many “AAA” titles for cheap on many digital platforms, and although it sounds bad for game developers, it can be a good proposition in the long run. Not only are game developers making more money for every game sold, but they could also do so by making their games cheaper as well. If game prices are lowered to $40 or even $30 at digital distributors, game developers could make more money on each game sold than compared to console games ($21-$28 per game vs. $6-$12 per game). Since there’s no need for a publisher in the digital space, developers will also have more money to spend on marketing and for future projects.

Distribution of the cost of console games

Even in the retail space, $30-$40 games can work. Although game publishers and developers may not make as much money as they would in the digital space, it can be compensated by more sales. The major complaint with the current gaming market is the fact that nobody tries new games anymore and people only buy games from franchises that they are familiar with (Call of Duty, Halo, GTA, Nintendo games, etc.). The problem is since games cost too much, people are less willing to risk $60 for a game that they may or may not like while they’ll more likely spend money on something they’re familiar with. Especially now that game developers are implementing anti-used game measurements to games and the digital space doesn’t allow the reselling of games, the risk of buying a game have increased dramatically. If game developers lowered the cost of their games, people would be willing to try out more games, which will increase game sales.

There’s Hope in Digital Distribution…

By this point, there are many complaints that are saying that blockbuster games couldn’t work in this sort of environment because they cost too much money to produce and advertise. Some argue that if publishers were to price their games lower than they are now, developers wouldn’t make enough money to keep producing the blockbuster titles we expect. Although game budgets are a different issue entirely, keep in mind that bigger budgets don’t automatically make games better. Downloadable games such as Braid, Bastion, and The Walking Dead: The Game have rivaled the single-player experiences of retail games by providing more in-depth stories and interesting gameplay mechanics. Multiplayer games such as Minecraft, Team Fortress 2, Tribes Ascend, League of Legends, DOTA 2, and Quake Live have provided more interesting multiplayer and co-op mechanics than many retail games released this generation, and they range in price from free-to-play to $20. Even mobile games such as Temple Run, Words with Friends, and The Pinball Arcade provide many hours of entertainment at affordable prices which many people find to be just as appealing as retail games.

It’s completely free and it’s one of the biggest games in the world currently

Big budget games don’t need to die, publishers just need to make changes to their direction and business models. The reason why many of these cheaper games succeed is not just their price, but because of their unique gameplay. Because of the risks associated with trying something new, game developers have relied upon copying ideas of other games in order to boost sales of their products (Call of Duty and Uncharted have been popular targets this generation). If games were cheaper, perhaps developers wouldn’t be as afraid to try out new game ideas and developers could have more freedom to innovate within their games. Although it may seem strange to propose lower game prices with the industry transitioning to a new console generation, but not only could it increase game sales, but it cloud bring forth more innovative and unique games, which could be a positive for everyone in the industry, not just consumers.

DLC Woes

Before I begin this discussion, let me start off by saying that there is nothing wrong with downloadable content (DLC). They are similar in concept to the expansion packs PC gamers have been used to for years but usually smaller in scale. If done right, downloadable content can add many hours of gameplay to an existing title. However, DLC does become a problem when it becomes detrimental to the final product, which occurs far more frequently than one might expect.

Recently, game developers have been experimenting with “Season Passes” which give players the ability to purchase all future DLC at once at a price that’s cheaper than buying all of the DLC individually. This may sound good in theory; but it doesn’t always work in practice. The idea of DLC is to expand the experience of a completed game. However, with game developers announcing downloadable content for games before they are even released and launching downloadable content alongside a “full” game, they run the risk of ruining their game’s image.

We know it’s coming, but you don’t need to flaunt it yet

Many people complain about downloadable content because they feel that game developers purposefully cut content from their games in order to sell it later. Although many within the industry dismiss such critiques as nothing more than whining from gamers, these complaints might be more valid than you’d think.

The main issue lies in how downloadable content is designed. Let’s imagine someone who has been a fan of a franchise for many years. This person has bought every game in the franchise and has enjoyed every new feature that each game brings to the series. However, whether due to poor sales or a lack of interest, the series goes into obscurity for many years. When the game publisher announces a new game in this franchise, many fans were overjoyed about the fact that they will be playing their beloved franchise once again. However, when the game finally comes out, many people were angered about many features of the previous games getting cut from the new game. When game developers finally release this content, it is usually in the form of downloadable content in which people are expected to pay extra money for features that were standard in previous entries.

Insert EA joke here

This is what happened to many games this generation. Game modes that were scrapped, characters that were removed, or parts of the story that were left unfinished, but were placed in later as downloadable content, ruins the reputation of a game as well as making a game feel “incomplete”. Game developers are free to create additional content for their games in order to prolong the experience, but designing games around downloadable content is not an appropriate way of implementing such a feature. All it does is raise the prices of currently expensive games discretely.

Release day DLC is the worst offender of this practice. Purposefully releasing premium content alongside the release of the game cheapens the final product and gives the allusion that the game they are about to purchase is “incomplete”. These feelings could be justified if the game itself pushes players to buy the downloadable content constantly, whether through the menus popping up or even in-game, where specific characters in the campaign ask you to buy downloadable content in order to perform a quest. These practices not only destroys the people’s perception of a game, but it also makes the game look “incomplete” when additional content needs to be bought on the first day of release.

This stuff writes itself

“Season Passes” work in the same way as day 1 downloadable content does. Although it’s nothing more than a pre-order for future downloadable content, it does give a warning to people that the game might be “incomplete”. “Season Passes” might be great for map packs or to save on downloadable content that is released or soon to be released, but to announce upcoming downloadable content can hinder a game’s worth in the eyes of the people. It may not seem like a huge issue to game developers, but by trying to release downloadable content as quickly as possible, game developers are harming their game sales. Since $60 is already a lot of money to spend on a game, seeing that a player needs to spend more money on additional content could scare away customers or will cause them to wait until the “Game of the Year Edition” comes out. If game developers could hold off on announcing downloadable content close to a game’s launch creating downloadable content around the game instead of creating the game around downloadable content, then most of these complaints wouldn’t be issues, but with gaming in its current state, it might be a good idea to change these practices.

Microtransactions, Because Charging You Once Just Wasn’t Working For Us

Here is the number one issue that people have with gaming today. Most people have issues with paying a small sum of money in order to get a small piece of content in the game (whether it’s guns, money, or small trinkets in many social games). Some people are calling it the end of gaming as we know it, but others are not as pessimistic.

Gotta throw Zynga into the mix somehow

For free-to-play games, microtransactions make sense. Game developers need to make money back on these games somehow, so what better way to get people into spending money by putting in-game items and currency for sale. To many people, this cheapens the overall gaming experience because people could only spend money on the game in order to progress. Some of these arguments can be validated if the game is designed specifically with microtransactions in mind. For many social games, the main goal is to accumulate as many resources as possible in order to complete certain tasks. If someone is playing for free, then it might take a long time for someone to progress in the game. However, if they were to pay real money in order to gain the materials they need, they can progress through the game much quicker. This “pay-to-win” method has discouraged gamers from trying out the new “freemium” format. Even with the amount of backlash this system gets, the free-to-play market has been enjoyed by many people through games such as Team Fortress 2, League of Legends, and Tribes Ascend, and as long as paying for content isn’t a necessity to progress through the game, then the system is more than justified.

However, it does become a problem once it becomes necessary to pay in order to progress through a game, and the amount of money necessary to progress. There have been horror stories around the internet talking about kids who spent thousands of dollars on in-game items for games such as Farmville. There have even been listings of items in games that could cost up to hundreds of dollars in games such as the $500 gun in Gun Bros. or the $100 engagement ring in Team Fortress 2. (6) With prices that are significantly more than just purchasing the game outright, is it really justified to have people spend tons of money on in-game items? Has the game industry gone too far with such a practice?

You mean I can pay hundreds of dollars in actual money for a decorative feature in a videogame? Sign me up!

For free-to-play games, microtransactions make sense. Game developers need to make money back on these games somehow, so what better way to get people into spending money by putting in-game items and currency for sale. To many people, this cheapens the overall gaming experience because people could only spend money on the game in order to progress. Some of these arguments can be validated if the game is designed specifically with microtransactions in mind. For many social games, the main goal is to accumulate as many resources as possible in order to complete certain tasks. If someone is playing for free, then it might take a long time for someone to progress in the game. However, if they were to pay real money in order to gain the materials they need, they can progress through the game much quicker. This “pay-to-win” method has discouraged gamers from trying out the new “freemium” format. Even with the amount of backlash this system gets, the free-to-play market has been enjoyed by many people through games such as Team Fortress 2, League of Legends, and Tribes Ascend, and as long as paying for content isn’t a necessity to progress through the game, then the system is more than justified.

However, it does become a problem once it becomes necessary to pay in order to progress through a game, and the amount of money necessary to progress. There have been horror stories around the internet talking about kids who spent thousands of dollars on in-game items for games such as Farmville. There have even been listings of items in games that could cost up to hundreds of dollars in games such as the $500 gun in Gun Bros. or the $100 engagement ring in Team Fortress 2. (6) With prices that are significantly more than just purchasing the game outright, is it really justified to have people spend tons of money on in-game items? Has the game industry gone too far with such a practice?

Pictured: Game publishers’ intended audience

I only ask this: what kind of art form tries its best to alienate its audience to the point where only the rich and the upper middle class can afford to experience it? Is gaming an actual art form or is it nothing more than a toy for the rich? It might be harder to make such an industry cheaper due to its close ties with constantly-improving technology, but the games industry should try in order to make gaming as accessible as possible without leaving anyone out in the process.

Conclusion

Because the industry’s in a period of transition, it might be best if game prices decrease. Whether game companies actually lower prices or come up with methods that make their game into a more complete experience (such as including all DLC with a purchase), it will be good for the industry if the traditional markets follows the route of digital markets when it comes to their pricing models. Not only will it allow more people to buy games with less of a risk, it will also bring new people into the industry that will allow it to grow and become a respectable art form.