The Cost of Doing Business
The launch to next-gen has been a tumultuous one, and while tumultuous is a word which can safely be applied to pretty much every hardware launch since 1990, the amount of genuine animosity between consumers and console manufacturers seems strangely high, even by normal launch standards. At the center of the conflict is the question of price with manufacturers taking a loss on production while consumers resist the seemingly bloated price tags. With the notable exception of the Nintendo Wii, itself the most expensive home console launched by the manufacturer, the next-gen systems have suffered near constant criticism for their pricing strategies including the six-hundred dollar price tag of a PS3, the price structure of Guitar Hero 2 downloadable content, the latest battle over the cost of Shadowrun and much more. The general mood has developers and manufacturers locked into a battle of wills against consumers on a budget.
The perception among consumers seems to be that the industry is either irresponsibly or artificially driving up the price of gaming, while manufacturers insist that prices reflect the rising costs of development to produce the hardware and software that consumers demand. The question is simple, has gaming become more expensive?
The answer would seem to be extraordinarily simple on the surface. The cost of both the hardware and games have risen dramatically even when compared with just the last generation. Microsoft has employed what seems to be a very strict pricing scheme to games on its new system, creating regular friction with consumers who feel that there need to be more budget friendly titles on the shelf and that Downloadable Content is regularly over-priced in comparison to the value it delivers. If Microsoft is experiencing friction with consumers, it might be argued that Sony with its extraordinary system price tag and similar game pricing scheme is actually waging a war with its own customers, climaxing in the late 2006 retirement of Playstation father Ken Kutaragi, a move which many saw as a direct result of the PS3's dismal launch.
But the answer may not be quite as simple as it seems, and the unpleasant truth might just be that industry is long overdue for higher prices. Virtually no one denies that the cost of making even an average game, particularly employing new hardware at the beginning of a new generational cycle, has risen dramatically, and early adopters of new systems are usually expected to pay the price for being on the cutting edge of technology. But, of course, that philosophy is predicated on the idea that as the technology becomes cheaper to develop and mass produce, so then will the prices drop. Experience tells us that a drop in game prices isn't likely, and considering that some estimates suggest the production cost of a 60GB Playstation 3 is just over $800, it's hard to imagine that any price drop is right around the corner.
In fact, the elevated prices, particularly for relatively cheap downloadable content, media licenses and add-ons to existing games, might be exactly what the industry is hoping will mitigate the losses experienced on manufacturing costs. It seems that the industry has stretched itself a little thin as the makers of expensive consoles hemorrhage money while falling short of their goals, thus pushing consumers to new heights of hardware retail costs and then demanding that consumers also pay more for content to offset losses. It's no surprise then that gamers are up in arms.
But, as I mentioned, the higher price points are long overdue. Video game prices have stayed relatively steady for more than a decade, despite increased demand for features and support from consumers as well as increased development costs across the board. Factoring in nothing more than inflation, a $49.99 game at the time the original Playstation launch should now cost between $65 and $70. The console makers suggest that most full-featured games should probably launch at MSRPs like $69.99, and considering the increased complexities of the development process and inflation, they may have a point.
Microsoft's hard-line stance on $59.99 as a standard price for Xbox 360 games might be a little easier to swallow when seen in the light that $59.99 is roughly $44 in 1995 numbers. Except, of course, that from a consumer point of view the price tag looks disproportionably steep when viewed in terms of the $400 already spent on the system – assuming you're fortunate enough to have an Xbox 360 that doesn't break – and the $10 extra down the road you're going to be expected to pay for updates, maps and extensions to the game.
The problem for Microsoft and Sony is that they seem to have very little goodwill left with consumers who feel under attack by what seems like a sudden and forced escalation of prices. Gamers have a pretty firm concept of what they are willing to pay for a gaming console, and the argument that the 360 and Playstation 3 have much more value than simply playing games is, not surprisingly, lost on gamers. If anything is artificial in the launch of these systems it's not the price but the direction which the manufacturers are trying to force the industry.
The Playstation 3 has an expensive ulterior motive by using the machine to win the Blu-Ray/HD DVD battle, and the Xbox 360 clearly is as interested in features that sell downloadable media and copies of Windows Vista as making great games. Consumers sense that the price of gaming is not entirely about the price of games anymore, and that these machines have been designed to make profits on operating systems, downloadable movies and Blu-Ray discs. Billions of dollars have been spent on features that virtually no one was asking for, and then we consumers are being given the bill in every copy of Shadowrun.
Nintendo, in the meantime, has reaped the benefits by recognizing that consumers buy consoles primarily to play games, and by keeping their prices in line with a more linear model of growth has become something of a savior of the generation. The Wii, despite a relatively mild growth in technology, has been the only unqualified success of the next-gen and it's hard not to suggest that the reasonable price of the system was a significant factor. And, by employing much of the existing and cheaper technology, Nintendo is able to maintain last-gen prices on their games.
Eventually game prices must rise, and there is certainly a strong market for systems dedicated to advanced gaming features and visuals. The truth is that a $49.99 price tag for a AAA title is low, but gamers have taken a relatively impressive stand against greater spending without clear benefits to gamers. Consumers, whether they mean to be or not, are more savvy than companies might expect, and they sense when the price tag for things they don't want is being put into the things they do want, and occasionally they do resist. But, the end result is that, much as we might resist, eventually we will have to "get used" to the prices of next-gen gaming or move on to another less-expensive past time. The days of $49.99 simply aren't reasonable anymore.
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Hard to guarrantee that a MP only game will have enough of a community for a couple of years...
A blog: by me!
EGGmen - A European gaming blog *Podcast episode 2 now live*
I think there'll be a community for a year or so. And by 'community' I mean groups of friends, real or online, that play together regularly.
In the case of drivers and shooters, it's been the same formula for years, so I'm sure they do. The fact that there are so many shooters could be used as a supporting argument for said cynicism; they're largely interchangable. etc..
I agree. A lot of these games would have been amazing back in the day but when you have played 15 other games that have the exact same game play style and only offer minimal feature/graphics differences it's hard to get that feeling back. It's like playing just about an MMORPG after EQ. Sure some things have become streamlined and simplified and they are a hell of a lot easier to get into without the crazy learning curve... But what does that do for me? I've been over most major humps in the "learning to play" portion of the fantasy MMORPG curve for years. I understand all of the general concepts behind tanking, healing, crowd control, sustainable vs burst damage, etc. So if anything reducing this learning curve is a step backward for my gaming experience. There are games that break the mold such as EVE or SWG but they are by far the exception. This seems to apply to FPS, Racing, RTS, Platformers and most RPGs.
This is not to say I haven't played any innovative games. On the MMORPG side of things there was EVE and ATITD and SWG to a lesser extent. For somewhat recent console games I really really liked Okami. It's pretty cheesy and kiddy but it doesn't have amazing graphics and it was a lot of fun. Overlord looks pretty promising but I have only played a little of it. Maybe Bioshock will do something to revive the FPS with heavy RPG elements type of game I dunno.
I guess the thought is that Elysium is right in that newer games aren't really any better or worse than those from the "good ole days". It's just that with having played so many games prior to them anything that doesn't provide a fairly unique experience isn't really going to have the same effect on me as the first time I played Frogger, Super Mario Brothers, Street Fighter 2, Final Fantasy, Doom, Metroid, Dragon Warrior, Kings Quest, hell even games like Pong or the old ghetto Chuck Yaeger's Flight Sim... When I play the newer games I OOO and AHH at the graphics for a few and then half the time come to the realization that I have already done it before.
It's why I rent.
I think I'd be a lot more annoyed with most console titles if I didn't have gamefly!
Hard to guarrantee that a MP only game will have enough of a community for a couple of years...
Depends on how many people you can get to buy into it I guess. Just look at CS it is still insanely popular. I guess HL isn't MP only but at this point the HL story isn't keeping people firing it up.
One thing I have to give to Sony, this strategy may very well be working, based on the last batch of numbers I heard.
Fedaykin98 wrote:
wordsmythe wrote:
Sometimes I want things, but I can't afford them. Sometimes I want things, but choose not to buy them. Sometimes I plan violent uprisings against capitalism, with a plan to replace the system with an ideology of "from each according to his abilities, to each according to his greedy, egotistical desires."
And sometimes I just play Gears with my fellow goodjers.
Elysium: The democratization of the web ... has installed an illusion of a digital first amendment that protects speech no matter how poorly spelled or stupid.
XBL: E Munnie
elementsofmeaning.blogspot.com
My Xbox is half broke. I get the "Need to clean disk message" which has largely driven me back to my PC, where the price for computers has rarely seemed to change all that much... about $1200 gets you a very good system for the times and added multifunctionality that does not come with the console.
I'm pretty sure I would have sacrificed pizzazz and spice for more reliability, especially when the consoles in question bounce you with a $500+ price tag, once all things are considered (extra controller, mem cards, XboxLive, other periphs)
Just recently, I bought a PS2 on the cheap and have been enjoying the games of my early 20s that have a richer, cheaper library and games that are, overall, designed better.
I think one of the largest problems associated with the new consoles is the perceived lack of content between games as compared to their older gen versions, citing sports games in particular.
Well, Cooking Mama didn't help me become a better cook, and Trauma Center certainly didn't help me become a better surgeon. I have the proof of both sitting in my freezer. -- imbiginjapan
Good article.
Of course it can be cheaper - or as cheap to make a game these days as it was a long time ago. The model of developing a game has to change if people want to make the most money possible. Some publishers and developers are seeing this and the market for off-loading or outsourcing various non-integral bits of development to specialised teams is the future.
Soon (in my skewed vision of the world) producers will be akin to directors... being called in on a game-by-game basis and not under a long-term contract. Art (concept, 3d, textures) will all be done by specialised companies who have dedicated staff who can work much quicker at the job than an in-house team - and at several projects at the same time. There will be fewer "from-scratch" game engines - almost all will be lisenced and all will come with myriad modules and packs that tailor the engine to the type of game that is required - driving down the exorbitant cost of lisensing the current top of the line engines.
A blog: by me!
EGGmen - A European gaming blog *Podcast episode 2 now live*
I wonder what the ultimate cost for Sony is though. TVs and DVDs just aren't as sexy as game consoles for advertising not just your specific product, the PS3, but your entire company brand.
Well, Cooking Mama didn't help me become a better cook, and Trauma Center certainly didn't help me become a better surgeon. I have the proof of both sitting in my freezer. -- imbiginjapan
There are couple of added points of interest. One, it is the manufacturers that force the "bigger is better" attitude on us. Yes, games cost more when you need 200 developers and artists to work for 3 years to create something on the latest iteration of the hardware. But when the end product is a dungheap that looks pretty, then it stands to reason that the manufacturer is going to spend even more money convincing the unwashed masses that it is not the content they want, but the visuals. Or the physics. Or the sound. Or whatever the latest gimmick that cost so much to create in the first place. And once the masses are starting to become convinced that it is in fact what they want, then the price will, of course, come along to tax them for their new desires.
Let me ask you this: how many of the "next gen" games would actually be worth anybody's time if there weren't fantastic visuals and/or sound? And would such a game--with lowered A/V requriements but equally addictive and fun content--still take $30 million to make?
Second aspect that nobody is adding into the arguments is the market size. Yes, perhaps games cost $20 million more to make today, but they are also being sold to 20 million more customers too. Compare a game from... what was the year used in the article? Oh yeah... 1995. Compare Gears of War to a shoot-em-up game from 1995. What was the market size available to the 1995 game? What was the market size available to GoW? I think this is very relevant to consider before falling for the "whaaa... our development costs are through the roof" whine from the developers (or more specifically from the publishers since they hold the purse strings).
(@)
Some good points, MoonDragon. The videogame industry has managed to out pace the film industry in terms of income, hasn't it?
Fedaykin98 wrote:
wordsmythe wrote:
Beat me to it! Jerk.
Certis beat me to it. - Elysium
I would be interested in whether including the portable game machines into the discussion would change your argument. Especially given the relative sales growth of the DS vs. the 360.
I think the problem is that graphics etc really do sell games now. Most of the people I know would be more likely to buy a game that looks sexified with reasonable game play than a game that looks like a giant digital turd and has amazing game play. I probably only research 50% of the titles I buy and when I go to the store to make a random purchase it will probably be a game that looks cool rather than one w/ mediocre graphics. I have no way of telling just from looking at the box which delivers better game play so I will pick the one that looks like someone gave a damn about making look cool and hope they also gave a damn about providing decent game play.
It's not like games are getting crazy expensive outside of the hardware. I am pretty sure I have payed 70$ for an SNES game in the past. I don't see this as a crazy price hike so long as someone like MS isn't forcing companies to charge at least that for their game. I think the expansion packs/skins/addons/whatever from XBL etc do start to get a bit pricey but on the bright side you also didn't have the option of additional content with previous systems. You had to wait for a sequel if you wanted more. There are plenty of games I have played over the years that I have completed and found myself wanting more of the same. At least now there is the potential I can shell out another 5$ for a bit more action. I am not happy over having to pay for this type of thing but really it's something extra that wasn't there before so I am not bent out of shape over it either.
Honestly I am more concerned about the quality of gaming systems and in some cases hardware being on the decline. It's like they are slowly degenerating into the MMO release model. "Who cares if it's broken at release we can just patch it in later..." Hell reading the various posts about the 360/PS3 I am honestly surprised that both of mine are still functional and that I have only had minor issues with them thus far. I remember reading articles about the NES where people had run their NES over with their car taken it back inside, beat the metal back into shape where the cartridge slides in and fired it up w/ no probs. Newer systems seem to crash and burn if you fart in their general direction... I don't mind paying 600$ for a PS3 that lasts me 3-5 years. However 600$ for a console that might randomly decide to melt kinda scares me~
And me too! Gah, I had the post typed up and everything.
"We're taught from a young age how to dodge rock hard objects moving at incredible rates of speed while simultaneously beating folks half to death with sticks. We do this for fun." -kung fu grip
http://blog.digital-lifeline.ca
It makes me wonder when the industry will "plateau" at a certain level of graphics advancement, and simply focus on optimizing the engines and other developmental stuff to reduce future costs, and put more time into innovative gameplay. I don't think that's the direction we're headed though, since everyone now assumes and expects devs to increase the quality of the graphics every year.
It's gonna feel like you took a tray full of cookies and BAKED THEM UP IN YOUR ASS!!!
http://steamcommunity.com/id/bravace
Eh.. my 360 broke in about 1.5 or so years after I bought it and that is with relatively light use, compared to most other folks. I would say the hours put into the machine certainly don't warrant the problems it currently has. The helpful folks at Microsoft informed me that I could ship to them to get it fixed for about $200 though. Hmm... thanks, but.
Well, Cooking Mama didn't help me become a better cook, and Trauma Center certainly didn't help me become a better surgeon. I have the proof of both sitting in my freezer. -- imbiginjapan
IIRC, game prices "dropped" when the Playstation was launched because it was cheaper to produce games on CDs than cartridges.
It's gonna feel like you took a tray full of cookies and BAKED THEM UP IN YOUR ASS!!!
http://steamcommunity.com/id/bravace
The game design world has become much more like the film production world. It even uses the same stradigies to offset costs, like product placement. When your racing down the road or jumping rooftop to rooftop keep your eyes open for your favorite bevrage or car company to be placing a bill board or sign in front of you. And just like films this alone will not pay the due. But when you pay $59.99 for a game then get to see a bunch of advertising your being hosed. And shall we not even enter the matter of merchandising of the game itself. Who's getting a Halo3 ZUNE?!?!?! hahaha
that is my 2 tokens.
"Why do I keep whipping it out, it never does anything!" -- Yes, I said this
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Inigo Mantoya
I know there's a thread of cynicism running now that somehow the actual gameplay of next-gen is subpar versus our fuzzy memories of games of yore, but I don't buy it. I think games like Forza 2, Gears of War, Crackdown,Rainbow Six Vegas, GRAW, Call of Duty series, Saints Row, etc. etc. etc. match up just fine against previous generations. I mention 360 games largely because I've had the most experience with it. I mean, I hate to be blunt but gamers like to bitch about how it used to be so much better, when frankly, across the board, it probably used to be about the same.
Now, considering that install bases are still well short of last gen, I'm not entirely sure the discussion of more people playing video games is really relevant yet. And, if you imagine that increased demand will inspire the companies to drop prices ... well, I don't think there's an analogous example of any industry doing that.
"I think Elysium has the right of it" - Certis
Except that way back when, the experience might've felt new and exciting.
Psychotic Foreign Teenage Chicks are so hot. - Legion
I find it ironic anytime a healthy vaccinated person bitches about science...on the internet. - MaverickDago
Blockbuster seems to agree. Maybe I'm closeted by apathy, but I can't imagine this being THAT profitable in the long run. Personally, I don't need to see every zit and pore on an actor's face, and am especially not interested in paying extra for the privilege. Maybe because I avoid the suburbs I'm not fully aware of the extent of people's Hi-def "needs".
Amen. $600 will still build serviceable machine for a non-graphicswhore. Bonus points for being able to work at home on a machine that can handle office-apps at a dizzying speed.
In the case of drivers and shooters, it's been the same formula for years, so I'm sure they do. The fact that there are so many shooters could be used as a supporting argument for said cynicism; they're largely interchangable. So folks are paying more for the same thing + some shiny gimmick. Originality seems dead. Super Mario 2 and 3 were novel. Zelda series was novel, Pikmin, Culdcept, Herzog Zwei, GTA3, hell, even Mighty Bomb Jack was different from the rest of the field at the time. Where are the equivalent titles now? Can we not have games now where we aren't simulating something we could already be doing in real life (military, sports, driving in circles)? Gameplay had been reduced to 3-4 derived modes. In that light, paying to play the same game I played on the last console, and paying more for it, seems absurd.
Have you heard that new Kenny Winker record?
It's hard to justify a price hike when, year after year, the "Gaming Industry" keeps posting record profits.
What was it this year? Bigger than Hollywood?
The man wears a bucket of KFC on his head. I wouldn't expect anything less. - Pred
and that is very sad!
Zune | STEAM | Live | Xfire
Can someone quote my post in theirs? I think Elysium hates me and has that script running to block my posts.
Nintendo disagrees.
Defining the issue around a standard price ignores so many other factors involved:
Honest PR is not smart business.
Publishers can and do roll unrelated expenses into game development. Do Madden fans deserve reduced features in order to pay for EA's monopoly on the NFL?
Competition is the best judge of true cost and value. Plenty of developers produce great games at the $50 price range.
Microsoft will take your first born male child if you let them. I've read the email.
When Epic and Bizarre make public statements that they wanted to release content for free, they are most likely telling us, in the most diplomatic way possible, the costs placed on you are probably not required.
Price consistency is clearly not Microsoft's purpose when Viva Pinata, a far superior 1st Party Microsoft game, was sold for $50.
Games face stiff competition from other mediums like movies, TV, even cell phones. How does Microsoft expand the market if the message is, "stay casual."
Judging by 360 software sales, gamers accepted the $60 price tag years ago.
Would you pay $10 to see a movie that is 30 minutes long?
From Rabbit's interview with Ken Levine:
By "a few" he means "2."
We shall grapple with the ineffable, and see if we may not eff it after all.
Maybe in America. We are paying about $85 US for new 360 games here in Australia. Of course the Australian dollar was quite a bit lower when the price was initially set.
The 327th Male
Yeah as usual we're getting screwed (smaller market and all that) but the pricing here seems more varied. Lost Planet and Forza 2 have RRPs of AU$110, Halo 3 AU$90 and Shadowrun AU$70. Using today's exchange rate those prices range from US$90+ to US$60. It's still on average more expensive than prices paid in the US but here Shadowrun is less than 2/3 of the new release price ceiling.
Hell, look at the continued sales of the PS2 - which probably shows that MS abandoned the XBox too soon. By focusing on HD entertainment-hub whiz-bangery this generation, MS and Sony harried each other into an immature emerging market and the high costs and reliability woes are a direct result. Congrats to Nintendo for reading the market better.
In my gaming lifetime, prices have fluctuated between $29.99 and $59.99, occasionally going over that mark. Computer games had tended to be the more expensive item but console games were never cheap, with regard to the big titles, even back in the early to mid eighties. Now I think console games are probably the more expensive but not by much (I could be wrong here). So personally I if I were ok with paying $70 for War In Russia on an apple machine back in '88, paying $59.99 for Gears is no big deal.
That is not to say that I am getting a good deal for my money and much of the price tag on games goes to pay for the many flops and projects that were invested in but never saw completion. To say that these companies are probably not wise with the money they make is an old story and we are probably fortunate games have not gotten even more expensive tp make up the difference in their lack of common sense.
There are two kinds of men in the world, those with loaded guns and those who dig. You dig.
It's why I rent.
These days there's rarely a game I can't finish or get bored of in the rental period.
PC games hold my attention a lot longer, consequently I'm happy to buy those.
It all comes down to bang for your buck.
Love thyself (just not in public)
Love thy neighbour (remember to ask first)
Certis wrote:
It's capitalism, baby. The manufacturers of a product will always sell it at the most expensive place they think they can get away with. The only way for the price of consoles and games to come down is for the market to vote with its wallet. Unless Sony and Microsoft are well and truly burnt by their current pricing strategies they won't change their pricing policy. And even then they'll probably blame the games, not the selling of the games. The games industry, like the movie industry, seem to behave like lemmings, and they all fall over each other to escalate a spurious arms race on their way to the cliff. The only time that interesting things happen is when people change the battle and fight it on different terms to everyone else. (cf. Nintendo Wii).
It will do good to heart and head
When your soul is in my soul's stead;
And I will friend you, if I may,
In the dark and cloudy day.
- AE Houseman, trailblazing XBL user
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By "a few" he means "2."
Yeah, but he's flogging a story. Shadowrun devs never claimed their game would reveal new features as mountains are worn down to dust. They just said it's a game you can play for years.
Classic case of 'Quite difficult to learn, harder to master'.
Hatchet Job - intelligent and irrevent gaming discussion.