Video Game Pricing is Wack

My wife works at Barnes & Noble, and The Lost Symbol just came out, which is of course expected to be big. Book pricing is not wack. They know a big quantity of these books will move so they order a huge amount and discount them 40% off while they are brand new and the marketing is in effect. Sure the margin is cut, but they know the discounted price will drive the purchase to Barnes & Noble, and maybe the savings will get an add-on sale involved at a higher margin. Movies do the same thing when they come out on DVD. Music does the same thing with CD releases.

One Wal-Mart in Canada does a 30% discount on Batman: Arkham Asylum when it first comes out and makes international gaming headlines as a result. Talk about an idea whose time has come.

I can understand that the margin is slim on new game purchases until development is covered, and that add-on sales at Gamestop usually just end up going to Gamestop in used game sales. These are problems that publishers must solve for video game pricing to not be wack--one idea: keep rampin those Wal-Mart and Target exclusive includes until at some point you just cut Gamestop out of the Gears of War 3 buy. Because with every other form of media, opening-week thunder is driven with a discount. With video games, being part of the sensation costs you extra.

Unless you like digital distribution, in which case video game pricing is still wack in the other direction, in overcompensation for its previous flavor of wack. DLC games come out, and stay at their pricepoint indefinitely, unless some sale is going on. Buy it launch week, $9,99, buy it two years later, that PSN game is $9.99 dude. It's value is constant as the northern star, even if it is online-only and no one's playing it anymore...

Steam is better. Things depreciate there like they do in the real world. Not the disk-based Gamestop world mind you, which has spoiled us all horribly, but the real world. But of course watch out for the 50% off, 75% off, 90% off sales! Discounts so low they make you wonder why you would ever be stupid enough to buy something when it's not on sale! Discounts so low you start to believe the sale price is the cost! Discounts so low no other business in the world is stupid enough to enact them and then turn around the next day and ask for the same item and 700% of its price from the day before!

I'd like the happy medium please. Less punishment for being in on the event in big disk releases. More of a trend of retained "new" inventory at retail to allow my later purchases to benefit someone other than Gamestop. And yet, less of the denial of depreciation that feeds the perception that the game at the bottom of the Virtual Console list ought to cost me just as much as the one at the top that just came out.

Less schizophrenia. Less wack. Thanks.

The thing with games is that their releases are more comparable to movies in movie theaters than movies on DVD or books. Games make a gigantic percentage of their sales in the first week, and get rotated off the shelves faster than you can blink. Compare the actual amount of shelf space at your local Gamestop to a music store or book store some time. Once you stop counting the used games (which is Gamestop's actual business), there's not a whole hell of a lot of product out there for sale. The prices are high in that first month because that's essentially the only month that it's widely available.

Imbarkus wrote:

Because with every other form of media, opening-week thunder is driven with a discount.

But every other form of media also isn't trying to recoup costs from a device sold to you at a major loss to begin with.

And in addition to that is what Switchbreak said. Books have hardcovers, then move to paperback. Music has tons of other merchandising and licensing opportunities as well as things like touring. Film has theatre grosses and then DVD sales and then cable and then general television. A game has one small window to make back their investment.

It's no different with games though.

It's cut-throat to get shelf space at a bookstore, the same way it is to get shelf space at GameStop or Best Buy. For every book you see on a book shelf there are hundreds, possibly thousands, that are available but you'll never see on the shelf.

Moving from Hardcover to Paperback: How is that any different from moving from non-Platinum Edition (or Greatest Hits) into Greatest Hits?

The only reason games are sold the way they are is that the market, i.e. the consumer (us), has proven to the producers that we're willing to let it be so. Consoles do not have to be sold at a loss anymore, Nintendo has proven that beyond a shadow of a doubt. Games do not have to recoup all their costs in week 1, there are tons of opportunities to keep sales going, the publishers and vendors simply aren't taking advantage of them.

I think that what we, the consumer again, have managed to do is create an environment in which the latest & greatest is always the most attractive, and the producers are responding to that. This is why games are following the same trend as movies. It's all in our perception, and the moment that the majority of game buyers stop always buying the latest & greatest is the moment we'll see games launching with 25% sales to move more units.

kuddles wrote:
Imbarkus wrote:

Because with every other form of media, opening-week thunder is driven with a discount.

But every other form of media also isn't trying to recoup costs from a device sold to you at a major loss to begin with.

And in addition to that is what Switchbreak said. Books have hardcovers, then move to paperback. Music has tons of other merchandising and licensing opportunities as well as things like touring. Film has theatre grosses and then DVD sales and then cable and then general television. A game has one small window to make back their investment.

This. It's unrealistic to expect games to be 40 percent off at release, unless, of course, they go to $100 or more the week after release.

I've never seen numbers, but I'd also bet the used market is minuscule in books and movies. At least, I know the largest retailers of books and movies aren't selling used books and movies alongside new product.

The only reason games are sold the way they are is that the market, i.e. the consumer (us), has proven to the producers that we're willing to let it be so. Consoles do not have to be sold at a loss anymore, Nintendo has proven that beyond a shadow of a doubt.

Nintendo is the only one of the big 3 that believes that they should sell everything at a profit. Neither MS nor Sony have ever done that at release.

ahrezmendi wrote:

I think that what we, the consumer again, have managed to do is create an environment in which the latest & greatest is always the most attractive, and the producers are responding to that. This is why games are following the same trend as movies. It's all in our perception, and the moment that the majority of game buyers stop always buying the latest & greatest is the moment we'll see games launching with 25% sales to move more units.

It doesn't have anything to do with being the "latest and greatest." Most of those books and movie sales are driven by the retailers, selling the items at cost or a bit below, hoping to get people into the store and buy other products.

Game retailers make most of their money from selling new releases at full price (or, at least most of their money that they make from new game sales). If they were selling them at cost, then they'd be losing even more money selling games as a whole. Why would Best Buy carry consoles, games and accessories if they only made money on the accessories part of the equation?

ahrezmendi wrote:

Consoles do not have to be sold at a loss anymore, Nintendo has proven that beyond a shadow of a doubt.

I don't think I'd agree with that. Nintendo's recent business model has been to eschew the bleeding edge of technology, and that's what's allowed them to sell hardware at a profit. It's *not* working for me though, which is why my Wii sits idle, collecting dust.

My 360, on the other hand, gets used daily. Would I have bought it if it was priced to turn a profit? I highly doubt that.

TheCounselor wrote:

It doesn't have anything to do with being the "latest and greatest." Most of those books and movie sales are driven by the retailers, selling the items at cost or a bit below, hoping to get people into the store and buy other products.

And there's absolutely no reason why this couldn't work for games as well, and in fact it does. This is precisely what GameStop does, except they cut out the sales part. The only reason GameStop sells new stuff at all is to try and get people to buy used. Why do you think they automatically grab a used copy when you ask for a game?

TheCounselor wrote:

Game retailers make most of their money from selling new releases at full price (or, at least most of their money that they make from new game sales). If they were selling them at cost, then they'd be losing even more money selling games as a whole. Why would Best Buy carry consoles, games and accessories if they only made money on the accessories part of the equation?

Because it expands their sales channels, it's not all about what % you make on the individual sale, the biggest money is to be made in encouraging future sales.

I maintain that the ONLY reason that video game sales are the way they are is because of the consumer. 100% a result of our buying habits. If the average video game consumer suddenly started going into Best Buy or GameStop and instead of buying the latest Madden game, they came away with a copy of Metal Gear Solid 2, we would very rapidly see a huge shift in how these products are marketed and sold.

But that's not going to happen realistically. Publishers, like Activision and EA, have conditioned us extremely well to always buy what's new, and to pass up what's old. This is what franchises like Madden and Guitar Hero push, they encourage us to always have the newest by incrementally outdating the old, which is precisely what movies do as well.

Jonman wrote:

I don't think I'd agree with that. Nintendo's recent business model has been to eschew the bleeding edge of technology, and that's what's allowed them to sell hardware at a profit. It's *not* working for me though, which is why my Wii sits idle, collecting dust.

My 360, on the other hand, gets used daily. Would I have bought it if it was priced to turn a profit? I highly doubt that.

I'm in the same boat, but the sales numbers don't lie. You and I, and many others, may not enjoy our Wii's terribly much, but the system has blown away all the competition, and when sold at a profit to boot.

That aside, the fact that the 360 is sold at a loss has nothing to do with it's appeal to the consumer, that's a result of the games. And again, a result of our being conditioned to have the latest and greatest. Are PS2 games still fun? Yes. Are they HD? Not in a million years.

ahrezmendi wrote:

I'm in the same boat, but the sales numbers don't lie. You and I, and many others, may not enjoy our Wii's terribly much, but the system has blown away all the competition, and when sold at a profit to boot.

That aside, the fact that the 360 is sold at a loss has nothing to do with it's appeal to the consumer, that's a result of the games. And again, a result of our being conditioned to have the latest and greatest. Are PS2 games still fun? Yes. Are they HD? Not in a million years.

Indeed, and because we don't enjoy our Wii's much, the software attach rate for the Wii is significantly lower than the 360 or PS3.

Which, circular logic aside, justifies Nintendo's business model. In fact, given the woeful attach rate, it's a good job they sell the hardware at a profit, because less software units are being sold for their platform.

And I'd hazard a guess that the 360 being sold at a loss is responsible for it's appeal to the consumer. Am I going to pay $600 for a console? Not on your nelly, I'm not, no, regardless of it's next-gennyness. Offer me the same hardware for $400 and I'll bite.

Also, are PS2 games fun? Yes. Am I still buying them? No.

Jonman wrote:

Also, are PS2 games fun? Yes. Am I still buying them? No. :)

Exactly! It's all the man, man. He's got us in his pocket!

Seriously though, I'm not saying how it is right now is bad. I love being on the bleeding cutting edge, it's in large part what makes video games fun for me. I'm just saying that the market is how we allow it to be. If you don't like the pricing model the way it is, then don't buy into it. I have a friend who is constantly a generation behind, because he refuses to pay more than $20 for a game, and it works quite well for him.

But it's important to remember that the consumer is, in the end, the one who drives how a market behaves, and thus has the power to change how it behaves.

...

Assuming there's no backroom meetings going on to make price fixing deals. Oh, what those backroom walls must know.

Switchbreak wrote:

Compare the actual amount of shelf space at your local Gamestop to a music store or book store some time.

Yeah but is this because Gamestop just doesn't want to move to the business model of retaining inventory of new product, becuase we are all to busy providing them with a rotating churn of inventory that they can just continuously resell?

Barnes & Noble could never launch a used book business where the used inventory sat right next to the new on the shelf. There would be a riot, and publishers would just sell direct!

Sounds like it would be their only solution, unless they could sway the consumer against the retail used market. Hmmm.

I'm going to miss disks, and packaging, and ownership rights...

Yeah but is this because Gamestop just doesn't want to move to the business model of retaining inventory of new product, becuase we are all to busy providing them with a rotating churn of inventory that they can just continuously resell?

Any business model that attempts to retain inventory(in other words, not selling things) is flawed in today's world, especially for a large retail chain like Barnes and Noble or Gamestop. If you're not moving a product, you get rid of it as quickly as possible, and make space for products that will sell. You maintain as lean an inventory as possible because that means that you're not overbuying anything.

Imbarkus wrote:

Barnes & Noble could never launch a used book business where the used inventory sat right next to the new on the shelf. There would be a riot, and publishers would just sell direct!

This I don't agree with, I think there is some other reason for why B&N doesn't sell used books. I mean, we're talking about one of the worlds largest book sellers, publishers aren't going to cut them out of the loop. And how would publishers sell direct, through catalogs and websites? They already do that, and it hasn't driven B&N out of business yet.

EDIT: Just occurred to me, one of the reasons could be that used books don't garner such a high price tag. This is one thing that GameStop has managed to do which simply amazes me - They've pushed the "used" price on games through the roof. New books range from $10 to $20, but used you'll find them for about $3 to $5, or 75% off. GameStop somehow gets away with murder by charging a mere $5 less than the new price, and people pay it.

None of these companies are in the business of holding onto their inventory, it's just a question of what they're trying to push, and really they're both doing the same thing - Using new product and sales to attract foot traffic, and then sell more than what the customer intended to buy. In the case of B&N, they're trying to sell you more books, or music, or extras (like the loads of bookmarks, magazines, and all that other stuff they have at the counter), and in the case of GameStop they're trying to sell you on a used copy of the game instead of a new one.

Look, Gamestop itself has proven that there is a market for games well after release date, because they sell them. They just buy the inventory from us instead of going back to the publisher's to refresh their coffers. There's only one reason Gamestop prices a pre-owned copy of Fatal Frame at $40--because there is enough demand for the title to offset the inventory space of waiting for somebody willing to pay it. The only difference is where they got that inventory.

NO ONE agrees with me that a DLC game ought to depreciate a reasonable amount after a while? EVERYONE's afraid to say something about the incredible Steam sales for fear they will end? What if it meant lower prices for older DLC games overall?

TheCounselor wrote:

I've never seen numbers, but I'd also bet the used market is minuscule in books and movies. At least, I know the largest retailers of books and movies aren't selling used books and movies alongside new product.

I don't know; the three closest bookstores to me are used bookstores. I have to go about twice as far to get to B&N or Borders.

kuddles wrote:
ahrezmendi wrote:

This I don't agree with, I think there is some other reason for why B&N doesn't sell used books. I mean, we're talking about one of the worlds largest book sellers, publishers aren't going to cut them out of the loop. And how would publishers sell direct, through catalogs and websites? They already do that, and it hasn't driven B&N out of business yet.

They don't like people to really pay attention to this, but Barnes & Noble would never sell used books because the largest publisher that supplies their books is themselves.

Actually, I'm not really sure why B&N or Borders DON'T sell used books-- how is that different than the Gamestop model? New books cost much more and make much less profit, while used books can be purchased for a fraction of the cost, and and a much higher profit margin. As with games, there will always be people who want new copies.

If the B&N model is to offer books simply to get people in to buy coffee and muffins, certainly it seems like this would be another way to accomplish that (and further drive the other bookstore competition out of business...).

ahrezmendi wrote:

This I don't agree with, I think there is some other reason for why B&N doesn't sell used books. I mean, we're talking about one of the worlds largest book sellers, publishers aren't going to cut them out of the loop. And how would publishers sell direct, through catalogs and websites? They already do that, and it hasn't driven B&N out of business yet.

They don't like people to really pay attention to this, but Barnes & Noble would never sell used books because the largest publisher that supplies their books is themselves.

Imbarkus wrote:

Look, Gamestop itself has proven that there is a market for games well after release date, because they sell them. They just buy the inventory from us instead of going back to the publisher's to refresh their coffers. There's only one reason Gamestop prices a pre-owned copy of Fatal Frame at $40--because there is enough demand for the title to offset the inventory space of waiting for somebody willing to pay it. The only difference is where they got that inventory.

You're pointing out the exception to the rule, here. One need only look at the extensive promotions they do to get you to trade in recent releases, how close used prices are to the new, and how quickly you have that bin of "3 for $20" for most titles over the six month mark.

Regardless, I think you're disproving your argument here. If Gamestop is never going to go back to the publisher to refill their inventory, what incentive is there for them to lower their prices?

SommerMatt wrote:

Actually, I'm not really sure why B&N or Borders DON'T sell used books-- how is that different than the Gamestop model? New books cost much more and make much less profit, while used books can be purchased for a fraction of the cost, and and a much higher profit margin. As with games, there will always be people who want new copies.

If the B&N model is to offer books simply to get people in to buy coffee and muffins, certainly it seems like this would be another way to accomplish that (and further drive the other bookstore competition out of business...).

Part of the reason is assuredly pricing. A new hardcover costs roughly $30, sticker price. You can get it ANYWHERE release week (assuming it's not a captive audience product like a textbook) for 30-40 percent off of that number. You're talking about a $18-21 product now. So, B&N can really only sell it for $12-15 or so. They'd have to be paying $7.50 or less, and that's on the latest and greatest. You'll have tons of people coming in with crap that no one will ever buy, and they take a loss on that. A buddy of mine tried a used book business a few years ago, and he failed because he couldn't sell the books for enough money, or get people to sell him anything good for what he needed to pay for it to make money.

You can find proof of this in the textbook market. Publishers can charge basically anything for textbooks, and they'll sell the same amount. So, they are expensive. However, they are selling to a market that doesn't have much money. So, college bookstores offer used textbooks, giving the college kids a bit of drinking money for their $100 book. The poor college student can save a few bucks on both ends, the bookstore makes a huge profit, and the publisher doesn't care because they get to overprice their books on the front end.

Pretty much the entire Videogame industry is out of whack right now.. we are in for a slow but radical overhaul in the entire industry top to bottom. I think anyone (even me!) telling you what it ultimately looks like 5 years from now is full of sh*t. If I had to predict I would guess that the industry is heavily based on Micro-transactions on all levels and games are more spread out across separate but ultimately integrated platforms.

edit

But I'm probably full of it.

TheGameguru wrote:

If I had to predict I would guess that the industry is heavily based on Micro-transactions on all levels and games are more spread out across separate but ultimately integrated platforms.

I think you're more correct than anyone is really willing to admit, especially if the price of development keeps on spiraling up the way it has over the last 5 years. Since the risk for huge AAA titles is getting bigger and bigger, the microtransaction/Asian F2P MMO model is really beginning to pick up steam right now, especially in the MMO space, with Free Realms and D&D Online. Stardock was looking into doing something like that with Society(which appears to be dead now, unfortunately).

Plus, look at the iPhone App Store(take a shot!). Ask anyone with a iPod touch or iPhone about how much they're spending on stuff there, and you're probably going to get many embarrassed looks.

We've talked about this subject before and I believe that while people feel $49/$59 for a game is expensive, the reality is game prices have not kept up with inflation. We've always paid atleast $40-$50 for our new games, if not more in the past, and the price went from high, to lower, to where they are now (a mere +$10 from the last gen).

N64 games could cost as much as $80
The average PS1 game was $50
For its North American release in 1985, the NES was released in two different configurations, or "bundles". The console deck itself was identical, but each bundle was packaged with different game paks and accessories. The first of these sets, the Control Deck, retailed from US$199.99 (equivalent to US$396 today). The NES that came with the zapper and duckhunt that we all know and love today - US$249.99 (equivalent to US$495 today).

What you're asking for is for game publisers to charge you $100 for a game and put it on sale release week for $60 - you just don't know you're asking for it. Sales are an illusion anyway, they just inflate prices in order to make you feel better about getting a deal. It's not a new concept.

ahrezmendi wrote:

I maintain that the ONLY reason that video game sales are the way they are is because of the consumer. 100% a result of our buying habits. If the average video game consumer suddenly started going into Best Buy or GameStop and instead of buying the latest Madden game, they came away with a copy of Metal Gear Solid 2, we would very rapidly see a huge shift in how these products are marketed and sold.

But that's not going to happen realistically. Publishers, like Activision and EA, have conditioned us extremely well to always buy what's new, and to pass up what's old.

I think you're on to something with this, but we're all overlooking: video games, to a far greater extent than books or movies, is an evolving medium where the newest technology generally provides an experience with more perceived value for the consumer.

To be clearer, the latest games usually look better, and older games often rapidly become obsolete. But a ten (or more) year old book can retain more of its value if it is well-written. I'm not saying there aren't some similarities with "trendy" books, but generally, the product is different.

Still, you are right, and there are a lot of games I look at and say "I would never pay $60 for this, but I'd pay $20/$30/$40 in a year or two; and I wish I could get that money to the developer and publisher instead of a used retailer." I'm hoping that as the technology slows down (we're churning out new hardware generations more slowly now) that pricing becomes less, as you say, wack.

Shoal07 wrote:

Sales are an illusion anyway, they just inflate prices in order to make you feel better about getting a deal. It's not a new concept.

This what I'm saying about Steam and DLC.

Imbarkus wrote:
Shoal07 wrote:

Sales are an illusion anyway, they just inflate prices in order to make you feel better about getting a deal. It's not a new concept.

This what I'm saying about Steam and DLC.

So, you're getting what you're asking for - sales - and the cost is inflated prices, as is the case with most consumables. Look at major appliances or furniture - are they ever not on sale?

My point is this: since game prices, and for the most part game systems, have maintained or even lowered their pricing a bit over the years, meaning they have not increased proportionately with inflation, games today are cheaper than at any other time in video gaming history.

Shoal07 wrote:

My point is this: since game prices, and for the most part game systems, have maintained or even lowered their pricing a bit over the years, meaning they have not increased proportionately with inflation, games today are cheaper than at any other time in video gaming history.

This is absolutely true and I think there's just way too many people that don't see it.

I think you're on to something with this, but we're all overlooking: video games, to a far greater extent than books or movies, is an evolving medium where the newest technology generally provides an experience with more perceived value for the consumer.

To be clearer, the latest games usually look better, and older games often rapidly become obsolete.

I think we're approaching the end of this kind of value in gaming, though. Let's face it, a new generation of consoles put out right now would probably offer only slightly better-looking games. Even at 4 years old, and 3 years old, respectively, the 360 and PS3 are still running great-looking games. GPU advances on the PC are really the only thing pushing the technology any further, and really, with each incremental upgrade, the improvement in graphics is getting more and more trivial. Ray-tracing is about the only major advancement left.

The playing field is getting level, except in the traditional ways, like writing. Games can, of course, still expect to have to compete on the graphics level, even after the hardware hits that graphical median, but there will be VERY few leaps left comparable to Playstation to Playstation 2.

Seeing older games as "obsolete" is, IMHO, a misperception of old games by the market. It's also cultivated by gaming companies (after all, why buy new if the old is still fun?). Nintendo demonstrates this pretty well, actually. New Super Mario Bros. on the DS added nothing truly significant to the various Mario games that came out for the NES or afterward. Yet it still sold INCREDIBLY well. Why? Was it because it was "new" or because the original hadn't really gotten old?

Basically I'm saying yes, the video games market is f*cked up right now. It's constantly changing, and marketing takes full advantage of what that means to gamers. But the fact that exclusives, a driving force in console choice and sales, are basically evaporating right now, is a harbinger of things to come. There will be reason for real competition in pricing before long.

Thin_J wrote:
Shoal07 wrote:

My point is this: since game prices, and for the most part game systems, have maintained or even lowered their pricing a bit over the years, meaning they have not increased proportionately with inflation, games today are cheaper than at any other time in video gaming history.

This is absolutely true and I think there's just way too many people that don't see it.

Well, they were too expensive before... 80 bucks for an N64 game? Ridiculous.

As a mostly PC gamer, yeah console games are way over-priced. Without much leeway.

There are true blockbusters, like Half-life, Sins. And I gladly fork over my 40 or 50 bucks. But those are maybe a tenth of the games I buy in a year.

Then you have the smaller games. Mount and Blade, Penumbra, Trine were at the right point at 20-30 bucks. Peggle is well worth that as well.

And that is what keeps me going back to the PC, There are games launching at 10, 20, 30 bucks far more fun or valuable than your typical 60 dollar console DVD. Because it is an open system. Every cent of my 40 bucks for L4D went to Valve on pre-order last year. Valve still got about 30-40 bucks worth on 360, EA, Microsoft, and the store got the difference(there was a good Gamasutra article on where the money goes based of Gears of War).

But the issue is that Sony and MS need to subsidize their hardware, by taking a bigger cut of software sold. They need to to cover the expense and losses incurred making the hardware.

NSMike wrote:
I think you're on to something with this, but we're all overlooking: video games, to a far greater extent than books or movies, is an evolving medium where the newest technology generally provides an experience with more perceived value for the consumer.

To be clearer, the latest games usually look better, and older games often rapidly become obsolete.

I think we're approaching the end of this kind of value in gaming, though. Let's face it, a new generation of consoles put out right now would probably offer only slightly better-looking games. Even at 4 years old, and 3 years old, respectively, the 360 and PS3 are still running great-looking games. GPU advances on the PC are really the only thing pushing the technology any further, and really, with each incremental upgrade, the improvement in graphics is getting more and more trivial. Ray-tracing is about the only major advancement left.

The playing field is getting level, except in the traditional ways, like writing. Games can, of course, still expect to have to compete on the graphics level, even after the hardware hits that graphical median, but there will be VERY few leaps left comparable to Playstation to Playstation 2.

Seeing older games as "obsolete" is, IMHO, a misperception of old games by the market. It's also cultivated by gaming companies (after all, why buy new if the old is still fun?). Nintendo demonstrates this pretty well, actually. New Super Mario Bros. on the DS added nothing truly significant to the various Mario games that came out for the NES or afterward. Yet it still sold INCREDIBLY well. Why? Was it because it was "new" or because the original hadn't really gotten old?

Basically I'm saying yes, the video games market is f*cked up right now. It's constantly changing, and marketing takes full advantage of what that means to gamers. But the fact that exclusives, a driving force in console choice and sales, are basically evaporating right now, is a harbinger of things to come. There will be reason for real competition in pricing before long.

I don't know, I continue to see statements like this made, but I don't buy it today, just like I didn't buy it years ago. Besides graphical enhancements there's also things like physics, enemies on screen, AI (AI has a loooooong way to go and requires a lot of processing power), etc. And we can still improve on graphics, especially when you consider all the "tricks" (bluring, lower rez textures at a distance, etc) used today. Basically, even today, and especially on consoles, the character model might be highly detailed, but when you look off and to the left it's a blurry or low rez pile of junk.

A good example is Gears and Gears2. In Gears, things were already pushing the 360 to its limits, and the fidelity was low (compared to Gears2). What they did in Gears2 to make it look better was to focus on what draws the eye in the scene and render that in high details. Other things actually went down in fidelity to compensate - all because of hardware limitations.

IMAGE(http://i472.photobucket.com/albums/rr82/GFDM007/gears-vs-gears-2.png)

And still gears isn't photorealistic - it's not even close yet. We have a long way to go.

My point? I don't see the business model changing as drastically as proclaimed anytime soon. Do I see microtransactions growing? Yes. However, they have shown to be signifigantly less successful and accepted in the West than in the East. It could be a cultural thing, but I think it's a societal thing. But that's another discussion.