Phantasy Star 4 cost 99.99 when it released in 1995!
Don’t get me started on Neo Geo prices!
With people being out of money in the U.S. since unemployment is ending and Republicans deeming it just fine to let millions go bankrupt, inflation on food and every other critical necessity, I have a feeling 2K is going to see a major dip in sales if they keep those prices up (at least until deep discounts show up).
2k will be fine. Junkies always find a way to get their fix.
That’s a shitty way of putting it, but I think even $70 for a game people will probably play for hundreds of hours is a pretty good value proposition, and video games are certainly cheaper than rent, cell phones, cars, etc. I think many people would need to be on the verge of homelessness to forego it, although they might think twice.
Why have prices been stagnating/deflationary(?) since the 80s?
Maybe there was always an increase of new customers but now growth has come to an end. Hence prices will rise? What’s behind the (extremely unusual) price stability of games?
The single most important answer is that expansion of the available market outpaced both inflation and skyrocketing production costs for many years.
Marketing got much smarter over the years as well; while we never really developed the ancillary markets some hoped for, a deep and inbred kind of segmentation evolved with gold editions, ports, backports, and compilations. The key development was what we paint with a broad brush as “DLC”. It has fundamentally changed game economics. It has allowed larger games to shift risk downstream, especially for post-alpha asset creation, and let smaller games harvest their niche more effectively, while reducing user acquisition costs to nearly nil.
Balance sheets at the larger publishers are also buoyed by revenue streams undreamed of in the retail heyday, like the entirely new and different mobile market, games-as-a-service created by the MMO craze of the oughts, and the newest kid on the block, catalog fees for streaming services (which I suspect will merge with GaaS not due to price pressure but subscription overload). There are so many moving parts these days that single game line P&Ls are almost passé. Hell, I’ve had to account for real world-based arbitrage and currency trends in internal game currency, and that was nearly a decade ago.
Production costs, while of course increasing by at least four orders of magnitude over three decades, have been helped by some key changes. Innovations like EA’s amortizing development costs across yearly editions is one factor, as is the rise of truly reusable engines and asset creation standards. In fact, we would never have been able to grow to the team sizes we see today without de facto technical and asset standards, which subsidized the costs powerfully but invisibly unless viewed across time. Finally, production costs have been reduced (though not remotely controlled for) by the rise of displaced development and remote work. I’m not talking about the general lubrication of cheap asset outsourcing, but the large-scale efforts pioneered first at Ubisoft, with their proof that lower-wage colonies can produce AAA results if paired with tight central creative and cultural control. Now Covid-19 has proven what many have suspected, that physical co-location is only a valuable luxury, not a necessity. This, along with the tool and asset chain standardizations mentioned above, will lead further down the path of labor commodification.
All that said, though, the $60 dam had to break sometime. It’s largely a meaningless emotional flag at this point, but as you can see in this thread many gamers are quite emotional about it. I’m not sure that I would have been the person to bang my fists on the boardroom table and demand a higher price on a luxury good right now…
When we’re out of this viral mess the price increase would feel much more reasonable.
Fantastic post. Thanks for this.
If it has to happen, a console generation shift is the easiest place to do it. Softens the impact if you only apply the increased prices to the new consoles (+PC once the old consoles are dead), and makes it feel like the increased prices are being tied to higher quality assets on nextgen. And the timing of the generation shift is outside of 2K’s control.
When I paid 60 dollars for Ultima IV in 1985, it came with 4 disks, a manual, a spell guide, and a reference sheet (all printed on quality paper). There was also a thick cloth color map, and a little metal ankh. Today, I get none of that.
But you get a game made with probably 10x the labor (if not more).
Very true. And I miss those too. But today for less than $200 a year I have access to thousands of dollars worth of games that I don’t need to carry around, track, or keep safe. All via sub models offered by MS, EA, Ubisoft, etc. I also have access to a ridiculous amount of free premium games like CoD Warzone, Dynasty, and a crap ton of MMOs that can be played to varying degrees with never paying. And the sales are constant both on console and PC, except Nintendo’s 1st party stuff. And even it goes on sales once or twice a year. As much as I enjoyed have a collection of stuff and stumbling across a hard to find game in an out of the way store I think the overall cost of being a gamer is cheaper than ever before.
Ain’t that the truth. In the early 2000s you could get a PC RPG or RTS made for $3-5 million by a team of 30-40 people.
These days those games are made by a team of 75-300 people and cost $40-50 million at the lowest end and up to $150 million for the big open world games.
That has 2,000x the audience. Games are much more “world” centric now than they ever were before. Previous publishers could’ve only dreamed of having instant access to markets like all of Europe, the Pacific Island Nations, South America, India, and with some effort China.
I think the quarantine situation makes the demand for games arguably even greater than before, despite the economic downturn.
These are luxury goods—the creators can price them at whatever they want. Whether they make more or less money by raising prices is, of course, an issue of demand elasticity. I don’t get the arguments for “they don’t need more profit”—this isn’t a public good.
After the complete and utter shit show that NBA2k20 was, the last thing they should be doing is something that is bound to be a publicity disaster. This is as tone deaf as it comes. I bought that game in a very deep sale, and I’m still pissed. The notion that I would pay 70 bucks for one of their games right now is…so delusional. I can buy 10 quality games for that price, maybe they are a year or two old, but so what? I’ve been happily living in last years model for games for a long time now, I can’t be the only one.
/shrug. I guess the people that are going to buy these franchises at release no matter what, still will.
Yeah, it’s one of those things where if they don’t do it now, their next chance is like 7 years away.
I think the price raise could bite them in the ass due to the economic downturn. There will be cheaper alternatives.
That said , they can prob get away with it on next-gen consoles, as those folks will be spending money.
I just don’t think there will be that many of them for the next 2 years- this console gen is not going to sell well to start.
Maybe the AAA folks think getting next-gen on board now will lead to price tolerance later. It probably will, but there’s the chance of a crash- I could see this console generation failing due to the downturn,GaaS, and backlogs.
Oh the days when the name of a game alone was enough to make me want to buy it for approximately a year’s worth of allowance.
I’m not sure how much my copy of SimCity (MS-DOS) cost back in the day. It had already been released for possibly a year.
I also made some stupid NES game choices around that time that I still regret. TMNT, Afterburner, an Al Unser Jr. racing game, I can’t remember the rest.