Why Next-Gen Titles Cost $60

Heartless Gamer writes "Forbes.com has up an article detailing what goes into the $60 price tag for next generation games. Publishers get about a buck per copy sold. 'The remaining $59 per game goes into many hands. The biggest portion — nearly 45% — goes toward simply programming and designing the game itself. Then the console maker, retailer and marketers each get a cut. Add in manufacturing and management costs, and depending on the type of game, a license fee. Some gamemakers also have to pay a distributor to help get their titles in stores.'"

Comments

What about Wii?

[jZnat]

Then how can you explain why Wii games only cost $50 still? I blame the increased graphical power of the 360 and PS3 which increases the development costs due to the developers' (or publishers?) need to utilise all graphical power available.

Re:What about Wii?

[Vandilizer]

Simple you want to know why Wii games cost less!

They are the only ones who are not subsidizing the price of their consoled with the games that they are selling!

Sony takes about $150 hit they need to recap!

Pay for it now, pay for it later in the end you are still paying for it! I for one do not mind paying a bit more now to save later!

Re:What about Wii?

[PrescriptionWarning]

not to downplay the Wii, I think its a really fun system, but most of the games simply aren't as feature filled. Again, not saying thats a bad thing, but it certainly makes it easier to develop cheaper. I also seem to remember that some of the games are simply ports as well, such as Call of Duty.

Re:What about Wii?

[MS-06FZ]

Then how can you explain why Wii games only cost $50 still? I blame the increased graphical power of the 360 and PS3 which increases the development costs due to the developers' (or publishers?) need to utilise all graphical power available. I disagree. More likely it's due to the Wii hardware's close kinship to the Gamecube. Developers familiar with the 'cube can take advantage of their existing skills - much like GBA developers could with the DS. The same applies to some extent to the PS3 and XBox 360, too, but those machines are much more distant from their predecessors in terms of capabilities.

But there's also this: in the end, they don't charge you what the game costs, they charge what you're willing to pay and then distribute the monetary yield. The Wii is an economy system, whereas the PS3 and XBox 360 are more high-end gear, (and with more "loss-leader" money to recover) so the game titles are priced to match.

Re:What about Wii?

[Itchyeyes]

Nintendo takes just as much a cut of the game as Microsoft and Sony do. The reason Wii games cost less is development costs, plain and simple. A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.

Re:What about Wii?

[Chmcginn]

A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.

True... but how does the cost of porting Oblivion compare to the cost of creating Gears of War? Or even Twilight Princess, for that matter.

Re:What about Wii?

[Seumas]

I don't get the "console makers get a cut" part. How can they require that?! I'm pretty sure Ford doesn't get a direct cut every time I fill up my tank or buy a new car stereo.

Re:What about Wii?

[Itchyeyes]

You can disagree all you like, but you'll still be wrong. Take a character model from Wii Sports and a character model from Gears of War, which one cost more to make? You can give Epic the best tools in the world and all the experience they could want with the XBox 360; it's still going to cost more to make Gears of War. You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.

Re:What about Wii?

[Itchyeyes]

First of all, Oblivion wasn't a port, it was developed for the PC and the Xbox 360 at the same time. However, developing a game for multiple systems is even higher then simply developing for one system, since in addition to the usual costs there's the cost of coding the game for the second system. Obviously, the benefit is that you get a larger install base to sell your game to, but the total cost of development is still higher.

Re:What about Wii?

[CastrTroy]

A better analogy. I don't see Dell getting a cut when PC games are sold. I don't think that the designers of the console should be entitle to anything. However, with this model Nintendo would still do well as they don't sell the console for less than it costs to manufacture, and they have a lot of first party games that sell quite well. Sony and MS would have a much harder time making ends meet if they didn't get a cut of every game.

Re:What about Wii?

[Kevin DeGraaf]

Easy!

On!

The!

Exclamation!

Points!

There!

Dude!!!

Re:What about Wii?

[nagora]

You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.

You're absolutely right, and that's a big part of why I didn't buy a console for 2 decades until the Wii arrived. I want enjoyable games, not tedious movie-wannabes or, even worse, pretentious dross by programmers who want to be "artists". That approach just means sinking the budget into visuals instead of game design.

Cheap and fun beats high-definition dullness every time.

TWW

Re:What about Wii?

[Applekid]

Typically, the console manufacturers will produce the games for the publishers. The fees the publisher pays for this service will vary based on how many they make and whether the title will be exclusive to the platform. In return, the manufacturer will produce the discs/cartridges and that media will work in the console. In that price is their "cut".

Re:What about Wii?

[Blakey Rat]

It's an interesting market. The console makers get a "cut" because they hold the keys to the car. Without using Microsoft, Sony or Nintendo's encryption on your disk, it's unplayable on their console. Slashdotters hate DRM. (And stop winging on about Nintendo being so great, the reason the Gamecube disks are so mutant is specifically to make them hard to copy.)

The console makers generally charge a fee to publish the game on their console, but then they spend this fee in additional testing and QA for the game. Microsoft has teams of people QAing non-Microsoft games to meet minimum established standards of quality. Since the publishers don't complain about this arrangement, I'm guessing that the QA service Microsoft/Sony/Nintendo provides is worth the publishing fee, but I don't know.

Re:What about Wii?

[RyoShin]

That's the main reason as far as I know. If companies kept their graphics at the height of the PS2/XBox generation, they would quickly be slammed by all video game media as having "lack-luster graphics", despite the fact that they might be able to then offer those games at $45 instead of $60.

A big reason a lot of previously-exclusive PS3 titles are going multi-platform or jumping ship altogether is because of the substantial increase in development cost for the PS3, combined with the very slow sales of the console.

Re:What about Wii?

[miyako]

Not to completely disreard your point, but sometimes it is substantially more difficult to create lower polygon models of things. Yes, games for more powerful systems often have more art assets- and that can correlate to more cost to pay artists- but at the same time there are certainly cases where a more powerful system means that artists and programmers don't have to spend as much time optimizing.

Re:What about Wii?

[bendodge]

That makes sense. I am a hobbyist game developer and have always found that programmers are a dime-a-dozen. Game art (esp pixel animation) is hideously expensive.

Re:What about Wii?

[MBraynard]

MS's own 360 games cost $50 still.

Re:What about Wii?

[krlynch]

I don't think that the designers of the console should be entitle to anything.

They're not "entitled" ... the companies have simply established a mutually beneficial business arrangement that you're willing to pay for when you buy a game. Nintendo sinks money into developing a console, in the interests of making money. The software company sinks money into developing a game title, in the interests of making money. The software company pays Nintendo to license the Wii name and logos for marketing and sales purposes (you know, so they can say the game is for the Wii), and to get Nintendo's technical assistance and expertise. That serves the software house's interest, as it allows them to sell more games, and hence make more money. It also serves Nintendo's interests, as they also make more money. You're free to go ahead on your own and develop and market a console game without the help of the console manufacturer ... but you aren't going to make a whole lot of money without their assistance and logos. Really, how many people are going to spend money to buy a game for a console when the box doesn't say it's for that console? Bloody few....

I don't see Dell getting a cut when PC games are sold.

In this instance, there's no mutually beneficial business arrangement that would dictate that. The correct comparison would to Microsoft getting a cut for each PC game sold. And they DO get a cut (of a kind ... I don't know if they get an actual slice of money per box), in that they license their Windows logos and tools to developers in another kind of mutually beneficial business arrangement.

Re:What about Wii?

[Anonymous Coward]

The total cost is greater, but that's irrelevant. The "usual costs" (design, audio, graphics, etc) are the same whether it's for one platform or 2; the development cost per platform is less.

Re:What about Wii?

[tepples]

I am a hobbyist game developer and have always found that programmers are a dime-a-dozen. Game art (esp pixel animation) is hideously expensive. Access to platforms that encourage multiple players per screen (for game scenarios such as Gauntlet, Secret of Mana, Bomberman, and Smash Bros., which do not require that the screen be split) is even more expensive. The only open platforms (Windows, Mac, and Linux) encourage the use of 17" monitors and one $800 PC+monitor per player, not the 27" monitors and one machine per four players of the consoles.

Re:What about Wii?

[larry bagina]

One reason that publishers don't complain is that it helps limit competition.

Re:What about Wii?

[MBraynard]

I don't think that the designers of the console should be entitle to anything.

The spreadsheet that is made to determine whether or not a project goes forward considers many things: both the upfront revenue and future revenue. All of this, minus costs, get calculated into a NET PRESENT VALUE.

If the net present value, minus the liscence fee that you don't think should exist, was not sufficient, the company would either not produce as good a console or not produce the console at all.

It doesn't MATTER if a company makes money on the console sale itself or makes it on the console + three games.

Re:What about Wii?

[tepples]

Since the publishers don't complain about this arrangement Microstudios, which more often than not produce casual budget games, have generally got the shaft on console platforms since 1985.

Re:What about Wii?

[Itchyeyes]

It's only irrelevant for blockbuster games, where the added sales far outweigh the cost of porting to a second system. For games with more marginal sales it's a valid consideration. Porting a game to a second platform may increase the overall sales of the title, but the added cost of moving to that second platform might decrease your rate of return on your investment. From a business perspective it might be better to invest that money in another game instead of in porting an existing game. It's something that has to be calculated on a case by case basis.

Regardless, we're now moving away from the point of the argument, which was that higher costs of development for games on high end PCs and next gen consoles is a legitimate cause of higher game prices. While the cost of development for Oblivion may indeed have been mitigated by releasing it on two platforms, it was still higher than the cost of development for Morrowind which was also released on two platforms. When you compare apples to apples, games cost more to make today across the board, which is why game prices have gone up. The parent's assertion that the reason Wii games cost less because Nintendo doesn't charge a royalty is patently false. They cost less because they require fewer assets because the platform doesn't have the power to produce high end graphics, end of story.

Re:What about Wii?

[Anonymous Coward]

"You're free to go ahead on your own and develop and market a console game without the help of the console manufacturer"

Except that modern consoles use encryption, digital signatures and sometimes custom disc formats to prevent unauthorised code from executing. You want to sell a PS3 game? Well, you'd better hire some bloody good reverse engineers and start building your own blu-ray plant.

P.S. Microsoft selling the odd copy of windows and visual studio to PC developers isn't really in the same league as getting 7 dollars per boxed copy... A typical game that sells half a million on 360 nets them 3.5 million bucks. A game that sells half a million on PC means the developers spent a few thousand dollars on MS software for the developer machines - which they can re-use for the next game.

Re:What about Wii?

[Fozzyuw]

Microsoft has teams of people QAing non-Microsoft games to meet minimum established standards of quality.

Indeed, this was around back with the NES. They called it the "Nintendo Seal of Quality". Basically, back then (as I remember it), the developers had to pay for this seal or the game was not allowed to be published on the NES.

That's the skinny on it anyways. Nintendo would claim that it means their 'standards of quality' but that certainly wasn't the came for many, many games at the end of the NES' life. The NES, like the modern-day PS2, had/has such a market penetration and pop.culture frenzy that making any game, no-matter how crappy, would guarentee trucks with off-white bags and black '$' on them to pull into your driveway. Back then, releasing a NES game would mean each video store would buy 2-3 copies and some customers would pick it up if it had something of interest (like a brand name such as a popular cartoon/comic/movie of the time).

It was a 'if you build it, they will come' sort of thing. It tends to happen on the mass marketed console. It happened on NES, PS1 and PS2 to some extent (though the later generations are harder due to massive up-front development costs). It appears to be moving to the Nintendo DS and might be on it's way to the Wii next. Though, like I said for the PS2, it's not as easy to see since the market is expensive to develop for these days, so this phenomenon is shrinking. That's partly why we only see "Zelda ##: do it again!", "Metroid XXX: The bad guy isn't really dead!", "God of War 2: We know, we said you where a God, but now you're not!", "Grand Theft Auto: 70's music!", "Madden Football: Yet another season!"

Sometimes I wonder what is worse? Playing it safe and copy/paste a design, add a gimmick and call it new? Or letting a mass of 'original' games flood your system, no matter how 'quality' they are? Anyway, back to the point. Yes, if you want to develop a game on "system X" you have to pay "company X" some money. Think of it as a license fee.

Cheers,
Fozzy

Re:What about Wii?

[MS-06FZ]

You can disagree all you like, but you'll still be wrong. Blow me. Like you're Mr. Industry Analyst and I'm just the know-nothing feeb? Don't be a prick, we're both just armchair quarterbacks here.

If you want to talk about effort required to make models - Miis are a special case as they're rather simple. But people don't want that in all their games. They don't want cartoon characters in Red Steel. If you're going for a complex look, it's harder to make a good-looking low-poly model than it is to make a good-looking high-poly model. Game designers have, of course, built up the requisite skills for making low-poly models in order to deal with hardware limitations, but as the hardware becomes more powerful they can make better models with less effort.

Re:What about Wii?

[Anonymous Coward]

It's simple, The Wii costs less than the ps3 or xbox. Wii owners are value consumers they won't pay $60 for a game. This is especially true when there are so many fine legacy games available for the Wii virtual console which cost less than $10 each.

Also, consider this..

As a percentage of the console price, the ps3 and xbox $60 game is less expensive than the $50 Wii game.

Re:What about Wii?

[krlynch]

You want to sell a PS3 game? Well, you'd better hire some bloody good reverse engineers and start building your own blu-ray plant.

I didn't argue that it would be "cheap" or "easy" ... I only argued that the cost structure isn't about "entitlement" but rather "mutually beneficial business arrangements". If building that blue-ray plant was a beneficial business arrangement for the developer, it would be built. The fact that it isn't, because the cost is high, doesn't weaken the argument.

Microsoft selling the odd copy of windows and visual studio to PC developers isn't really in the same league as getting 7 dollars per boxed copy.

Again, I disagree ... Microsoft and the developer community have arrived at mutually beneficial level of costs and benefits here. If Microsoft charged developers much more than they do, then some of the marginal development houses might not develop. If they charged less, then Microsoft would make less. They've arrived at a mutually beneficial business arrangement. I didn't say it was identical or even directly comparable to the console arrangements ... I said it was a more apt analogy to compare Microsoft and the console manufacturers than to compare Dell and the console manufacturers.

Re:What about Wii?

[nuzak]

It's great that you enjoy that style of game, it really is. I liked Katamari too. But none of us are really interested in your two-minute hate against fancy graphics. I bet God of War cost a lot to do the graphics on (and yeah, it's a last-gen title, but there'll be a GoW3). And guess what, Kratos wouldn't work as a Mii.

Re:What about Wii?

[DarkGreenNight]

Lucky you... In Spain Wii games cost 60

FNAC.ES prices http://www.fnac.es/dsp/?servlet=advancedSearch.Pro ductListServlet&Code1=859979761&Code2=135&PAGINA=1 &SearchedSentence=myForm%0AName+'KEYWORDS'%2C+Desc +'Interprete+u+orquesta'%2C+Value+'Wii'%0AName+'SE ARCH'%2C+Desc+'pagina+de+b%26uacute%3Bsqueda'%2C+V alue+'SIMPLE'%0AName+'CRITERIO'%2C+Desc+'Criterios +de+busqueda'%2C+Value+'0'%0AName+'TREE'%2C+Desc+' Arbol+de+categorias'%2C+Value+'0'%0AName+'STREE'%2 C+Desc+'Arbol+de+categorias'%2C+Value+'0'%0A&CRITE RIO=4&ORG=1
(I'm too lame now to make the link shorter sorry, too dumb after global corporate meeting)

Games have the price people are willing to pay. Also, if you have to pay more for something you value that thing much more than the one that is cheaper.

Re:What about Wii?

[tepples]

They're not "entitled" ... the companies have simply established a mutually beneficial business arrangement that you're willing to pay for when you buy a game. Then why haven't the console makers figured out any sort of "mutually beneficial business arrangement" that they could make with education, hobbyists, or microstudios, apart from Sony's too-brief experiments?

Really, how many people are going to spend money to buy a game for a console when the box doesn't say it's for that console? "For the PlayStation 2 console" on the box of Datel's unlicensed Action Replay brand accessories is a fair use of Sony's "PlayStation" trademark in several jurisdictions.

Re:What about Wii?

[tepples]

In Spain Wii games cost 60 There are three issues at work here:

• In Europe, sales taxes are higher than in North America.
• In Europe, sales taxes are included in the advertised price, unlike in North America.
• Europe is geographically farther from China and Japan than North America is.

Re:What about Wii?

[rjung2k]

"not to downplay the Wii, I think its a really fun system, but most of the games simply aren't as feature filled."

If that were true, then feature-filled Wii games should be expected to cost more than $50. And yet I can find feature-loaded titles like Sonic and the Secret Rings (all-new for the Wii) and The Godfather: Blackhand Edition (with new Wii-exclusive missions and career paths) at the same $50 price point.

Re:What about Wii?

[jythie]

Programmers are a dime a dozen in the same way artists that can only do stick figures are a dime a dozen.

For a large scale software project like a complex game you need quite a few skilled/disciplined programmers, tool developers, designers, architects, a build master, a CVS master, project leads, etc.

At the low end, go to any high school or other such environment, do a quick poll, and you will generally find far more amature artists then amature programmers (who are not just webmasters).

For something like a console title, you are going to need good numbers of both.

Re:What about Wii?

[Anonymous Coward]

Wii game cost less and PS3/360 titles cost more because that's what the market will bear.

Actually, the console manufacturers and game publishers pick a price point based on what they believe consumers will be willing to spend, an estimate of how much they need to recoup, and picking an easy to understand number that will leave most consumers unsurprised when they get to the checkout stand. They also add in competitive factors such as not wanting to have a dramatically higher, or lower, price than the competition.

PS3 and 360 owners perceive their console as a premium purchase. The companies in question priced their games to reflect this. Nintendo wanted to position their console as a lower price machine accessible to anyone. They felt they needed a lower per-game price point to perpetuate this image.

But Nintendo didn't go for $40 or $30, even though the cost to develop them may have justified these price points. Why?

For one, they didn't want to be seen of as "cheap" or low quality. There's a huge difference between being lower priced and being considered substandard. In the past when game makers lowered the price of their premium games too much, they found their sales plummeted. People equated the lower price with less popularity or a poorly made game.

Second, they felt, based on their Gamecube experience, that their customers would be willing to pay the $50 per game.

Third, and this is related closely to #2, they didn't want to "leave money on the table." If people are willing to pay a certain price, thats the price you want to charge them, regardless of what it costs to make. Otherwise, it's like giving money away. You leave it on the bargaining table, even though you're customer was more than happy to let you walk away with it.

That all equals, "what the market will bear." If all of these manufacturers thought you would pay for it, they'd charge a lot more per game, even if their costs didn't change at all. They will simply charge whatever they think they can get away with charging because we're willing to spend it.

Re:What about Wii?

[MaverickUW]

They actually have.

The scale of how much money goes back to the console maker is a sliding scale. Last generation, several high profile games came out on Gamecube for $40 instead of $50. Nintendo lowered their own royalties so that publishers would be more willing to take a smaller hit by offering the game cheaper, but likely be able to sell more units. If you have a $20 title, it pays less royalties because it's sold for cheaper than a $50 title.

Of course, there's also Virtual Console to deal with...

Re:What about Wii?

[LordRobin]

And guess what, Kratos wouldn't work as a Mii.

Sez you! I'd love to see a super-deformed Kratos rampaging through the Mii Plaza, decapitating Miis left and right!

------RM

Re:What about Wii?

[7Prime]

You're both wrong.

First off, graphical resolution has very little to do with developement costs. Graphics are usually originally vector based (done in things like Illustrator and Maya), or high-res raster files... of which are downscaled immensely when going over to a console. This is pretty much true of any graphic design field. For my TV production (still NTSC), I do a lot of my graphics in vector or high-res raster, just in case I may need to use the graphics later for print, or to do some rescaling animations. Graphics are almost always done with the mindset that they may someday go to print media, which means that even the most advanced HD doesn't come anywhere close. Bottom line is, it takes almost no more developement to do HD graphics than SD, since both are going to be highly downscaled anyway.

And the GameCube-similarly comment is just silly.

Only a very small handfull of people think of the Wii as an "slightly updated GameCube", in fact, I'll bet you that more people think of the 360 as an updated XBox (due to the name and the relatively small change in game styles for the new system). The only people who think of it that way are a) tech people who are b) Nintendo Naysayers who only look at processing power as a benchmark for quality. That's a very very small percentage of the population. The GameCube didn't sell, the Wii is selling incredibly well, which means that there must be a huge difference in people's minds between the systems... it's a much larger leap of sales than any other console in recent history. Even that aside, like hell does Nintendo want to market it that way. In fact, I would have expected them to price it differently simply to try to burn it into people's heads that the games were higher quality than GC games. Even if they were to think of them as similar, they're not going to want to admit it. From a marketing perspective, this makes very little sense.

No, the primary reason is that Nintendo has been playing the populist card now for quite some time (and doing so quite well) and their pricing matches that. It becomes difficult to keep up the populist image while jacking up prices so that the populis has trouble paying for it. Sony and Microsoft did all the work for them... they jacked up their prices. So to come off looking like the caring, populist corporation, all Nintendo had to do was NOT change their prices.

It's all about marketing, it has nothing to do with development costs or horsepower speculations. You can only talk about development costs being a factor if each unit sold requires a certain amount to produce. All that goes into the production of the game package itself (the disc, the case, the box, the booklet), is extremely cheep. It's close to a 100% profit margin, in terms of basic production costs per unit, so all they really need to do is price it so as much money is made from the sales, regardless of how many units that is.

Re:What about Wii?

[deuterium]

The tricky difference between securing a good programmer and a good graphic artist is that you can judge the skills of the artist fairly directly. Does their stuff look good? Great.

With programmers, though, unless you have fairly extensive technical skills, or someone else with said skills doing the hiring, you can't be sure what you're getting. If the person you interview knows just enough more about programming than you do, it's hard to say that he's incapable. People pad their resumes and embellish their abilities. There are also sub-skills within programming, such as the ability to structure large systems, understand databases, write readable code, and manage time.

Re:What about Wii?

[Vexorian]

why Wii games only cost $50 still?

hmmm?

Re:What about Wii?

[7Prime]

Generally, for games, sequels work very well... in fact, it's the sequels for video games that offer some of the greatest innovations. Many times, it's the originals that have to play it safe, since they can't afford to screw up. With sequels, game developers have more freedom to go nuts within the framework of the series. There's a typical progression: the first game is fairly solid, the second game is wild, and disjointed (as the developers get a bit TOO experimental), and then the third is probably the most refined, thoughtful, and solid. Very rarely are the first games of a series the most innovative, popular, and of the highest quality.

I think "series" of media have recently recieved a bad rap from the film industry. Traditionally: books, music, artwork, all had series that were regarded as some of the best works in their genre. Composers wrote highly acclaimed song-cycles, sets of etudes, series of operas... etc. Classic literature had many periods of highly episodic content, painters did studies of certain objects, ideas, forms, or people. Only recently, with the "cash cow" movie sequel, have media series gotten a bad name. Luckilly, I don't think games really have inherrited the same problems that movie sequals suffer from.

I think a game series is more akin to a musical groups' discography, than it is to movie sequels. Rarely is a group's first album considered the best, most innovative, and most popular... most known pop groups don't even get picked up until their 2nd or 3rd outting. It's a learning process, and the group becomes more and more refined and confident after they've done a few ablums. A group doesn't really get together with the intent on doing just one work and calling it quits, where-as a film crew is gathered together for specifically one project. Game development teams are somewhere in the middle... maybe more akin to a theatre troup, in which some members come and go, but the core remains relatively constant.

Movies, on the other hand, are produced from the ideas of a single, finished screenplay, and are almost always self-contained. The crew has to interpret that screenplay to the cinematic medium. This means that sequels take a very different development approach, as following screenplays are then written with specific directors, actors, and general impressions in mind, where-as the original wasn't. Games, on the other hand, are brainstormed by the group, recieving no outside, pre-composed ideas, and all sequels are done in relatively the same manner.

Re:What about Wii?

[Anonymous Coward]

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Re:What about Wii?

[bendodge]

At the low end, go to any high school or other such environment, do a quick poll, and you will generally find far more amature artists then amature programmers (who are not just webmasters). That is true for paper artists, not pixel artists.

Re:What about Wii?

[KDR_11k]

European sales taxes are significantly lower than the 50% overcharge we're getting. They could produce the discs locally, it's not like there aren't any disc factories in or near Europe.

Re:What about Wii?

[Dutch Gun]

The market disagrees with you: http://www.gamecareerguide.com/features/266/are_yo u_in_demand_2006_game_.php

I'd tend to agree that there are a lot of hobbyist game programmer out there - probably because there are a pretty large pool of general programmers, and game programming is something that many people like to dabble in. The number of LaMothe books seems to confirm this as well, as these are typically targetted at the amateur market. But characterizing game programmers as "dime-a-dozen" is way off the mark.

One trend that's been interesting to note is that the non-programmer-to-programmer ratio has been steadily increasing over the past decade. The first game I developed required three full-time programmers and one part-time artist. My current company employs over a hundred developers, but only 25 of those are programmers. We have about 50 artists of various flavors (character, prop, world, concept, effects, cutscene, etc). We employ several full-time writers, and well as a dozen game designers and scripters, a small QA team, and a couple of audio guys. The rest are involved in other miscellany - localization, production, etc.

I'd say this is probably a pretty typical ratio for most game development companies. In general, with the increase in processing power comes expectation of filling the world with high-definition content - meaning large expenditures of resources for story, graphics, and audio. We're still coming to grips with the production challenges of this sort of content. While next-generation engines are a relatively straightforward matter to develop, the *real* challenge is creating next-generation content-building tools, allowing the art teams to do more for less. The current games are largely solving the content problem with a combination of brute force and slightly-improved tools. A considerable amount of both programming and content for games is still painstakingly hand-crafted. So, with all of this, you might expect me to claim that development cost sets the price... Partially correct, but it's not the full answer.

Other factors include: willingness of consumer to pay a specified price (Sony may have inadvertently discovered the consumer's upper limit), size of market, and general rate of consumption. There's pretty fierce competition in the industry, though, so if there was some magic bullet answer to getting costs down, I think we'd have seen it by now. My guess is that the numbers simply require this cost in order to have any reasonable chance of making a consistent profit.

Re:What about Wii?

[nagora]

I bet God of War cost a lot to do the graphics on

Yep, and the resulting game was a yawnathon of 15-years-old gameplay. Wake me up when we get to the promised land.

TWW

Re:What about Wii?

[Talgrath]

You're both wrong.

First off, graphical resolution has very little to do with developement costs. Graphics are usually originally vector based (done in things like Illustrator and Maya), or high-res raster files... of which are downscaled immensely when going over to a console. This is pretty much true of any graphic design field. For my TV production (still NTSC), I do a lot of my graphics in vector or high-res raster, just in case I may need to use the graphics later for print, or to do some rescaling animations. Graphics are almost always done with the mindset that they may someday go to print media, which means that even the most advanced HD doesn't come anywhere close. Bottom line is, it takes almost no more developement to do HD graphics than SD, since both are going to be highly downscaled anyway. Eh, wrong. In games you don't just take a high-rest raster file and toss it in and expect it to work; it won't. Game renderers use a different sort of engine, which (while still vector-based) has to model things in real-time with physical reactions to collisions between objects; an object not only needs a model, but properties that determine how actions it performs or has performed on it by other objects will effect it. What's more, you don't usually just buy an engine (assuming you don't make one...which takes far longer) and then use it as is, you usually tweak it to optimize its performance for your game type; optimizing an engine can take quite a bit of time on its own.

Why would game graphics be done with the mindset that they may someday go to print media? They're not going to use a game graphics engine to make a magazine; there are far-better, static renderers out there that will produce a much better shot in a few hours (given a raster or some other sort of file) that an engine designed for modeling games.

Re:What about Wii?

[7Prime]

Yes, but we're not talking about engines, we're talking about the actual vector data, plotted in by designers. The program used to make a poster will, obviously, be completely different from the engine that renders a realtime image in-game. But you can be sure that someone isn't having to replot all that data bit by bit, everytime they change media. That's just a complete waste of time. If you already have the vector data, why not use it? If you need more detail, add to it. If I remember, Final Fantasy X, the cut scenes (rendered out of time) were done with completely different models than the in-game engine. But with Final Fantasy XII, they used the in-game models as the basis for the cut scene models... which saved a lot of time and made for better continuity.

Yes, going higher def does have it's extra work, but not as much as everyone seems to be thinking about. The engines might be more complex, they may take longer to use, but you can still use the same basic vector data plots... I mean, why not? That's the beauty of vector data, it can be resized without any data loss. Sure, it's not quite that simple, but it's not as hard as, say, having to re-create a splash-screen bitmap from scratch at a higher resolution.

Re:What about Wii?

[SP33doh]

why does a game that comes out on the 360 and the PC cost $60 on the 360, yet only $50 on the PC?

Re:What about Wii?

[kornkid606]

I would speculate (key word) that Wii games cost less because the hardware itself is based on old technology. Just like the SNES was an enhanced version of the NES (extremely similar hardware), so is the Wii hardware extremely similar to the GameCube. Of course this doesn't apply to the controller. Because the hardware is similar, it should be just as difficult to develop a top notch Wii game as it was to develop a top notch Gamecube game. And since there is already a large tool and knowledge base for the Gamecube it allows developers to cut down development time and, thus, cut down the market price for games. At least that is what I believe to be the reason.

Re:What about Wii?

[edwdig]

At the low end, go to any high school or other such environment, do a quick poll, and you will generally find far more amature artists then amature programmers (who are not just webmasters).

A very small subset of artists are capable of creating game art. The subset gets much smaller when you limit yourself to pixel art with tight color and tile count restrictions. It's *really* hard to find capable artists for a 2D game.

Not a clue how hard they are to find though when you get outside of pixel art.

Re:What about Wii?

[Raenex]

Good graphics and move-style story telling can be fun, if done right. Have you played Warcraft III on the PC? Those guys (Blizzard) have great artists, voice acting, etc. I remember seeing one of their cutscenes on Cinimetech, and I thought "wow, those guys get it", and bought the game. I wasn't disappointed.

Don't get me wrong. Good graphics doesn't make up for bad gameplay. I agree with you on God of War, it was a button-masher. Still, the environments were amazing. And it had the whole "boobs" gimmick :)

Re:What about Wii?

[anduz]

More likely it's due to the Wii hardware's close kinship to the Gamecube... The Wii is an economy system...
I think both of these, and the lower game costs are all the result of a very intelligent marketing by Nintendo.
The playstation 3 has some awesome hardware but that same hardware is the cause of it's high price - a price a lot of people simply aren't willing to pay for a gaming console despite it's power. Even worse, to experience all that graphical power, and, the blu-ray features to their fullest you need a television/sound set - which a lot of people won't have for a long while...

The 360 is somewhere in between, it did have a whole year to extablish itself as the first next-gen console, but it shares those nasty 60$ games with the ps3. I don't know about everyone of course, but around here you won't see students like me buying 60$ games unless it's an absolute musthave like Final fantasy, Gears of War, Mass Effect and so on. Sire I ended up renting Lost Planet with a few friends to play over a weekend - but I bought WarioWare and Raymond.

You're right though, it's all about what we're willing to pay - but I think 60$ "so-so but still good" games shoot beyond what a lot of us are willing to pay for them - no matter what kind of system they're for.

Re:What about Wii?

[tbannist]

You realize, of course, that he would then have to extract vengeance on you for that indignity, and as you well know, you don't want to be the subject of his vengeance.

Something tells me...

[rhartness]

... that also a large chunk of this probably goes to the console maker as well. I'd be quite surprised to see that Sony (or M$) hasn't upped their licensing fees for these new systems over the last generation significantly.

Inflation

[UbuntuDupe]

Easier explanation:

-Why did next-gen titles five years ago cost $50?

-Now, take that answer and apply inflation for five years.

1.1^(1/5) = 1.9% per year inflation is all it takes, and it's been worse.

Re:Inflation

[MobileTatsu-NJG]

"1.1^(1/5) = 1.9% per year inflation is all it takes, and it's been worse."

You've got a good point. It's amazing that the $50 price tag held on as long as it did. However, even a bad next-gen game still fills the DVD with textures etc. because Sony and Microsoft insist on it.

Re:Inflation

[ToxikFetus]

It's not like $60 is an unheard of price point, either. Hell, I remember FFIII and Secret of Mana costing $60 when they came out on the SNES.

Re:Inflation

[Nimey]

In their cases, that was because they were large games that required lots of ROM, and ROM was expensive.

Re:Inflation

[Senobyzal]

Hell, I remember paying $50 for Genesis titles back around 1990. That's almost $80 in today's money.

Re:Inflation

[Hotawa Hawk-eye]

$50*(1.019^5) is about $55. 1.2^(1/5) is about 3.7% and $50*(1.0371^5) is about $60.

Re:Inflation

[shotgunsaint]

Absolutely correct. Nintendo kept a tight reign on the ROM supply, and since you had to buy it from Nintendo to make a NES licensed game, they stayed expensive. I remember paying $75 for Final Fantasy III (6) back in middle school. Funny that I'd have more disposable income then than now.

Re:Inflation

[Anonymous Coward]

hell, I remember $50 Wii games? So, Nintendo is immune to inflation, while the Xbox360 and PS3 are prime victims? BS, it is pure and simple greed. Look at other media, DVD movies for example. Costs have stayed almost the same, and have actually probably come close to going down on average. You cannot tell me inflation ignored the movie industry. You also cannot tell me that movies became cheaper to produce in the last five years either. Like I said, this boils down to one thing...GREED.

Re:Inflation

[grumbel]

ACK, back when the SNES was up to date basically all third party titles cost around 65EUR over here, some even up in the 75EUR, only some first party titles where sold at 50EUR and even then those prices aren't adjusted to inflation. If video games actually would adjust to inflation we would probably pay around 100EUR today.

There is really nothing to complain about the current prices, even if one doesn't like the 60EUR price tag, there are a ton of used games out there and all those cheap platinum/classic rereleases, which weren't available back then either.

Re:Inflation

[JLennox]

But this ignores the cost reduction as optical media becomes cheaper to manufacture (Blu-Ray may have an argument, but DVD does not) as well as the costs of the ROMs to construct those old carts.

Re:Inflation

[poot_rootbeer]

-Why did next-gen titles five years ago cost $50?
-Now, take that answer and apply inflation for five years.

It's not that simple, or else Atari 2600 games would have retailed for under $10.

Come to think of it, they DID, after the industry collapsed. I know MY cartridge collection, for one, grew substantially circa 1984 as retailers attempted to liquidate their remaining stock.

Re:Inflation

[WinterSolstice]

Yup - and I think I paid about that for Ultima on Apple II :)
That's why things like DOOM ($35?) were so nice.

I guess some things never change.

Re:Inflation

[Phisbut]

ACK, back when the SNES was up to date basically all third party titles cost around 65EUR over here, some even up in the 75EUR, only some first party titles where sold at 50EUR and even then those prices aren't adjusted to inflation.

Back when the SNES what up to date, there was no such thing as an EUR.

Re:Inflation

[Phisbut]

Come to think of it, they DID, after the industry collapsed. I know MY cartridge collection, for one, grew substantially circa 1984 as retailers attempted to liquidate their remaining stock.

Yeah... games were so cheap then... I bought a shovel and dug out lots of cartridges, they were coming out of the ground, for free. I later attempted to sell on a gray market to make a hefty profit (no eBay back then)... I still haven't recovered the cost of the shovel...

Re:Inflation

[Anonymous Coward]

Well, ignoring the possibility he was backtranslating to the currency, the ECU was conceived on 13 March 1979, which predates the SNES.

On January 1, 1999, the euro (with the code EUR) replaced the ECU, at the value EUR 1 = XEU 1. Illinois and New York passed laws recognising the two currencies were the same.

Nintendo stopped manufacturing SNES/SuperFamicoms in 1999 in USA, but 2003 in Japan :-)

Re:Inflation

[jchenx]

Frankly, I'm surprised that more game companies just don't say "inflation" and basically end it at that (regardless of whether or not it actually is inflation). Most people are familiar with the general concept, as we all feel it in our normal lives (especially as it comes to things such as the cost of food and gas).

Re:Inflation

[Anonymous Coward]

People don't want to realize just how bad inflation is. People like to believe that they're getting somewhere in their careers. If they are forced to realize just how much the dollar has inflated in the past 10 years, they'd realize that they're effectively making less than they used to or haven't come as far as they currently think they have.

Not to mention that if a game company did flatly say that they were adjusting game prices for the rate of inflation, every one of their employees would expect their salary to receive the same rate of increase.

Re:Inflation

[Deliveranc3]

Well photorealistic textures are starting to take over, so instead of artists needing to make 1024x1024 bitmaps all the time they can just take photo's (And blend them together in software which is fuzzy or do it by hand which is still faster than designing the whole thing) Motion capture is getting a lot cheaper (and replacing the animators, which I assume is because it's cheaper/better).

The Genre's are becoming more defined so programmers are getting experience in the genre they will be designing.

They typically use existing engines instead of designing their own and they don't need to fight for every gram of power because the consoles have so much more head room (though software tools such as sh are just coming out usually they are learned by the engine designers not the rank and file game dev houses).

Publishing costs on the 360 and ps3 will be really high due to high console costs, but that doesn't explain the 20% increase in price.

I think a lot of it comes from being in a $40bln industry and being gouged for movie liscences, hardware liscences and publishing.

Probably 5-10% is internal fighting because dev's want to do something exciting and management takes out features (See "evolution" of Halo for an example).

Each detail takes time and effort, but the big stuff should be getting easier at a rate which evens out with the increasing complexity of the small touches, there just isn't a good reason why games need to be so expensive.

And many great games ones aren't...

Re:Inflation

[tbannist]

Shh! Are you trying to drive the Nintendo fan bois into a homicidal rage with your fancy-pants logic and reason?

They don't want the truth, they want the cool, sweet taste of propaganda. It's easy to tell because they're still raging about how much it sucks to have pretty games and how nobody in the whole world owns a HD TV or even wants one, and how Sony and (to a lesser extend) Microsoft are evil for producing consoles that can produce HD output, because as everyone knows graphics and gameplay are inversely proportional. There has never been a pretty game that was also fun to play.

Bull

[AliasTheRoot]

The publisher makes a hell of a lot more than $1 a title, and the money certainly doesn't go to the developer. The retailers take a huge chunk of it. Realistically speaking, the publisher takes the lionshare of the profit - and uses that to cover the advances made to the developer.

The reason games cost $60 is nothing to do with the cost of manufacturing anyway, the console manufacturers run a cartel and have agreed these prices.

Re:Bull

[j00r0m4nc3r]

The publisher makes a hell of a lot more than $1 a title

Yeah, especially when they doctor their books so that the $1mil they were supposed to spend on marketing and PR went straight into their own pockets, and when they massage sales figures so they don't have to pay the developers what's fair. Publishers are a dirty dirty breed. Their entire business model pretty much falls apart if you remove the corruption.

Re:Bull

[Nimey]

OK, show your research proving this. You have research, don't you?

Re:Bull

[Tickenest]

The extensive supporting documentation and sourcing you have included with your argument makes it all the more compelling. Perhaps you have a newsletter to the likes of which I may wish to subscribe?

Re:Bull

[Itchyeyes]

Source? Unless you've got something to back it up, I think I'll believe the story from a reputable business magazine over an anonymous message on the Internet.

Re:Bull

[Canthros]

From the article: 45% of revenue goes to development costs of various sorts: art, programming, engineering, design, etc. Everything that it takes to get from having nothing at all to having a salable product. Retailers get about 20%, or $12. Of the retailer's $12, at least $11 goes to cover various operating costs associated with having a storefront. That shouldn't be a surprise: it's been known for a while now that videogames are a loss leader for many stores, and that the real money in video game sales is in used games, not in new ones.

There's another 11.5% in console licensing fees. The article implies that these may be waived for exclusivity of the title. I'd bet the fee varies depending on which console you're looking at, but it's probably comparable across the board. Marketing will eat up another 12% of the revenue, licensing an additional 5% (expect that amount to wind up in the marketing budget if the property is original), packaging 5%, publisher and distributer 3% between them (about a buck each per unit sold, it looks like), management and corporate overhead .3% and hardware development costs .05%. Retailers take a large chunk, but it's not the largest chunk.

The point at which a developer can rake in money on their own is when they successfully establish an original property. When that happens, they get the smaller marketing budget associated with a licensable property, but they're essentially licensing it from themselves, so they can pocket that 5% that would otherwise go to, e.g., LucasArts or Marvel Entertainment.

Re:Bull

[A Name Similar to Di]

The retailers take a huge chunk of it.

I know I only have anecdotal evidence on this one, but I don't think retailers take a huge chunk of it. About 8 years ago I worked at CompUSA (it was my first job). The employees got their purchases at cost which we could look up. While I got a nice discount on some hardware, I was disappointed to see that cost for most $50 games was about $47. In fact, when the store would put new games on sale in their weekly flier for $45, most of the employees jumped on the sale as well as the store was selling at a loss to draw more customers through the door.

Now that was a long time ago, but I doubt that the retailers have managed to somehow carve a bigger chunk out of the price for themselves.

Re:Bull

[91degrees]

Wow!

Once upon a time, it was something like 20% each for the distributor and retailer.

Re:Bull

[KDR_11k]

However many of these costs don't scale with the number of units produced so we have to ask how many copies of the game were made and what kind of budget was used for development, marketing, etc. A game that was made on a 200k$ budget and sold a million copies certainly isn't going to spend 45% on development, neither is a game that cost millions to develop but failed to sell.

Re:Bull

[Canthros]

They're probably average figures. If you want to talk about extreme scenarios, then, yes, a game that fails to sell will probably spend over 100% of revenue on development, and a game that sells like mad will spend much less. In fact, if your game sells really poorly, you probably take a loss on almost everything that isn't strictly per-unit-sold. And, contra that, if you make Halo, your costs, even if astronomical in terms of absolute dollars, will be far outweighed by revenues.

Up-front costs (development time, art, design, etc) are probably scaled according to sales estimates, and probably some of the other costs (marketing, say) scale similarly in terms of absolute dollars. Others (licensing, publishing, distribution) are or include per unit, rather than per title, fees or are so far amortized (hardware, management) that the number of units of a particular title sold will probably not greatly change the amount they affect the price.

But this is probably all Business 101-type stuff, and you're attempting to argue against a generality with specifics. It's like claiming that the existence of the Manx means that cats don't have tails.

Re:Bull

[KDR_11k]

The article is trying to explain why games cost 60$. Since most costs aren't per unit they aren't really a justification for increasing the price and I don't think the per-unit costs increased at all. The only reason the price was increased was because someone thought it's more profitable that way. But of course "We increased the price to make more money" isn't something the public likes to hear.

Re:Bull

[Canthros]

Well, you'd be wrong. But keep rebelling against the man, and, I'm sure, someday you'll be right, justifying, long after the fact, all those long years of paranoid delusion.

Just because development is only paid for once, you can't assume that it's actually free. This isn't like Big-O notation, constant values don't necessarily amortize out to nothing just because you sold several hundred thousand units. Development costs on games are exceeding twenty million dollars for AAA titles. Supposing you sell 10 million copies (and that's a lot of copies--Super Mario Brothers sold 40 million, but most of the top 20 best selling video games sold well under 10 million), that gets down to $2/unit. Supposing you sell only 500 thousand, though, it's more like $40/unit. Not many titles will break a million units, so these costs can't be hand-waved away.

Re:Bull

[KDR_11k]

Just because development is only paid for once, you can't assume that it's actually free.

That doesn't matter. Free, 14 billion dollars, the costs stay constant. You still try to maximize the profit at a per-unit cost of 1$ or so. If your game makes 4 million $ at 40$, 5 million $ at 50$ and 4 million $ at 60$ you sell it at 50$, no matter what the dev costs were (because you subtract them from the total). If you don't understand why higher prices don't immediately equal more profit you should look into economic theory again.

Sure, the costs amortize but that doesn't make them a per-unit cost. At 50k units made your dev costs may be 50$ per unit, at 500k units it's 5$ per unit but in the end you still paid 2.5 million $.

Cute

[MobileTatsu-NJG]

I click on a link to an article of why game prices have gone up and I get a full-page ad asking me to compare various sports cars.

Beats the music industry

[pipatron]

If the programmers and actual developers get 45% of the remaining $59, it beats the music industry content creators by a magnitude or more.

Re:Beats the music industry

[Anonymous Coward]

You can't really compare it to the music industry, AAA games usually take 3 years to make, and involve more than 100 people working on it. I don't think there has ever been and album that has required resourses like that. And you're just comparing it to the what the artist gets, not all of the people that worked on it, there is no one person who makes a game (these days anyway). Don't be fooled games cost a lot of money to make.

Re:Beats the music industry

[Anonymous Coward]

A "magnitude". Is this a mathematical or scientific term? How big is a "magnitude"?

Re:Beats the music industry

[SirTalon42]

An 'order of magnitude' would be 10x, so for his statement to be accurate 'content creators' would have to get 4.5% or less (though he said 'content creators', not artists, which probably get far less since they're not used for marketing purposes, thats what the artist is for).

Re:Beats the music industry

[pipatron]

Yeah. I only know the Swedish numbers, but I don't think they differ that much internationally, at least not in the western cultures. According to them, the content creators gets to see about 2% of the money that the population spend on culture. The rest ends up in the pockets of various middlemen.

Re:Beats the music industry

[cspariah]

Not per-capita, and not spread out over the time required to generate the content. How many music albums require 50 people 4 years to complete? And that's just dev, that doesn't count marketing or any other publisher activity.

Re:Beats the music industry

[91degrees]

But honestly, how many game take 50 people 4 years to complete? 18 months with a team ramping up to 50 over the course of the project is considerably more typical.

Re:Beats the music industry

[kinglink]

The reason this is better is because the publish pays the developer for the game. The developer pays the employees for the game. So the only way the game is made is if the programmers get a fair share of the money.

Basically that 45 percent they are talking about is already spent by the time any of this profit comes in. And suprisingly it works. Most programmers are salaried and they get paid whether the game does excellent or awful, but they are held accountable because they really do want to make the best game possible because it makes them look better in the future.

Re:Beats the music industry

[Anonymous Coward]

NIN - The Fragile took 5 years and has a personnel list about 100 people long lol.

Re:Beats the music industry

[KDR_11k]

They don't get a percentage of the sales, they get a fixed salary and that's it, for better or for worse. Usually the publisher pays for the development and reaps all the profits, the devs get only the money the publisher paid them to make the game (I'm ignoring the developing company here). The advantage is that the employees don't need to be running around looking for the next "gig" (unless they're contractors) all the time, they do their regularly scheduled work and if the company goes bust they go elsewhere.

Because it's what the market will bare.

[hal2814]

As long as people are willing to pay $60 per title, that's what they will cost. You can break down the numbers all you want but if the market won't tolerate $60 games, there sure as heck won't be any. The least important links in the chain will either be paid less or eliminated entirely.

Re:Because it's what the market will bare.

[Anonymous Coward]

Interestingly, as long as the alternative is a choice between $60 and $0, a big chunk will pick $0 instead.

Re:Because it's what the market will bare.

[xdroop]

My god, man, this is Slashdot -- it is no place for rational discourse. And on economic theory no less!

Unless you are going to rail about the "unfairness" and "greed" inherent to the current system, I recommend you find another place to discuss the matter.

(Now in your defense, you did disguise your rationality by using "bare" instead of "bear".)

Re:Because it's what the market will bare.

[hal2814]

"(Now in your defense, you did disguise your rationality by using "bare" instead of "bear".)" Yeah I noticed that after I hit submit. I guess I've seen the "We bare all." billboard a few too many times on I-85.

Re:Because it's what the market will bare.

[Aladrin]

Interestingly, as long as the alternative is a choice between supporting the company and paying for something legally, ethically, and morally, and downloading it off the internet and screwing the developers of the game you love so much, damning your eternal soul, and taking a chance on going to jail, a big chunk will pick $60.

There, I fixed that a bit for you. It goes far beyond the money aspect. Some people actually appreciate the fact that the developers put a lot of hard work into the game and if sales are bad, the company will quite making them!

Re:Because it's what the market will bare.

[91degrees]

downloading it off the internet and screwing the developers of the game you love so much, damning your eternal soul, and taking a chance on going to jail,

True. That's why some people choose to pay.

Of course, to some other people their eternal soul and the risk of jail are less than $60 but more than say $30. This is far from an unheard of concept. Most people have a price on their morality.

Re:Because it's what the market will bare.

[BlueCodeWarrior]

Interestingly enough, it's possible that the OP meant that when choosing between paying $60 for a game and not buying one at all, some just won't buy a new system at all. I know $60 games are one reason that's kept me from buying any next-gen consoles so far.

Not everything is about piracy.

Re:Because it's what the market will bare.

[MeanderingMind]

If it's a waste, why are (hypothetically) you taking the game for free? That appears to be what you're implying is the proper response to the price.

I'm confused by a strange attitude I see in people today I'd label "entitlement". Somehow, we are entitled to anything we want, whether or not we can afford it. Instead of dealing with it and living without luxuries, we take what we want.

I don't know where this attitude comes from, I'm just noting what I've been seeing here in America.

Re:Because it's what the market will bare.

[Pendersempai]

You're neglecting the supply side of the price/quantity equilibrium. If some suppliers were willing to supply their (equivalent) games for $50, then even consumers who would tolerate a $60 pricepoint will instead by the $50 games. Your formulation assumes that the developers would all collude to fix their price at the maximum the consumer would bear -- which may be true, but I haven't seen any evidence to support it.

Re:Because it's what the market will bare.

[hal2814]

"You're neglecting the supply side of the price/quantity equilibrium."

Most games on a given platform despite their differences are priced within about $5 of each other at launch. Pricing them any lower tends to give consumers the impression that the game is a "value" (read "inferior") game. That impression is worth more than any possible collusion. Pricing them much higher simply keeps consumers from buying in the first place. At launch, games are priced as high as consumers will tolerate. After that, game prices will depreciate thanks to other factors. A game may launch at $60 but thanks to things like the supply of similar games or the quality of the game in question, the price may remain high or drop drastically or something in-between. The price of a game can only realistically go down so pricing as high as consumer tolerance is the best move. So yes I do ignore the supply side of the equation but only because it doesn't matter when considering initial pricing.

Re:Because it's what the market will bare.

[The-Bus]

The thing is that we passed the $60 limit, in real dollars, a long time ago.

NES cartridges could be $45 back in the late 80's (possibly higher, I don't recall, just remember that as an average price point for new releases). Some games on the SNES were even more expensive: I distinctly remember seeing Mortal Kombat being advertised at $79.

Adjusting for inflation we're looking at $75-$105 prices nowadays. And outside of specialized collector's editions or games requiring additional hardware, we're not at that price.

Sure, games were more expensive back then because of the carts. But a game being on a cart or a disc didn't matter to most people. They weren't buying the physical media, they were buying the game.

That doesn't mean I agree every game should be $60. But game pricing over the past 25 years hasn't increased at the torrid pace some might complain about. Arcade pricing, on the other hand, has. Most arcade games should be about $0.50 now. Many are much higher.

Re:Because it's what the market will bare.

[91degrees]

But Commodore 64 games were £10 in the mid 80's. That was just $20 ($37 adjusted for inflation). Early Amiga and Atari ST games were £25 at the time which probably translates to more than a PC game - although at the time they were way too expensive for me ever to buy one. Games have pretty much kept up with inflation since then, but have remained at a price I'd call "really expensive". I think the industry is missing out on the impulse purchase market, but the only way for the prices to fall would be for all publishers to agree to cut their prices by 50%. Nobody will take that risk.

Re:Because it's what the market will bare.

[The-Bus]

Some take the risk but it's not across the board. Katamari Damacy had a great price on release, $30 or under if I recall. Even in the new gen, some titles come out much cheaper: take Test Drive Unlimited for the X360 for example. It's better than many $60 driving games but it was $40 on release.

You're completely right though: it should happen a lot more.

Re:Because it's what the market will bare.

[Anonymous Coward]

I don't know where this attitude comes from

Sweden.

Re:Because it's what the market will bear.

[iainl]

Exactly. An extra £10/$10 was slapped on the price of 360 games because the publishers (not Microsoft, the publishers) thought they coud get away with it at that stage of the game.

The vast majority of a game's expenses are on the creation of the product; R&D if you will. They're the same whether the game sells one copy or a million. So, just as we saw with the previous two generations (more? I wasn't buying console games then, as I was computers only) and indeed with DVDs, the price starts high while the people with the machines are the early adopter stage, then once the userbase is a bit bigger you can drop your prices to sell more copies.

Sooo..

[Anonymous Coward]

..who gets what percent of the $0 I spend on awesome homebrew games?

Forbes is out of its element

[Anonymous Coward]

Even though it is a Forbes article, and not some random blog post, that's a lot of horse puckey. I think Ms. Rosmarin is buying whatever major game pub or console producer are selling her. Remember, according to Hollywood studio accountants, no film ever makes a profit. "Woe is me," says game publisher, "I only get $1/unit if I sell more than $500,000". Granted, video games are a 'hit driven' industry, one success pays for many 'failures'.

As if console games were cheap before

[Anonymous Coward]

http://en.wikipedia.org/wiki/Phantasy_Star : 69 $ (20 years ago)

Well this one is an exception :) But 15-20 years ago console games (especially the bleeding-edge ones) WERE as (if not more) expensive are today's ones.

Obvious

[WankersRevenge]

Do we really need an article to spell this out? I mean, it's not rocket science. Right now, the cost of obtaining a temporal snatcher device is very expensive. First you need to power it, then find someone who knows how to use, and then calibrate it so you can even find a Playstation 4 dev kit. Not an easy task by any means. I mean, do we even know there is even going to be a playstation 4? What happens if you snatch Rosanne's underwear instead? It might make for a happy dev team (if your team is into that), but the investors will be a little miffed.

I once worked on a project where we actually snatched one of George Lucas' fake beards. We fed-exed it back to ILM, and instead of thanks, we got a lawsuit. Not what the money men were looking for. After that incident, we switched development to xbox 360/playstation 3 which - surprise, surprise - is cheap in comparison.

Market forces

[tygerstripes]

It's interesting to see where that money goes & how it's divided, but to suggest that the ultimate destination of that revenue is the reason for the price of games is ignorant and foolish. Supply and demand, people. Any company who doesn't get all the revenue they can for a release won't last long.

Re:Market forces

[tygerstripes]

I'll grant you, I've simplified. Price-fixing by the Big Bad Cartel is the way of the gaming world ATM, and it's done for various reasons, but it basically comes down to "If we fix games at a price-spot for a while, we won't have to worry about free-market competition dragging down all of our revenues. So let's agree on a price-spot that maximises revenue for the whole industry".

Price fixing is a complicating factor in basic economics, but overall it's still a question of finding the sweet-spot on the supply/demand curve. Price fixing just makes the effect on that curve of a free-market economy less treacherous for the Big Bad Cartel.

Way past my impulse buy point

[sixteenvolt]

When I am browsing through something like Steam, I don't think twice about buying a game for $20 or $30. For $60, it definitely becomes a calculated purchase, and I really start questioning how badly I want the game.

$60 seems to be pushing the extreme limits of how much I'd even pay for a video game under ANY circumstances. I wonder if this line will ever be crossed?

Re:Way past my impulse buy point

[RexRhino]

I will pay $60 for a console game, easy. A) I know it works on my system. B) It is legal to resell it when I am done, and recoup some of the costs. C) I am getting subsidized hardware.

However, for a PC game from Steam, where you can't resell the game, where your PC might not be enough to get optimum performance from the game, where you have paid the full unsubsidized cost for the hardware, and especially on the PC where they release beta products that need to be patched before they work properly... then definitly a fair price would be around $20 or $30.

If you are comparing $60 for a console game, and $60 for a PC game, it is not a valid comparison.

Re:Way past my impulse buy point

[photomonkey]

That, to me, seems like Sony and Microsoft set the price point (understood the market) very well. You didn't say you are unwilling to pay $60, you said $60 is about the limit. They've maximized the amount of money they're going to get out of you per game, while making sure that you're not upset enough to pass on the sale, usually.

I've found that if more than 85% of the people I meet with say 'yes' to a price I quoted them for work to be done, the price is probably set too low.

Let them take their gripes....all the way to the cashier. Especially here in America where the average person spends almost his entire earnings every year, significantly so on credit-purchased luxury and entertainment items. Provide the right status/luxury good or service, and the unwashed masses will throw money they don't have at you for it.

Re:Way past my impulse buy point

[TypeC]

"For $60, it definitely becomes a calculated purchase, and I really start questioning how badly I want the game." Indeed, which I why I only own about 5 N64 games; $60-70 is too much just for any old game. It must be GREAT. That is one thing that led me to buy a PS2. Tons of games for cheap. Even brand, A-list new games can be $30-40. I have a ton of PS2 games because of this. Hell, I have a ton of Gamecube games for my son because of the low price.

Re:Way past my impulse buy point

[Kelbear]

I think I share your price elasticity. I buy games on Steam on an impulse, it hardly takes more than 2-5 minutes before I decide to pay up.

At $60, so long as it looks like it'll be "decent" I'll pay up.

But more than $60 bucks and I would take a long hard look at what else I could be buying for that price. Opportunity costs.

Thing is, while inflation keeps moving, the practical buying power of the average consumer isn't necessarily moving at the same pace. And that buying power is much more relevant than how much the price would be if it moved with inflation.

This breakdown doesn't work

[91degrees]

Or rather it's the price that changes the breakdown. Lets assume that a game has a staff of 30 programmers and designers at $100 000 pa and takes a year to write. That means that it cost 3 million to write the code. Now then, if they sell 100 000 copies of that at $60 a time, then that's $30 per programmer for each copy sold, or 50% of the cover price. If they only sell 50 000 copies, that means that 100% of the sale of each game goes to the programmers. If they sell 500 000 then it means $6, or 10% of each game goes to the programmers. So, do they reduce the price of games if they know they'll sell more? Doesn't seem to be the case.

Okay, next - the retailer gets $12 for each game sold. Would he still demand $12 if the games cost $20 each? What if they cost $12? Of course not. The retailer knows that the lower price would yield higher sales and would be happy with a similar percentage cut. Teh same applies to the console feee. The console companies charge a smaller amount per unit for budget games.

Manufacturing costs - Now this is something that actually affects the end unit costs. However they exaggerated severely. Small (1000 disc) runs cost less than half that.

Marketing? Well, that's not even in the picture. If this was considered an expense, they might as well get rid of the marketting department and make a whopping $4 extra per unit. Every dollar spent on marketting sees more than a dollar return either in allowing them to increase the sale price or increasing the number of sales.

This is pure bullshit

[ludomancer]

This article is a work of fiction on a hilarious level. "Next-Gen" titles cost $60 because the greed of publishers demands it. Publishers get the majority of the profits, developers only get the amount it actually takes to develop the game and pay their employees. I can't believe the writers of this have the gall to say otherwise.
For the record I've worked in the industry for 15 years. There doesn't seem to be a hair of truth in this article.

Re:This is pure bullshit

[LordPhantom]

....and your post was grade "A" fertilizer. Look, real prices of games have actually gone down over time due to inflation. 60$ today is -not- the same as 60$ in 1995 or 1990, etc. When you were buying the high end games for your SNES, you were paying the equivalent of roughly 20$ more in terms of today's money. The reason for games being cheaper also probably has something to do with the fact that more of them are selling (volume).

In short, greed has nothing to do with it. It's a simple matter of money value over time, and mildly increased production costs.

And honestly, using a vague work history for the record industry isn't likely to increase your credibility for most people here, most of all in a post that tries to imply that -game- publishers are greedy.

Re:This is pure bullshit

[Anonymous Coward]

He said for the record. Not that he worked for the record industry. Read the post again.

Re:This is pure bullshit

[scot4875]

And *your* post was grade AA fertilizer.

When we were buying those NES and SNES games, we were also buying a cart that generally made up a large portion of the manufacturing cost. ($20ish) A lot of PS1 titles were $40 because they were cheap to manufacture.

How much do you think it costs to press those optical discs? Are Blu-ray discs an extra $10 per disc to justify that cost?

--Jeremy

Re:This is pure bullshit

[p0tat03]

Spoken like someone who doesn't develop games, which isn't your fault, but here's some clarification:

Depending on the types of games you play, production costs have risen dramatically since the last generation. Heck, they've been rising since long before then, but only have we seen a price hike now. The workload to produce your average FPS is now *many times* more than during the times of Halo 1 or Half-Life 1, and the size of teams have ballooned dramatically just to give you all the marvelous eye candy that gamers have come to demand.

Certain types of games are less susceptible to this content ballooning, like Sim-style games and strategy games where much of the content is stationary and can be re-used. This is also why a game like Supreme Commander debuted around here for $35, instead of $60 like most console shooters.

I don't agree with the publisher-developer system the industry operates under right now, but I do not believe this $60 price point is driven primarily by greed, but rather by the fact that production costs are skyrocketing with no end in sight. It is also because of this that more and more developers are looking at procedural content to ease the pain.

Re:This is pure bullshit

[AdamThor]

Just so you know:

Back in the day I bought plenty of games for $25 each. I know this because Electronics Etc. used to send me coupons for $5 off any purchase over $25.

This was probably about 1985, according to my memory of being in about 5th grade.

$25 in 1985 = $46.78 in 2006

according to http://www.westegg.com/inflation/

Re:This is pure bullshit

[exp(pi*sqrt(163))]

For the record I've worked in the industry for 15 years. There doesn't seem to be a hair of truth in this article.

Yeah, but your position in the games industry has nothing to do with the price decision making so you're talking out of your ass as much as anyone else. More so, you have a vested interest in bitching about the profits of games companies while people outside the industry can think rationally about the subject.

Re:This is pure bullshit

[LordPhantom]

Ok, so let's compare what the economically challenged folks are talking about (keeping in mind my original post had estimated numbers, I didn't have time to calculate them), $60 is HORRIBLE in comparison to the 40-50$ SNES games back in the early 90s, k?

According to your site:
What cost $60 in 2006 would cost $42.02 in 1992.

Ta da - assuming that the average cartridge in the new game market (1985 Atari games aren't run on the same marketing model or mass market as SNES generation games)), it's extremely questionable to imply that games are -more- expensive, especially given the massive improvements in complexity, play/replay time and such. Trying to say that the $60 you spend in 2007 (which is equivalent to the cost of a new NES cartridge, and if you check, same for SNES) was less value to you in terms of "work value/cost" is sheer lunacy, and the market laughs at you (look at game sales in 2005-2007 and 1995-1997 and you'll see what I mean).

Pricing

[Anonymous Coward]

In the UK, 360 games are £40-£50 (guessing $70-$90 ?).
PC games are £35 or so.
Wii games are £40.

At those prices, I cant afford to buy lots of games on the offchance they are any good, so I have to spend hours reading reviews for games to help decide what to buy.
If the games cost half the price, I could impulse buy many more titles - they would probably get 2-3 times the revenue out of me than they do now. All for the price of a CD/DVD and a plastic box?

oops :-(

[UbuntuDupe]

Sorry, that calculation was for 10% over 5 years. It actually increased 20%. (10/50) Still, they've been steady at $50 for about ten years, so the surprise is why it didn't increase sooner.

Re:oops :-(

[Anonymous Coward]

That's okay, you can probably blame it on the bootloader.

It's mostly licensing...

[MaWeiTao]

I don't think the $60 price tag is anything new. I recall seeing PS2 and Xbox games in that price range.

The obvious reason why console games are expensive is because of console licensing costs. It's why the same game for PCs costs $10 to $15 less. PC games have been $45, at most $50, for years but console games seem to have been creeping up in price in that same time period. So the price difference clearly isn't due to increased development costs.

This is one of the reasons I never really got into console gaming. I don't like having to pay for these nonsense licenses nor do I like having to spend that much on games. Certainly consoles have some desirable games, but not desirable enough that I'm willing to spend that much more money on them. And if you think what we pay in the US is bad, you should see prices in Japan where your average game is at least $70, and I've seen some close to $80.

Re:It's mostly licensing...

[duerra]

You're not wrong, exactly, but I think that there is another factor in there - PC games have to compete with free (piracy). That also helps keep the cost of games down.

What gets me is that I know I'm not the only one who would be more likely to drop $25 or so on a game without thinking twice if they were priced as such, but when they're priced at $60... I feel more compelled to wait. Then, by the time the prices for the game actually come down, there's usually a newer version of the game out and I don't want the original anymore anyway.

If the price of games came down, I guarantee that I'd be purchasing more games.

Re:It's mostly licensing...

[ivan256]

What gets me is that I know I'm not the only one who would be more likely to drop $25 or so on a game without thinking twice if they were priced as such, but when they're priced at $60... I feel more compelled to wait.

You've struck on the exact reason that I own neither an Xbox 360 or a PS3 yet. When the $25 "Greatest Hits" libraries for those systems grows to something sizable, perhaps I'll reconsider my ownership position. $60 for a game is on the borderline of what I'm willing to pay, but they push me over the edge with all this bullshit about how they had to charge that much because development costs are so much higher now.

If they're really too high, then figure out how to get them down. Nobody is forcing you to spend $20 million on development, and if you do spend 20 million on development you'd damned well produce a hit game that is fun to play. Those types of games would have no trouble recouping $20mil at a $35 price point.

Oh, one last thing. Stop including brand licensing fees and the additional cost of voice talent with name recognition (as opposed to one of the hundreds of perfectly good voice actors who don't charge you a million bucks to put their name on the box) in the "development cost" figures. Those aren't development costs, and they have nothing to do with the game being "next-gen".

Re:It's mostly licensing...

[Anonymous Coward]

I recall paying $72 for Killer Instinct II for the SNES back in (i think) 1996. Granted, I saw it the next day for $65 at a different electronic store.

Why does anything cost what it does?

[ThousandStars]

Because people will pay the price. If they won't, the product sooner or later disappears.

Re:Why does anything cost what it does?

[oliverthered]

The why aren't games / movies cheaper on the psp?

Re:Why does anything cost what it does?

[trdrstv]

The why aren't games / movies cheaper on the psp?

A fine example of an over priced product disapearing from the market.

Re:Why does anything cost what it does?

[oliverthered]

Sony's just about to release a new version of the PSP, that's hardly a disapearance.

Re:Why does anything cost what it does?

[trdrstv]

Sony's just about to release a new version of the PSP, that's hardly a disapearance.

I was refering to UMD movies, which have been dropped by most studios (even Sony's studios cut back support).

hmmmmm

[Joker1980]

This was my biggest worry about gettting a 360, but to be honest ive got about 8 games now and i havent paid more than £25 for any of them (and they were new). The irony is that so far this gen has been much cheaper for me.

Its probably just luck, seeing the deals at the right time and such but i swear if u stay the hell away from brick and motar stores you'll be fine.

Because it's what the girls will bare.

[Anonymous Coward]

Naturally, however it is an informative article that brings to the forefront those elements that are common across most games. For example the quest for immersiveness generates a lot of the cost across a number of genres. Even RTS's are becoming more realistic.

Doesn't add up

[Cauchy]

The article says that they need to sell 1 million units before they get into the black and start making $1 per sale. It also says that many games cost $20M+ to produce. Assuming the $20M mark, and assuming that production costs don't increase with sales (do programmers get royalties?), that means they are paying off their investment at $20/sale. If this is so, why do they not start making $20/sale after selling 1M units?

Re:Doesn't add up

[tomstdenis]

Supply and demand.

If the game is selling million*S of copies, there is still a strong demand for it. Lowering the price would not make much economical sense.

When sales taper off they usually promote them as "players choice" or "gold" games for $39 or $49 or whatever...

If you can resist buying a game for the first year after it comes out, you usually can save yourself some money. However, if you instead just buy fewer games you can get them early.

Re:Doesn't add up

[Cauchy]

I'm not arguing they should lower the price. I'm saying if they are receiving a net $20/sale (as the math shows) that after they pay off their production costs, they should be profiting $20/sale, not $1/sale.

Re:Doesn't add up

[tomstdenis]

Oh, yeah, well expect some level of lying. But don't underestimate the # of hands in the pot. Especially sport franchises where they pay millions in license fees just to stick a jersey on some modeled animaton. /me plays NES games, and desperately wants a Wii

Re:Doesn't add up

[Cauchy]

One presumes that the licensing fees go into the other $40.

BTW, I have a PS3 that my wife bought me after I mentioned I might start playing WoW again. I play it once every week or two, and I desperately miss WoW. *sighs*

Re:Doesn't add up

[MaineCoon]

They do... and it helps cover the losses of games that only sold, say, 200,000 or so units. It also helps to fund the next game, with a potentially bigger budget, or fund more titles in development. Plus, costs of migration (transitioning to the next gen has been very expensive for companies), paying investors their dividends, etc.

Total Horseshit!

[lbmouse]

I call shenanigans on this piece of FUD. Sure the poor lil' ol' publisher only makes $1 and the evil programmers make $27... based on how many games sold? After you paid the expenses of producing a game, you don't pay more. There are no royalties provided to the creative minds behind what actual did something... like make the game. It all becomes pure liquid profit for the publishers. Why do you think the asshats can afford to charge only $20 for older games? Did they all of a sudden become cheaper to make, market, or distrubute? Nope, it's because they already raked enough cash to buy that private island in the Caribbean, but still need to hire Jose to wax the yacht. One buck a game? My ass. Leave it to Forbes.

Re:Total Horseshit!

[tomstdenis]

They sell old games at a discount for various reasons

1. To clear stock, selling a game at a lower loss is better than a total loss.
2. Older game could inspire future sales (lead generation)
3. Why the hell not?

Tom

Wrong, It's all about what people will pay.

[Oz0ne]

If you'll notice, a lot of next gen titles are existing previous generation titles in higher resolution with a few more effects enabled. Obviously the development costs there weren't anywhere near what the inintial development was, especially with cross platform titles that have to have a portable enough code base to be deployed on disparate architectures.

The $59.99 is completely artificial, because that's what people will pay. There's no other reason for it. Of course, some games do cost quite a bit more to develop than others, so it makes sense their publishers would price them higher. That's not what happens though. Some games and publishers will price lower, because they can (or other marketing reasons,) but most will price the same at release to make the most profit possible. Good for them.

Just like last generation you'll notice games will come out at "max" price. A month or so they'll be down $5-10 everywhere, then they'll keep dropping, eventually they'll hit a "bottom" price where they'll be republished as a "greatest hit," if they can still sell. They're still making profit off the greatest hit games. Whether it's because they've completely recouped development costs at that point, or if it's just what the market will bear for that game, who knows. Probably a bit of both.

Re:Wrong, It's all about what people will pay.

[tomstdenis]

I'd like to point out that it make take several titles to recoup the cost of a single game engine.

That said, I think they're focusing too much on detail [the wrong details], which is why the games cost so much. If you had to hire 200 artists, musicians, modellers, etc. for a year to make a game, you'd sell it for $60 too. Back when games were the product of 10-20 folk, it was totally possible to sell them for $20 and profit.

Tom

Hypocrite Alert!

[Anonymous Coward]

I hope none of you World of Warcraft players paying $15 a month for two years are in the group complaining about a $60 game :)

PC games too

[Anonymous Coward]

PC games are a lot cheaper too, in the UK it's not uncommon for a PC version of a game to cost half as much as the 360 version.

The article claims that the licencing fee is only about $7 - where does the rest go then?

e.g. on play.com Battlestations Midway: 18UKP vs 40UKP, Star Trek Legacy: 18UKP vs 25UKP, Oblivion: 18UKP vs 30UKP, Prey: 10UKP vs 18UKP
http://www.play.com/Games/PC/4-/478909/BattleStati ons_Midway/Product.html
http://www.play.com/Games/Xbox360/RNR/3-/2553438/B attlestations_Midway/Product.html
Can't be bothered to link the rest, check for yourself...

Of course, the answer is that the prices are what the market will bear. Try to charge 40UKP for a new-release PC game and people will just pirate it, whereas Gears of War has an RRP of 50UKP and people bought it.

And People Wonder Why DS Sells So Well...

[EXTomar]

I agree with the parent that $60 is past the "impulse buy" range. I suspect why the DS does so well month after month isn't the hardware (which is so-so) but the fact it is a cheap gaming device with cheap games. Especially with kids, are you willing to spend $60 on a game you've never heard of for your kid or a $30 kiddy looking one?

This is why I'm disappointed in this era for consoles. Both the XBox 360 and PS3 are overpriced, their software is overpriced, and the games are getting shorter and maybe of questionable quality. The Wii could make a killing if they actually had some games. All in all we are getting the short end of the stick for video games on consoles this time around where maybe in a year it will clean up and pick up but I'm not holding my breath.

Re:And People Wonder Why DS Sells So Well...

[MeanderingMind]

The Wii could make a killing if they actually had some games.

Not to mention systems.

Re: Cost =! price.

[trdrstv]

The reason Wii games cost less is development costs, plain and simple.

No. There is no direct correlation between development costs and consumer price.

If it did you would have non-standard prices that would vary wildly. Do you pay more to see a 'summer blockbuster' that cost 200 million dollars [to make] than an independent film that cost $5 million?

The developers have standard price points and they set their price and development budget to a level they feel they will make the most profit.

Welcome to capitalism 101.

Supply meet Demand

[MrCopilot]

Why do they cost $60, People will pay it. Period.

Next-gen?

[ebingo]

I'm sorry, but I always buy games for current-gen systems. What would be the point of buying a game for a system not out yet?

Order of magnitude

[tepples]

A "magnitude". Is this a mathematical or scientific term? How big is a "magnitude"?
An order of magnitude difference is a factor of approximately ten. For instance, Mega Man X for Super NES was 1,280 KiB, which is an order of magnitude larger than Mega Man for NES, which was 128 KiB.

Re: Cost =! price.

[Anonymous Coward]

True, but pretending that cost does not influence price is an oversimplification. The amount of profit a game developer can make depends on the cost of the game and the price people are willing to pay for it. If you can lower the price (and therefore increase the number of buyers) while still making as much or more profit (due to lower costs) as you would have doing something else, then you are likely to do so.

If you think of it in terms of opportunity cost, then the pull on the seller is to equalize their total profits from game development on the consoles. (If you can make more profit on PS3 games, even at higher cost, then you are likely to switch to that, assuming you are equally capable of game development on all consoles.) The lower development costs of the Wii are reflected in lower prices, since developers can make just as much there with lower sale prices as on the PS3/XBox360.

Because They Can

[Greyfox]

Just wait a year and buy the game in the bargain bin for $15. If you've got to have the title NOW, you obviously don't mind paying the premium that much.

Homebrew on what platform?

[tepples]

..who gets what percent of the $0 I spend on awesome homebrew games?

You meant on Nintendo DS, right? Wii, Xbox 360, and new PSP units are still completely locked down, and PLAYSTATION 3 homebrew using the "Other OS" bootloader still has to use Quake 1 era software rendering because the hypervisor turns off the RSX chip.

GoW production cost: $10m not $20m

[El_Muerte_TDS]

Now explain why other games that were twice as expensive to be made also have the $60 pricetag.

It's getting to be too much at times...

[PotatoHead]

Frankly, Final Fantasy XII was worth the $60. (Yeah, I know the non-collectors one was $50, but it was out of stock at the time.)

Many of the franchise games, with recurring themes, are no longer worth the $60. Many of these simply look better, or have some nifty feature and that's it. Hmmm... reminds me of Microsoft software actually. --no thanks! This title was big (really fricking big), expanded on the story line and overall theme nicely and had fantastic art direction. Beautiful and engaging game, with a lot of depth. Casual players could blow through it and enjoy the title. Those wanting to really explore the game are rewarded with lots of things to do. Playtime on this title ranges from 20-30 hours, to nearly 200! That's worth the $60.

If the game is actually something new, and provides that escape factor, the $60 is no biggie, particularly if it's got some playtime to it. If it's a rehash, I'm more inclined to snag it used, or just skip it period.

All of the licensing that goes on, makes sure the existing games remain expensive for new versions. I've no problem with that, but I think as time goes on, more people will start doing what I am; namely, skipping or buying used or trading. That pie will shrink somewhat. New gamers will counter that somewhat. Don't know where those curves intersect!

A new Madden game, for example, is generally not worth the $60, IMHO. The core elements that make that kind of game fun are present in the titles I already own. Getting new players and such is cool, but not $60 worth of cool.

Retro gaming is getting pretty fun these days. Being able to self-publish creative and fun games for older consoles is a kick and more people are doing it now than ever. I like this scene. The games are fun, you can get to know the developers and even participate in the process too boot! Interestingly, some of these titles hit $40.00 each! Many sell into the hundreds and a few into the thousands. $40.00 for a game written for the Atari 2600, suggests there could be a very strong market for smaller scale development efforts, given the right expectations are set. It also suggests that smaller houses could make plenty to make the whole affair worth it.

The current crop of consoles is powerful enough to allow for some level of abstraction to make developing new games easier. The price will be perhaps somewhat smaller games, or maybe less potent graphics, but the creativity is likely worth it in the longer run. We need new genres, or perhaps we just need to really explore some of the ones forgotten.

For now, I'm not getting a new console. The trusty PS2, retro machines and my computer all provide a lot of gaming fun. I'll spring for a new title, and I'll pay the higher price too, but I just don't do it as often. For so many games, it's the same overall ideas with different skins, essentially. No thanks!

Rather than get into a price discussion, I would prefer that be off the table and instead see more efforts to encourage smaller scale game development. Heck, if the console makers are worried about managing expectations (graphics, for example), brand the effort with a logo so those titles are differentiated from the blockbuster ones filling the shelves now.

More diversity and creativity in gaming will expand both the pool of potential gamers as well as generate a new set of core platforms from which second and third gen games can be built. This is where the value is. Always has been, always will be.

I fear the established players have a solid interest in not seeing this go any farther than the current retro scene. If people got into games as art, and played them for playability and all the other classic things that make games fun, suddenly the need for totally new console hardware drops doesn't it? Efforts, like the ones I described above, could span several consoles and even generations of them, given some engines to work with. This would be a much better scene than the one we have now.

BTW, of the

OK... but what's changed?

[fdumlao]

None of the conditions that were mentioned in this article are new to the "NEXT-GEN" consoles. The percentages were the same on the PS2, XBOX, and GameCube.

So what's changed that is making these games cost 20% more?

I read someone's comment about inflation, but that did not take into account the fact that many of the costs associated with developing a video game have decreased significantly as well. And the market for publishers is more competitive than it ever has been in the past. Also, video games, like music, have never really followed closely to inflation trends.

I understand that some games have production costs in the $20million range, and I would probably not mind paying more for a game like that. But PLEASE don't try and convince me that every game (Sonic the Hedgehog for PS3/360 for example) costs that much to produce. Why not chage less for games that cost less to make? At least then the old "you get what you pay for" addage would be as true for video games as it is for everything else in the world.

I think though that the numbers speak for themselves. The Nintendo Wii is selling it's games at $50. Every month when the figures come out, the Nintendo Wii is the number one selling console (see past slashdot posts) even though they are still almost impossible to find in stores. And it owes that to more than just a fancy magic wand for a controller. For the price of a PS3 with NO GAMES you can buy a Wii and FIVE GAMES. I have both, guess which one I have bought more titles for?

And here's a question... When the PS2 games sold a million copies (or so) they would release the game as a platinum release for $19.99. Is the PS3 version going to cost $29.99 (a 33% increase)?

Re:OK... but what's changed?

[jchenx]

I read someone's comment about inflation, but that did not take into account the fact that many of the costs associated with developing a video game have decreased significantly as well.

Uhh, what? Can you provide an example? If anything, the opposite has occurred. Team sizes are a lot larger nowadays, which implies all of the additional costs that go with it (benefits, health, insurance, etc.). Production values are much higher. You tend to need a lot more people on your team. Gone are the days of "dev art". Same goes with sound, testing, management, and all the other things that go into making games nowadays. And of course, there's the marketing and promotional aspects to consider.

And along with all of this, you still have to consider inflation, and how that affects everything in some shape or form.

Yeah, of course I was bummed that game prices jumped up this generation. But considering inflation especially, I certainly wasn't surprised.

Re:OK... but what's changed?

[fdumlao]

Are you kidding? Are you telling me that a year ago when I was buying brand new games at $50 development of video games was completely different? That they diddn't have multi-million dollar development teams way back in good 'ol 2006?

It may be just an opinion, but I think it has merit: Game developers, publishers, and retailers have long been looking for a way to make more money on the games they sell, and finally found an excuse with the "Next-Gen" consoles to raise prices.

It is not costing them more to produce the game today than it did last year when they sold the games for $10 less.

Inflation is really being thrown around here like it's some kind of GOLDEN WORD that explains why prices go up the way they do, and that we should just accept price increses because there is this obvious national force called INFLATION that surrounds all things with monetary value.

In the world of media publishing inflation is just not a factor. Look at DVDs, CDs, CD-ROMs, BOOKS, etc...

When was the last time you saw the average price of any of those things jump by 20% OVERNIGHT? They haven't. In fact in a lot of cases those things are cheaper today than they were a couple of years ago. They have figured out how to produce content and publish it and turn a profit too!

Re:OK... but what's changed?

[desmondmonster]

There's some economics behind why even if a game cost much less than a marquee to produce, the price point would be the same: most consumers judge a product's quality by its price. Pricing a new 360 game at $40 would send a subconscious message to consumers that the game isn't as good as the $60 one. Ever notice how tickets for an indie film with a budget of $100,000 cost the same as tickets to Michael Bay's newest nonsense? Most people would look at the prices and assume that a movie that only costs $5 to see is half as good as a $10 movie. The industry has an interest in keeping a stable price point that doesn't necessarily reflect the cost of bringing a product to market. I should note that the audience for throwback games (ie, Live Arcade and Virtual Console) is different and not subject to the same phenomenon; that's an entirely different market where costs have already been met and all sales are extra gravy. This principle applies to newly released commodities, generally in the entertainment industry where value is more abstract.

Re:OK... but what's changed?

[jchenx]

Are you kidding? Are you telling me that a year ago when I was buying brand new games at $50 development of video games was completely different? That they diddn't have multi-million dollar development teams way back in good 'ol 2006?

...

When was the last time you saw the average price of any of those things jump by 20% OVERNIGHT? They haven't. In fact in a lot of cases those things are cheaper today than they were a couple of years ago. They have figured out how to produce content and publish it and turn a profit too!

Your whole argument falls apart when you consider that prices for standardized products like games can't be easily adjusted year to year. This is not like orange juice or gasoline, where prices can be changed almost daily. The easy answer to your comment is that the industry has been sitting on these inflationary pressures for several years, and now it's at a point where it makes sense to increment the game prices by a fixed amount (in this case, $10).

One example from another industry would be movie ticket prices. Every couple of years, it seems like the price to see a movie increases by 50 cents to a dollar (which sucks). But notice they do so at an interval that makes sense. It's not like they up the price by 12 cents one year, then 23 cents the next. And they may not do it every year either.

Now, I don't really know if inflation really is a major cause in game price increases. I'd need access to all sorts of data to see how much inflation really mattered in this. But to me, it's certainly plausible. Undoubtedly there are other issues at play too (publishers, developers, retailers needing more profit, etc.), but I also think it's unwise to totally discount inflation like you appear to be doing.

Inflation is really being thrown around here like it's some kind of GOLDEN WORD that explains why prices go up the way they do, and that we should just accept price increses because there is this obvious national force called INFLATION that surrounds all things with monetary value.

In the world of media publishing inflation is just not a factor. Look at DVDs, CDs, CD-ROMs, BOOKS, etc...

Inflation is being mentioned because it is an important economic statistic. Go talk to the Fed chief, and he might argue that it is a "GOLDEN WORD". :) (I listen to business news all the time, you might want to as well)

Other media, such as DVDs, CDs, books, follow the same "fixed price" principle as games (although to a lesser degree). Even their prices do go up after time. You should try looking up the prices of some of these items 5, 10, 15, 20 years ago (assuming those technologies existed).

Going back to the fixed price model (not sure of the exact term for this, btw), should the industry consider going away from that? Or at least lessen the impact? If instead games went up $5 two years ago, and then another $5 this year, would there be any less grumbling? On one hand, it makes sense to do it with the introduction of a new console generation. On the other hand, $10 is a fairly significant jump for some people.

Where do you live?

[BlackCobra43]

20$ now being equivalent to 50$ of money from 10 years ago? That's 10% yearly inflation - not remotely close to reality. In accusing others of downplaying the impact of inflation, you grossly exagerated it.

Re:Where do you live?

[LordPhantom]

Someone obviously failed basic reading comprehension 101. I was about to reply to your post, but the fellow who commented first said it verbatim - don't get haughty just because you don't like my point :).

$40 in the 80s

[mr beeth]

We can argue the percentages of profit in this business model but I would like to remind everyone of how much we aren't paying. My brother and I saved up and shelled out $40 (that's what I remember, can anyone confirm this?) in the 80s when Pac Man came out for the Atari 2600. Was the game worth that? Hell no, it was terrible. Are games now worth $60? I'm not sure. Some games I might pay $100 for, others I won't play until I see a 3 year old used copy for $9.99. Basically we're lucky they haven't tried to milk us for more.

Re: Cost =! price.

[Itchyeyes]

There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple. Even still there were plenty of games sold at "non-standard" prices. Limited editions went for $55 and $60. Do you think they put those out just to make you happy? They're there to help recoup costs from people who were willing to pay the higher price. Likewise, games that were easier to develop, like Katamari Damacy, often went for $40, $30, or even $20. Furthermore, games were almost never sold at $50 for their lifetime. Once publishers have exhausted the amount of people who are willing to pay $50 they generally drop the price to attract customers who are more price conscious. Lastly, the $50 price point does not exist overseas. In Japan, "non standard" price points are much more common.

Also, you're analogy is flawed. The reason you pay the same ticket price for the movie that costs $200 million to make and the one that costs $5 million dollars to make is because:

a. More people will usually see the summer blockbuster and more sales = more profits.

b. The people who want to see the indie movie do not regard it as having less entertainment value than the bluckbuster. Thus they are still willing to pay the $8.99 to go see it. Decreasing the ticket cost for the indie movie would not likely attract much of a larger audience.

better question...

[quick_dry_3]

is why does the same game on Xbox360 cost AU120 while the Xbox game cost AU90 at release?

The games in question have already been out for a fair while on XBox, yet the 360 version costs even more and the game is old. (OK, maybe not a better question, but I find it damn irritating /rant)

The Publishers 1.6%

[Rob Kestler]

Honestly, please guide me to a publisher that would only take a dollar on each sale. I would say this article is misleading at best. Publishers MAY only make a dollar but that's if they are picking up 100% of the marketing, advertising, localization, QA, etc costs. This is not always the case (I wouldn't even say that this is frequently the case). Trust me, there wouldn't be a ton of publishers out there if they are only making a dollar a pop per game with the costs of overhead to also keep in mind.

Re: Cost =! price.

[trdrstv]

There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple.

If their is any coorelation between the cost to produce a good and the price of a good, it starts with what the customer is willing to pay. The cost of the final product to the consumer dictates the development costs and not the other way around (otherwise the market would not support it).

The Fact that Gears of War cost more to make than Dead Rising didn't mean it debuted at a different price. They were priced equally to maximize profit on each. Gears sold amazingly well, but would not have sold at a $99.95 price point simply because it cost more to produce. We as the consumer don't care how much it cost, we care about the value added to us, and what we are willing to pay for that.

Likewise, games that were easier to develop, like Katamari Damacy, often went for $40, $30, or even $20.

Lower development costs help a publisher's ability to do that, but it was priced lower to make it more attractive to the average buyer. If a Mario game, or Harry potter game cost the same to develop as Katamari it wouild still be priced higher than $40 since that is what the market will pay.

Furthermore, games were almost never sold at $50 for their lifetime. Once publishers have exhausted the amount of people who are willing to pay $50 they generally drop the price to attract customers who are more price conscious.

Exactly, and this works reguardless of initial development costs. Once the publisher has exausted the maximum profitability of the higher price point, they lower it to bring in more people. That's why you typically have a step down in pricing (from $50 to $40 to $30 to $20) rather than simply cut the price from $50 to $20, because you are optimizing profit and brining in new people at each level.

He lives somewhere they teach math

[Sycraft-fu]

The SNES was released in 1991, the new top titles were $50. Take $50 in 1991, run it through the Bureau of Labor Statistics inflation calculator, you get $75 in 2007. So if the cost of new top titles currently is $60 in 2007 dollars then SNES games were $15 more each in real dollar terms. Given that the grand parent seems to have done an estimation, $20 is close enough. He's not saying that $20 in 1991 = $50 now, he's saying that the $50 you spent on SNES games would be about $20 more than the current price of games today, and he's pretty close on that.

Games have not gotten more expensive in terms of real dollars, that's the point.

It's all about the market

[amuro98]

Game publishers think enough people will buy at $60. So long as people buy games at $60, games will remain $60.

If publishers think they could charge $70, $80, $100 and still get the sales, don't you think they would? Of course.

I fail to see why this is such a big revelation to someone like Forbes...

Re:It's all about the market

[animaal]

Well, as you're implying, Forbes aren't surprised. It's all economics. Forbes must think they can sell more issues by writing about high game prices than by writing about the price of trout in Belgium.

Re:It's all about the market

[BarneyL]

In the UK we do pay the equivalent of $70, $80, $100 for games. That does include 17.5% sales tax but I've never heard the remainder of the increase justified. I suspect as you say it purely is because people here are willing to pay that price.

Re: Cost =! price.

[Garridan]

For independant game designers who make shareware games, price probably depends directly on development cost.

For the heavy hitters, development cost is a function of price, which is a function of demand. A game designer comes up with some idea, and passes it onto marketing. Marketing does some research, and finds that x gamers would be interested in a certain type of game. Then, with some simple calculus, find that y games will sell at a price of z for maximal gross sales of yz. Subtract out the price to manufacture, franchise fees and the whatlike, and you have a budget. If the budget is too small, tell the designer to shove off, or tweak the idea until it appeals to a more profitable market.

Consider the game Duke Nukem Forever. Marketing discovered that as time passes, market interest has decreased at a linear rate, such that a negative number of gamers are interested in the game. Also, as time increases, the development costs have increased at a linear rate. So, at this point, any reasonable price tag will result in a loss -- that's a negative sum of money. Here comes the stroke of brilliance: by selling the game at a loss, to a negative number of gamers, this is a product of negative numbers, so positive! Thus, 3D Realms' marketing department has determined that by delaying the game, since both market interest and profits are decreasing at a linear rate, the profit function increases quadratically! I figure, they're waiting until this profit will result in every employee earning a cool hundred million -- then they can release the game, and retire!

Bad math corrected: $28 per copy, not $1.

[ChaosDiscord]

Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold.

The remaining $59 per game goes into many hands. The biggest portion--nearly 45%--goes toward simply programming and designing the game itself.

Aaah, no. This is terrible, terrible math. The article is claiming that for copies 0 through 1,000,000, the publisher makes nothing. Then for copies 1,000,001 and beyond, the publisher is only making a dollar per copy. Utter nonsense.

Why would be publisher not be profiting for the first million? Obviously because they're recovering their initial investment. The investment into programming, design, art, and the like. So once that millionth copy is shipped, you don't get to count it as an expense any more.

The attached graphic indicates that art/design is running about $15 per copy, and programming is running about $12. From this we can conclude: For copies 1 through 1,000,000, the publisher is making zero profit. For copy 1,000,001 and beyond, the publisher has recovered the art, design, and programming costs. Add in their $1 pre-planned profit (also in the graphic), and now they're making $28 per copy. A significant difference from the articles insanely wrong claim of $1 per copy.

What about microstudios?

[tepples]

Yes, if you want to develop a game on "system X" you have to pay "company X" some money. Think of it as a license fee. If a license fee is the price of admission to play on monitors larger than 19 inches diagonal, then where can a microstudio with a working PC-based prototype of a video game get the money to pay this license fee?

Re:What about microstudios?

[Blakey Rat]

Microsoft's new game studio express product (I think that's the name...) will let you create a temporary Xbox 360 port for QA/testing purposes and for submission to Microsoft to consider publishing it on Live. Of course, the catch is that the game has to be made with that specific development tool; if you made it in plain C++ I'm not sure how you'd port it to 360.

I dunno if Sony and Nintendo have any similar program in place, but I get the impression Nintendo's service is only for retro/emulated games.

Although, frankly, getting capital is part of business. If you really have a killer game you think belongs on a console, raise the capital for it... if you can 'wow' people with your game, raising a dozen grand should be no problem at all. Nothing different from any other industry-- you also need a lot of capital to get a TV show on the air. Complaining that you need to raise capital to start a business sounds like a goofy complaint.

Re:What about microstudios?

[Blakey Rat]

I should also mention that it's definitely possible to break-in to the industry. The guys who made Alien Hominid started with a fancy Flash movie, and now they have multiple console games under their belt.

Re:What about microstudios?

[edwdig]

If you've got a good game idea, create a demo. Polish it up extremely well. If you're aiming for a console title, try to make something that fits within the technical specs of the system you're targeting.

I'd recommend going the DS route. Grab the homebrew tools and make something good that runs on the DS. Shop it around. There are publishers that like independent teams. It's hard, but certainly doable if you put in the effort.

Re:What about microstudios?

[tepples]

If you've got a good game idea, create a demo. Polish it up extremely well. If you're aiming for a console title, try to make something that fits within the technical specs of the system you're targeting. Imagine the following scenario: My team has developed a nearly-completed PC game. Its technical specs are capable of scaling back to PCs from six years ago (which are roughly comparable to Xbox or Wii). I shop it out to 120 licensed publishers and get 120 rejection letters. What did I do wrong? Should I finish the game for the PC, sell it online, include detailed instructions on how to set up USB hubs for multiplayer input and how to set up video cards for television output, and pray that less experienced PC users will think to follow them?

Re:What about microstudios?

[edwdig]

If that happens, then your game isn't very good.

Try publishers that like independent teams like O3, Gamecock, or Alten8. You'll probably end up with a better deal working through them anyway.

And for your scenario, say you did finish it for PC. We're well into the age of USB. New computers come with plenty of USB ports. It's not hard for someone to hook up multiple controllers.

Animal Crossing

[tepples]

I bought a shovel and dug out lots of cartridges, they were coming out of the ground, for free. Yeah, I dug up a Pitfall that way. All I had to look for was an asterisk marking on the ground.

I later attempted to sell on a gray market to make a hefty profit (no eBay back then)... I still haven't recovered the cost of the shovel... Perhaps if you bury it in the right spot and dig it up later, you can get a golden shovel with a built-in metal detector.

Nothing new

[hansamurai]

$60 is nothing new for games, I remember NES and SNES games costing this much, and after inflation, that price was probably closer to 80 or 90 of today's dollars. I've probably only bought about five total $60 dollar games, and most of those were for the N64. I buy most of my games used or at the $40 price range, just requires a little patience...

Correct me if I'm wrong, but...

[falsified]

I really think I remember seeing Mario Kart for the SNES being something like $55-60 (and offtopic, but it was some weird random number like $57.42)...back in the early 90s. Yes, I know that cartridges cost more than CDs/DVDs to manufacture, but Sega CD games were in the same price range at about the same time.

The laws of inflation don't seem to apply in the video game realm. We get off kind of easy now as compared to before. I don't remember relatively new "greatest hits" being sold for $20 a pop back then either...yet we see that today, even with Sony, which isn't exactly known for its philanthropy.

$60 is fine.. If there are no strings.

[lmnfrs]

Unfortunately Microsoft requires you to pay for the game and pay for broadband Internet access too. I went out and spent $400 on an Xbox360 and another $60 on a game. I got home and it didn't work because the console needed an update from the Internet.

Microsoft just expects that everybody has broadband Internet at home. If it's not available in your area you're screwed. Their old system worked fine, the updates were included on Xbox game discs and installed automatically. Now, anybody who can't get broadband can't play their Xbox360.

Yes, I called Xbox360 support. They said update discs aren't available. I was instructed that I could buy broadband or lug my huge-ass console to a friend's house to use their broadband. Not just once, but every time a new game comes out that requires an update. I asked why it was designed to be so difficult and the phone rep, completely unaware that rural areas exist or that some people can't afford broadband, explained that I was mistaken in being annoyed and it was infact very easy to do.

I've always been aware that Microsoft uses some unfriendly tactics to force users into using their products, but this is really an ass move.

Re:$60 is fine.. If there are no strings.

[dmwst30]

I call bullshit on this. There has been NO Xbox 360 game out that requires a download-only patch to even RUN on the Xbox 360. Maybe you're thinking of an Xbox game which required a firmware upgrade for backwards compatibility. What game was this?

360 not locked - XNA

[a16]

The 360 isn't locked for homebrew at all - it's easily the best homebrew gaming development platform out there right now. Have you never heard of XNA?

Legit

[cspariah]

I think that the people who are calling this BS aren't reading carefully, or are otherwise not paying attention. This is not percentage of PROFITS. This is percentage of gross. Yes, the biggest bulk of the cost goes into development. For a next-gen title like a Gears of War, you have several dozen personnel working for multiple years on the project. For a typical game, that 45% chunk goes back to the publisher, who fronted it to the developer during the years of development. It's not like the game sells and suddenly the devs are rolling in money. They've already SPENT that 45%.

What about inflation?

[Anonymous Coward]

Honestly I'm surprised that they haven't cost more than $50. As long as I've been buying games, going back to my 386 days (remember Starflight anyone), PC games or console games have always cost $50 when they're new. Only after they've been on released for about a year or so do the prices drop to $40 or less. Considering that the complexities of the games from graphics, to AI, etc have only gone up it shows you just how efficient the industry has become. All things being equal, we should be paying $90/game considering just the inflation pressures alone (assuming 3%/year.) However the larger market along with controlled costs have help keep prices down.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Xbox 360 with XNA is $894

[tepples]

As I understand it, the XNA Creators Club subscription costs $99 per year per console for all users, not just developers. This adds $495 to the total cost of ownership over the five-year expected life of the Xbox 360 platform. XNA Game Studio software also needs a recent PC running Windows XP Service Pack 2, unlike Dreamcast and DS that get along fine with a not-so-recent PC. From XNA Frequently Asked Questions:

Right now XNA Game Studio Express is only designed and tested for Windows XP SP2. [...] The individual you are planning to share the game with must be logged in to Xbox Live and have an active subscription to the XNA Creators Club The $495 extra cost of XNA over the 5-year life of an Xbox 360 isn't far off from the $599 cost of a Wii-sized Mac mini computer to put on top of the TV.

Chrono Trigger was $100 in speciality stores

[Astarica]

Was it because it cost roughly twice of any game that's ever been developed? Or maybe cartridges cost $40 more than CDs? No, it's because whoever sold it thought this is the right place to maximize profit. They may be right or wrong, and history seems to indicate $100 is probably the wrong price to sell a popular game. But really it's not our problem whether games are priced right or wrong. If they're priced wrong the publisher eventually pays for that mistake. If $30 gets you more profit than $60, eventually someone will notice this and start selling them at $30. The fact it's not happening suggests selling at $60 might be a good idea after all.

slightly off-topic but...

[Anonymous Coward]

"Next-Gen" is the stupidest term to ever be coined out of the tech/gaming industry.

Re: Cost =! price.

[7Prime]

Yet your (b) reason just goes to prove his point. Similarly, the reason why games like Katamari are around the same price as FF12 is because people who buy them view them as not having THAT much different entertainment value. We're used to media having relatively flat rates, because there's no accounting for taste. If people don't like Katamari, lowering the price to $20 isn't likely going to make them pick it up, but pricing it at $39.99 will likely get MOST of the people who would have bought it for $20. I can't think of an instance where a specific type of media varied wildly in price. Okay, software... but that has a lot of unique properties that I won't get into.

If that's right, it has changed.

[Malkin]

I don't know where Forbes got their numbers from on that. Historically, the percentage I've heard quoted for developers is MUCH lower. It may have changed for this generation (development costs have arguably increased more than publishing costs), but I still find the number surprising.

Re: Cost =! price.

[KDR_11k]

Development is a fixed cost (this while "45% goes to development" claim is BS for that very reason, dev costs are sunk and don't increase with the number of units sold). It has no bearing on the price that will generate the optimal profit. Games are 60$ because publishers felt they could get away with it on the "powerful" consoles.

Re: Cost =! price.

[KDR_11k]

Dev costs are independent of the sales. No matter how high they are, the cost to make one copy is always a few dollars. You are supposed to price your goods so you see the most profit, as the dev costs don't influence your per-unit profit at all you'd have the same optimal price for both a cheap and an expensive project (assuming identical demand). If raising the price of the game at retail would result in more profit you should have raised it LOOONG ago. Since game prices remained stable for so long it's reasonable to expect that they've already found the optimal price. As such any increase or decrease in price will lead to lower profits.

Games like Katamari are cheaper (in some territories) because the publisher didn't expect there to be much demand for them at the usual price and decided that a lower price will probably yield higher profits.

Similarly "next-gen" games are more expensive because publishers feel that the next-geniness of the game will make customers willing to pay a higher price and as such increase the optimal pricepoint.

Video Game Economics 101: Dev costs are irrelevant

[Prien715]

There's one thing people seems to forget. Physical goods have two prices associated with them. If my product is oranges, I can sell each for $1, knowing that I have to buy additional trees for each orange sold and pay some migrant^H^H^H^H farmer to pick them.

For software, I just pay the cost of development. For each additional CD that I print, the cost is negligible. Let's say I'm releasing Mario's DS Funhouse. It's well-liked by a lot of people, but not the kind of people who pay $60 for a game. For $60, let's say I have 10K sales (so $600k net). But, once I lower it down to $50 I sell 20k copies, since your older sister now wants a copy (now I make $1m!)

Let's take the case of Wolfenstein 4D. It costs as much to make as Mario's DS Funhouse, but the players are mainly hardcore and would buy the game for almost anything. Selling it for $50, 12k people will it (600k net). At $60, 11k people still will buy it ($660k).

10 years ago, the audience for gaming was generally smaller (e.g. sales were up 26% last month) so even if development costs went up, assuming more people buy/play games, prices could actually be the same. As the above model suggests, regardless of development costs, the optimal profit for a game is entirely dependent on demand. Games aiming for a large audience ought to lower their price, but "hard-core" games ought to have a high price, since offering the game at a lower price is less likely to increase sales.

Lost Data

[Kuvter]

Someone must have lost a $38bil file in the process of making the game.

Simple

[TheQuantumShift]

Because we'll pay it. And bitch, and moan, and pay $70 for the "collectors edition".

WRONG

[togashi06]

People will pirate them. :P

Translation costs money

[tepples]

European sales taxes are significantly lower than the 50% overcharge we're getting. And how much does it cost to hire script translators and voice actors for the twenty-three languages of the European Union? Compare to Japan, where Japanese is enough, and North America, where English and Quebecois are enough.

They could produce the discs locally, it's not like there aren't any disc factories in or near Europe. Are these disc factories equipped to write the malformed sectors and Burst Cutting Area that the copy authentication mechanisms in DVD-based consoles are known to rely on? And what do the factories in Europe charge compared to what the factories in Red China charge?

Re:Translation costs money

[LeninZhiv]

FYI, for the DS at least I know that localisation in Europe typically means SKUs with 5 languages, not 23. (French, English, German, Spanish, and Italian.)

Hungarian, Finnish, Greek, et al. may be official languages of the EU, but that doesn't mean they get their own video game translations.

Re:Translation costs money

[KDR_11k]

And how much does it cost to hire script translators and voice actors for the twenty-three languages of the European Union?

Apparetly not enough to cause a similar price increase for PC games. Usually the translation staff is between one and three people per language and often only a handfull of languages are actually covered (often only three, one of which is English and they never bother to translate American English to British English).

And voice actors? Don't make me laugh, VERY few console games translate the voice acting at all, most just throw subtitles on there and call it a day. Meanwhile PC games get fully translated voice acting yet have nowhere near the price increase console games do.

Re: Cost =! price.

[Talgrath]

The cost to make a game (or any other product) ALWAYS factors into the end selling price; with very few exceptions (one of them being game consoles, which recoup their losses from licensing fees); any first year business student can tell you that. Nobody is going to sell a game at a loss, nor are they going to sell a game at so low a price to merely recoup their money; they're going to sell their game at a profit, the same as any other product

Now, developers have said that the cost of developing for systems like the PS3 and the 360 is higher, they could be lying and if they are we won't necessarily know without comparing similar titles from the two different "generations of consoles" side-by-side (a tough task, as no two games are exactly the same); assuming they are telling the truth, this would mean their cost went up, and to keep making a profit they would therefore have to increase price. The discrepancy, in my opinon, between Wii games' prices and PS3 and 360 games' prices likely comes from a difference of cost; the reason why is the graphics.

I don't know if you've ever done graphics programming before, but it's extremely time consuming to build a renderer; especially if you do it from scratch or nearly from scratch, like many "next-gen" games are. Not only getting the engine to work, but getting the engine to look good is going to take up a lot of time making a game. You're talking about some rather complex linear algebra here, each image is made up of the color results of thousands of collisions and if only a few are off, the whole image looks bad. Slight imperfections in the formula can ruin the entire image and reducing imperfections can take months of hard programming and mathematical work. Usually this engine also deals with game collisions (bullet impacts, punches, running into walls, etc.).

Next there's making models, which is, again time-consuming; this time because many games go through many many models of their characters before settling on a definate one and each model can take a great deal of time to make and tweak, even with professional tools.

In all, graphics and modelling are going to take more time on a game than actually making the levels and most gameplay elements. Now, if you go with an already-built engine and tweak it, your costs significantly drop for actual graphical development, but you see a big increase in licensing fees (game engines are not cheap). So, if you have a game system where people aren't expecting nearly as much eye-candy (the Wii, as an example) as other systems, you can significantly drop your costs by using a weaker graphics engine. That's why Wii games cost less, more likely than not (that and most of the Wii games out so far are ports of other games for systems that were simply modified for the Wii).

why charge $60 ?

[Anonymous Coward]

.....because they can.

and people pay it.

Salaries ARE adjusted for inflation

[jchenx]

Not to mention that if a game company did flatly say that they were adjusting game prices for the rate of inflation, every one of their employees would expect their salary to receive the same rate of increase.

I don't know about you, but my salary is actually adjusted by inflation to a degree. Is that not the case for most salaried workers in the tech industry? (Honest question, maybe I'm just lucky)

Re:Salaries ARE adjusted for inflation

[Anonymous Coward]

But that's the point...salaries are adjusted for inflation to remain at their current buying power. People like to think they're getting raises since it gives them the illusion that their making progress in their career. But if all that's happening is their salary is being adjusted to reflect inflation (and, in many cases, at a lower rate of increase than inflation), people would realize that their career is stagnating. It's at this point that they would start looking elsewhere for someone who will pay them more.

It's in the interests of most companies to maintain the illusion, as much as possible, that a dollar today is worth what it was a few years ago. Meanwhile, everyone laments that "everything is more expensive these days" with the connotation that things should be cheaper when, in reality, their salary should be higher and the tax brackets should be adjusted to account for the fact that their higher salary doesn't result in any increased buying power.

And it's not just inflation in general...the Euro has gained 9% on the dollar over the last year and the Pound has gained 10%. It's specifically the inflation of the US dollar.

Re:What about Uss?

[MS-06FZ]

You're both wrong.

First off, graphical resolution has very little to do with developement costs. Graphics are usually originally vector based (done in things like Illustrator and Maya), or high-res raster files... of which are downscaled immensely when going over to a console. This is pretty much true of any graphic design field. For my TV production (still NTSC), I do a lot of my graphics in vector or high-res raster, just in case I may need to use the graphics later for print, or to do some rescaling animations. Graphics are almost always done with the mindset that they may someday go to print media, which means that even the most advanced HD doesn't come anywhere close. Bottom line is, it takes almost no more developement to do HD graphics than SD, since both are going to be highly downscaled anyway.

The question isn't really about creating an image that'll look good on the system's display, though, it's about creating a full interactive environment, with characters, etc. that'll look good and work well on the system. That means dealing with all the minor headaches of whatever platform you're dealing with (PS2 had some pretty substantial development difficulties due to its very strange hardware, for instance - but any platform has you dealing with a certain set of built-in functionality and available pre-supplied libs, hardware limitations like memory, CPU, GPU, and so on - those things, plus the developers' pre-existing familiarity with the system and the type of game being made, are among the major technical challenges in creating a game.

And the GameCube-similarly comment is just silly.

Why? Be specific.

Only a very small handfull of people think of the Wii as an "slightly updated GameCube"

I didn't say it was a "slightly updated GameCube", I said the machine had a strong kinship to the 'Cube hardware. This is like saying, for instance, the PS2 has a strong kinship to the PS1 hardware, or the DS has a strong kinship to the GBA hardware. A DS is very different from a GBA: but if you know GBA programming (in particular, the video and audio systems) it's quite helpful in writing DS programs. (Then, of course, you would want to add 3-D graphics programming skills and wireless networking, among other things, in order to make the most of the DS. Likewise, even though the PS2 has loads of hardware the PSX didn't have, a PS2 game will still use the hardware that was included in the PS2 specifically for PS1 compatibility.)

The GameCube didn't sell, the Wii is selling incredibly well, which means that there must be a huge difference in people's minds between the systems...

What's in people's minds means very little in terms of what's actually inside the machine. The 'Cube also had a huge initial burst of popularity, it just lacked staying power. I think a lot of us fear that kind of fate will fall to the Wii as well. But I choose to remain optimistic - I love what they've done with the machine, much like my prized DS. Even if it does sink ultimately I think I'd really enjoy being along for the ride.

It's all about marketing, it has nothing to do with development costs or horsepower speculations. You can only talk about development costs being a factor if each unit sold requires a certain amount to produce.

Well, you're only going to sell a finite number of any one title - so naturally there's some non-zero amount of money from the sale price that has to cover development costs. But this is also something that publishers average out a bit - playing the field with various experimental titles looking for the one hit that'll pay for several failures. But there's certainly truth in what you say - at a certain level Sony and Microsoft charge more because they can, and Nintendo doesn't because that's not the experience they want people to have.

As a side note - I have found that there are cases where a more powerful machine does make a significant difference in the

Re: Cost =! price.

[JohnFluxx]

> The cost to make a game (or any other product) ALWAYS factors into the end selling price; with very few exceptions (one of them being game consoles, which recoup their losses from licensing fees); any first year business student can tell you that.

Total rubbish. You sell the game at a price that maximises your profit. The cost of the developing the game doesn't come into it.

Just because the game cost you more to produce that doesn't change the optimal price for maximum profit.

The 360 launch line up says otherwise..

[Channard]

This argument might hold true, if it wasn't for the fact that some of the titles available for the 360 have been ports of current gen games, with only minor graphical tweaks. Yes, I'm look at you, Gun, American Wasteland and Battlefield 2. Yet they still cost the same as other titles which were developed for the 360. It just doesn't add up.

Because it's what the sin will bare.

[Anonymous Coward]

"I don't know where this attitude comes from, I'm just noting what I've been seeing here in America."

Original sin, or if you're into evolution? "Survival of the fitest", but I don't know how free luxuries will help one survive longer than others?

econ 101

[SP33doh]

they cost $60 because people will pay $60, end of story.

Re: Cost =! price.

[SP33doh]

thank you.
they'll charge what people will pay.

Why does anything cost what it does?-"0"!

[Anonymous Coward]

Piracy throws a wrench into that argument.

I call BS

[webheaded]

Games have costed relatively the same since the NES. To say this generation is more of a jump than any other, frankly, is bullshit.

The companies are simply using this Next Gen hype bullshit to try and make more money. Now inflation I MAY understand a little, but even that is bullshit when being applied to intellectual properties.

Re:What about Uss?

[7Prime]

You're still thinking from a programmer/tech person's perspective, instead of a mass marketing perspective. Price has EVERYTHING to do with what the image of the product is in the public eye, in this case. Obviously, hardware is a little different, since there's huge manufacturing costs to consider (PS3 is around $900 to manufacture, for instance)... but for software, that amount is virtually nil, which means you have complete control over how to price the product to maximize sales. We're not talking "development costs" here... you can pretty much forget about those, because in this case it takes hardly any more money to design and develop a product that may eventually sell 1 unit, than 3mil. In that case, all you need to do is maximize your profits, of which are close to 100% of the sale price, and then spread them out amongst the development team, or however their contracts are written.

Also, the GC did see a bit of a surge, and then falloff... but we're talking magnitudes less than the Wii. Considering the fact that we're in the inevitable "post launch drought", and the system is still selling far faster than any other system to date... exactly 4 months after launch... you'd be pretty hard pressed to make a decent case for a substantial decline. We haven't even begun to see the big titles come out yet (most likely this fall), I think there's little doubt that the Wii is going to be very strong for at least a full year, and if it can make it that far, developers will just eat it up. You *say* you're optimistic, but I'm really seeing it. Frankly, you don't really have to be an optimist to predict the success of the Wii, you'd have to be blind to history, in order to think otherwise. Optimism is predicting an all-out success for the PS3, at this point.

Re: Cost =! price.

[Hawkxor]

There is a correlation. Why? Because if I charge $50 and it only cost $20, then another firm will jump in and undercut my price but still be profitable. In an industry with no barriers to entry (which this admittedly is not), the price should exactly equal the marginal cost.

Re: Cost =! price.

[KDR_11k]

That does not matter. The optimum price is the one that gives you the most profit per copy multiplied by the number of sales. The profit per copy is NOT affected by dev costs. Dev costs are sunk in advance and will not increase or decrease if you make more or less copies of the game.

The maximum for x * f(x) (where f is a monotonously falling function) and x * f(x) - y (for any fixed value of y) have the same value for x.

and thats also why..

[Anonymous Coward]

..thats also why most games are not bought and are just pirated and ripped. I would dare to say if the games would cost 30$ they would sell 3 times as much, if its a good game.. if its crap of course, it wont sell.

Re:What about Uss?

[MS-06FZ]

Also, the GC did see a bit of a surge, and then falloff... but we're talking magnitudes less than the Wii. Considering the fact that we're in the inevitable "post launch drought", and the system is still selling far faster than any other system to date... exactly 4 months after launch... you'd be pretty hard pressed to make a decent case for a substantial decline. It's also too soon to make a substantial case against a substantial decline. We got no idea at this point what the system will be like two or three years down the road. Will the novelty wear off to the point that the system starts to become a dead-end, or will its initial popularity (and hence, one would hope, large installed base) sustain a large library of new games? My point isn't that the Wii will fail, just that after the 'Cube I'm a little concerned with how it'll fare in the long run. But, if the Cube is an example of what could go wrong, the DS is an example of what could go right - a quirky, unconventional system, inferior hardware compared to the competitors, strong emphasis on unusual gaming styles, and a couple years later the system is still champion of the portable gaming scene. (I think PSP has made a lot of progress from the days when everybody thought its gaming library was going nowhere - but I still thing DS comes out ahead.)

Frankly, you don't really have to be an optimist to predict the success of the Wii, you'd have to be blind to history, in order to think otherwise. Bah, I say. Talk to me in two years and we'll see how the Wii's doing.

Optimism is predicting an all-out success for the PS3, at this point. I certainly agree with that. I don't have a lot of confidence in the PS3 at this point.

Re:What about Uss?

[7Prime]

Fair enough. But consoles generally don't do amazingly for 2 years, and then plummit, for one reason: DEVELOPERS! (Balmer can say it another 25 times if he wants). If, after 2 years, the Wii is going strong, then everyone and their brother in the industry is going to jump on board, to the point where the investment is just too strong. There's a chance for one system to come from behind and begin to pick up the pace (as the XBox did, and the PS3 MIGHT do), but there are simply no instances of consoles going strong and dieing... it just doesn't happen. Failed consoles usually fail right out of the gate: their launch might be adiquate, but 2 months later, they're dead. The DreamCast did this, the Saturn did this, the GameCube did this (to a lesser degree). The PSP did this, but was able to make a bit of a comeback, even if it isn't looking come anywhere close to the sales of the DS.

Nintendo isn't the closed off "be weary of third parties" company it used to be. In fact, they attempted to appeal to 3rd parties with the GameCube, but most weren't really interested in what they had to offer, and were still a bit standoffish due to the N64 debacle. Through the GBA and the DS, however, Nintendo have really learned how to coperate with not just large 3rd parties, but smaller ones as well. They've got a lot of new friends in the industry now, and those are likely to only grow and develop.

How big is a PC monitor again?

[tepples]

say you did finish it for PC. We're well into the age of USB. New computers come with plenty of USB ports. It's not hard for someone to hook up multiple controllers. I have considered this. However, (pulling numbers out of my ass) a typical Wii monitor is 27 inches from corner to corner. A typical PC monitor is 17 inches from corner to corner, which is only 40% of the area. How are players going to fit four grown people around a 17" monitor? Or how is a self-publishing microstudio going to teach customers how to set up every make and model of video card for television output?

Re:How big is a PC monitor again?

[edwdig]

I have considered this. However, (pulling numbers out of my ass) a typical Wii monitor is 27 inches from corner to corner. A typical PC monitor is 17 inches from corner to corner, which is only 40% of the area. How are players going to fit four grown people around a 17" monitor? Or how is a self-publishing microstudio going to teach customers how to set up every make and model of video card for television output?

You can usually fit at least two people comfortably around a computer, so you can get some multiplayer. There's also LAN play, which is huge with the college crowd.

I'd strongly recommend that you give a serious go at making a DS game with an aim at getting published. Stop complaining and thinking up ways to fail and just give it a serious try.