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$60 Games Are Here To Stay
Next Generation explores the price jump for 'next generation' titles, looking into the success of the $60 price point for videogames. They have a copious number of graphs and charts to support their findings: "Even without Guitar Hero II, prices in 2007 are still at historically high levels. In January, fully four of the top 10 games sold for $60 or more. In February, that jumped to five $60 games, and the average rose accordingly. While there were four $60 games in March, they shared the top 10 with two Nintendo DS games which brought the average down sharply. This happened again in March -- the month of Pokemon -- and also in May."
Wii games are $50 US, $60 games are not here to stay.
Inflation and rising development costs result in both a higher price tag and acceptance of a higher price tag. News at 11.
Prices don't go up because people are "greedy," prices go up because your government decides every day to ruin the value of your money.
Games now have many international ties (design, programming, etc). Because the U.S. dollar is being inflated as fast as it is (and has been since 1913), more dollars means that the dollars out there are worth less, especially versus foreign currencies. This means that prices seem to cost most.
The flipside of inflation is that some people, especially the banking elite, get the new money earlier than others -- so it is usually the middle and lower classes who are harmed with prices inflating faster than their wages do. Eventually wages DO increase because of the easy money out there, but usually it is too little, too late.
Prices go up in any inflationary market. Prices also go up because of a limited supply for a highly-demanded item. Generally, though, in a market with a currency backed by something other than fiat/force, prices go down slowly -- soft deflation. The benefit of this is that you actually can SAVE your money and earn value on it, unlike today where even the stock market gains don't keep up with the TRUE cost of inflation.
Sidenote: Government inflation figures are lies, plain and simple. Find some old credit card statements and see what inflation really is in your life. You may be surprised that it is 10-12% annually for the past 3-4 years.
$20 games that were $60 games last year here to stay too.
If moderation could change anything, it would be illegal.
....modchip sales are brisk.
$50 in 1988 is equivalent to $88 now. Prices are dropping in real terms. (http://data.bls.gov/cgi-bin/cpicalc.pl)
... games cost $90 and we had to play them on the Sega Saturn.
I modded the firmware in my 360. True, I don't have Live access anymore...then again, considering I have burned roughly 20 games, I have saved about $1200...I think I will go buy a core system and spend a hundred bucks on Ebay to buy used version of the games I want on live...I've saved enough to make the purchase warrented.
Still. I refuse to pay 60 dollars for a game (unless it is something like Bioshock or Mass Effect or Fable 2...I intend to purchase those.)
Am I a criminal? Perhaps. Is what I'm doing morally wrong and illegal? Perhaps. Do I give a fuck? no.
Living With a Nerd
Man, enough already. You've been posting this gold-standard bullshit for years, and it's never made any sense. You have no credible sources for any of this. Give it up.
You've also posted a lot of mystical pseudoscience babble about gold. It's just a metal. Inasmuch as it has little to no innate utility to anyone, it's a substitute for actual goods of value in the same way that paper money is, or any other currency standard.
more dollars means that the dollars out there are worth less, especially versus foreign currencies.
Except for the obvious logical fallacy that foreign currencies have also abandoned the gold standard?
prices go up because your government decides every day to ruin the value of your money.
That was the only interesting thing you mentioned. Yes, money you hoard devalues at a long term average of about 4% per year. And that's a good thing - it's better for the economy to have money actively invested rather than sitting in a mattress. You'll note that time periods with low or negative inflation were times of currency crisis - because the wealthy hoarded their money and little was left in circulation to sustain the economy.
Fixed ;)
I pirate games because there's nothing like the smell of black powder wafting across your forecastle after you've laid a broadside into an EA Game heavy with gold doubloons from the Spanish main. Aaarrrr!
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Are You F**KING NUTS?
The dot com bubble happened because of INFLATION? The dot com bubble made Many Many Many people wealthy, and kept the economy going for quite a few years. Then the charlatans became too common and the economy corrected. Inflation had ZERO to do with it. Over eager investment in stupid ideas is why the bubble burst.
House is the exact same thing. Stupid investors bought bad investments because they thought they could. Good for the sellers. Good for for me who fixed up and flipped two houses and then got the hell out of the market. For a while the cheap money helped a lot of people. Then people got stupid and it had to stop. That has absolutely nothing to do with inflation. That has to do with human nature and emotional purchasing.
A boom/bust cycle is NORMAL and HEALTHY. Every thing in the world is cyclical. If you have no cycle, you have no growth period and no correction period. If there is no cycle, the economy becomes stagnant and unless you already have money there is no way to earn good money. Sitting on my cash in the hopes that deflation will cause its value to grow slowly is a great plan to avoid risk and an even better plan to avoid reward.
In a cyclic economy the bulls make money, the bears can make money and the pigs get slaughtered.
In a flat non-boom/bust economy only the pigs who already have money can make money and anyone who wants to make money either through working hard or through buying smart has no opportunity to do either.
Don't be a dogma-quoter. Use your brain about what caused something to happen.
Might I recommend moving beyond Economics 101 into the more daring regions of inflation vs. economics of scale? Thanks to the economics of scale, the price per unit falls dramatically even as inflation drives the price upward. The result is that there exists a "sweet-spot" where the price may remain stable. It's only through the introduction of radical new developments that prices go upward.
Basic Market Fact: The market for video games is larger than at any previous point in history. Every generation has seen a distinct rise in the number of overall units sold. (i.e. There's more pie for the competitors to divide.)
The Wii prices have remained stable because Nintendo is riding the economics of scale to combat inflationary costs. The XBox 360 and PS3 are so costly because they bucked these economics and embraced the cost of the disruptive HDTV technology. HDTV is at the edge of technology. It's what the CD-ROM was in the days of the 3DO. It's a high-technology item that still has limited scale to back it. Prices of the sets and microchips to support them are dropping, but not fast enough for the consoles to exist in a competitive region of scale vs. inflation.
Thus it's a gamble: Will the consumer pay more for cutting edge video-game technology?
The traditional market response has always been a negative. The 3DO priced itself out of a market, the Jaguar priced itself out of a market, the Saturn priced itself out of a market, the Turbo-Grafx priced itself out of a market, etc. The closest example of this trend being disrupted was the original Playstation. It was introduced to the market at $299, a full $100 more than the market was used to for new consoles. However, its price fell quickly and newer models dropped the unit cost by that much more. The majority of consoles were sold at a much lower price. The trend repeated with the PS2.
In fact, history shows that the inferior technology often wins out. Atari 2600 v. Intellivision, NES v. Master System, SNES/Genesis v. 3DO/Jaguar, Playstation v. N64, PS2 v. GameCube/XBox, etc.
All this adds up to bad news for overly expensive consoles. They are gambling on superior technology, but the market tends to not put much value there.
Javascript + Nintendo DSi = DSiCade
The standard economist line is not that inflation is good, nor that is bad, it is just inflation.
If I give you 1 dollar and want my value back at the end of the year with 4% inflation, then I need 1.04(I'd probably want some sort of a return for depriving myself of the use of the dollar, but for simplicity we can leave that out).
If actual inflation is 5%, I lost value, because to get my value back I should get 1.05, so if inflation goes up, the receiver of a loan wins.
If actual inflation is 3%, I gained value, because I really only needed to get 1.03, so if inflation goes down, the lender of a loan wins.
Inflation is bad because it makes it hard for 2 parties to agree on a mutually beneficial exchange when uncertainty is introduced like this. They can plan on an equal exchange, and then inflation risk can fuck it up.
Deflation is the same, it's just smaller numbers but the same effect. If the value is dropping at unpredictable rates, it stunts business because the 2 parties can't depend on a fair exchange. The information of knowing it will be stable is important to efficient resource distribution and investment in an economy.
So what is important is not inflation or deflation, what is important is how much variance is in the inflation or deflation.
Inflation makes the number bigger, deflation makes it smaller. But as long as the percentage of change is steady and predictable, it has no effect on the exchange in value. However, large inflation numbers tend to carry more variance, while low numbers are more stable. So that's the job of the Fed. To fight inflation so that business people can do their thing without worrying about instability fucking up the exchange they're negotiating.
Some say some small inflation is good, because it keeps pace with the growth of actual value in the country. GDP(just one of several measurements of a nation's value) for example, for the U.S it's been growing around 2-4%, so to keep the right amount of money flowing to represent this increase of gross domestic product, the idea is to keep the amount of money growing at 2-4%. Not everyone agrees with this, I don't see maintaining the speed of money circulation(How fast 1 dollar circulates) is worth intentionally keeping a level of inflation(Wouldn't the value of money change appropriately to adjust for changes in the speed of money circulation?)
However, a gold standard is just a different form of currency. Now a nation's currency growth rate is tied to...mining rocks? The currency itself is worthless, it's the value behind the currency that matters. A gold standard wouldn't help combat this fluctuation, it just ties it to a different fluctuation, mining. The real goal here is to keep the value stable, which is what the fed should do. They're trying to keep it steady at the current value, which is fine if they can pull it off. I'd be happier if they kept it steady at 0% inflation.
The more pressing issue is trade deficit. Inflation should be moderated by the Fed as it is currently. I don't like the idea of upsetting this tender balance. As much as I agree with many of Ron Paul's stances, abolishing the Fed for a gold standard is a dealbreaker since I believe it would bring little good to the country, while potentially wreaking catastrophic results. Another global Great Depression sort of catastrophe.
My explanation is rough, I know, but hopefully someone else can clarify this better than I.
You conveniently leave out the causes of the depressions and bubbles that occurred prior to the great depression (hint: speculation does not require fiat currency to occur).
No, I didn't. The Federal Reserve went on a massive inflationary credit/money creation spree from 1924 to 1929. This easy money gave everyone, even the shoe shiners, a huge increase in the value of the stock markets. But it was that easy money that made the stock markets rise, not actual increased profitability of companies invested. In 1924, a few early investors had early access to the new easy credit. The stock markets ticked up, and as that new money trickled down into the economy, more and more people invested -- causing the market to swell artificially even more so. The Fed did nothing but create more and more credit, which flew into the stock market pushing it higher and higher. Government inflation caused the market to bubble. The Fed tried to control the market boom by restricting that easy money, so those who were holding the stocks (namely, a decent portion of the population) had no one to sell to -- no more easy credit meaning no one else to buy those stocks. Quickly people sold off stocks, but the banks were restricted in paying out deposits because the Fed was trying to deflate the currency base.
The Fed caused the Great Depression.
The boom-bust cycle is nothing new, and not a product of inflation. Inflation is part of the boom-bust cycle.
I'm amazed people give you any trust or value, honestly. Inflation causes the boom-bust cycle as I easily explained in this post and in previous ones in the same threads. Inflation, the creation of money, gives people false indicators of a growing market. In a free market, stocks go up in value because they either pay more dividends, or because the company is truly worth more money now or in the near future. In an inflationary economy, stocks go up usually because another sucker used easy credit/money to buy stocks from a previous sucker, at a higher price. That's boom-bust. It is NOT part of a healthy economy.
I'll go out on a limb and say that over time, the boom-bust cycle is healthy. It promotes advancement during boom cycles, then weeds out the weak during bust cycles. In the long run, the boom-bust cycle promotes technological advances that result in increased standard-of-living across the board. The key is to mitigate the bust cycles so that the economy doesn't collapse.
Society blossomed during a stable currency base during the Industrial Revolution. Why? Companies and individuals found ways to become more efficient, introduce more products and services to the market, and reduce prices for everyone (deflation). This happened pre-fed, during a strong dollar that didn't fall more than a few percent in value over 150 years. The dollar has lost 98% of value since 1913, because of inflation/the Fed. In a strong dollar economy, people still create, but do so wisely because they find profitability in efficiency or new inventions. In an inflationary economy, companies sell nothing or junk (dotcom, housing) because they have easy access to easy credit, used to fool foolish investors.
Call me crazy, but the grandparent poster doesn't mention the gold standard once in his post.
He does mention that our economy is inflating somewhat rapidly, which can be very easily verified by taking a look at some graphs plotting the exchange rates for US dollars.
Whether or not this is an explicitly bad thing is a subject of debate. From what I understand, inflation is generally considered to be a good thing in small amounts, and that the US is on the brink of passing the cusp of these "small amounts".
Take a look at what happened in Argentina. Their currency became worthless almost overnight due to poor economic practices (nothing to do with the gold standard).
The grandparent poster then draws a bunch of conclusions from the assumption that the dollar is inflating, all of which appear pretty sound in the context of other economic inferences. If the dollar's worth less, as in any economic disaster, the people with the least money are obviously going to be the most affected. Because people have to eat, wages will then hopefully rise to try and catch up.
-- If you try to fail and succeed, which have you done? - Uli's moose
But energy can neither be created or destroyed, how can it be inflated?
(That's what you get for discussing economy with geeks...)
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I pay $5 or less for my games. No hurry to get the latest, so wait until the price drops to what I'm willing to pay. "XIII", "Max Payne", "Oni", etc. are suitably entertaining, engaging, and cost less than lunch at McDonald's.
You want the latest? You are willing to pay $60 for the latest? Then, supply-and-demand, retailers will charge you what you're willing to pay for what you want - and that, for the collective "you", is working out to about $60.
Go figure.
Can we get a "-1 Wrong" moderation option?
If inflation is 0% (stable pricing), then I am indifferent between buying something now or in a year, as my money is worth the same. If there is a small amount of deflation, I have an incentive to sit on my money, because it will be worth more in a year... If I get 2% by putting it in my coffee can, why not wait when things are cheaper. With small inflation (2%-4%), there is a reason to spend now (money becomes worth less in a year).
Basically, small inflation forces people to either spend their money, or save it in interest returning investments, or invest it... you can't sit on it. Small deflation causes people to sit on their money. If you look at the cyclical nature of the computer industry, the fact that the computer industry is deflationary has caused all those hiccups. For consumer goods, the built up supply chains of distribution work fine... doesn't matter if it takes 3-4 weeks to get the shampoo from the factory to the store to your home, nobody loses money... recently companies have gotten so good at just-in-time manufacturing, that they decided to worry about this, NOT because of deflation and collecting less money at the end, but because the finance department realized that the "inventory" that they are shipping around uses working capital (if I carry $20m in inventory, that is $20m that I am either borrowing or not investing, so there is a "cost" of the inventory). However, in the computer industry, Dell was the first to move to just-in-time, and decimated everyone... not because of carrying costs which are small, but computers deflate at 2% a month or so, so if it took two months to get the product there, they lost 4% of the value in the channel.
Basically, small inflation is devastating, because it means that the "real" risk free rate is negative. If expected inflation is 3%, and people expect a 2% rate of return for 0-risk, then the nominal interest rate for treasury bills is 5%. If inflation rises to 4%, then the interest rate foes to 6%, with no major change. If instead we get 3% deflation, then the "interest rate" SHOULD become -1% (-3% deflation + 2% required rate of return = -1%)... Now, who would buy a bond for -1%? Instead the money sits in the mattress. As a result, you might see an interest rate of 1% or 2%, but that means that the real interest rate is 4%.
A higher real interest rate means that people require a higher return for "risk," which means that bond yields go up (making it more expensive for companies to borrow money, which means that they don't invest as much in growth. It means that stock prices go down, because stock price today = NPV(future returns), and the higher the interest rate, the lower the NPV.
Basically, deflation => higher REAL interest rates => slower economic growth, plus deflation => lower expenditures while people hoard cash => slower economic growth. Deflation is VERY bad. Look at Japan's long recession, they couldn't get out of the cycle, because once you lower the interest rates to 0%, there is nowhere to go. When the US economy went into recession, the Fed was able to lower rates from 5.25% to 1%, which sped up the economy. The reason they moved it up so fast, they were scared that if another attack happened or something else slowed the economy, they had nowhere to move, they COULDN'T lower interest rates more, which meant severe recession or depression to fix things.
The Fed's ability to affect rates lets them tweak the economy. The tweaking works fine in normal conditions (moving between 3% and 5% GDP growth is manageable, once you get outside that range, the interest rate can't control it). The American people like to know that each year they will generally be a little better off. In the late 90s, you had red hot growth, which everyone enjoyed, but when the economy slowed to absorb those gains, people decided that a mild recession was a severe depression.
Look at the housing market, people expected 4%-5% growth, inflation + 1%, and while they enjoyed the 10%-20% growth while it lasted, it forced people into doing stupid moves to get ahead of the game... Now prices drop 2%-4% in a year, a minor fluctuation, and people are talking about a market collapse.
...of money for the software industry.
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Ok, I'll give you that, but can you explain why this is the opposite trend in the PC hardware industry?
Case in point, in 1992 I ordered what was then a top of the line PC:
* 486 - 66 MHz / 8 Meg memory
* 240 Meg hard drive.
* No CDROM
* No sound card.
* No networking or modem.
* Diamond Stealth 64 video card (Vesa local bus)
* Cheap case with floppy.
* 14 inch VGA muti-sync monitor.
* Mouse/keyboard.
* $2,500.00
This past Sunday 7/26 I just purchased my new baby:
* Intel D975XBX2 (Bad AXE) mobo with a load of stuff on board.
http://www.intel.com/products/motherboard/D975XBX
* Intel QX6700 (Core 2 quad core 2.66GHz)
* 850 Watt SLI power supply.
* EVGA GeForce 8800GTX 768Meg video card.
* 4 Gig DDR2 800 MHz RAM (PC2 6400).
* 320 Gig SATA 7200 RPM drive.
* Lian-Li PC1200B II case.
* 20X CD/DVD burner SATA.
* Windows Vista Ultimate.
* $2,800.00
Please tell me why inflation and rising development costs didn't have an effect on these prices?
As an engineer I can tell you that moving from the hardware technology of 1992 to 2007 was also "a lot of work" and required "a lot of resources" and "a lot of money". Yet based on inflation, I got a system that just crushed the older one into the ground.
Hmmm...