Do Video Games Cost Too Much?

Valve's Gabe Newell gave the keynote address at this year's Design, Innovate, Communicate, Entertain (DICE) Summit about the cost of games, the effect of piracy, and how to reach new players. Valve undertook an experiment recently to test how price affected the sales of their popular survival-horror FPS, Left 4 Dead. They Reduced the price by 50% on Steam, which "resulted in a 3000% increase in sales of the game, posting overall sales that beat the title's original launch performance." They also tested various other price drops over the holidays, seeing spikes in sales that corresponded well to the size of the discount. This will undoubtedly add to the speculation that game prices have risen too high for the current economic climate. G4TV ran a live blog of Newell's presentation, providing a few more details.

Comments

Yes they are...

[xtracto]

Considering that a $200 million "film" can be obtained in DVD for USD$20 at most, I am sure that there is no way a Wii game should cost more than that... (currently 50 euro!)

Impulse power!

[Anonymous Coward]

My psychological maximum for impulse buys for games would be about 20$. Keep games around that and I would have a hell of a lot more.

Well, that and wine compatibility but that is a whole 'nother story :)

Re:Impulse power!

[Blimey85]

Yes, yes, yes!!!

I've bought several games that were great in theory but that I just couldn't enjoy if you paid me. I recently went through about 20 demos and found that of all of them, I only really liked one. These were 20 games that I would have otherwise just bought and hoped for the best, only be to be disappointed in the end, and quite a bit poorer considering that new xbox games are $60 each. To make matters worse, the actual games does not always match the demo. Conker Live & Reloaded was great in the demo. I couldn't wait for it to finally come out so I could play the whole thing. I picked it up on release day and raced home. Popped it in and immediately noticed that the game play was quite a bit different than what I had played on the demo disc from some magazine.

It's one thing to buy a game and end up not liking it. It's quite another to play a demo of the game only to buy the full game and find out that the game company decided to make some major changes to how the game was played. Of course I couldn't return the game so I was out $$$.

Hiopcrits?

[deejay1]

Well, but he didn't mention the situation with Valve's store in Europe where prices are much higher for two months now as they used to be. And there's no answer at all from Valve even though there's a massive thread over at their forums and even sites are being created about this issue. Just take a look at http://steamunpowered.eu/ or http://www.steamrepowered.eu/

Re:Hiopcrits?

[cHALiTO]

Yeah, sorry, typed it wrong. It's 1 dollar = 3.52 pesos.

113.35 USD isn't insanely high when your salary is in dollars.

When your sallary is in pesos, 113.35 dollars is a fortune.

Elasticity of Demmand

[Gonoff]

I did this in Economics long ago. Have a look at http://en.wikipedia.org/wiki/Income_elasticity_of_demand.

I think, it means that when stuff costs less more (or less) people buy it differently. It works differently for different stuff. Fuel, for instance probably is not very elastic because it is not a discretionary purchase - you have to get it. I think some really expensive stuff might actually sell more because it is expensive - caviar anyone?

A game is a highly discretionary purchase and so it will be very elastic. Proper capitalism should mean that you try and maximise your profit by lowering the price and increasing sales. Obviously, you can only cut the price so far because you need to make some profit per unit but the theory is sound and fairly obvious to me.

The idiots in charge in the industry seem to see the whole thing differently. Obviously MBA/parasite economics is not the same as real economics.

Re:Elasticity of Demmand

[Aladrin]

I've often wondered if they had a clue about economics. But they probably do. It's not like the developers are doing the pricing, it's the MBA at the top that's doing that. And if he doesn't get economics... Well, the company has pretty major problems.

So then the answer comes down to: They already know how to set pricing, and they've already done it. They need to cut costs if they want to make the product any cheaper, and cutting costs would make the product less 'cool' in the eyes of the consumer.

Cutting costs in software means 1 or more of the following:

Fewer flashy effects.
Shorter game.
Less polished gameplay.
Less testing. (And therefore more bugs.)
Less media hype.

There are probably more ways yet, but they all (except the last) boil down to 1 thing: The game won't be as good. The last one means they'll sell less copies and has probably already been balanced anyhow.

So at the same time gamers are yelling 'too many bugs', 'not long enough', etc, they are also yelling 'too expensive'.

The company has to balance all that out.

And BTW, casual games are a response to this as well. Some companies noticed that games want to buy cheap (sub-$20) games and have fun and they were willing to have less in the game to do it.

Re:Elasticity of Demmand

[TheRaven64]

Shorter game.

You can make a shorter game with more playability if you release a good set of tools for expanding it. Think about the original Quake. I don't think I ever did more than the first of the four parts in single player (and was pretty bored by the end of it), and that was in the shareware release. At one point my quake directory was around 500MB, while the original game was only 50MB. All of the rest was provided by third-party mods. We played Team Fortress, QTank, Quake Rally, Air Quake, and a load of other mods regularly at LAN parties. Of the total time I spent playing Quake, at least 90% was spent playing various mods.

If you want to cut costs, look at the modding scene for a similar game and send the people who make the best ones complimentary pre-release copies of your game. Give them a few months to play with it and see what they come up with before the official launch, and you'll probably end up with more third-party content available than there is in the original game.

Re:Yes

[thermian]

I wait until the games I want are on the bargian shelves then buy them (or cheap on Steam). Ok, this usually means I'm behind other gamers, but new to me is good enough.

Nor am I starved for quality games, less so perhaps, because by the time I get round to buying, the shit games have been identified, and the gems lauded.

Diablo 3 may cause me to break this trend, at least for that one game, but everything else is bought cheap or not touched.

It's based on the game

[TuaAmin13]

I wouldn't draw a hard and fast line on how much games should cost. If every PC game was $25 new, I still wouldn't buy every game I was interested in on release day.

I bought L4D this past weekend because it was a steal. Great game (all my friends have been raving about it), and I thought I would like it (it reminded me of counters strike a little bit). Would I buy Mirror's Edge for $25? Probably not. Crysis? Maybe once it hit $15-20, but that'll be much faster than starting at $50

Question of perspective

[Seth Kriticos]

It's really a question on who you ask.

If you ask the gamers: Yes, way too much! I better pirate it.

If you ask the studios: How much can we squeeze the most out of the costumer? Can we put into legislation, that games cost 100$ and every one has to buy one at least once a month? Can we also put an additional tax on everyone, because everyone is pirating anyway?

If you ask some folks how don't feel gaming is of mush value, and do it only as passion: They cost enough to keep me away from buying them. And cool, I have a lot of time I can use for something useful.

Because every game is a monopolistic product by it's definition, you really can't compare it like for instance cheese. It's also not utterly required for survival. At this point it is only a question on priority. Probably the software houses can increase this priority (demand) of third group costumers and increase the legal purchase of the first group by producing better quality games and/or lowering the price.

It depends.

[Xest]

I bought Dawn of War 2 yesterday for £24.99 which personally I don't mind paying for a game.

But then I got home and tried to install it and it requires you install Steam and Games for Windows Live and activate the game via Steam. I tried to activate it and was told I can't because it's not for sale in my country- presumably because although some shops are selling it THQ decided the actual release date was today.

So yeah, that changed my mind, £24.99 is fine for a game I can play when I want and whatever system I want but it's far too overpriced for a game I can only play when they decide I'm allowed to play it whilst also having to give away a bunch of personal details to Valve for Steam and Microsoft for Windows Live.

The box at least said an internet connection and registration was required to play but it still said nothing about having to give away details to register to Valve AND Microsoft and it certainly said nothing about them being able to choose when I can and can't play the game.

It's been said here many a time that pirates provide a copy of a game cheaper (free) and that you can play without restriction when you want and where you want. If companies want to increase sales then perhaps they need to accept that they have to beat pirates on at least one of these levels, by either matching them on price (not gonna happen) or by beating them on product quality. Whilst they continue to do neither they wont get anywhere.

As for me and DoW2? I file a complaint with UK trading standards and will be returning the game tommorrow and they can damn well take it back even if it is opened because as far as I'm concerned if I don't have the guarantee of being able to play it when I want and have to hand over personal details to two third party companies to be able to play then it's faulty or simply misadvertised. Just as I got burnt with Spore's DRM I've now been burnt with Dawn of War II's. You see when I was young I used to pirate games because I couldn't afford to buy them, now I make plenty enough to buy these games I do so, just as I *gasp* bought a copy of Windows for my most recently built PC. I also bought music from iTunes only to find the only music on my iPod that would play on the game Lips on the 360 for my girlfriend was downloaded MP3s and none of my legally purchased music would work. Some may think it's not a big deal having to wait a day to activate but my concern is that they can revoke my access just as easily as they've prevented my access to a game I've legitimately bought.

What they need is a change of attitude and price is only part of that, I wont buy brand new XBox 360 games at £39.99 but at around £29.99 I don't mind because at least the restrictions are pretty obvious when you buy the game and console. It's not ideal that there restrictions exist but it's light years ahead of the unadvertised 5 install limit with Spore on release and the "Valve gets to choose when you can and can't play" with Dawn of War 2. So whilst I'll buy 360 games, I wont buy music, I wont buy PC games, not even if they were £9.99 anymore it's not just worth the hassle.

So yeah, even Valve with their "Hey look at us guys! we think DRM is silly, we love piracy and think it helps! hell we even do great discounts sometimes!" are still the scum of the Earth and as bad as EA when it comes to draconian DRM in that they prevented me playing a game made by the company THQ and bought from the company GAME and could just as well prevent me again any time they wish.

Re:The only ones at fault are Sony & Microsof

[Elrond, Duke of URL]

This is an excellent point and one which I think too many people overlook.

It's certainly true that many games cost a whole hell of a lot of money to produce, but the fee that the console makers charge is astronomical for exactly the reason you give.

The only exception is Nintendo since they do not take a loss. So why are their games not substantially cheaper? Simple: they don't have to be. As long as they charge developers less and Wii games cost less than 360/PS3 games, customers will recognize the less expensive choice.

Personally, I'd be extremely happy if PC game prices were uncoupled from the console prices. There are no licensing fees since there is no central authority. I'm not sure if the "Games for Windows" logo/certification costs anything. Some publishers might want it because it makes their game look more official, but on the other hand Microsoft needs that logo on more boxes to make Windows seem more attractive. At any rate, it's not a significant portion of the cost.

Own it dont rent it

[justinlee37]

Well, after you pay your $60, you can play indefinitely. If you ever stop paying $180 a year, you can't play World of Warcraft anymore, even if you've already paid $40 or $60 for the boxed software AND poured hundreds or thousands of dollars into monthly fees.

Many games are good for way more than a month as well, especially if you spend a healthy amount of time on games instead of making them your life. Games like Fallout 1 & 2 (even 3 to some extent), Baldur's Gate 1 & 2, GTA 3 & 4, the Total War series, and so on, have each individually entertained me for many months. And that's not even getting into multiplayer games like Team Fortress 2, Company of Heroes, or Civilization 4, games which you can play for as long and as often as you like, without feeling bored or that you've already "beat it." It's like owning a chessboard, or a deck of cards for poker. Chess and poker never get boring.

Would you rather own 3 new games for the rest of your life, or play World of Warcraft for a year?

Choose wisely.

Re:Yes

[Anonymous Coward]

Buying games at launch (or near to it) increases the chance a sequel will be made. It is voting with my dollars for what I want the gaming industry to focus on.

Also, I have the bad habit of actually following gaming news, so by the time a game comes out that I want to play I have already been reading about it for months.

Hollywood learned the same lesson long ago

[Benfea]

When VCRs first came out, buying a movie on videotape cost what? $50? $60? It took Hollywood years to learn that they made a lot more money selling a very large number of movies at $20 apiece than they made selling a small number of movies at $50 each. One has to wonder why it's taking the game industry so long to learn the same lesson.

Bingo. Its the Price, not the Piracy!

[Jackie_Chan_Fan]

ALL of these developers could easily sell more if they lowered their prices.

We've been saying it for years and finally someone has the balls to try it.

The Result: PROFIT.

Will anyone learn from this? No.

Konami sucks that way

[metamatic]

I've learned to buy Konami games as soon as the first price drop, because they always seem to manufacture too few copies to meet eventual demand and fail to reissue even their highest rated games.

(I have both We Love Katamari and Rez.)