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Why Games Cost $60
eldavojohn writes "Crispy Gamer is running a very interesting article on why games cost $60. Many games start out at this retail price — but why? Did the makers of The Beatles Rock Band game just happen upon $59.99, as did the makers of Batman Arkham Asylum? After all, those two titles surely took different amounts of man hours to develop, and result in different averages of entertainment time enjoyed by the consumer. They interview a director at Electronic Entertainment Design and Research, who breaks down the pie as $12 to retailer, $5 to discounts/returns/retail marketing, $10 toward manufacturing costs and shipping. That leaves $30 to $35 in the hands of the publishers. Though lengthy, the article looks at three forces of economics on why game publishers continuously end up in lockstep for pricing: sensible greed, consumer stupidity or evil conspiracy. When asked about the next step up to $70 or $80, Hal Halpin (president and founder of the Entertainment Consumers Association) says, 'I'm not sure that we'll see a standard $70 price point at all. To my mind, emerging technologies, subscriptions and episodic and downloadable content should all enable price drops — increasing accessibility to a much wider audience.'"
"subscriptions and episodic and downloadable content" already drive the cost (to the consumer) of games to $70-$80. My kid gets an XBOX game for $60. Plays it. Finishes it. Pays $5 -$10 for points to download an add-on pack, or 2 or 3 or more, and next thing you know, he has invested $70 - $80 in the game. I already assume when he buys ODST, it will cost $80 before it's all said and done, and to me, that's the real cost of the game.
I think they have to keep the initial price at $60 for now because that's the point above which more consumers would say "screw it, I'll get something else". I'm pretty sure downloadable content will soon be (if it isn't already) about the only way game makers profit.
I prefer rogues to imbeciles because they sometimes take a rest.
What TFA didn't mention is that the $60 price point goes all the way back to the NES days.
I specifically remember My family shelling out (thanks!) the sixty apiece for SMB 2 and later SMB 3 and Megaman 2 when they were new. I think that the less popular or complex games costed less, but there were some real turds like Legacy of the Wizard which also went for the full sixty.
The article's pricing justification seems like complete BS to me. Just looking at the claimed "retail + shipping" costs tell me that the values are completely inflated.
$10 to manufacture and ship? WTF?
It costs approximately $0.75* to manufacture the DVD, print it's label, print the wrap that goes in the amaray case and package it. The packaging is approximately $0.55-$1.50* more (depending on how much junk / crap they stuff inside plus the manual).
Then once packaged the product gets bulk shipped. Claiming $7.75 for shipping per product would mean that a case of 20 unites would cost $155 to ground ship. That's a pretty absurd number. $7.75 is the cost to me if I were to ground ship each package individually to a different location.
No, this article is nothing but BS justification for game prices. The real reason why games cost exactly $59.99 has nothing to do with costs or logistics and revolves entirely around price point.
$59.99 is exactly the price point that industry wants per game, regardless of actual cost/development.
*Note: I work for a company that replicates DVD's and print the packaging and assemble. Thus I know the real costs for the packaging.
Actually, the article has it completely wrong. Beginning with the NES, companies pay very high licensing fees for games ($20 per game). I have friends that used to work at Interplay and they told me that the cost is up to $25-$30 per game sold.
This is actually surprisingly easy to confirm. To find the console license fee, subtract the PC version price from the console version price.
For instance, at launch, Lego Star Wars for consoles was $59. For PC, $29. Every other cost is the same in making the different versions. Marketing, packaging, distribution, advertising, etc. So what is different? The console maker's tax.
That means that console makers are taking 50% of the cost into their pocket, even though they didn't do anything in the development of the game at all.
This is why they can eat $150 on the price of a console system with a mere 4.5 game average attach rate.
Personally, I buy PC versions whenever possible. The experience is usually equal to or better than consoles and I save 50%.
Peter predicted that you would "deliberately forget" creation 2000 years ago...