Why do Games Cost $60?

Posted on March 24th, 2008 in Editorial

20061208_empty_wallet_2 Why do Games Cost $60?

Gaming is an expensive hobby, everyone knows that. My question is, why does it have to be? The makers of movies, music, and books have all realized that if something is sold at a cheaper price, people will buy more of it. You can get brand new, quality forms of those medias at a fraction of the cost of new games. Why should gaming be any different?

Is it a problem with the install base? Are there just not enough users of a console to be able to make a profit from selling a game at a lower price? If there aren’t, this is the console developer’s fault, as they should make their consoles as cheap as possible to attract new users. Look how fast Blu-ray players have lowered their prices in about a year. You may say it’s because of their competition with HD-DVD, but I seem to remember there being three consoles on the market. Why is it that Sony is the only company that has significantly worked to make their console as affordable as possible?

Or is it a problem with the rising cost of game development? Games are now costing nearly as much as movies to make. Publishers see a high price tag as the only way of making a profit. They don’t realize that they could sell many, many more copies of the game by lowering the price tag. There are plenty of consoles in the market right now and publishers could make a profit by selling twice as many copies at $30 instead of half the amount at $60. So why haven’t companies started doing that? The truth is that companies have been doing that for a while now.

But they’ve been implementing this strategy in the wrong way. Companies have discounted the price for budget games (AKA “bad games”), instead of offering their great titles at a lower price. This makes gamers uneasy when they see a $40 price tag on a brand new game. They immediately think the game is a budget game and will instead pick up a $60 game, even if the $40 one is better. This type of thinking only promotes selling games at higher prices.

So is all hope lost for lower prices of games? Not necessarily, says I. If a company like Valve, which is always willing to try something new (look at Orange Box, possibly the best deal in gaming history), was to continually release quality games at discount prices, it would change the whole “$60=quality” mentality. Gamers wouldn’t scorn at games whose prices are less than $50 and eventually the industry would be much healthier as more and more people bought games.

Sadly, my pessimistic side says this day will not come in the near future. This concept will take years and years to catch on, if it even does. But the gaming industry has repeatedly “anything you can do I can do better”ed (yes, I just made that a verb) the movie industry. So if you can get movies for under $10 these days, hopefully before I die, the same will be for gaming. Then maybe I could afford another 2007 of gaming.

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Tags: Cost of gaming, Why are games so expensive, Why do games cost $60

This post has 26 comments

funnyman
March 25th, 2008
Look at this way. You don’t have to buy all of the games. Only buy the games that interest you.

[Reply]
Mark
March 25th, 2008
but i wanna buy all the games haha

[Reply]
Joe
July 8th, 2008
Orange Box is definitely quality but it contained releases that were out well back before the game was released. TF2/Portal/Ep2 were the new content and yes those were nice but none of them are a full game. Ep1/HL2 were both games I had already played and forced to buy when Orange Box was released.

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HERO
July 8th, 2008
No offence but this story is crap. Companies can sell videogames at lower costs, and they do ON THE PC. You can buy the same game on the PC for $10 to $20 dollars less than you can on a console. All they are doing to console gamers is ripping them off, and it’s because we let them, why are we as console gamers spending $60 for a game when they sell the same one on the PC for less? We need to grow backbones and stand up to them and say no more, give me better prices or I won’t buy your game.

[Reply]
Mark Reply:
July 8th, 2008 at 10:15 pm
I don’t understand how console gamers buying crappy games makes this story crap… Maybe I missed something there

[Reply]
ryan
July 8th, 2008
“So if you can get movies for under $10 these days, hopefully before I die, the same will be for gaming. Then maybe I could afford another 2007 of gaming.”

I’m assuming you are speaking of DVD’s. Direct to DVD? Everyone has to go to the theater and pay anywhere from 5-15 to watch it ONCE. Now if you want to go to 3 video arcades and play GTA 4 for 1-12 months before it comes to your home console, only being allowed to play for approximately 2 hours for every 10 dollars you spend, that’s the closest approximation to how we will achieve lower prices. 15 a month for WOW- this game has cost me over $300 bones but how many games is that on a console? 5-6 before tax. Here’s a thought….Eventually, movies will be produced in serial form, like comic books, and the amount of time and technology will be almost DIY in comparison to the BIG projects. Imagine SpiderMan 1-12, full length movies downloaded directly to your home, produced using technology that 5 years from now will allow for customization and actual synthesis. Look at Japan and what their fans do with the work they love so in anime and manga- always adding to it, building off of it. Prices will not go down because there is nothing as of now to replace it. Other than not buying video games- or you could just pirate them and put them on your hacked console….but i didn’t just suggest that.

[Reply]
mike
July 8th, 2008
anyone who judges the quality of a game by the price has no business playing games, maybe they should be testing cow dung for the quality of the stench, u will get more for ur money that way retard. if the effort it takes to make a product goes up you do expect the price to rise in most cases. but we have seen a 10 dollar junp in prices every generation. so does that mean in 10 more yeard games will be 80-100 dollars??? i hope not.

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LC
July 8th, 2008
I generally agree that if games released $20 or $30 cheaper that I myself at least would buy more games at that price versus the very few I buy now at the full $60 price. I think that if I payed $30 or $40 for a new game versus waiting for many of them to be sub $20 that they would make more money.

Honestly though, its my opinion that very few games are worth $40 much less $60, like for instance I played and enjoyed advent rising, purchased for $5 brand new, hitman blood money $12.99, forza $11 the list goes on, sure I had fun with these games but It would have been disappointing if I had forked out full retail.

Another game I am interested in playing is too human, dennis dyak repeatedly states that gamers don’t want 100 hour games anymore so hes gone and done us a favor, split up one story arc over 3 games at $60 a pop for a measly ten hours of gameplay. The price should reflect that too I think, if he wants to sell episodic game content he needs to put a $20 price tag on it because frankly that’s the most I will pay for it.

[Reply]
Mark Reply:
July 8th, 2008 at 10:17 pm
I fully agree with that statement. If developers are going to gimp us from game content, show it in the price

[Reply]
Developer X
July 8th, 2008
Why games cost $60: (These are all averages)

Manufacturing: Printing, handling/shipping, disc replication $5

Development (given a $10 million dollar budget with expected sales exceeding 1 million units sold to retailers): $10

Publisher cut (also covers advertising/PR, quality assurance, ESRB ratings, TCR/TRC submission etc): $10

Platform holder royalty: $15

Retailer: $20

TOTAL: $60

[Reply]
Ale64
July 8th, 2008
It’s because of the high prices that there is so much piracy, and with reason

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matt
July 8th, 2008
This doesn’t makes sense at all every gamer i know hears about what’s coming out before it comes on the shelf. In today’s modern age, everyone can simplify go on their home pc and look at games from gamespot, or ign, etc. These sites give the people the information on how good a game is. Like Grid , I read the review gamespot gave it a 8/10. Likewise you are able to go and look on what everyone else says about that game as well. It’s not like people go out to bestbuy on a random day and buy a random game. Most people would go research on certain games they wanted beforehand, and then go buy the game, if developers droped prices on games more people would be buying more of that game problem is there isn’t that many customers that are into the same game unless its call of duty 4

[Reply]
walt
July 9th, 2008
if anyone thinks pricing won’t make a difference then take a look at NFL 2K4 vs. NFL 2K5 in total sales. 2K4 sold roughly 400k on ps2 and xbox combined http://forums.e-mpire.com/archive/index.php/t-12216.html , whereas 2K5 priced at $19.99 sold 3.5 million. http://www.1up.com/do/newsStory?cId=3137806

[Reply]
Mark Reply:
July 9th, 2008 at 1:25 pm
That’s a great example. Too bad Madden had to grab the exclusive license so we won’t see aggressive price drops like this much more

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Rob
July 9th, 2008
Umm…is it just me or am I the only person that remembers paying $80.00 for games? PC games used to come in huge boxes (20cm x 15cm x 5cm) with a square jewel case and a tonne of cardboard inserts in them. Wasn’t until around 2000 (I wanna say The Sims was the first one I saw) when the boxes were reduced to a double-thick DVD case which dropped prices by like 30%. Bring on the enhanced pipelines for online content and we can eliminate the packaging/shipping costs and you’ll see games drop in price.

[Reply]
Transience
July 9th, 2008
I think they can get away with charging more because games are more interactive experiences, and last longer than movies, and some even last longer than books. Also, I’d have to disagree with the author’s logic. First, movies have a larger installed base. Think about it, do your parents and grandparents play games? Do they watch movies? If they’re anything like mine, they do the latter but not the former. Also, it’s really a different business. Movies use one or two universal consumer formats which any company can make a player for, at a tidy profit. In the game business, each company makes their own console for their own format, and they take a loss on each console sold, assuming they’ll make it up when they sell five or so games (on average) to go with that console. Therefore, if they were to lower the price, they’d have to sell more games to start making money on the console, but they’re selling to a market ultimately smaller than the DVD market. Plus the developers need paid and have to cover their budget. Movies cover their budget through theatre sales, merchandising, and home format sales. While there is some merchandizing of video games, it does not compare to movies, leaving only home sales to pay back developers.

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Jørgen Balle
July 9th, 2008
Okey.. i agree that the games should be much cheaper for us consumers to buy, but you are unacrurate and write: publishers could make a profit by selling twice as many copies at $30 instead of half the amount at $60.
30 * 100 = 3000
60 * 50 = 3000
lol:P bad example:P
well well, in norway, new games kost 600 KR, that is about $120, so stop your whining. we have to pay twice the same as you guys overseas have to…

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Ryan
July 9th, 2008
2K Sports line comes exactly to mind. I had the option between Madden 04 and NFL 2k4 and I picked NFL 2K4 for the exact reason that it was $20. That was a deal. And you know what happened? EA gobbled up the exclusive rights to the NFL games and there went the competition. That is also something to fear, if you’re a company willing to sell cheaper, high quality games, someone big decides to gobble you up because you are competition.

There are quite a few high quality (in my mind) games that were way too steep at $60. I really did want to support those games but I only purchased them after a few price cuts.

[Reply]
jordan
July 9th, 2008
This article is total shit.

The price of games is not to high. Games are priced that way because they have to be. And to all the people who are bitching about games new costing $60, there are 2 very good reasons for that. First, the cost of producing a game on this generation of consoles is higher than it’s ever been. Second is a factor most people seem to forget when talking about the price of games, inflation. I don’t see how people expect to pay the same price for a new game that they would of 10 years ago. Everything is more expensive than it was 10 or 15 years ago, why do so many gamers expect gaming to be the exception to that rule.

Oh and one last thing, You cannot compare video games to movies. Never.
There not the same business. As ryan pointed out, movies make half their money makeing people pay 5-15 dollars to see it once. Then they can turn around and release a dvd for 20 bucks. There is however another reason you can NEVER compare video games and movies. How many hours of enjoyment do you get out of a movie? 1.5-2, 3 tops. Now even the shortest games that people are complaining about being to short for the price tag are 10 hours. And some games still offer 100 hours of game play. So if you where to compare the amount of time spent with each product, a $60 game vs. $20 DvD. On average your paying 10 bucks for an hour of entertainment when you buy a DvD. With games your paying between 6 bucks and .60 cents. To me that sounds like video games are a much better deal than movies.

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jim
July 9th, 2008
Hmmm are we forgetting how well NFL2k5 sold? At 20 bucks a pop it was the best football game (arguably ever!).

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JoelR
July 9th, 2008
for sales on one million units (average sales during launch week - before used titles pirate all the sales from the new copies)

How come Uncharted and Assassin’s Creed cost 60 dollars, while Super Mario Galaxy cost 50 dollars on the Wii? The first answer jumps to mind is “lower development” cost, but what does that mean? Do you know that when Konami publishes a game like MGS, they only make 1 dollar per game? In this special segment, we take a look at where your dollars go! We’ll break it down for you in a nice pie, because it’s always nice to know who’s taking a bite out of your pocket pie this Christmas.

Art/Design: 25% (about $15)

The rippling oceans, expressive faces and explosive action sequences gamers want to see don’t come cheap. Publishers pay millions for computer-generated graphics, animation and motion-capture talent. “It’s just like making a movie,” says ABI Research’s Michael Wolf.
Programming And Engineering: 20% (about $12)

This expense includes the gaming “engine”–the software equivalent of a game’s guts–which can be bought, developed in-house or licensed, such as Epic’s Unreal engine. Also included: artificial intelligence programs, online game-play systems, video compression software and “localization” for international markets. Engineering and development costs can quickly escalate when publishers agree to port a game title to an additional platform–and most of them now have to do so, notes ABI Research’s Wolf. Some third-party developers secure deals to receive a cut of royalties based on how well a game sells.
Retail: 20% ($12)

Most games wholesale for about $48, giving retailers like EB Games, or Best Buy $12 of markup; at best, a dollar of that may drop to the store’s bottom line.
Console Owner Fee: 11.5% (about $7)

This is why Sony, Microsoft and Nintendo are laboring so mightily to make their machines to success: Each gamemaker that wants to roll out a new title has to fork over a fee for each unit sold. This may vary per console maker–some publishers say creating games for the PlayStation 3 is more expensive because of fees Sony charges to use its Blu-Ray DVD standard. “But that number can get smaller depending on the publisher’s status,” says Peer Schneider, vice president of content publishing at IGN, News Corp.’s gaming portal. “The fee can be waived for exclusivity to a platform–that will buy you a kickback.”
Marketing: 7% (about $4)

The game marketing budget is smaller if a game belongs to a well-known franchise, such as one of Activision’s Tony Hawk titles, or can benefit from the marketing extravaganza tied to a movie budget (like Activision’s Spiderman games). But good luck trying to market a brand new game concept. “To say, ‘This is our new universe that you’ve never heard of,’ that’ll pile on additional marketing costs,” says Luke Smith, news editor of Ziff Davis Media’s gaming site 1up.com.
Market Development Fund: 5% (about $3)

It’s not just enough to end up on a retailer’s shelf–if you want good placement, or a spot in a retailer’s advertising, you’ll have to pay up again. This includes paid placement for print circulars, banner ads and highlights within a retailer’s TV spot.
Manufacturing Costs, Packaging: 5% (about $3)

Blu-Ray discs might cost more, and so will collectible “special edition” sets. Otherwise, this amount covers the blank DVD media, the game imprinting, the sturdy plastic case and the included instruction manual.
Licensing: 5% (about $3)

From athletes and sports leagues to Marvel characters and movie studios, if a game title takes its name and plot from a well-known pop culture icon, publishers can expect to pay top dollar for the licensing rights. Headlining voice talent, such as Marlon Brando in Electronic Arts’ The Godfather game, may even receive a percentage of retail revenues; unnamed voice actors and musicians get a flat fee. Costs vary widely here. For original-concept games, this cost is zero.
Publisher profit: 1.5% (about $1)

After all other parties–including the in-house or outsourced development teams–have been paid, the publisher collects about a buck toward the bottom line. As these pricey consoles become more mainstream, those dollars will add up.
Distributor: 1.5% (about $1)

If a small publisher wants to reach mass audiences, or a large publisher wants to sell to a small-time retailer, they’ll need help from a game distributor, such as Ingram Entertainment.
Corporate Costs (quantitative analysis, management overhead): 0.3% (about 20 cents)

Number crunching is cheap, says Sega of America president Simon Jeffrey. Lawyers are not. But publishers need to pay all of them. And if they find themselves in legal trouble–as Take-Two Interactive did when it had to defend its Grand Theft Auto game’s racy content in federal court–this number will shoot way up.
Hardware development costs: 0.05% (less than 3 cents)

[Reply]
shoescum
July 9th, 2008
yeah i agree with funnyman. i used to try to get all the good games that came out and complained abut the price. the thing is i wold get bored and never play those games again. so now i only buy games that REALLY interest me and must buys and my wallet is able to survive.

[Reply]
Johnno
July 9th, 2008
Games will never match the popularity of movies because people by and large are more interested in passive entertainment that doesn’t require them to do anything but watch for a couple of hours. Games require a lot of time to invest in and usually many tend to simply give up when things get too difficult and never finish a game so that also factors into their worth, the risk of not completing what you purchase. Gaming is not worth it to many people therefore not as many people get into gaming even if the prices are low enough. Sure lower prices will attract more buyers, even on a whim, but there simply will never be as many people interested and thus having games at the same price as movies on a low install base compared to DVD will never make enough money to sustain the gaming industry. Also the reason DVD players and subsequently blu-ray players will fall faster in pricing is because there are many companies out there manufacturing them and finding ways to reduce costs, whereas in gaming there are only 3. Also when you consider that DVDs work in ALL players whereas Gaming has games exclusive to their systems and you have the added hassle for you average consumers. There’s a reason one format had to die in the blu-ray/HD-DVD war, it’s because consumers will not put up with that shit! Gaming however can survive with multiple exclusive platforms but it’s a different thing altogether from movies.

[Reply]
Mark Reply:
July 9th, 2008 at 4:49 pm
“Also the reason DVD players and subsequently blu-ray players will fall faster in pricing is because there are many companies out there manufacturing them and finding ways to reduce costs, whereas in gaming there are only 3.”

Thats the reason I hope the third party manufactured 360’s rumor is true

[Reply]
LC Reply:
July 9th, 2008 at 7:27 pm
That’s one reason why it would be a benefit to consumers if they could agree on a general hardware spec and allow manufactures to compete with different skues. The focus should be on software and some could argue the input device, those who say the wii could only be done if a hardware manufacture sold it as a package might be proved wrong if Microsoft unveils its rumored motion control device.

Another thing to consider why games have smaller install base is because of the cost of entry, whether your old or young $600 or $700 to buy a console and a game/accessories or two is rather steep. By the time there affordable enough for mainstream consumers to buy in, the hardware and software manufactures are cashing out leaving those late to the game with diminishing selection, zero support and an environment that says too bad for you should have bought sooner.

You can argue all the points for the reasons games cost so much but the industry is responsible for a lot of the nonsense the consumers end up footing the bill for.
HERO
July 10th, 2008
Once again I rest my case. Developer X, why give those amounts when they are pure CRAP. You can get the same game on the PC for $10 to $20 less, and it went through the same developement, the only reason they cost so much on the consoles is because we as gamers allow it PERIOD, WHY DOES NOBODY UNDERSTAND THIS BUT ME?

[Reply]

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