Friday, March 29, 2013

$60 Price Point; Too Expensive or Just Right?

by Daniel Goad and Cam Sky

We are trying to enter a new era and all new heights for the quality of the articles that come from Some of our efforts involve a new line of articles that feature an entirely new idea incorporated into them. In the below article you will be presented with a debate between two highly reputable TechFixation Editors; Cameron Skayman (Cam Sky on TechFixation, @cam_sky on Twitter) & Daniel Goad (TechFixationJedi on TechFixation, @thepausemenu on Twitter). The topic as chosen and structured by these two will be covering "Are Video Games worth an initial $60 cost?"

As you progress through the editorial, you will be presented with each of their opinions on several unbiased key points. Please, feel free to comment below to chime in with your opinions on the given topic and each of the editors represented opinions. You can also comment to Techfixation on Twitter @techfixation. Starting the debate, we introduce TechFixation's very own Jedi; Daniel Goad.

To be honest I cannot afford to have every game on every Tuesday. I'll be lucky to swing a single AAA game every few months. With that said, you're likely to assume that I would be opposed to the $60 price point, however I strongly support it and am in favor of it. Truth be told when a game stands out and grabs my attention, I will likely purchase special editions and collectibles of the game. I have two main points I will touch on; state of the art media deserves a higher cost, & the employees and staff of video game development studios deserve more money and praise for the art they create and the entertainment and memories they instill into the consumers.

Gaming is a highly prized area of entertainment and can accumulate quite a hefty some of money if you're marketing teams focus on the right demographic. Video games are also extremely expensive to manufacture. The graph above illustrates the average monetary cost of games based on generations. Games built for Nintendo's NES, on average, took $100K to produce, while the next generation; PS4 and the unannounced Next Xbox, cost a projected $60 Million to create. To put the cost versus the profit into perspective here are some of the best selling video games of all time:
  • Call of Duty: Modern Warfare 2 (PS3) - approx. 4.8million units sold = approx $288million worth
  • Call of Duty: Black OPs (360) - approx 12million units sold = approx $720million worth
  • Uncharted 3: Drake's Fortune (PS3) - approx 3.8million units sold
  • Halo 3 (360) - approx 8.1million units sold
L A Times
Click to enlarge

I understand your point about how the developers deserve more money, but having a $60 price point limits the audience a game can have.

The lower the price of a game, the easier it is for anyone that is not a die-hard fan of series to justify its purchase. If all new games were $30 I would buy most without looking at review scores. It's easier winning over new gamers when the price of entry is lower. The more people that buy the game results in more people to purchase downloadable content (DLC). The DLC also cuts out retail, which gives the developer and publisher a greater percent of revenue.
Bobby Kotick, CEO of Activision Blizzard [his eyes are not like that in real life]

The $60 price point is also killing the mid tier developer because the games that were developed were not priced accordingly.

The following are all the development studios that have shut down since 2006:
  1. 38 Studios - 2012 
  2. 3D Realms - 2009
  3. 4mm Games - 2012 
  4. 7 Studios (Activision) - 2011
  5. Backbone Vancouver
  6. BigBig (Sony) - 2012
  7. Bizarre Creations (Activision) - 2010/2011
  8. Black Rock (Disney) - 2011
  9. Black Hole Entertainment - 2012 
  10. Blue Fang Games - 2011
  11. Blue Tongue (THQ) - 2011
  12. BottleRocket - 2009
  13. Brash Entertainment - 2008
  14. Bright Light - 2012 
  15. Budcat (Activision) - 2010
  16. Castaway Entertainment - 2008
  17. Cheyenne Mountain - 2010
  18. Cing - 2010
  19. Clover Studios (Capcom) - 2006
  20. Codemasters Guildford - 2011
  21. Cohort Studios - 2011
  22. Concrete Games - 2008
  23. Dark Energy Digital - 2012
  24. Deep Silver Vienna - 2010
  25. DICE Canada - 2006
  26. EA Chicago - 2007
  27. EA Bright Light - 2011/2012
  28. EA Japan - 2007
  29. Eidos Manchester - 2009
  30. Eidos Hungary - 2010
  31. Ensemble Studios (Microsoft) - 2008
  32. Factor 5 - 2009
  33. FASA (Microsoft) - 2007
  34. Fizz Factor - 2009
  35. Flagship Studios - 2008
  36. Flight Plan - 2010
  37. Frozen North Productions
  38. FuzzyEyes - 2009
  39. Gamelab - 2009
  40. Game Republic - 2011
  41. GRIN - 2009
  42. Helixe (THQ) - 2008
  43. HB Studios Halifax - 2012 
  44. Hogrocket - 2012 
  45. Hudson Entertainment - 2011
  46. Hudson Soft - 2012
  47. Humannature Studio (Nexon Vancouver) - 2009
  48. Ignition London - 2010
  49. Ignition Florida - 2010
  50. ImaginEngine -2012
  51. Incognito Entertainment (Sony) - 2009
  52. Indie Built (Take-Two) - 2006
  53. Iron Lore - 2008
  54. Juice Games (THQ) - 2011
  55. Junction Point - 2013
  56. Kaos Studios (THQ) - 2011
  57. Killaware - 2011
  58. Killspace Entertainment - 2011
  59. KMM Brisbane - 2011
  60. Krome Studios (might still be operating on skeleton crew) - 2010
  61. Kuju Manila - 2009
  62. Kuju Chemistry - 2009
  63. Kush Games - 2008
  64. Locomotive Games (THQ) - 2010
  65. Luxoflux - 2010
  66. Mass Media (THQ) - 2008
  67. Monte Cristo - 2010
  68. Monumental Games - 2012
  69. Midway Austin - 2009
  70. Midway Newcastle - 2009
  71. MTV Games - 2011
  72. Multiverse - 2012
  73. NetDevil - 2011
  74. Ninja Studio - 2009
  75. Outerlight - 2010
  76. PAM Development (Take-Two) - 2008
  77. Pandemic Australia (EA) - 2009
  78. Pandemic LA (EA) - 2009
  79. Paradigm Entertainment - 2008
  80. Paragon - 2012 
  81. Pi Studios - 2011
  82. Pivotal Games (Take-Two) - 2008
  83. Propaganda Games (Disney) - 2011
  84. Pseudo Interactive - 2008
  85. Rainbow Studios (THQ) - 2011
  86. Realtime Worlds - 2010
  87. Rebellion Derby - 2010
  88. Red Octane - 2010
  89. Rockstar Vancouver (formerly Barking Dog) -2012 
  90. Rockstar Vienna - 2006
  91. Sandblast Games (THQ) - 2008
  92. SEGA San Francisco - 2010
  93. Shaba Games (Activision) - 2009
  94. SOE Denver - 2011
  95. SOE Seattle - 2011
  96. SOE Tuscon - 2011
  97. Sony Liverpool
  98. Spellbound Entertainment
  99. Stormfront Studios - 2008
  100. Straylight Studios - 2009
  101. Team Bondi - 2011
  102. The Code Monkeys - 2011
  103. Titan Studios - 2009
  104. THQ Studio Australia - 2009
  105. THQ Digital Warrington - 2009
  106. THQ San Diego (formerly Midway San Diego) - 2012 
  107. Transmission Games - 2009
  108. Universomo (THQ) - 2009
  109. Ubisoft Vancouver (Formerly Action Pants) - 2012
  110. Venom Games (Take Two) - 2008
  111. Vicarious Visions California - 2007
  112. Visceral Australia (EA) - 2011
  113. Wolfpack Studios - 2006
  114. Yuke's Company Of America - 2010
  115. Zipper Interactive - 2012 
  116. Zoe Mode London - 2009

Bad management and corporate shenanigans lead to many of the studios on the above list being shut down, but I believe that if many of them released a product at a lower price they would have sold a lot better and would result in keeping their doors open.

Epic Mickey 2 bombed at retail, even though it wasn't a bad game nor was it a great game. But it was a game that could not justify the $60 price point. It came out the same time as Black OPs II and Assassin's Creed 3, and with the American economy still in the toilet. Many people can't afford to purchase every game that is released at full price. If it was released for $30 it could have sold a lot better.

Unforgettably, Junction Point was closed down as a result of the failure of Epic Mickey 2. The industry is going to a state of less games with a handful of titles making a majority of the revenue. This kind of business model is great in the short term for investors, but it turns the industry into a stagnant environment where innovation is ignored. Revenue might be up, but new studios and jobs will be rare. For every new studio that is opened, three will close.

The publishers need to step up and price their games accordingly; control costs, or go the way of THQ and Midway.

[IGN & Kotaku]

Your evidence is staggering in its truth and reason, but I must continue on to my last point. I personally believe that the employees of these great and ambitious studios deserve to be rewarded for their extreme and tireless efforts to create art and put together the games we play and love. Most AAA studios pay their staff handsomely, but others risk lay offs and shutdowns because their games simply do not sell. I take pride in buying games at $60 or more because I know of the people that make the games. As a part of TheTechFixation we catch a greater glimpse at how diverse the projects are, the length of time production lasts, and the level of dedication it takes to stand behind a game.
Bethesda Softworks Staff Photo

Now to get past my adoration, I do believe that lowering the cost of AAA/AA games by $10-25 would increase sales by a major amount. As a gamer on a low entertainment budget I have to pick and choose my games wisely in order not to waste my hard-earned dollars. If the industry wasn't such a dog-eat-dog world, gamers like me could choose two similar titles on launch day for under $70. No hard decisions on if Medal of Honor is better than Black OPs II, no inner struggle if you would get more enjoyment out of Watch_Dogs than Assassin's Creed IV: Black Flag, and no more sacrificing personal entertainment versus multiplayer functionality. I could guarantee sales would double for software and hardware if AAA titles for next-gen consoles would release for $40 instead of $60-70. It would entice people to fork out the hundreds of dollars for that new console they want AND purchase two games to play instead of one.
Ubisoft Montreal Staff Photo

I understand that this editorial started out as a debate, but now is a common agreement. The fact of the matter is; if the entertainment industry wants to grow and expand in scale and monetary value they need to appropriate prices for lower income families and persons. The economy is rough and not everyone has the ability to spend money towards entertainment. If games continue the $60 price tier I will remain respectful and loyal, but if they would innovate and accept the next generation's limits, things could reach a new level of success.

I'm glad that you saw the light. I know that it is tough to see that my opinion isn't farfetched and it is nice to understand what your stance is as well.  I understand where you are coming from but I stand strong and believe that at times a $60 initial cost is too expensive.  I'm looking forward in discussing the topic for the next editorial: "Is Free-to-play killing the Industry".


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