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The price of video games has held pretty steady over the last 15-20 years, and yet the cost of developing them has increased dramatically. Why is this, and is the current price of games really the best one?

Caleb Compton, Blogger

June 9, 2020

11 Min Read

The following is a reproduction. The original article, and over 100 more, can be found at RemptonGames.com



What’s up designers, welcome back to Rempton Games. Today, I’m gonna be looking at a pretty complicated and controversial topic – the price of games. With that I will be touching on a number of other topics, such as loot boxes, subscriptions, and paid DLC, and if those things make you mad I ask you to please hear me out and wait to the end of the video before leaving an angry comment. Without further ado, let’s get started.

Before we start trying to answer the question of how much games SHOULD cost, lets start by answering a much simpler question – how much DO games cost? This may seem like a simple question, but it’s a bit more complicated than it may seem. These days, a AAA game is going to run you about $60 if you buy it full price, but a large number of games will be bought on sales and discounts, which means not everybody is paying that full $60 price. In addition, smaller, more independent games could sell for significantly less than this (with many games having no upfront cost at all), and many games have a “deluxe edition” that could cost more than $60.

That’s a lot of variability, but for the purposes of this video I will be focusing primarily on the $60 price tag that tends to be what players expect to pay for a quote-unquote “full” game. And I use that word “full” intentionally – I believe that players have certain expectations when they pay that $60 dollar price tag that the game they are purchasing is a total experience, with an adequate amount of content and appropriately up-to date visuals. If a game is very short, or visually does not meet expectations, players will tend to want to buy it at a lower price-point. And, unless they are given something extra to go along with it, players are generally unwilling to spend more than $60 up front for a game.

But why is this? What is so special about this price, that it seems to be the default price that both publishers and players are unwilling to budge from? I can’t say for sure, but there are two things I do know. Thing number 1 – $60 has been the base price for console games for the better part of 2 decades and 2 – based on several forum thread and comment sections I read through while researching this video, there is a huge portion of gamers that are NOT willing to pay more than this for their games. There have been experiments over the years with higher prices, but the higher price generally leads to fewer people buying the game, and so $60 has stuck.

Keep in mind, although the face value of buying a game has remained the same for the last 15-ish years, the ACTUAL cost of buying the games has gone down due to inflation. If you bought a $60 game in 2005, you were actually paying the equivalent of about $80 in 2020.

Okay, so games cost $60 to buy, and that price likely isn’t going up because raising the price would significantly reduce the size of the market, as well as piss off a good number of gamers. If anything, looking at things like the mobile market and Steam games are actually more likely to get cheaper over time, and they are definitely already getting cheaper simply by not keeping up with inflation.

On the other hand, the cost of making games is not going down – it has actually grown exponentially. To explain why, let’s first look at Moore’s law. Moore’s Law is an observation that the number of transistors in an integrated circuit would double roughly every two years. This observation was made by, and named after, Gordon Moore, a co-founder of Intel, in 1965, and this observation has mostly held true since then – although there has been some apparent slowing in recent years, and even Moore himself has predicted that this rate of growth will probably level out over the next decade or so.

What this generally means is that processors have been getting more powerful at an exponential rate for over 50 years, which has led to an explosion in technological power and innovation. 20 years ago, for example, we didn’t even have Ipods, and now the mere idea of a dedicated MP3 player seems like an ancient relic.

This brings us to another law, this time by the former Chief Technology Officer at Microsoft Nathan Myhrvold – Software is a gas. This means that software grows and expands to fill its container – it’ll get as big as it possibly can unless it is contained somehow. The “container” in this case is the limitations of computing – there is no point in making a game that no computer can actually run – I’m looking at you, CRYSIS. As computing power improves, games can’t help but try to grow and improve with them – simply compare Pong to Red Dead Redemption 2, and you can immediately see the astounding level of progress games have made as an art-form in a few short decades. This growth comes in many forms, from more impressive visuals to larger worlds to more complicated AI.

These bigger, more impressive games don’t come free, however. As computing power increases exponentially, so have budgets. In the 70’s and early 80’s, the cost of games basically came down to hardware costs – they had to be distributed in massive arcade cabinets or bulky cartridges, but the actual cost of developing the software was minimal. In these early days it was not unusual for games to be made by a single individual over the course of a few weeks – the real challenge at this time was manufacturing, not software.

As time went on, however, the cost of game development began to grow. As computers improved, developers continued to push the limits of the hardware, and consumers began to expect more and more out of their games. Sprites and backgrounds became more complex, until they were replaced almost entirely by 3D models. These models started out quite simple, with maybe a few dozen polygons and low resolution textures, but these models became more complex over time. By the mid 90’s a triple-A game would cost a few hundred thousand dollars to develop, and by around 2005 these costs had risen to over 10 million. Today, even the most advanced game from 2005 would not be given a second look. Modern models can have tens of thousands of polygons, and textures that look nice on a 4K UHD screen take a lot more time and money to develop than the low resolution textures of the past, and it isn’t rare for a modern blockbuster to cost over $100 million to develop.

So is the increased cost of making a game solely due to the cost of assets? Mostly, but there are a few caveats. The first thing to mention is that a lot of games are trying to fit more actual gameplay into their games, but the amount of code going towards gameplay has not risen to nearly the same extent as the cost of assets. The second caveat is that there is not a direct linear correlation between the amount of asset data and the cost of producing that data. The amount of data included in a game is increasing even more quickly than costs. This is mainly due to the improvement of tools such as game engines and 3D modelling programs that allow developers to create these more advanced assets more efficiently than before. This makes it more efficient to produce these assets, although this increased efficiency is nowhere near keeping up with the increased demand.

This increased cost of development has had a number of effects on the game industry. For one thing, it has resulted in fewer AAA games being released each year – as costs increased, developers couldn’t afford to make as many games as they used to. Similar to the movie industry, this increased cost has also led to these companies taking fewer risks, and putting more emphasis on sequels and reboots. Because each game represents such a huge investment, if they release a handful of flops it could spell the end of the company – countless game companies have already fallen victim to this.

This is connected with another consequence of this rising cost – fewer companies are producing AAA games. As these blockbuster games get more expensive to make the barrier to entry gets higher, which means that fewer companies are able to compete at the AAA level. As these higher costs also drive existing competitors out of business, the overall landscape of big budget games is going to get more and more sparse.

So, if games are so expensive to make, why do they still cost $60? The answer is…they basically have to. Even if you might be willing to pay $70, $80, $90 dollars for the games you want to play, the overall market simply isn’t willing to accept it. This leaves you with 2 choices as a game company – reduce your costs, or try to find alternative forms of revenue.

You can see both of these strategies at play in the modern game industry. There are tons of smaller game companies out there that do make smaller games, and distribute them on platforms such as Steam or the Google Play store. These games don’t necessarily rely on a higher price tag to make money because they don’t cost that much to make. The downside of this, of course, is that while these sorts of smaller indie games have the potential to be very successful, they are also INCREDIBLY competitive, and a huge number of them make next to nothing.

Alternative revenue models are also becoming more and more common among modern games. In this context, the $60 dollars you pay for the game isn’t really the “price” at all. Instead, it’s more like an entrance fee, which is supplemented later on with additional revenue with things such as paid DLC, loot-boxes, annual passes, etc.

Now, I know that gamers tend not to be huge fans of these sorts of monetization strategies, to say the least, and I’m not going to say that greed is never involved. There are certainly companies out there who employ monetization tactics that I would not only consider to be greedy, but also manipulative and unethical. However, I think that is a problem with how these features are implemented, and not an inherent problem with offering these additional payment options to players.

Keep in mind that offering options such as loot-boxes is not just a matter of money, but of risk. Many game companies live right on the edge of success, where a single failed game can mean the end of the entire studio. I have actually seen this myself first hand – last year I worked as an intern at Rooster Teeth Games, and during this time they were developing a game known as Vicious Circle. Vicious Circle ended up being a flop, and because of that basically the entire team of talented artists and developers was let go. Game development is a risky business, so having alternative revenue models built into your games can help even out this risk – if a successful game is still able to produce money, maybe you won’t go bankrupt if your next game doesn’t do so well.

So, to finally answer the question – how much should games cost – the truth is that I don’t have the answer – and neither does anybody else, really. This is still a relatively young industry that is changing fast, and must evolve as it grows. However, based on the way the industry is moving, it doesn’t really seem like raising the base price is really a solution to the problems the industry is going through – even if prices doubled it wouldn’t necessarily make the development model more sustainable, and nobody would actually buy a $100 game. If I had to guess where game prices go over the next several years,  I wouldn’t be surprised if the cover price of a game continued to trend downwards towards $0, and smaller ongoing payments became the norm rather than a bigger up-front cost.

That’s all I have for today. Thank you so much for watching this video, and I would love to hear your thoughts on this topic in the comments below. If you liked this video, please leave a like and subscribe so you don’t miss more videos like this in the future. And join me next time, where I will be taking a look at a project I did a while back and show you how you can teach an AI program to play Pokemon Emerald. Until then, thank you so much for watching and I’ll see you all next time.

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