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Opinion: Why 3DS' digital games will never be as cheap as iPhone's

Renegade Kid's Jools Watsham explains why eShop's $2-$8 games can't match the App Store's cheap prices, and examines consumers' evolving expectations for downloadable titles.

Jools Watsham, Blogger

January 6, 2012

5 Min Read

[Why can't the 3DS eShop's $2-$8 games match the App Store's cheap prices? In this opinion piece, reprinted by permission, Renegade Kid's creative director Jools Watsham explains the challenges developers face when pricing eShop games, and examines consumers' evolving expectations for downloadable titles.] It seems as though the price tag of video games has always been criticized as being too high. Now that we live in a world where iPhone apps are available for $1 or even $FREE, a $40 video game seems outrageous in comparison to many people. Perhaps $40 for a 3DS game is outrageous, but what surprises me is when people scoff at the cost of $5 and $10 Nintendo eShop games. Really? Now even $5 or $10 is too much for a game? Where do prices of video games come from, and why are they important? From my perspective as a developer, and now a publisher on the Nintendo eShop – aw yeah! – the price that my games are being sold at have a distinct importance to me and my business. Take [Renegade Kid's upcoming eShop game] Mutant Mudds, for example. Let's say the development of Mutant Mudds cost a grand total $100,000 for all of the expenses involved with the creation of the game, such as team salaries, equipment, etc. This number is not real, but $100,000 is a nice round number that is not outside the realm of reality. Games can easily cost much more or less than this. Beyond our goal of entertaining people with our games, we also have the simple goal of making enough money to continue operating as a business so we can make more games. If Mutant Mudds cost $100,000 to make, we need to make $100,000 back to break-even, right? That at least puts us in a good place where we don't owe anyone any money. However, we must also make money beyond that if we are going to be able to move beyond Mutant Mudds and make more games. Let's imagine we sell Mutant Mudds for $40 and our cut of that is 50 percent (that percentage is fabricated, but it works nicely for this example). So, we make $20 for each game sold. Nice! That means we have to sell 5000 copies of the game to make our initial investment of $100,000 back. That is a very manageable goal… … however, the reality is that we can't sell Mutant Mudds for $40, for many reasons. OK, so let's go to the other end of the spectrum and price it at $1 with our cut still being 50 percent. Oh wow, we would need to sell 200,000 copies to make our $100,000 back. Hm, that might be a tricky goal to achieve. Time for some perspective: our best selling DS game has sold around 100,000 copies worldwide. Based on how the average original non-licensed game sells on the DS market, 100,000 copies is a big success. On a side note, we saw no profits from this title due to the broken business model of retail – but that's a different story. OK, back on topic. Based on historical sales data, it's probably best to assume the game will sell around 30,000 copies – tops – in its lifetime. It could certainly be a lot less, or a lot more. That's the roll of the dice. OK, so our expectations are 30,000 copies sold in its lifetime. Alright, let's work from that number then instead. To break even, we will need to receive basically $3.34 per copy sold (30,000 x $3.34 = $100,200). That would mean that we need to sell the game for $6.68 to make our initial investment back, with our cut at 50 percent. OK, let's go crazy and sell it for a whopping $10 now, with our cut still at 50 percent. Here's the math: 30,000 x $5 = $150,000. Hm, not bad at all! We make our initial investment of $100,000 back and have $50,000 towards the next game. Considering Mutant Mudds cost a fictional $100,000 to make, having $50,000 to make the next game means we either need to make a game that requires less team members, less time, less features, or we need to get some more money from somewhere else to make something that is the same scope as Mutant Mudds. And there lies the chaos of game development. In my opinion, iPhone games have a greater chance of selling closer to 200,000 copies due to the nature of the platform and the audience using it (they also have the same chance of selling zero copies due to how flooded the market is). But, they have to be the right types of experiences for the iPhone audience. I think it is safe to assume that there are more people in the world walking around with a phone in their pocket than there are people with a DS or 3DS in their pocket. The phone audience is massive. However, this does not mean that this is an audience of gamers. The typical iPhone user wants to play a simple game to waste some time, which cost them very little money to buy. Their investment is equal to their perceived value of the experience they want from the game. There is nothing wrong with this. I too want these types of experiences on my phone. I think the part of me that wants this is not my gamer side. It is my casual kicking-a-stone-on-the-street side. It is the side of me that finds it entertaining to flick a crumb off a table. Is this / should this be what the typical 3DS user wants from games? I think not. I think the 3DS audience wants games that do more than just mindlessly waste some time. I think the 3DS audience wants something different. I think they want games that entertain them. Challenge them. Inspire them, perhaps! Games that go beyond literal simple pleasures take time and money to create. This will never change. If people are unwilling to pay higher prices for richer experiences, then these types of games will cease to exist. You know supply and demand and all that. We will then be left with a market full of simple gaming experiences that offer the same value as what you paid for it.

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