Article originally posted in Daniel Camilo's LinkedIn profile. Daniel is an international BD for APPTUTTi - Chinese mobile game publisher and Unity partner - and expert on the Chinese gaming market.
With Take-Two revealing that NBA 2k21 will cost $70 for its next-gen versions, is this the first (clear) sign that game prices will increase with next-generation consoles?
While it's fair to point out that game prices have remained stubbornly "frozen" for most of the last 3 decades (weird looks towards the N64) and didn't follow inflation, I believe lower prices are actually the logic way to go, if we want to keep the momentum of growth within the industry, and for console games in particular.
Yes, development costs are always increasing, salaries have not remained "frozen", etc etc. Not saying it's easy to keep prices down, but too much has changed in the last decade with the democratization of free-to-play games, in particular on mobile. Standard edition games at $70, plus the price of consoles, and paid-subscription services to play online add up too much cost for the average household and consumer.
Higher prices will further exclude the casual gamer from “traditional” gaming, and even a lot of “core” gamers are always just a few dollars away from being excluded from the scene. Not to sound too hyperbolic, but price increases in gaming always remind me of the NEO-GEO console. Games shouldn’t be that much of a luxury! It just doesn’t work. We know that much.
...we are at risk of laying down the stepping stones for the console market to become even more niche in the future, almost “boutique”-like. This would be devastating, considering how far we’ve come and how long it took to make gaming mainstream.
Why have prices remained the same over the years?
Economically, does it make sense that game prices have remained the same over the years? No. But does it make sense for gaming? Yes, it does. Would an outside analyst agree with this? Probably not. The gaming industry is just “different” that way.
While it’s true that game prices haven’t significantly (or at all, in some markets) increased over the years, it’s important to not lose perspective over the greater context in which videogames live and breath: hardware, computer tech, gadgetry, multimedia entertainment. While game prices haven’t changed, almost everything else directly surrounding them has over the years. Computers and smartphones are now owned by billions of consumers worldwide, multimedia content is seamlessly delivered through digital platforms at low cost and/or for free (including videogames), and development of games is no longer mostly focused in the USA, Japan and Western Europe.
Almost everything in and around the videogame industry has become more accessible to wider audiences over the last decades. Considering this, it’s safe to assume that current consumers will be increasingly resistant to paying top dollar for individual pieces of content. Is that fair for the developers who witness operational costs increasing year-to-year? Probably not, but the consumer doesn’t care about that or isn’t even aware. The industry should adapt to consumer trends, not expect consumers to change their ways in order to accommodate. Easier said than done, I hear you.
To be clear, personally, I totally understand why developers would want to increase the price of games, specially for AAA titles. I get it, and I would support them. But as a widespread industry move, I see it ultimately hurting sales more than anything else.
Will $70 games succeed?
For heavily marketed, hyped AAA games, an $10 increase, while significant, would ultimately be of reduced consequence. I’m talking about the heavy-hitters here, the biggest franchises in the industry. For those, no matter what the cost is, there will always be anywhere between 1 to 10 million consumers willing to buy. But what about all other games?
Since the 360/PS3 generation we have witnessed a steep reduction in the number of “AA”/budget/"mediocre" titles released (just compare with the amount during the PS2 era), and for good reason: even in some cases with a reduced price point of around $40, these games have found it harder and harder to get the attention of gamers in a market that is filled with extremely good games at one end, and free-to-play ones at the other end (which are sometimes also excellent experiences). Opening the door to $70 games would only widen the chasm between these different development approaches, and push even more gamers out of console gaming. Worst and long case scenario, we are at risk of laying down the stepping stones for the console market to become even more niche in the future, almost “boutique”-like. This would be devastating, considering how far we’ve come and how long it took to make gaming mainstream.
But hey, who knows how much more competitive pricing will become for digital releases, and how price-cuts will evolve post-launch, and how much more quality games we will get on mobile, and how much more services like Game Pass will make it up for all the extra costs, and so on and on. Surely someone, somewhere, must have it all figured out, and creativity and quality content will prevail in the end. Right? Right......?