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Game Pricing's Happy Spot

Thoughts on game-pricing models and how to increase total revenue. Conclusion? Cheaper games = more games being played. Simple as that.

As a gamer, I spend money buying games. Sounds simple. But there's a complex internal calculus of sorts that goes on whenever I want to buy a game. There are inevitably more games out there that I want to play than I will be able to - at least until I win the lottery and don't have to work.

And so I must choose among numerous games, until I find the one that is right for right now. For me, that comes down to a question of value. I want to get the most out of whatever I decide to buy.

It's not just a matter of fun - if a game will only entertain me for 10 hours, I'm not likely to feel it's worth the $60 price tag that this generation of console games come with out of the gate. I'm happy to wait a few months or even a year to play a great game for half that price. That's my pricing happy spot.

Which leads me to wonder why more games don't arrive on shelves priced differently. Surely GTA IV cost bundles of dough to make and hence it needs its sixty bucks over and over, but not every game requires such sizable resources to develop, market and publish.

It'd be great to see a company try to sell a good game at a competitive price. I doubt they can honestly tell you what would happen if a game with half as much hype as GTA 4 released at $30 or $40 dollars. Given that GTA 4 sold 8.5 million copies as of May 31, 2008 (sorry that data's sold old, best I could find), according to Take-Two Interactive, total sales revenue should be $510,000,000.

However, there are 27.93 million Xbox 360s in the world. That means the GTA4 tie ratio was 30%. If a price point of $40 would have raised that rate to 50%, they would have $558,600,000 in revenue. I can't say how many more people would have bought the game at $40 versus $60, but I can say this: I didn't buy it at release.

This may be an exercise in futility - I lack the data to make a serious argument about particular price points. But the industry is obviously waking up to the attractive nature of small payments.

Just take a look at the number of get-rich-quick-stories that iPhone apps has spawned. Need I state the obvious? At $5 or so a pop,buying an iPhone app is an easy, thoughtless, guiltless impulse purchase.

Along the same lines, free-to-play games with micro-purchases are moving their way west, where the same psychological strategy is employed - $2 for a new outfit for your 'toon is a small, harmless drop-in-the-bucket. The key, of course, is to get a high user count with low overhead and to rake in the pennies.

All in all, I think the gaming industry needs to wake up to the relevance of pricing games and the importance of the psychological impact a price tag can have on potential consumers. If they're going to consider a micro-payments model, they need to also think about releasing games in the $20-40 range. Then maybe people like me will find them worth the value.

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